How to Scale a Manufacturing Business Without Mass Hiring
Steven CalhounNov 19, 2020
Scaling your manufacturing business is hard work. You know that you will have to spend money to achieve this goal, but maybe you aren’t sure where your money would produce the greatest return on investment. Perhaps you’re even wondering if there are ways to scale without spending.
Veryable knows that the hiring costs of full-time employees make scaling expensive. Hiring full-time employees also comes with significant risk if demand doesn’t constantly require you to have the higher headcount. That’s one reason why we at Veryable created our marketplace – to connect you with on-demand labor so you can scale without hiring a ton of full-time employees at once. For example, we helped one company reduce lead times from six weeks to three days using our on-demand labor platform to increase day-to-day agility.
But besides hiring workers or even on-demand labor, there are plenty of ways to prepare your business for growth and to scale your operations. This article will walk you through the five steps that you need to take if you want to scale without mass hiring. We will outline these steps below:
By the end of this article, you should have a good understanding of how you can tactically approach scaling your organization without adding a bunch of full-time salaries.
First thing’s first, you’ll need to prepare yourself financially for scaling your operations. You need to know what your cash flow looks like to have a realistic expectation of how much money is available to spend on scaling.
You should examine your system for tracking cash flow. Who is in charge of the different areas where money flows? Who has access to accounts? How are transactions tracked and how often are they reported? All of these questions will help you understand your financial situation.
Receivables are an important area to keep an eye on. What system do you have in place for collecting receivable cash? You need to make sure that you are collecting money owed to you in a timely fashion, and to do that you need to know who manages this process. Meet with them and make sure their system is efficient and has failsafes so that nothing falls through the cracks.
Simple processes are less error-prone, easier to train new workers on, and make it easier to identify bottlenecks. In Lean methodology, this type of error-proofing is known as poka-yoke. To apply this practice in your business, you should examine each role your workers play to see if there are any ways to break that job down into smaller tasks and remove complications from their processes.
Not only does this help your business produce more efficiently, but it will also reduce stress on your workers. This is good news because a study by Colonial Life linked stress to decreased job performance and increased costs for employers. In the study, 41% of surveyed full-time employees reported that stress reduced their productivity.
Before you scale operations, be sure to thoroughly check your production equipment and systems to ensure they are running the best they can.
You should examine your systems and processes to be sure they are running optimally. Take note of where work slows to identify bottlenecks you could remove with simple tweaks to your systems.
This could mean assigning less skill-intensive tasks to other workers so your skilled workers can focus all their time on their output. Or it could mean changing the order in which specific tasks are done in to eliminate wasted time. Some tasks can be done simultaneously, but you might not realize that if you aren’t intentional about examining your systems periodically.
It is also important to take the time to perform total preventative maintenance on your equipment. By addressing one machine at a time while letting the rest keep running, you can reduce downtime. Properly maintaining your equipment prepares you to take full advantage of your assets.
Sometimes small changes to a system can result in big changes in outcomes. So spend a day or two paying close attention to the systems in place, not just the individual workers or the equipment.
If maintenance and optimal systems still don’t produce the results you were hoping for, it might be time to upgrade some machinery. Newer machines might be able to help you reduce downtime, increase quality, speed up production, and gather more data about your processes.
Data plays more of a role in manufacturing each year. You should prepare now for growth by asking yourself if your systems for gathering and understanding data are scalable.
Your data could be coming from a number of sources: machines, financial software, scheduling software, order management software, and any of the other digital tools you use to run your operations. It is important to identify your data sources and know how to collect and store this data so you can analyze it.
Now that you’re gathering data, how do you plan to analyze it?
Data is meaningless if you have no way to understand it. Analyzing your data is an important step toward increasing productivity and becoming capable of handling increased volumes without having to buy more square footage.
To analyze your data, you first have to determine what you hope to know from it. Do you want to know which processes create bottlenecks? Do you want to know if overtime hours are as productive as regular hours? Once you have a few questions you want to answer, this will guide how you explore and analyze the data you’ve collected.
The final step is to find software or implement a system to organize your data for analysis, then establish a routine for analyzing your data. You can do this with simple spreadsheet software like Excel, a database management system, or a programming language you’re familiar with.
With everything else lined up for maximum efficiency, the last duck to get in a row is labor. If you know your processes and systems are set up correctly, and you have an understanding of your data, then you should have an idea of what the optimal amount of labor you need looks like.
First, you should assess your scheduling system to see if it will work with the changes you have made. Can your data inform the scheduling process? Are you able to manage the extra employees you’ll need after you grow? Ensure that the system you have in place is ready to scale alongside your operations.
There are tasks that distract or delay your skilled workers each day. By lumping these tedious tasks together and assigning them to a part-time worker, you can let your specialists focus on what they’re uniquely qualified to do. This allows specialists to spend more time being productive and less time with work that takes away from their main goal. This becomes even more important as you seek to fill increased order volumes.
For example, if you have Jimothy, a skilled machinist, but he has additional tasks that prevent him from focusing all of his efforts on work that produces output, then you could give that work to someone else. Let’s say he currently spends 15 percent of his time prepping and cleaning his machine. Instead of having him do the prep and cleanup, you could find a part-time employee or an on-demand worker whose assignment is to take care of these minor tasks that hinder Jimothy’s productivity. That way Jimothy can focus on operating his machine 100 percent of the time and stay focused for maximum output.
The workers you bring in to support your specialists only need general skills, and can be part-time or sourced from an on-demand labor platform on an as-needed basis.
Another boost to efficiency is to avoid scheduling overtime whenever possible. Not only is it costly, but it has also been linked to negative effects on worker health and performance.
Consider flexible work arrangements for your existing employees. SHRM studied manufacturing companies and found that some businesses are making flexible schedules work for them with positive results.
Some ways to make the workplace more flexible include:
To fully capitalize on flexibility, you can use staggered start times to create longer uptime hours. You can do this without pushing your employees into overtime or hiring additional full-time workers. To stay running for more hours each day, you can schedule workers at different start times so that they overlap during the core workday.
For example, one half of your full-time employees could work the eight hours from 8 a.m. to 4 p.m., and the other half could work from 12 p.m. to 8 p.m. They would overlap in the middle hours from 12 p.m. to 4 p.m., and part-time workers or on-demand labor can fill the gaps on either end of the workday. In this case, you would need to fill half of a shift in the first four hours of the day and half of a shift in the last four hours of the day.
This is effectively a split third shift made up of part-time and on-demand workers, providing you the added benefits of less labor costs, more flexibility for full-time employees, and longer uptime every day.
The manufacturing environment is only going to get more competitive. To get your piece of the pie, you need to be running efficiently to delight customers and beat the competition.
With access to on-demand labor, you can reduce your dependence on overtime and plan a lower headcount based on your average minimum demand, scaling your workforce just in time and only as-needed to meet demand changes.
When you want to start addressing labor inefficiencies and gain the flexibility to scale when you need to, we can help you get started with on-demand labor. Learn more in our article explaining how on-demand labor solves the capacity planning puzzle.