Stephen Harding explains why simply adding more people is not the answer and outlines three things businesses can do to genuinely boost manufacturing productivity
The UK is not much more productive now than it was after the 2008 recession. However, because productivity is measured by the amount of goods produced per person per hour, government creates incentives and applies pressure on businesses to simply hire more people.
According to a recent UK Government report, productivity has stagnated since the recession. Labour productivity in the fourth quarter of 2016 was only 0.5% higher than it was at its peak, nine years earlier, in 2007.
The report suggests that part of the reason for this is that a weakness in investment has reduced the quality of equipment employees are working with. It also suggests that many employees are being moved to less productive roles.
It's important to note that, while it is only one of many factors that contribute to profitability, productivity can heavily influence a company's bottom line.
By measuring man-hours against output, business leaders can identify weaknesses and make efficiency improvements. Improving efficiency can reduce waste and increase throughput. With this in mind, here are three tips businesses can use to boost productivity:
1. Drive efficiency in the short term, create value long term
A sustainable competitive advantage is achieved by creating value in the business long-term. In the past few years, we've seen the trend for businesses to cut costs and postpone essential upgrades to vital equipment.
Although this approach delivers capital expenditure (CAPEX) savings in the short term, it also means that equipment needs to undergo more frequent maintenance and downtime to keep it working, eventually driving up operating expenditure (OPEX) and ultimately total expenditure (TOTEX).
For example, manufacturers of confectionary items, snacks and cereals depend on continuous production, so unplanned downtime can be very costly.
When equipment needs emergency maintenance, a company may need to hire temporary staff, which will lower the level of economy per unit of good produced.
2. Prepare for adaptations ahead of time
As consumer demands change over time, businesses need to respond. The best businesses respond to buying behaviour quickly and accurately. The problem is that too many businesses do this too late in the manufacturing process.
Take crisps, for example. The market for crisps in the UK contains dozens of brands of crisps and supermarket shelves are lined with the latest and greatest flavours — as well as a host of more obscure ones, from chilli and chocolate to pesto and roasted peppers.
Despite this, most brands are produced by a small selection of manufacturers that adapt their production lines to achieve the variety.
While larger manufacturers can afford to spend up to £500,000 on an automated end-of-line packaging and palletising machine, smaller manufacturers need to hire more staff to manually handle the picking and packing process, especially for seasonal demand in the run up to Easter and Christmas.
To make this process smoother, plant managers should consider using the right equipment ahead of time.
As an experienced manufacturer of bucket elevators, conveyors, vibratory screens and feeders, at Gough Engineering we've helped manufacturers create flexible layouts where they can control throughput and handling to suit demands.
3. Innovate better, don't just throw more people at the problem
There is a temptation that if a problem is difficult to solve, you can throw more money or people at it to make it go away. However, this does not always work.
The UK productivity report also highlighted that, "labour productivity may be driven by a number of other factors, many of which have little to do with the innate qualities or efforts of employees. For example, an increase in capital or developments in technology will increase the amount of output."
It's evident that plant managers should carefully choose the right combination of equipment to deliver better results, or consult an expert.
By following these three tips, businesses can be well on their way to genuinely boosting productivity.
Stephen Harding is managing director of material handling expert Gough Engineering.