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Demand Management Won't Help if  You Can't Actively Manage Labor

Competition on the retail shelf is often settled long before products are even stocked. Consumers expect a see a particular product where and when they want it at a reasonable price. It is absolutely critical for companies to tailor their manufacturing to address these consumer demands. If an organization cannot meet these needs, a competitor happily will.

Many organizations are addressing these challenges with sophisticated demand management efforts to more accurately forecast consumer demand. However, even after making significant investments in this area, organizations often still rely on manual efforts and complicated spreadsheets in response to unpredictable demand. While these tools generally provide a better plan, the reality is the plan can never be completely accurate given the certainty that unpredictable changes will occur. 

Today’s consumer-driven market requires a “pull” rather than “push” model of production. Food and packaged goods manufacturers are truly in the business of replenishing retail stock. They produce only what is needed, when it is needed - nothing more. The days of “pushing” product to the consumer from costly inventory storage are long gone. Dynamic consumer purchases now “pull” replenishment stock directly from production lines. This “pull” model puts considerable stress on a facility’s ability to profitably manage its supply chain. With no safety inventory available, a facility must essentially be ready to produce any amount of any product at any time. Any kinks in this process - whether in the form of excess or depleted raw materials, labor/production mismatches, or the inability to coordinate shipping - directly and significantly cut into the facility’s bottom line. Large, powerful retailers add to this challenge by demanding an increased number of SKUs, shorter delivery timeframes, special packaging and other value-added services. It’s an extremely tough task to remain flexible enough to meet consumer needs while also being extremely tight with production costs and resources. 

Many organizations are addressing these challenges by undertaking sophisticated demand management efforts to more accurately forecast consumer demand. These forecasts can be translated into production plans that account for the proper mix of raw materials, labor, and logistics needed to respond to anticipated market needs. While the effort and cost to implement such demand management strategies is critical to success, it is only part of the solution. An organization must be able to effectively execute these plans. Moreover, the organization must be nimble enough to quickly adjust its entire supply chain when the production plan inevitably changes. The inability to execute to a production plan, along with its last-minute permutations, has far-reaching effects on the consumer experience. It means that an organization cannot ensure the delivery of product where and when the consumer wants to buy it. Poor execution also adds considerable production costs, which means that the delivered product is not presented to the consumer at the lowest possible price. 

The longer a production plan is in place, the higher the rate of execution success.  This is why dynamic, last-minute plan changes require special attention. Even after making significant investments in demand management and operations planning tools, organizations may still rely on manual efforts and complicated spreadsheets in response to unpredictable demand. This is most often seen in the creation of a facility’s workforce schedule. While these tools generally aid in the building of a staffing plan, the reality is the plan can never be completely accurate given the day-to-day and shift-to-shift changes that inevitably occur. Effectively competing in the manufacturing arena now requires the ability to actively and accurately staff labor to constantly changing demand. In order to eliminate labor variance from the supply chain, workforce scheduling must be driven by the very same demands that drive the production lines. Complex work rules must be built into the scheduling automation, honoring them no matter how often or drastically the production plan changes. Employee qualifications and training need to be recorded, visible, and directly tied to how and when labor is deployed. By automatically flexing workforce schedules up and down with changing demands and production plans, overstaffing is virtually eliminated. Overtime can be used when necessary or as a “best practice.” Automating labor deployment execution contributes to a more stable supply chain that accurately matches production output with production requirements.  

The ability for a manufacturer to meet consumer demand is directly linked to its ability to adjust to dynamic production plans. By implementing an automated workforce deployment program that is easily controlled across a facility and enterprise, an organization can finally use its labor as a key differentiator in its supply chain. Because each manufacturer’s supply chain success and failure is passed along to the consumer, effective labor deployment really does mean happier customers.

Schedule a demo to see how we can address your unique scheduling needs or call us to learn more about our customers in manufacturing: 1-800-416-9006.
 

 

ScheduleSoft helps manufacturers match labor schedules to production requirements because:

  • There is constant pressure to do more with less.
  • Labor is the largest controllable cost of packaged goods.
  • Product profitability requires visibility into actual labor costs.
  • Demand driven manufacturing requires demand driven scheduling



    "Rethinking Labor" What you will learn in this 60 minute Webcast:

    • The trends that are driving the need for supply chain innovation
    • Key supply chain challenges that automated labor scheduling can address
    • How best-in-class companies are thinking differently about labor to gain a competitive edge

     

           

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