Business growth comes with rising costs and pressures, including maintaining a productive labour force that is able to respond to the challenges in modern food enterprises.
In a 2014 food industry report prepared by Food South Australia, labour costs were shown to be the second largest input cost in the majority of food industry segments.
Labour-intensive industries such as factory-based bakery and fruit and vegetable processing maintained the largest proportion of production workforce, while beer and soft drink manufacturing had a smaller proportion of production people and a larger proportion of sales and marketing staff.
Clearly, positive improvements in the planning and management of labour costs within food businesses have the potential to significantly improve business performance.
Labour cost implications
In 10 out of 13 industry segments investigated in the report, the percentage of Wages for F&B companies were consistently higher than the national average, highlighting the extreme importance of labour efficiency.
If you have a limited view or insight of how labour time is spent, you will be unable to see or manage your true labour costs and the factors behind margin variances. In addition, idle or underutilized workers become expenses rather than value adding employees, which can lead to hundreds of thousands of dollars going down the drain every year.
In the face of increasing workloads that are typical in a rapid growth environment, hiring additional labour resources is often the initial answer for food companies. This can have a significant impact upon the cost base of the business. Expanding staff can also perpetuate manual entry and processes, which could in turn limit activity to office hours, potentially delaying production and other aspects of operations, as well as leading to significant cost implications.
To optimise both labour cost and utilisation, an alternate strategy is to review the systems and tools that you are using to plan and track your labour.
How integrated software helps optimise your labour force
Here are some ways that integrated software can help to improve your labour costs:
- Automation of tasks reduces the manual data processing and planning, as well as helping to minimize or eliminate human error or duplication of data input
- Tracking and reporting upon recovered labour helps to get a realistic picture of how your labour force is contributing to the business.
- Improved forecasting and planning helps to optimise the labour force and mitigate the number of employees that you deploy in the business
- Allows you to reallocate existing labour time and resources to growth-promoting areas, including customer service, sales creation, and marketing initiatives
- Encourages greater employee contribution and engagement as they move from repetitive low value tasks to value adding tasks
Integrated software can support your expansion plans and mitigate the need to incrementally grow your headcount. It can help you transition from paper-based systems and reactive labour deployment to proactive, intuitive staff management and planning.
Why labour optimisation counts
If you are an F&B company with the chance to land a new business contract and expand nationally or internationally, how are you going to cope and meet the challenge? On the labour side of things, do you add more people and deal with the related management challenges and ongoing cost implications, or should you re-evaluate your processes first to better structure your workforce spending and planning?
In order to maximise the benefit from your growth strategy, you should be seeking to innovate and deploy scalable outcomes. Integrated software provides you with the capabilities to cope with increasing workloads, and the associated planning challenges, without the need to scale your workforce proportionately.
Whilst it is clear that as you grow you will need to increase headcount, the objective is to limit this to productive employee roles, whether that be in production, distribution or sales. Adding labour to compensate for poor systems or inadequate planning tools will undermine the outcomes achieved, as well as pose an ongoing management and cost burden.
Try to view technology integration and innovation as an investment that could yield savings year in and year out when it comes to labour deployment.