Why Care About Labor Scheduling?
If you are interested in avoiding the non-stop shortages and extended lead times that have plagued us the last few years, you should care about labor scheduling. Almost every disruption we experienced from baby formula to computer chips to the Southwest Airlines fiasco related to the shortage of resources. From a client point-of-view, EVERY single client, even the best of the best and industry leaders, lost revenue due to shortages and extended lead times. One of the ingredients to success is the topic of labor scheduling.
What is Labor Scheduling?
At its simplest, labor scheduling is determining which people (and which skills) you should have at which sites at which work centers at what time (shift) to ensure the right products can be delivered to the right customer at the right time.
In many manufacturing operations, it can seem pretty simple. For example, an industrial manufacturer runs one eight-hour shift across all work centers five days a week. However, even in this simple situation, the question becomes how to handle surges in customer demand or how to occupy your resources when volume drops off. In a distribution environment, the question becomes how many people do you need to pick, pack and ship to meet your carrier schedules and customer pick up requests. In the transportation industry, the appropriate type of truck driver (long haul vs. local) needs to be in the “right” place at the “right” time to deliver customer orders. Even in the service industry, the key is to have the appropriate number of resources in the “right” place at the “right” time to service customers. Long wait times in restaurants illustrate this importance.
Even in these simple situations, labor scheduling will become more complex. For example, in working with clients in a stable environment and consistent demand by work center, you might have the appropriate numbers of people, but not the appropriate numbers of people with the required skill sets. For example, an aerospace manufacturer required a high-skilled machinist to run their 6-Axis CNC machine whereas they required a completely different skillset to run the punch press. Unless they had the appropriate numbers of 6-Axis skills on the appropriate shift, operations stopped.
What is Complex Labor Scheduling?
Take labor scheduling up a notch, and you’ll gain complexity quickly. For example:
- Building products manufacturer: Although they could determine the number of people required to support their sales forecast, they struggled with labor scheduling in their Canadian operations to get the “right” products produced at the “right” time to service customers. The main issue is that they scheduled each production line without looking at the big picture. They did not have enough resources to run all production lines simultaneously, and certain items required extra people to run. Additionally, certain items had to run at the same time as other items so that they would be available for the next operation at the same time. Unless you planned across all machines in combination with labor schedules, service would suffer.
- Consumer products manufacturer: Taking it a step further, if your volume exceeds a five-day schedule, alternate schedules will need to be evaluated. A consumer products manufacturer struggled with service levels due to their inability to scale up to meet the increased demand. Of course, they utilized overtime, but their resources were tired, absenteeism increased, and production was unreliable. They tried adding people and running different shift configurations to increase output but continued to struggle.
- Bottling company: Taking it a step further, if you throw union rules into the mix, complexity deepens. In this case, they had relatively predictable volume on a quarterly basis; however, the volumes changed from quarter to quarter and from line to line based on peak season adjustments. Several, if not all production lines required a 7 day per week schedule. When the forecast became available, it had to be analyzed in comparison to the potential shift configurations (five 8 hour shifts starting on various days of the week, staggered five 8’s, four 10 hour shifts, a hybrid of 5 8’s and 4 10’s, a bridge shift to make sure the lines could run 24 hours a day continuously even during lunches and breaks). And, finally, you had to layer in the union requirements in terms of forced overtime, voluntary overtime, off days, and much more.
- The ports: Taking it a step further yet, the L.A. or Long Beach ports require more than the appropriate number of people at the correct dock at the right time. There are multiple terminals and so you have to plan resources (labor, equipment) to the terminal and dock level. To ensure the equipment is available, you need to plan the appropriate resources to get the appropriate equipment to the right place at the right time. You need to know where the specific containers on the ship are going so that they can be routed appropriately. The gate operators need to be on the same schedule. And the truck drivers need to be at the right terminal at the right time to get the “right” load to transport to the “right” warehouse (or train) to avoid congestion and service customers. At this just begins to explain the complexity.
- Airport scheduling: As we’ve seen with the Southwest Airlines chaos that unfolded over the holidays, if you don’t have the “right” plane in the “right” place at the “right” time with the “right” pilot and flight crew, appropriate ground crews, gate agents, and more, the system will come to a halt.
Maximize the Benefit with Optimized Labor Scheduling
There are many best practices that will optimize your labor schedules. However, there are no formulaic solutions. Instead, they are highly dependent on your unique situation, skill requirements, customer requirements, workforce preferences, and several other factors. With that said, there are a few common themes:
- Flexibility: Building flexibility into your labor schedules is a “must” with today’s constantly changing customer requirements and Amazon-like service expectations.
- Backup plans: Optimize isn’t the same as minimize. To optimize labor schedules, you will need to have “excess” resources and capabilities for critical areas to account for the most likely (and forecastable) issues that arise. For example, a client had a significant number of key resources for the bottleneck operation go to Mexico on vacation during the Christmas season every year. Instead of being surprised every holiday, putting backup plans in place would ease the pain.
- Focus on conflicting goals simultaneously: There needs to be a focus on customer service, cost, and cash flow simultaneously. They will often conflict with one another. For example, if you increase the run size to improve operational efficiencies, you will have excess inventory which might unnecessarily absorb resources and cash. On the other hand, if you focus solely on serving customers, you might change over too frequently or between flavors or sizes that create quality issues and cause the line to break down at night. You’ll not only increase cost with reduced operational efficiency, but you might waste materials and have people idle until expert resources can arrive to resolve the issue.
- Think big picture: Do not plan in isolation. Instead, focus on how each element impacts the rest of your schedules. Look at connections and down-the-line impacts.
- Elevate scheduling beyond the analyst: Production and labor scheduling often falls to entry level or analyst resources. If there are enough complexities, provide supplemental resources (from other departments, consultants, other facilities) and expertise to ensure maximum benefit.
Labor scheduling should not be relegated to whoever is available. Too many clients leave it to supervisors or analysts without the full picture to schedule properly. If you don’t schedule, chaos will follow. Why not reevaluate what you are doing and optimize your labor schedules especially as supply chains continued to evolve and change. Your labor schedules must evolve as well.
Refer to our blog for many articles on planning, inventory and related concepts. Also, read more about these types of strategies in our eBooks, Thriving in 2022: Learning from Supply Chain Chaos and Future-Proofing Manufacturing & Supply Chain Post COVID-19. If you are interested in talking about what it would take to right-size your inventory, contact us.
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