Category: Job Shop Manufacturing, Shop Management, Planning and Scheduling, RFID

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Secret Number 1 to Reduce Cost on the Manufacturing Shop Floor

Increasing efficiency and productivity of machines and employees are some of the big factors that can affect manufacturing profitability. The more data you have about how your machines and employees are performing, the better decisions you can make and the more true your bottom line will be.

So how do you reduce costs on the shop floor? By following the 5 secrets to reduce costs on the manufacturing shop floor.

Allow me to share the first secret with you: reduce labor costs.

Labor tracking can be a difficult process – rife with errors from data entry; lack of ability to accurately clock in or out of jobs, absence of oversight on the right reports to see where you can cut costs.

ERP software simplifies this process and allows you pinpoint where and how to reduce labor costs. ERP software improves direct labor reporting and reduces indirect labor costs by measuring how much time employees spend on a job. Through barcoding, RFID or fingerprint technology, an employee simply scans into the job when they start work and scan out of the job when they finish. Global Shop Solutions ERP software applies overhead and direct labor to the jobs, calculating efficiency and productivity of employees and machines, and measuring estimate versus actual charges.

In Global Shop Solutions ERP software, while both direct and indirect labor performance are measured, unaccounted time is also highlighted. Reducing unaccounted time can almost immediately increase efficiency which directly affects profitability down to the minute. It also allows for the meticulous accounting of costs by job and employee. Labor costs are minimized by evaluating efficiency and performance reports and using automating tools such as a planning and scheduling module to reduce labor costs through minimizing setups and maximizing planning efficiency.

“In the past, we didn’t have anything besides outside payroll reports. Now we get all the hours by department and by job. We also get a weekly report that shows how many hours every employee worked and in what areas. We use this at weekly management meetings to keep on top of labor costs.”

– Dave Dunn, Controller at Watson Grinding

Global Shop Solutions customer Watson Grinding previously tracked all labor using manual time cards – a slow and tedious process. With Global Shop Solutions, they found that labor tracking is automatic. Workers use the Shop Floor Data Collection or GUI screens on the shop floor to scan in and out of jobs, and the software electronically tracks the time. To determine labor costs for a job, managers simply click their mouse and the data they need appears on the screen.

Read our blog next week to learn about the remaining 4 secrets to reducing cost on the shop floor, or download our whitepaper today.

Adam Grabowski  is the Director of Marketing for Global Shop Solutions. He is responsible for strategically positioning the company and its ERP software product to make existing customers more successful and compete for new business opportunities in the manufacturing industry.

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