PEOPLE & SKILLS
overspend situation can become if not dealt with early on .
“ We saw this really high percentage of overtime , and I started drilling in ,” she explains . “ We found the major culprit was one plant . The more senior workers were the only ones that had the skillset needed for the overtime . So , the more expensive workers were the only ones that were able to take advantage of overtime and more junior workers , which would have been cheaper , weren ’ t having that opportunity .
“ Just by cross-training the workers , there was not only a bigger pool to choose from , but it reduced overtime costs , as long as it wasn ’ t against a union contract . That was hard savings . The firm was able to retrain a group of employees that were lower in pay , and started seeing their overtime costs go down . It also benefitted from a better-skilled workforce that knew multiple skills , instead of how to work just one machine .”
Bogrand is also of the belief that the 5.5-point employment bump that manufacturing has seen in the US , as per the index , was not actually needed and perhaps a result of similar examples to the one cited . She points out that employing people inefficiently now could lead to cuts being made to jobs which are needed in future . “ Your labour costs have to be optimised , or you ’ re going to start cutting ,” she warns . “ That overspend is going to affect your overall financial performance . We always like to see employment increase , but was that due to what we call a labour overspend , or could we have not had that increase and been okay ?
“ Frankly , the leadership , the shareholders , they want their money to be being well spent . They have to produce a quality product , no matter who they are , but they also need a productive , efficient workforce . You have to have efficient processes out in the plant , or the quality is going to start going down , or labour costs going up . This will result in an increased cost of product , so it ’ s just a boomerang effect . It goes out and comes right back at you , in different ways .”
It all comes back to cost efficiency , as Bogrand concludes : “ Making sure that they ’ re efficient is going to provide a better bottom line and financial impact , and will allow them to be a little bit more flexible in their cost-to-build .”
26 June 2018