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Shift Work Scheduling Strategy: A Labor Management Crash Course
 

Shift Work Scheduling Strategy: A Labor Management Crash Course

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In this session John Frehse, Chief Strategist at Core Practice, will share business strategies around labor management and how to remove costs from your organization. This exercise will not only ...

In this session John Frehse, Chief Strategist at Core Practice, will share business strategies around labor management and how to remove costs from your organization. This exercise will not only educate, but will help you focus on the biggest opportunities available now. John will begin by sharing a list of the top hidden costs that most companies miss. He will then lead a short discussion about foundational labor issues including the importance of properly defining and creating a labor strategy that makes sense for your company with a closer look at pay policies. Next, strategic scheduling initiatives will be shared including how to manage variability. John will finish with a discussion about employee benchmark information that will be helpful to everyone in operations and human resources. He will accept questions at the end of the presentation.

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  • Great Power Point! Here's a related article on shift work safety - http://www.safetyawakenings.com/safety-on-the-second-shift/
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  • If people want to learn more about this, please contact me directly at 415 672 4271 or 212 534 0539. My email is jfrehse@corepractice.com
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    Shift Work Scheduling Strategy: A Labor Management Crash Course Shift Work Scheduling Strategy: A Labor Management Crash Course Presentation Transcript

    • Labor Strategy Session – Foundational Strategy
      Proven Cost Reduction
    • 2
      Core Practice: Company Profile
      Founded to create flexible, low cost scheduling options for companies that don’t have traditional “9 to 5” operations
      Senior team members each have a minimum of 10 years experience successfully implementing cost savings and change management strategies
      Rapid improvement methodology with a focus on operations and labor means cost savings are achieved within a short timeline (12 – 16 weeks)
      Typical savings equal 11 to 17% of total labor costs
      Implementation is done directly with the workforce
      Heavy employee involvement means cost savings stick
      Clients are Fortune 1000
      Best Practices database with over 10 million data points
    • 3
      Share Best Practices From Other Industries
      Niagara Regional
      Police Service
    • 4
      2005, Core Practice Partners LLC
      Results Oriented? It Must Be About Cost Savings!
    • 5
      Operations
      & Labor
      Employee
      Buy In
      Safety &
      Health
      Implementation
      4 Key Components – To Be Successful, You Must Use All of Them
    • 6
      Hidden Costs of Current Scheduling
      High overtime
      High inventory levels
      Inability to staff efficiently for seasonal, monthly, weekly or daily demand
      No full time/part time/temporary employee strategy
      Uneven skills across shifts
      Idle labor time (overall or pockets)
      Hard to recruit and retain good employees
      Outdated HR policies
      Past changes have not achieved long term results
      Consolidation or blending opportunities
      Not maximizing current capital
      Inefficient and/or numerous startups and shutdowns
      Poor forecasting tools
      Not meeting productivity potential/goals
      High level of unplanned absences
      Continued/Increasing health and safety problems
      Hourly employees have morale issues
      Us vs. Them employee/management mindset
      Problems communicating to evening and night shifts
      Inefficient vacation, lunch or break staffing
      Green Room time underutilized – shift change inefficiencies
    • 7
      What is a Schedule?
      FORGET ABOUT SHIFT LENGTHS AND START WITH BUSINESS DRIVERS!!
      A customer demand driven system for utilizing people and capital equipment, incorporating employee preferences, optimal HR policies, and high levels of flexibility to provide a low cost solution.
    • 8
      2005, Core Practice Partners LLC
      Correct Policies are Critical to Success
      Shift Change Strategies $ 201,000
      Relief Staffing $ 104,000
      Absenteeism Policies $ 292,000
      Incentive Strategies $ 462,000
      Holiday Shutdowns $ 215,000
      Quality Incentives $ 126,000
      Off Shift Retention Plan $ 147,000
      Pay Differential $ 234,000
      “44th Hour” $ 615,000
      Break and Lunch Costs $ 725,000
      TOTAL $ 3,121,000
    • 9
      2005, Core Practice Partners LLC
    • 10
      2005, Core Practice Partners LLC
      Profit = 10%
      Additional
      Profit
      Fixed Cost = 30%
      Variable Cost = 30%
      Labor = 30%
