COVID-19 continues to present operational challenges to organizations all over the world, and every department is under pressure to maximize its efficiency within new constraints. According to the Federal Reserve, average workforce utilization in the U.S. is significantly lower than pre-crisis levels.
As COVID-19 cases remain high in large areas of the country, producers have several difficult decisions to make while planning their workforce.
The abrupt changes in market conditions are prompting companies to rethink their business, but companies often tend to overlook the effect of the pandemic on workforce management.
This is an important area, particularly with labor-intensive workforces that are directly affected by COVID. Companies need to minimize labor costs, ensure a flexible workforce plan, and track the productivity of their workforce, now more than ever, given new health guidelines and restrictions.
Using a Labor Management System (LMS), specifically designed to help companies with these challenges, in an effective way for managers to optimize performance in challenging times and mitigate future uncertainty.
3 key benefits of using Labor Management Systems are as follows:
Benefit #1: Reduced costs through increased productivity
One of the primary reasons companies implement an LMS is to reduce labor costs. This is achieved, typically via boosted employee productivity, which is done by carefully engineering the optimal method to complete repeatable tasks. Once a task – such as picking item X, which weighs Y pounds, and placing it onto forklift Z – is optimized by a group of engineers, an employee performing this task can pick and place more items in a given day. This allows managers to either improve the gross output of their facility and reduce the number of employees needed to complete a given output or both. This reduces a facility’s net labor costs, given a level of output. Maximizing the productivity per employee and minimizing the labor costs needed to fulfill a set number of orders is critical in an environment in which companies must save every dollar to stay financially stable during the crisis.
Benefit #2: Dynamic workforce plan
Another commonly-cited reason for implementing an LMS is to accommodate a more flexible scheduling capability due to rapidly changing demands. Overstaffing can lead to underutilization, where employees have too much idle time because there aren’t enough orders to fulfill, which squeezes profit margins. On the other hand, if economic conditions improve, leading to more than expected orders, companies risk losing business due to longer fulfillment times, poor customer service, or readily available products from competitors. LMS can incorporate budget constraints, labor forecasts, employee skill sets, and several other features to create a balanced and efficient labor plan. This helps mitigate the risk of over or understaffing, which is especially useful in uncertain times.
Benefit #3: Real-time tracking and re-evaluation of performance metrics
In addition to balancing how many employees to have on-site for a particular timeframe, it is clear that companies must implement new health and safety standards to protect employees. While some guidelines are relatively simple, such as daily temperature screenings and health questionnaires, other policies may have a more nuanced impact on employees and their productivity. For example, will employees in a warehouse be able to pick as many items off shelves if they are wearing masks? How can travel paths be optimized when workers need to remain six feet apart from one another? This brings us to the third, commonly-cited reason firms turn to LMS, which is to track their labor productivity and costs in real-time to make adjustments when necessary. The core functionality of LMS is to track the productivity of each employee throughout their shift and help managers set benchmarks. Visibility into these benchmarks allows managers to revise goals as needed. For example, if new health and safety guidelines directly impact productivity. They can also observe if an employee is not fully compliant with new rules (For example, if one employee’s productivity is significantly higher than their peers after a rule change). This can be critically important as firms work to ensure a safe, efficient work environment for their employees while still protecting their finances.
As firms seek to evolve their operations to succeed in the next normal, LMS presents an opportunity to invest in technology that can pay dividends far into the future.
Has LMS helped your business in the pandemic? Contact our experts below with your comments and questions.
Senior Consultant, Infosys Consulting
Andrew is a Senior Consultant with experience leading cross-functional teams and using analytical skills to solve a wide variety of business problems related to business strategy, supply chain, process improvement and sales/marketing. He has led strategic projects and used business analysis, project management and problem-solving skills to impact business across several industries, including energy, aerospace and defense, and financial services; and is based in Nashville, TN.