Drive Business Continuity in Manufacturing: Fuel Lasting Financial Resiliency
Manufacturing continues to combat massive disruption, and it shouldn’t come as a surprise that 80% of manufacturers expect the pandemic to have a financial impact on their business1.
Current economic conditions have caused manufacturers to quickly adapt to protect their businesses – focusing on revenues, costs, cash, and operations.
This rapid response has clearly demonstrated to manufacturers that, to ensure business continuity and future resiliency, they must shift from reactive to proactive crisis management and emphasize access to real-time data to support agile decision making.
This is the last in a three-part blog series to discuss how manufacturers can drive business continuity now and into the future, by considering three guiding principles:
1. Accommodating the new employee experience
2. Enabling continuous operational agility
3. Fueling lasting financial resiliency
Today, we focus on the third principle, fueling lasting financial resiliency.
According to Oden Technologies’ recent The State of Manufacturing Report, margins are a core challenge and 45% of Executives say maintaining revenues or profitability is a long-term concern.
Source: The State of Manufacturing by Oden Technologies
Fueling lasting financial resiliency is paramount and manufacturers must safeguard revenue continuity through creative labor strategies to effectively manage their overall cost to serve. Manufacturers can do so by adopting a workforce management strategy which supports financial resiliency into the future. When developing strategies to support revenue continuity, they should focus on three primary areas:
1. Maximize profitability
Reducing labor costs while increasing productivity has never been a simple task, and its complexity is amplified, given the challenges manufacturers are facing today with enhanced financial pressures and resource constraints. To start, manufacturers need visibility to the activities their employees are working on and the ability to develop accurate labor standards to support a more accurate labor costing model. How can manufacturers measure the profitability of current jobs and make better business decisions about labor utilization if it's unclear where labor costs are occurring?
A workforce management solution with shop floor labor tracking capabilities and labor analytics not only delivers the visibility needed to support those efforts, but it also enables managers to quickly respond to production issues while enhancing productivity and controlling labor costs. Detailed labor costing information is invaluable when evaluating product profitability and allows for more informed pricing and product mix decisions which ultimately increases profitability.
2. Optimize talent and workforce strategy
To further support maximum profitability, manufacturers must also optimize their talent and workforce strategies. Planning for future workforce needs requires understanding the capabilities of the current hourly workforce in order to identify potential gaps in critical job functions. This visibility can help alleviate potential issues in the future.
With a robust workforce solution in place, manufacturers can gain a clear view into employee performance trends as well as currently available skillsets, allowing managers to make more-informed talent planning decisions and identify areas of opportunity for employee development, such as cross-training or reskilling.
Real-time visibility into workforce analytics and performance is also critical. Easy access to workforce performance information enables managers to identify opportunities for more effective labor utilization. Understanding who top performers are or those who may be struggling can inform coaching conversations or create opportunities for team member mentoring. This visibility can help alleviate potential issues and is essential in today’s unstable business environment, when the conditions of tomorrow are truly unknown.
3. Minimize the impact of future disruption
Traditional key performance indicators (KPIs) used before COVID-19 may not be enough to navigate today’s dynamic environment. Identifying the KPIs and metrics – such as absenteeism hours as a percentage of production hours – that are most critical to your organization is essential in order to minimize the impact of future disruption.
Workforce management tools help managers, HR leaders, and business analysts gain real-time insight into their organizations, enabling them to measure their organization’s performance against business goals and objectives and provides the reliable data needed in order to understand labor issues and make strategic decisions to plan for the future.
Maximizing profitability by developing accurate labor standards and costing strategies and optimizing talent and workforce strategies by understanding skill availability and performance insights are just a few measures that can be taken to minimize the impact of future disruption to their business and fuel lasting resiliency.
Learn how UKG can help your manufacturing organization drive business continuity.
Source: 1. National Association of Manufacturers (NAM) 2020 2nd Quarter Manufacturers’ Outlook Survey. https://www.nam.org/2020-2nd-quarter-manufacturers-outlook-survey/