Compared with other enterprise applications, workforce management software may defy easy categorization into a standard set of features or homogeneous market. Yet the software delivers a clear set of benefits that can help manufacturers improve operational efficiencies and control labor costs.
The workforce management software picture is blurred, partly because some functions can be found tucked inside nearly every major enterprise application, from mainstream ERP and human resources systems to more specialized
For example, human resources systems handle many aspects of payroll, while MES can track basic time and attendance for workers on the shop floor. There is some overlap with labor management systems, used not just to track individuals’ performance, but to measure the productivity of labor resources against predefined standards, allowing companies to identify bottlenecks and monitor performance levels. While these other platforms provide some benefits, the breadth of components in a standalone workforce management system, when combined with integrated analytics, offers greater bang for the buck for delivering labor-related efficiencies and cost savings.
In the wake of the global recession, manufacturers, in particular, are looking at any process change or tool that can help them use labor more efficiently. Manufacturers must do more with less, and having tools to better deploy human resources--assigning the right people to the right tasks and eliminating unnecessary overtime--is a core element of their strategies, analysts at Framingham, Mass.-based research firm IDC Manufacturing Insights noted in an April 2010 research brief.
The five principal functions of workforce management software
With the bigger picture in mind, there are five core functions in workforce management software, according to Gartner Inc., a research firm based in Stamford, Conn.:
- Labor scheduling, which can help manufacturers manage employees’ skills and compliance requirements more effectively.
- Time and work data collection, for capturing and reporting highly detailed information about labor use.
- Leave management, for processing paid time-off requests with visibility into the staffing and liability implications.
- Task and activity management, which delivers a more detailed view of labor management requirements to help with the sophisticated decision making required for activity-based management.
- Time and attendance, the heart of any workforce management system, which takes input from the other modules and applies rules against the reported times, based on the company’s requirements.
When implemented together, these capabilities can positively impact labor costs, which typically comprise anywhere from 20% to 70% of a company's expenses, according to Jim Holincheck, a vice president at Gartner.
Cost savings come from schedule optimization, improved payroll and billing accuracy, reduced “buddy punching” (industry slang for paying for unworked time), overtime costs and leave liability, Holincheck said. In addition, workforce management software can reduce the compliance risks associated with collective bargaining agreements and the ever-increasing number of government regulations that affect labor and employment, he said.
The idea is to zero in on a company's core workforce-management issue. “Is it about union contract compliance and paying people accurately or is it about trying to lower overtime costs?” Holincheck said. “Which one you’re looking at places emphasis on a different solution.”
Talent management is an especially critical area for many manufacturers, said Joe Barkai, practice director at IDC Manufacturing Insights. With baby boomers set to retire, manufacturers are facing a twofold dilemma in workforce management.
“It’s not only about the fact that there are going to be fewer people, but that most of the people retiring are taking a lot of expertise with them,” Barkai said. “Companies in the manufacturing, design and service phase are facing issues around how to capture the expertise of those leaving and for those still with them, how to allocate those resources most efficiently. That makes the issue of tracking [workforce-related] activities even more critical.”