As an operations leader in today’s hypercompetitive landscape, you’re always on the lookout for ways to reduce lead times to better satisfy internal stakeholders and, ultimately, delight the customer. In a volatile time with so many supply chain disruptions, the companies able to put products on shelves and in carts are the ones that get orders.
That’s why being faster is how you steal market share and differentiate yourself from your competition. Often, people are willing to pay a premium for speed, and even more so when just getting a product in the first place is questionable.
At Veryable, we’ve seen hundreds of companies improve lead times by using on-demand labor to flex labor capacity in real time in response to demand.
In this article, you’ll learn how to improve lead times with on-demand labor by leveraging constraints, focusing your specialists, flexing capacity, and tying costs to output.
Know your competition and current position
First thing’s first, you have to know where you stand in relation to your competition. Gauge how you compare in terms of lead time for your product and market. You should aim to be 40% faster than average, or if you’re feeling confident, target the best-in-class lead time as your goal.
To do this, you need to know your quoted lead time and actual lead time. Your actual should be faster than your quoted, or at worst it should be the same as your quoted.
If your actual is longer than your quoted, then you should have a strong sense of urgency to change this. That’s because nothing goes according to plan 100% of the time. Without adequate agility to adjust and meet your quoted lead times, the slightest hiccup can upend your entire production schedule. Then you’ll be pushing orders and shipping late, which destroys your service level performance or creates costs when you have to expedite shipping to make up for the lost time.
Create flow in your operation
Excess inventory buffers in your process are a low-hanging fruit that you can attack. To do so, you can add hours in off-hour shifts and weekends to flush out the excess inventory so you can establish a quicker, smoother flow of value through your operation.
This is easier to accomplish with access to flexible capacity. Plus, you don’t want the overtime and attrition costs of burning out your FTEs by asking them to cover these extra hours for weeks on end.
Create real-time flexible capacity
To achieve real-time flexible capacity, you’ll need to build a labor pool of workers available on demand. Your labor pool is like a bench of workers who are trained in your work processes and ready to work on short notice.
By adding on-demand workers who perform well to this favorites list, over time you will build a powerful asset for your company and gain the confidence to get more done, faster.
This is because when you can flex your capacity infinitely upward, you are able to increase your throughput without making huge fixed investments. That means you can take on bigger orders and more orders, because you have confidence that you’ll be able to respond quickly using your flexible capacity.
Leverage constraints with additional uptime
If you have long lead times because of an immovable bottleneck, you can add more hours of uptime to keep that bottleneck fully utilized. This will leverage the constraint so that you can increase output without having to invest in footprint or machinery right away.
With on-demand labor, you can offer multiple shift options to your current FTEs and spread them out across the extra shifts, then address the extra workload with workers from your labor pool as needed.
Help specialists focus by reassigning their non-value-add tasks
Chances are that you have specialized workers in your facility who are great at a certain machine that’s critical to your product. And there’s a good chance that they are doing more than just that specialized tasks, which slows them down and keeps production from really zooming.
With on-demand labor, you could bring in additional workers to assist your specialized workers with tasks like setup, cleanup, and moving materials. When you really need the production line to hum, this will let your specialized workers focus on doing their critical, value-add work so they can produce more.
Speed up receiving, packing, and shipping
Because lead time includes everything from when you get materials to when the customer gets the product, the additional areas of receiving, packing, and shipping are important to tackle as well.
Adding on-demand workers to these areas can speed up your processes tremendously. Workers on the Veryable platform commonly list material handling and packing skills on their profiles, and because this work is fairly standard across companies, you can trust that if you pick a highly rated Operator, they will pick up the skill quickly in your operation.
Keep costs tied to output
When you only schedule workers when you need them, you are able to tie your costs to output. This is especially so if you pay workers by the production unit, known as piecework pay.
When using on-demand labor, if you are staffed to your minimum average demand, the workers from your on-demand labor pool will only be deployed when there is extra work that needs to be done. Since they’re only being paid when they’re doing work, your labor costs are directly tied to the output of the workers.
This makes planning easier, and gives you a more accurate picture of how labor costs factor into the overall cost of the product. It’s a huge improvement over having a fixed labor cost and variable output per worker, in which case you’re basically guessing how much of the product’s cost comes from labor. You end up relying on averages far too often, which is how you become an average business.
How to get started with on-demand labor
Improving lead times with on-demand labor is as simple as making a free Veryable account and following our guidance on building your labor pool. Our local teams will be your partner to ensure you’re set up for success as you take control of your capacity using this operational tool.