Executive Summary from the Management Today report “Achieving Total Capacity Flexibility, New Employment Strategies for Manufacturing Businesses”

 

by Professor Colin New , Dr Malcolm Wheatley and Dr Marek Szwejczewski of Cranfield Business School.

 

• Major changes in the business environment are forcing all businesses to respond faster to market requirements. Out-of-date working practices on the factory floor often mean labour resources are not available when they are needed, or that they have to be paid for at very expensive overtime rates in order to meet deadlines.

• Intrinsic to remaining competitive in these conditions is understanding demand patterns. This is not a new problem, but it has become super-critical, as economies have moved steadily from being supply-driven to demand-led. Not only do demand levels now change very fast, but demand switches very rapidly from product to product. It is important to understand whether your business essentially operates in conditions of demand uncertainty or demand variability, or a mixture of both.

• Traditionally, unexpected changes in demand have been solved through offering overtime to existing employees, or taking on temporary help. Whilst these solutions are still valid in certain circumstances, they can create as many problems as they solve; they are not long-term strategic responses to the changed business conditions.

• Annualised hours are an increasingly popular employment strategy for many types of business. Used correctly, they can deliver considerable flexibility at sometimes little extra cost to the employer. They can also offer considerable benefits to employees, in terms of better working conditions, more quality leisure time and improved pay deals. However, they are not appropriate in all business circumstances, particularly those of high demand uncertainty.

• Part-time working is another neglected employment resource which is particularly appropriate to achieving flexible working. Not only are part-timers sometimes more efficient than full-time employees, but they are likely to be able to boost capacity by a greater amount, and cost less. However, employers should be wary of abusing their position: there is an increasing amount of legislation governing part-time working, which is likely to erode any direct cost differentials.

• In practice, most companies use a range of flexible employment options to achieve their aims, but calculating the pros and cons of each solution set is extremely complex. The difficulties of predicting actual demand, even when you are very familiar with the variables affecting your market place, is extremely difficult. It is essential to use a model, and a monitoring system that allows rapid adjustments to be made throughout a budget period.

• Negotiating the new deals and drawing up new employment contracts is a lengthy process, and professional advice is essential. Once in place, the new ways of working have to be monitored carefully, for both internal control purposes and external regulatory compliance reasons. Most companies invest in software to help them manage the new system.

• Adopting new employment strategies such as those described in this report can represent a considerable culture challenge for a business, which should not be underestimated. However, few companies will be able to avoid the necessity - flexible working practices will be essential for survival in the increasingly complex, faster-paced, networked environment of the 2lst century.