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Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
Shift Work Scheduling Strategy: A Labor Management Crash Course
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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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Transcript

  • 1. Labor Strategy Session – Foundational Strategy
    Proven Cost Reduction
  • 2. 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. 3
    Share Best Practices From Other Industries
    Niagara Regional
    Police Service
  • 4. 4
    2005, Core Practice Partners LLC
    Results Oriented? It Must Be About Cost Savings!
  • 5. 5
    Operations
    & Labor
    Employee
    Buy In
    Safety &
    Health
    Implementation
    4 Key Components – To Be Successful, You Must Use All of Them
  • 6. 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. 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. 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. 9
    2005, Core Practice Partners LLC
  • 10. 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. 11
    Finding The Long Term Low Cost Option
    Cost per Case
    Current
    Future
  • 12. 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. 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. 14
    The Implications of Different Staffing Strategies
    Short Staffing Even Staffing Extra Employees
  • 15. 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. 16
    OVERTIME:
    2005, Core Practice Partners LLC
  • 17. 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
  • 18. Employees Get Sick More Often On Fridays:
    At Least 40% More Than Any Other Day
  • 19. September is the Least Healthy Month
    September is 63% Higher than the Avg.
    24
    14.75 Avg.
  • 20. Vacation Distribution By Month
    Migrate Vacation to the Low Season
    146 Avg.
  • 21. 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. 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
    • 23. Heavy employee interaction and input
    • 24. Documented course correction based on employee feedback
    • 25. Buy-in achieved through combination of participation and benchmark results
  • Scorecard
    23
    2005, Core Practice Partners LLC
  • 26. 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
  • 27. 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
  • 28. Thank You For Your Attention!
    www.corepractice.com

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