Getting Beyond the “Non-Revenue Generating” Objection

by | Sep 2, 2011

In my last post, I wrote about how manufacturers are striving to become more efficiencies efficient across its operations. Many plants have state of the art equipment, but administrative functions lag behind. How many times have you heard that certain types of activities are “non-revenue generating,” which is code for “not a budget priority.”

The reality is that non-revenue generating activities can be streamlined and made more efficient. Some of the activities that can benefit the bottom line by eliminating inefficient practices or processes are often left on the budget cutting room floor.

Take employee labor hours. Labor hours are critical when determining efficiencies and product costing. While many manufacturing organizations track an employee’s payroll time via some type of workforce management system (Kronos, WorkForce Software, Empower, etc), tracking what the employee does is a bit more rudimentary. Here is a typical scenario:

  1. An employee arrives at the plant and either swipes in at the gate or locker room for their payroll time, may swipe in/out for lunch, and then swipes out at the end of their shift for their payroll time.
  2. During the course of their day, they may track the work orders/jobs/projects that they are working on via various methods including spreadsheets, databases, manually writing down on a log or homegrown systems.
  3. The next day, someone on the accounting or operations team reconciles the payroll time and the labor time to determine the amount of direct or indirect hours for each employee. During this process they also allot the hours to the appropriate work order or project for costing.
  4. The next day (two days after the work was performed), plant supervisors and managers receive a report that breaks down hours for each employee. At this point they can see where there may be discrepancies or missing labor entries and make adjustments (if possible).

For many on the operation side of an organization, this process is all too familiar, inefficient and potentially inaccurate. The good news is there are solutions to alleviate many of the steps without jeopardizing the required results. What does that process look like when using one these systems? Here is an example:

  1. Employee swipes in for payroll and scans in a bar code for their work order or project to start the job. Can have multiple starts/stops throughout the day on as many jobs as needed. Employee swipes out and all jobs are stopped.
  2. Payroll time versus labor hours are automatically reconciled.
  3. Data is automatically sent to payroll and to the system tracking project costing.

Automation creates a more efficient process, it also gives plant management a real time view into what an employee is working on throughout the day. It also allows the person who did all of the manual reconciliation to be redeployed to other departments in need of assistance. The accuracy of the labor hours is also improved, which allows for better product costing.

The benefits to moving to a more automated time and labor solution can show significant returns via increased efficiencies, accuracy and real time views into the operations.

Maybe it is time to see if this solution was on your budget cutting room floor?

Never miss an update!

Sign up for our WFM Newsletter for all the latest trends, insights, and expertise from Axsium.