Whether your manufacturing company is feeling the cost of recent tariff hikes or bracing for whatever comes next, you’re not alone. According to the National Association of Manufacturers’ most recent outlook survey, industry optimism is freefalling, and more than half of those surveyed cited trade uncertainties as their #1 challenge.
As you know, according to the Federal Reserve, manufacturing output shrank over two consecutive quarters. The ISP Index is at its lowest point in nine years. Some segments are feeling the pain more than others. In the electronics manufacturing sector, 69% of companies have reported lower profit margins. In the automotive industry, it’s projected that revenue losses could amount to $66.5 billion.
When increased tariffs inflate production costs, manufacturers have several choices:
- Absorb the costs, and take the hit to profits
- Pass the price increase along to buyers, inhibiting sales
- Split the difference between the two
- Reduce operating costs to offset some or all of the increase
While we can’t speak to the first three approaches, we are intimately acquainted with the latter, specifically one effective (but painless) cost-cutting strategy—implementing cost-saving workforce management technology across your operation.
While service-based industries have been utilizing advanced workforce management solutions for some time, some manufacturers have been slow to embrace them. If your company is one of them, now is the time to get up to speed.
How Workforce Management Software Cuts Costs
If you’re using time and attendance software, you’re already using some workforce management technology. But some systems are more powerful than others, particularly when it comes to the hourly workforce.
The best workforce management software doesn’t just track time and attendance, it offers tools and features that actively identify and trim the waste from your labor expenses. These include:
Preventing Time Theft via Biometric Time Clocks
Time theft is epidemic in the American workplace, ranging from overt buddy punching (when one worker clocks in or out for another) to padding worktime by a few minutes a day. In one survey, 43% of hourly workers admitted to doing it; one-fourth of them said they do it most or all the time!
These same workers indicated that there is one time-tracking device they can’t outsmart: biometric time clocks.
Biometric time clocks use facial or fingerprint recognition technology to measure each worker’s unique physical characteristics. When a worker punches in or out via a photo or fingerprint scan, the system attempts to match their characteristics against stored data—recorded as mathematical algorithms—in its database. If the two don’t match, the punch is brought to the manager’s attention, a process that shuts down time fraud attempts very quickly.
Bottom line: if you’re currently using a time clock that accepts swipe cards or badges, simply upgrading to biometric time clocks could result in significant savings.
Optimizing Weekly Schedules with Cost-Conscious Scheduling Software
Only 45% of employers use scheduling software, although it’s a highly-effective way to ensure your workforce is deployed cost-effectively.
For example, some advanced scheduling software features built-in budget calculators that will tally the costs of a proposed schedule as it’s created, allowing managers to create schedules that makes the most financial sense for any given shift or line.
In addition, some scheduling software will flag the system if a proposed schedule creates inadvertent overtime—an already-costly labor expense that’s about to become more costly for many employers (keep reading).
Limiting Unintended Overtime with Proactive Manager Alerts
Effective January 1, 2020, 1.3 million more workers will become eligible for overtime, as the Department of Labor’s higher overtime salary threshold goes into effect. If some of your employees fall into this group, now’s the time to put more aggressive OT safeguards in place.
In addition to the overtime flags found in scheduling software, some workforce management systems can actually send managers real-time text and/or email alerts before a worker crosses the overtime threshold, allowing management intervention. Analytics help limit overtime, too.
Generating Analytics that Pinpoint Waste in Labor Costs
Workforce management analytics take all that everyday data workers and managers enter into their company’s time and attendance system, then manipulates it to offer frsh visibility into workforce behavior. For example, workforce analytics can reveal:
- Which shifts, lines, or managers are incurring the bulk of overtime costs and how/when it’s occurring.
- How actual labor hours and dollars compare to budgeted hours and dollars (and where the deviations are).
- Which if any managers are editing employee punches or pay rates—a possible indication of time fraud.
In addition, analytics can help you spot a range of wage and hour related compliance violations, eliminating the expense and worry of potential fines and lawsuits.
In summary, advanced workforce management software can help manufacturers cut labor costs, without resorting to layoffs or relying on attrition. It can function as a powerful tool for offsetting tariff hikes and otherwise maintaining profitability during an industry downturn.
If you’d like to learn more about workforce management software that’s geared to the manufacturing industry, look no further. EPAY’s advanced workforce management solution has the power to cut your labor costs by up to 5% or more.
Furthermore, our rugged biometric time clocks can withstand the rigors of the factory floor, and our workforce analytics are the most comprehensive you’ll find. Yes, you’ll start seeing results right away. Take a minute to learn more here or start the conversation now by calling 877.800.3729.