New KPI measures plants' overall labor effectiveness

In the spirit of knowing that you can’t manage what you don’t measure, Kronos Incorporated has announced a new key performance indicator (KPI) that allows manufacturers to measure the effectiveness of their workforce. This new KPI, Overall Labor Effectiveness (OLE), measures the utilization, performance, and quality of the workforce and its impact on productive output. With its industry-specific solutions, Kronos for Manufacturing is uniquely positioned to help organizations reach operational excellence through the measurement of OLE.

Kronos for Manufacturing is a comprehensive offering of software and services designed to improve business productivity and profitability, increase resource utilization, and improve compliance. This comprehensive, integrated suite addresses the challenges of managing the workforce in manufacturing with solutions for time and attendance, scheduling, absence management, analytics, labor tracking, and shop-floor data collection. The solution is supported by a focused team of manufacturing experts who deliver deep domain knowledge and industry best practices, which are critical to the successful implementation of continuous improvement projects such as lean and Six Sigma.

“Labor is the next critical manufacturing element to optimize in today’s demand-driven world. Savvy managers have realized that their workforce can be the engine that drives supply chains and manufacturing in the quest to move to the next level of performance,” said Dave Caruso, principal at David Caruso and Associates Inc. “Kronos is leading the innovation in this area by enabling manufacturers to reach operational excellence by optimizing their workforce. Introduction of OLE is a testament to Kronos’ innovative approach to managing the workforce.”

Leveraging best practices from OEE
Similar to Overall Equipment Effectiveness (OEE), OLE measures availability, performance and quality. A manufacturer can improve shop-floor productivity, and therefore the level of profitability, by understanding the interdependency and trade-off of these factors and managing them in real time.

·     Availability — There are many factors that influence workforce availability and, therefore, the potential output of equipment and the plant. OLE goes beyond simple coverage to help manufacturers ensure they have the person with the right skills available at the right time. OLE also accounts for labor utilization. Understanding where downtime losses are coming from and the impact they have on production can reveal root causes, which can include machine downtime, material delays or absenteeism that delays a line startup.

·     Performance — When employees cannot perform their work within standard times, performance suffers. Effective training can increase performance by improving the skills that directly impact the quality of output. A skilled operator knows how to measure work, understands the impacts of variability, and knows to stop production for corrective actions when quality falls below specified limits. Accurately measuring this metric can pinpoint performance improvement opportunities down to the individual level.

·     Quality — A number of drivers contribute to quality, but too often the effort to improve quality can result in a lowering of labor performance. When making the correlation between the workforce and quality it is important to take certain factors into consideration including the training and skills of employees, if they have access to the right tools to follow procedures, and their understanding of how their roles drive and impact quality.

“While almost every manufacturing organization measures availability, performance and quality, very few are measuring the interdependencies between them. OLE, supported by Kronos for Manufacturing, allows organizations to reach the next frontier in overall manufacturing performance,” said Gregg Gordon, global practice leader for manufacturing at Kronos. “OLE can show how assets and employees come together to drive great performance. It also provides actionable insight at all levels of the organization. The true power of OLE is its ability to demonstrate how investment in the workforce can impact overall performance, and most importantly, profitability.”

For more information, visit www.kronos.com.