Over the last year a story about labor has emerged in production supply chain companies. There appears to be a major shortage of labor: not just a shortage of production labor but also a shortage of experienced, highly competent managers in the fresh meat and dairy sectors. One of the reasons for this is a reliance on employees with institutional knowledge that is gained through years of experience. With the younger workforce coming up there is less and less of that knowledge to draw upon. Given these issues, how can software improve both the line labor shortage and the experienced, highly competent corporate business manager shortage?
Can a data science based supply chain management product help solve labor shortage challenges?
Let’s start with what a supply chain management product does better than any human can. A properly configured software solution will emulate and enhance the decision-making process of your best and brightest managers across every aspect of your business. Let’s look at the example of one small portion of the supply chain: pricing. Today, many companies have a manager or managers in charge of pricing product for supply clearing, pricelists, forward spot business (sometimes called Ad business), etc… Each of these pricing types have their own unique needs. As you might imagine there is a different price to sell a truckload of product that is already made and sitting on the dock at 4 days old versus selling a 15 load package of product to ship six weeks from now.
I could list hundreds of pricing types based on sales channel, region, volume, individual customer, and how long a timeframe the product will be produced and shipped in. That’s a massive matrix for decision making that people simply can’t manage perfectly on their own. However, supply chain managers, planners, and executives can create flexible models and dynamic rules in a properly configured, data-science-based software solution that make decision-making more accurate, more powerful, more accommodating of unforeseen challenges, and faster. The output in this example will be prices that can be utilized by the entire sales team, reducing the back and forth between your sales and pricing teams and saving the company money and time. This systematization of pricing liberates your sales and pricing team from fighting fires all day so they can utilize their time and considerable talent for the improvement of the business.
Another example is a data-science-based supply chain planning product which integrates supply planning, demand planning, and production planning, and also tells you what you have left to sell. Many companies still utilize spreadsheets or a cobbled together tool in their ERP to plan production. These techniques and inflexible solutions require massive amounts of time from your production planning team to put together a plan each day. Anytime something changes (supply, for instance) the entire plan has to be reworked. These planners are often exceptionally competent and require years to become proficient. With a solution utilizing data science at its core, like ours, your team has an optimized, actionable production plan at its fingertips in minutes. This saves hundreds of hours a year.
What can a supply chain product do to help with line level labor issues?
From a supply chain plant labor perspective, I will outline just a few of many ways a solution can save line level labor. First, if you have ever scheduled a plant’s production, you know that changing the plan on the day of production too often is a great way to get a friendly note from the plant manager questioning your competence. Changing plans during the day of production can cause plant and labor inefficiency as well as causing product production that was not needed – this snowballs to losses on the sales side.
By having an optimized, data-science backed production plan ready and waiting for you when you start the process, mistakes are eliminated or reduced, you’re working from a plan that is complete, you’re implementing the plan quickly, and the plan is more efficient. Also, on those unavoidable days when something changes, you provide the new plan to the plant in a fraction of the time, helping create agility and stability across the board.
All of these attributes reduce rework, overwork, and frustration. This has a direct bearing on labor efficiency. Further, by building in the production constraints of a plant, each scheduler is less likely to double up the capacity of any given machine or line – something that always causes plant supervisors to have to call the planner and work out a new plan on the fly. Avoiding this scenario improves labor and plant efficiency.
What are other ways supply chain management software helps solve labor issues?
Another way an integrated supply chain solution helps is by allowing you to utilize the concept of incremental margin analysis (IMA) to create breakeven pricing models in the pricing side of the business. In these volatile times where labor can be short a company can quickly determine just how profitable a bone-in loin is in comparison to boneless loins, for instance (or any other de-boning/fabrication), for each UPC they sell. With this knowledge in hand, pricing can be set to limit or even eliminate a high labor / low incremental margin product such as “5-muscle to the red” boneless hams which require a significant labor force and often have limited upside to margin.
As you can imagine, building the IMA logic directly into your pricing models forces your sales force to get maximum profit for anything you sell that is high labor and limit sales to lower margin / higher labor items. All of this can be done with minimal to no daily interaction using comprehensive supply chain management and planning software like ours.
There are many other labor reductions to be had from these types of solutions, from reducing the time salespeople are selling distressed product to the long term Integrated Business Planning (IPB) that a tool like this supports (plus too many other benefits too long for a blog post). Suffice it to say, utilizing properly configured supply and business planning software is the future of business that can help you manage the challenges you have today.
Want to know more about our end-to-end supply chain products can help solve your labor related challenges?