Planning process

How to optimise your direct workforce within a manufacturing company with volatile demand

Mar 2023

Optimising your direct workforce in a manufacturing business with a make to order strategy can be challenging when trying to balance labour availability with demand, however there are several strategies you can employ to increase efficiency and reduce costs.

Here are some suggestions:

  1. Cross-train employees: Cross-training employees to work in multiple areas of or across different processes or functions can help you to better manage fluctuating demand. When demand is high, you can shift resources to the areas that need the most support, and when demand is low, they can work in other areas or focus on training.
  1. Use temporary workers: Temporary workers can be a great way to manage demand variability in manufacturing during times of high demand. You can bring them in when you need extra help, and then release them when demand returns to normal. This can help you avoid overstaffing during more quiet periods.
  1. Implement flexible scheduling: Implementing a flexible work schedule can help you manage direct labour resources during volatile demand. For example, you can implement shift scheduling, where some workers work in the morning, and others work in the evening. This can help you to better match your available resources to balance with your production needs.
  1. Introduce automation where you can: Automation can help you reduce the need for direct labour during this time of skills shortages in manufacturing. By automating certain parts of the manufacturing process, you can reduce the number of operatives needed to complete a task. Additionally, automation can help you increase efficiency and reduce costs overall but it will often require a medium to longer term view as capital will often be required to justify the capital spend.
  1. Monitor demand: Keeping a close eye on demand patterns can help you to anticipate changes in demand and adjust your direct labour requirements accordingly. For example, if you know that demand is likely to increase in the near future, or you have forecasts and you have experience of measuring your forecast accuracy you can begin to ramp up your direct labour resources in advance.
  1. Create a sales and operations planning process:  Sales and operations planning (S&OP) is a business process that helps a company to align its sales, production, and financial plans to meet its overall business goals. The S&OP process typically involves cross-functional collaboration between different departments, such as sales, operations, finance, and marketing. The process starts with the sales team forecasting future demand.  The operations team then reviews the forecasted demand and creates a production plan to meet that demand. The finance team then reviews the production plan to ensure it is financially viable.
  1. The S&OP process is designed to ensure that all teams are working together towards the same goal and that the company can meet its customers’ needs while maintaining profitability. It also helps companies to anticipate and mitigate potential supply chain disruptions, such as shortages of raw materials or unexpected spikes in demand.
Training and development

By using a combination of these strategies, you can optimise your direct labour even if you have highly volatile demand. It may take some trial and error to find the right mix of strategies for your specific situation, but with persistence and careful planning, you can find a solution that works for you.

Introduce annualised hours contracts: These contracts are where an employee has to work a certain number of hours over the year but they are able to keep some flexibility about when they can and can’t work. They are sometimes referred to as ‘core hours’ which the employee regularly works and the rest of the hours are more flexible, for example when when there’s extra demand at work over peak seasons etc.