You’ve been here before: operations seem to be doing just fine, until you check the numbers and see that output is not keeping pace. You should be taking on more orders, but you’re having trouble keeping up with the ones you have. So what do you do?
At Veryable, we help companies achieve productivity improvements by flexing their labor capacity on demand. We won’t get into the specifics of our on-demand labor marketplace here, but we will explore how on-demand labor could help you improve productivity.
In this article, you’ll learn how to improve productivity in general and, more specifically, how to improve it using on-demand labor.
Drive outputs and inputs in parallel
You should think with a customer-first mindset about the improvements you are planning to make. To meet customer demand, there’s a certain level of output you need to achieve. To reach that output, you’ll need appropriate inputs. So start with your demand, decide the output you need to reach, and start making improvements to your process and inputs to reach that goal.
As you begin, don’t exclusively focus on outputs or inputs. It’s important to keep an eye on both, and making improvements to inputs and outputs at once is a sure way to make progress.
If you focus only on outputs, you might influence the outputs while unwittingly ignoring the costs of your inputs. Focusing exclusively on ramping up your outputs can create an “at all costs” mindset, which might raise your top line, but if your bottom line follows because you’re just amplifying an inefficient process, your margin stays the same.
Likewise, if you only focus on inputs, you might starve your operation by ignoring the effects that reducing inputs has on outputs. By pulling your inputs too far back without making the necessary improvements to your process, you might end up lowering your top line along with your bottom line.
By driving improvements in outputs and inputs simultaneously to meet customer demands, you will quickly improve key outcomes and impact margins.
Optimize for uptime to drive output
If you aren’t fully utilizing the machines you have, then there is room to improve. Remove anything that’s keeping machines from running as often as they should be.
This might require you to address a bottleneck so that you don’t have some machines running while others wait. Doing more within the time you are already running is the first step in improving output.
To do this, you need to examine the processes that your operators are (or should be) following to ensure that there’s nothing unnecessarily keeping them off their machines. If there is some work taking away from the productive capacity of your specialized workers, then you should remove this work from them so they can focus on value-add tasks.
To improve output, you can add workers only when needed to support your specialized workers by handling setup tasks and any non-value-add work. The cost of that additional worker would likely be offset by the additional output you receive when your specialized worker is consistently available to drive production.
One final step would be to add shifts to increase your uptime. This is another area where on-demand labor could help, because you could level out your full-time employees across the shifts and use on-demand labor to help meet real-time demand around the clock.
Flex your inputs to match demand for optimal efficiency
Problems with inputs arise when there are more inputs than needed to get your outputs. You must first have a goal for output, then work backwards so you only provide the necessary inputs. That’s how you achieve efficiency.
This is most often found in labor, when companies base their labor capacity on the average demand. It might seem like an intuitive approach that can’t go wrong, but when you use this approach and demand is low, there are people standing around with nothing to do. That means there is waste in the form of input that is not resulting in additional output.
With a flexible labor capacity, you could match the labor input precisely to your target output based on your real-time, actual demand. With sufficient flexible capacity, you can staff to the baseline demand you’re certain you’ll see every month, and then use on-demand labor to flex your inputs day-by-day to fuel output as needed.
This is an output-first approach, which means that you will first look at your target output and then decide what inputs are necessary to achieve this. This approach puts the customer first, because all of your decisions will be based on customer demand, rather than essentially telling the customer “we can’t do any better than this.”
Remain competitive and protect margins by optimizing costs
Changing the amount of input and output will necessarily create changes in costs. You have to remain vigilant to keep the costs of increasing output in line with what’s actually necessary by flexing your labor, and then to progress into finding ways to decrease the costs of your inputs.
Beyond flexing your labor input, you can optimize the cost of your other inputs (i.e. materials and machines) to find further improvements to margins. By making process improvements, you can reduce material waste and improve the utilization of your machines.
How to get started addressing productivity issues using on-demand labor
You can easily flex your labor input to impact productivity by using on-demand labor. Many companies have used on-demand labor to build a labor pool, increasing their output and optimizing their input to generate massive results.