Thursday, August 14, 2014

Using the workforce to identify cost bottlenecks

One of my most memorable jobs was that of a sweep-up boy in a joinery. After school, I'd go into a factory and sweep up sawdust. It was a fascinating job. I would watch robotic machines fashion a square piece of timber into a smooth round table leg. The end result being a beautiful dining table. I guess that in the last 25 years, a lot more of the process has been automated.
At the time, I was one of the only people in the factory who appeared to have a full set of fingers. Most of the men working there had lost one or more fingers. Safety standards were not as high as they are today. Looking back, I would assume that such an injury would have had a significant cost to the company. Putting in place safer equipment and reducing injury has hopefully helped to control costs.
It is essential to be able to identify costs in a production line. A hold-up caused by a faulty machine can see costs spiral out of control. As waged staff are affected by dependencies not being met, ordinary time rates can quickly become overtime rates.
In a survey conducted by BusinessWeek Research Services (The fact gap: The disconnect between data and decisions), found that the majority of survey participants (77%) know of bad business decisions made within their organization because of insufficient information; nearly all recognize that inefficient information access significantly impacts productivity.
As a sweep-up boy, I use to enter my time into a notebook. This data was then collected once a week and used to process the payroll. It was too late for management to make an informed real-time decision.
By having accurate real-time data, it is a lot easier to make good decisions to help reduce cost bottlenecks. With the greatest expense being the workforce, it is important to be able to improve efficiency. Job-costing, Time & Attendance and Electronic Punch Clocks help to provide this data.
By having the right data, you can easily do the maths to work out how to reduce the cost. For instance, is it better to keep repairing a dodgy piece of machinery or is it going to be financially rewarding to replace it? The local sales rep keeps talking about how incredible the return on investment would be by using a new piece of equipment, does the ROI really add up when compared to your data? Having the right data at the right time can almost eliminate guess work and increase the chances of a good outcome.

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...