Measuring progress: 5-steps to improve labour productivity

Business Inisights

How productive is your workforce? It’s a simple question, but not so simple an answer; At least not for most manufacturers, due to the challenges of actually monitoring and measuring it.

Knowing which operatives are doing what, where, and when is of course at the heart of this understanding, as such a view helps determine the profitability of each job, and to understand the challenges associated with delivery.

In reality however, such data is often a static, retrospective view of the production process. It can also leave many questions unanswered. For example:

  • If a job takes longer than planned, what is the cause of the delay: a breakdown or lack of raw materials, availability of tooling or speed of production?

  • If the problem was lack of raw materials, could the operator have been placed onto another job during that time?

  • Was the delay part of a pattern that helps identify the true root causes of losses?

These are questions that can lead to a fast remediation if answered in a timely fashion. Obviously some manufacturers can do this, other though can’t – or at least not in a short enough timeframe to have an impact.

A difference that’s determined by the level of actionable information made available. And a difference in the maturity levels of those capabilities needed to generate the necessary insight.

Step by step improvement

At MESTEC, we’ve worked with manufacturers of varying degrees of maturity when it comes to measuring and managing workforce productivity. As a result, we’ve been able to witness:

  • The real-world benefits of moving from a reactive stance to a proactive one, including productivity increases of 40% and beyond

  • How elevating your maturity for managing productivity also leads to a fundamental shift in how it’s optimised in terms of both process and culture

  • The critical importance of accessing productivity data in real-time to enable an effective response to any disruption – rather than simply counting the cost ‘after the event’

Putting these experiences to work, we’ve created a 5-stage maturity model:

Step 1: Formative

This is the base level with an estimated productivity rating of 30%. Organisations here are able to confirm paid hours worked, but only have limited visibility into the labour content per goods produced. As a result, any understanding of productivity is limited to high-level retrospective analysis.

Step 2: Reactive

With an estimated productivity rating of 45%, during stage 2 more detail of hours worked are being routinely collected – but in a slow manual process. Doing this enables a more accurate estimate of standard labour hours per operation, as well as reporting on recoveries. Ad-hoc analysis is possible, but is inefficient, open to error, and always retrospective.

Step 3: Progressive

By this stage labour productivity is up to around 60%, supported by the real-time collection of actual hours and tasks completed. As a result, manufacturers can record productive/non-productive/indirect activity with confidence – as well as a detailed understanding of the ‘why’. Alongside this is real-time reporting of recoveries, which in turn offers a clear view of utilization KPIs by individual, team, and department.

Step 4: Proactive

With an estimated productivity rating of 70%, the Proactive level sees unaccounted hours tracked as standard in what becomes a culture of continuous improvement. Performance is also supported by the on-going analysis of the causes of indirect losses, as well as real-time exception alerting – with all insights actively pushed out to operators.

Step 5: Expansive

With ‘full maturity’ comes a productivity rating of 80%+. It’s here that manufacturers can routinely analyse the causes (both visible and underlying) of poor productivity, and remedy any challenges or issues in real-time. Work scheduling is also optimised to ensure the full utilisation of all available resources, backed up by real-time inventory management.

The above descriptions are of course just our high level definitions. More detail, and certainly more analysis, is available in the report: 5 Steps To Productivity, The Labour Productivity Matrix from MESTEC.

Summing it all up

Understanding the maturity of your labour productivity ‘capabilities’, and what’s needed to get you to the next level, is in our view one of the fastest ways to delivering a measurable up-turn in revenue performance – and a dramatic improvement in labour productivity.

There’s no magic involved. No complex ‘strategic consultancy’ that can take years to figure out what’s actually wrong. Instead, this is a model for optimizing every facet of production, and for maintaining a flexible operation that’s able to respond instantly to any disruption.

To find out more about labour productivity, click here to download our Ebook “5 steps to optimisation”