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6 Ways To Reduce Labor Costs in Manufacturing
6 Ways To Reduce Labor Costs in Manufacturing
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Luckily, there are several. Here are six methods for reducing labor costs in manufacturing:
2. Eliminate Overscheduling
Overscheduling is a considerable source of labor costs in any operation. When management
has access to imperfect information about the production demands, their scheduling is just a
"best guess." However, using predictive scheduling software based on sophisticated
algorithms, you can optimize your employee scheduling efforts.
With this software, managers are able to look ahead at the incoming production demand and
make the scheduling decisions from that data. This ensures the business is adequately staffed
to meet the demand and eliminates excessive/unnecessary labor hours.
3. Lean Production
Lean production eliminates non-value added processes within manufacturing. When
implemented ef ciently, lean production doubles the labor productivity, reduces inventory
and cuts production throughput times signi cantly. Essentially, with a more ef cient
production process, employees are able to produce more unitsthus lowering your labor cost
per unit.
In addition to eliminating non-value added processes, lean production also helps eliminate
bottlenecks within the typical production line. Bottlenecks will reduce output and cause the
productivity of some line workers to decrease signi cantly.
4. Standardization
Process and part standardization can result in economies of scale and automation. With
automation, there are fewer employees on the assembly line and the equipment manages the
assembly. Bene ts of this option include more consistent quality, quicker output and
signi cant savings on labor costs.
5. Technology Implementation
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Furthermore, with technological advances that aid in automation, there are some jobs where
machines can do the work of a human more ef ciently and effectively. Systems such as
automated inspection, automated picking of componentsfor assembly and automated
assembly will all aid in reducing labor costs in manufacturing.
With the occasional bit of preventative maintenance for the machines and maybe a few
operators and mechanics to monitor the equipment, you can have an automated process
which eliminates the full cost of some humans on the manufacturing line with similar or better
output. With countries like China, Indonesia and other low-wage locations offering
competitive labor rates, many companies are modernizing their equipment to keep jobs
domestic in order to compete with the low-wage countries.
Labor costs are a signi cant portion of the budget for any new launch. However, there are
ways to streamline the process which aids in reducing labor costs in manufacturing. The
aforementioned six areas contribute to a solid production foundation which will help in
reducing labor costs in manufacturing.
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