      The Profit Greater As Utilization Increases?
      Currently: 5 Day Base Schedule
      7 Day
      6 Day
      Price/Cost
      Per Unit
      100%
      Profit
      Fixed
      80%
      Cost
      60%
      Labor
      40%
      20%
      Variable
      Cost
      0%
      600,000
      500,000
      700,000
      Annual Units
    • 11
      Finding The Long Term Low Cost Option
      Cost per Case
      Current
      Future
    • 12
      For 100 core positions, the total annual mismatch cost = $552,000
      Cost/Week/Position (Dollars)
      Weekly Operating Hours
      500
      160
      400
      140
      300
      120
      200
      Coverage Required
      Coverage Provided
      100
      Staffing Mismatch Cost
      100
      80
      0
      Jun
      Jul
      Aug
      Sep
      Oct
      Nov
      Dec
      Jan
      Feb
      Mar
      Apr
      May
      Seasonal Workload
      Staff to the Average Workload (Average Hours of Coverage =132)
      2005, Core Practice Partners LLC
    • 13
      What is your TLC (True Labor Cost)?
      $12.00
      Average Wage =
      Burden =
      Pay Ratio =
      Cost of Straight Time=
      Cost of Overtime=
      Adverse Cost of Straight Time =
      Adverse Cost of Idle Time=
      Adverse Cost of Overtime =
      30%
      10%
      1.30 X
      1.10 =
      $17.16
      $12.00 X
      $19.38
      1.0765 =
      $12.00 X
      1.5 X
      Idle Time Is About 8 Times More Expensive Than Overtime
      $17.16 - $17.16 = $0
      $17.16
      $19.38 - $17.16 = $2.22
    • 14
      The Implications of Different Staffing Strategies
      Short Staffing Even Staffing Extra Employees
    • 15
      For 100 core positions, the total annual mismatch cost = $232,000
      Cost/Week/Position (Dollars)
      Weekly Operating Hours
      500
      160
      400
      140
      300
      120
      200
      Coverage Required
      Coverage Provided
      100
      Staffing Mismatch Cost
      100
      80
      0
      Jun
      Jul
      Aug
      Sep
      Oct
      Nov
      Dec
      Jan
      Feb
      Mar
      Apr
      May
      Seasonal Workload
      Optimum Staffing (Average Hours of Coverage = 116)
      2005, Core Practice Partners LLC
    • 16
      OVERTIME:
      2005, Core Practice Partners LLC
    • 17
      Out of Industry Example:
      Lost Efficiencies (37%) Occur During Low Milk Supply Periods On Wednesday and Thursday At a Cost of $367,000/Year
    • Employees Get Sick More Often On Fridays:
      At Least 40% More Than Any Other Day
    • September is the Least Healthy Month
      September is 63% Higher than the Avg.
      24
      14.75 Avg.
    • Vacation Distribution By Month
      Migrate Vacation to the Low Season
      146 Avg.
    • Shift Overlap Costs = $408,000
      Current: 3 – 30 Minute Overlaps
      6:30 AM
      3:00 PM
      11:00 PM
      1st Shift
      7:00 AM
      2nd Shift
      3rd Shift
      2:30 PM
      10:30 PM
      FT : 112 * (1/3) * 14 overlaps * ½ hour overlap * 49 weeks = 12,805 hours ($30.02) = $384,000
      Temp Employees: 21 * (1/3) * 14 overlaps * ½ hour overlap * 49 weeks = 2,401 hours ($9.94) = $23,866
    • 22
      Drive Employee Acceptance –
      Great Ideas Are Worth $0 Unless You Can Implement
      • Narrow options to choices that meet both business needs and employee preference
      • Heavy employee interaction and input
      • Documented course correction based on employee feedback
      • Buy-in achieved through combination of participation and benchmark results
    • Scorecard
      23
      2005, Core Practice Partners LLC
    • 24
      Hidden Costs of Current Scheduling
      High overtime
      High inventory levels
      Inability to staff efficiently for seasonal, monthly, weekly or daily demand
      No full time/part time/temporary employee strategy
      Uneven skills across shifts
      Idle labor time (overall or pockets)
      Hard to recruit and retain good employees
      Outdated HR policies
      Past changes have not achieved long term results
      Consolidation or blending opportunities
      Not maximizing current capital
      Inefficient and/or numerous startups and shutdowns
      Poor forecasting tools
      Not meeting productivity potential/goals
      High level of unplanned absences
      Continued/Increasing health and safety problems
      Hourly employees have morale issues
      Us vs. Them employee/management mindset
      Problems communicating to evening and night shifts
      Inefficient vacation, lunch or break staffing
      Green Room time underutilized – shift change inefficiencies
    • 25
      Optimization, Not Automation, Yields 23% Savings…
      23%
      Find economies of scale across teams
      Minimize over-staffing
      Increase employee productivity
      Reduce staff turnover
      Develop pay policies
      Assess impact of business changes on costs (attrition, training, etc)
      14%
      Operational Best Practices
      Up to 9%
      Software
      Labor Cost Savings
    • Thank You For Your Attention!
      www.corepractice.com