Direct labour productivity and cost reduction
“Any idiot can cut costs or automate. Getting more from people is a somewhat greater challenge.”
Increasing direct labour productivity is a core imperative for operational leaders the world over, and has been the subject of many different approaches and theories of management over the years.
Applied Acumen understands the key components of the productivity puzzle, and we help our clients to create action plans that increase and sustain higher productivity.
What are the key components of the productivity puzzle?
An Applied Acumen productivity programme examines all these aspects in recognition that ignoring, misunderstanding or blindly making assumptions regarding any one of them will ultimately lead to disappointment, underachievement and regression.
- Standard work
- Lost time
- Planning (of both products and labour)
- Incentives and disincentives
- Equipment and automation
- Process – the “value stream”
Applied Acumen has developed specific tools to properly measure, reflect and diagnose each of these aspects, allowing us to build a holistic solution to increase productivity in an organisation.
Having these tools, and having our expertise means we can not only do this quickly, you can also be sure that the job is being done properly. Learn more here.
How do you cash the cheque from a productivity increase?
The benefit from an increase in productivity can be measured in both financial and non-financial ways, with these including:
- Reduction in the weekly direct labour bill (for a given level of output), less people, less paid hours
- Reduction in overtime hours worked
- Reduction in temporary or agency labour
- Reduction in shift hours worked, or whole shifts
- Increase in throughput/output (contribution)
- Increase in availability
- Increase in sales
- Increase in asset utilisation
- Increase in service level
- Decrease in working capital
- Reduction in administration
- Reduction in run-time (and potentially in indirect costs associated with running, e.g. energy)
- Increase in pride, welfare aspects and staff engagement
- Increase in customer loyalty and respect
To find out how these things can be measured, and what they might be worth to your business, contact us.
How do you tell a busy bee from a busy fool?
Let’s face it, we can all look busy when we want to. This is true in any business, at every level.
It may surprise you to learn that we happen to disagree with the established industrial engineering methods that have prevailed since Henry Ford’s days, that of measuring the work – so called ‘standard work’ then adding in allowances for fatigue, breaks, skill and so on.
There are better ways, far less damaging ways, to implement ‘standard work’ packages, and to set expectations and performance targets, without alienating the work force, restricting further improvement, limiting ambition, implementing barriers between management and staff or wasting hours constructing fake timings for activities. Such methods are archaic, unhelpful and out of date, especially when compared with the Applied Acumen approach.
In addition, we know that intensive activity in an area does not necessarily correlate directly to ‘value added’. Anyone who has witnessed a first time swimmer will testify to that!
Applied Acumen has analytical methods to distinguish between the activity that has meaning, value and importance, and that which has not. We share these methods with our clients, and they can be applied in non-production environments just as effectively as they have been in factories, design departments, purchasing departments, finance organisations and distribution hubs. Find out more by speaking with us today.
Are the French really that much more productive than the British?
Official statistics on productivity show that the UK lags behind the economies of the US, Germany, and even France. Successive Chancellors of the Exchequer have boldly claimed that a worker overseas can pack up and go home on Thursday lunchtime leaving the poor UK worker to continue toiling until the weekend before achieving the same output. Let’s be clear: this is utter rubbish.
Quoted figures are based upon worked hours per unit of (GDP) output. Factor in the significantly higher unemployment of our European and US cousins, the ‘hours not included’, the difference in structural costs and a different picture emerges; a picture where some UK factories’ output per worker, on a like for like basis, are not just the best in Europe but the best in the world – certainly our clients would feature.
However, this also is not the entire story. The relatively high employment costs in Europe has created a certain culture in management from which the UK could learn a great deal; more empowerment, more investment in capabilities, more focus on getting the last Euro of value from the people you have, less reliance on throwing people at problems, less resistance to new ideas, new approaches, and new technology.
One thing we do know, Brexit will add a new dimension to the competitive challenge.
We run a tight ship – how could you help us?
Our approach begins with an exploration of exactly how we can add value.
In a confidential discussion we shall examine:
- Your current ambitions
- Your current performance benchmarks
- Your immediate challenges
- Your strategic challenges
Our ‘big data’ technology also can provide a deeper perspective of your performance data, and the true potential of your business without reliance any capital investment.
This analysis (done as a ‘one off’ free of charge) can be illuminating! It requires nothing but your own data, and does not obligate you to act upon it. However, be prepared for (a nice) surprise!
To talk about how we’d undertake this free data analysis, contact us.
How can we incorporate growth and stay productive?
A typical challenge where a rapidly growing company is adding to the payroll and it becomes extremely difficult to then know when and if additional personnel are required to fuel that growth.
This becomes especially challenging when growth is through acquisition, and new businesses are at different levels of evolution, both in terms of process integration and people capability.
Additional complexity comes through regional or market variation (say between countries), cultural variation, and system variation.
The answer is to have a very clear plan, clear goals and objectives, and a structured, scalable growth process that people understand and are able to follow.
This is often something a company feels it should handle by itself, but this is to forget where most of the executive time ought to be spent – the culture! The integration, the technicalities of process, of systems, of managing activity – and the consequent productivity – task and delegate to experts who can support local managers – call us! You might think this is what you’re paid to do, but you’d be wrong.
Every waking moment of the Company executive ought to be on promoting the realisation of the culture you are trying to attain, ensuring people feel wanted, valued, and part of the family.