In 2016, workers in the manufacturing sector tallied nearly one trillion dollars in wages and benefits based on an annual compensation per manufacturing employee of $82,023 in total earnings and benefits. That’s not chump change and therefore shouldn’t be treated as such. Depending on what you manufacture and how you manufacture it, labor and benefit costs in manufacturing can account for up to 70% of your company’s total expenses. For certain, that can be an unwieldy number.
With an investment of that magnitude, Tommy Schroeder, a Vice President at Workloud, the international workforce management company with offices in Boston, Madison and Athens, finds it difficult to believe that many in the manufacturing industry still operate their businesses without automated time and attendance solutions. “I think it’s striking that manufacturers invest heavily in inventory, inventory control, equipment and raw materials – as they should – but not necessarily as heavily into workforce management systems in general, and time and attendance software more specifically,” said Schroeder.
Although materials, plant overhead, energy costs, marketing and general administrative expenses are all potential burdens on manufacturer’s profits, nothing can be so draining as expenses related to labor. That’s why Workloud’s Schroeder is sometimes surprised to see companies working with spreadsheets and even primitive time management systems when so much money is at stake. As Schroeder says, “Even small manufacturers with, say, 50 employees, are still looking at an annual labor expense of $4 million. Even if you could gain a few efficiencies, save 1% or 2% on overtime or better scheduling, and reduce payroll errors by another 1%, a manufacturer would be saving well over $100,000 each year for an investment that would be a fraction of that.”
That’s exactly why time and attendance software in industrial environments is so critical to profits. Schroeder likes to highlight all of the areas where time and attendance solutions can pay dividends. He routinely cites the following business functions that can drive operational and financial excellence through better workforce management software:
- Elimination of Payroll Errors caused by overpayments in overtime, pay-rate miscalculations and compliance penalties
- Greater Transparency in payroll which heightens employee confidence, reduces turnover and adds efficiencies to the HR department
- Enhanced Compliance Standards reduces the risk of penalties through Federal, State and Local laws or through union agreements
- Capturing Time more accurately and quickly with integrated time clocks, scanners, readers and other digital devices
- Demand-Driven Scheduling that can lower per unit production costs based on seasonal, weekly and daily demands
- End-to-End Views that give manufacturers a complete snapshot of time and attendance patterns, occurrences and data used for continual process improvement
Because all businesses are sensitive to margin compression, it’s no wonder many industrial companies are shedding the manual back-office processes that dominated the previous century in favor of automated, comprehensive and easy to use time and attendance software that has a faster time to value rate and a quicker ROI.
According to Schroeder, what would once take months to implement at a cost that was high because of required hardware investments and custom programming, now takes weeks and is a fraction of the cost because of Workloud’s SaaS solution that require no investment in hardware. As Schroeder says, “The day has arrived where it makes no sense for almost any size manufacturer to not implement a workforce management system. What company wouldn’t want to preserve or even grow their profits?”