Overall Labor Effectiveness
Overall Labor Effectiveness™ (OLE), a unique KPI developed by Kronos that is similar to OEE (Overall Equipment Effectiveness), provides a window into the productivity of your workforce. OLE allows you to expose the impact of both direct and indirect labor and take action to reduce costs and identify opportunities for increasing overall labor productivity and profitability, which could include Lean and Six Sigma initiatives.
With OLE, manufacturers can analyze the cumulative effect that three workforce factors have on productive output and make labor decisions to improve the overall effectiveness of the workforce. The three elements that make up OLE are:
- Availability — the percentage of time employees spend making effective contributions
- Performance — the amount of product delivered
- Quality — the percentage of perfect or saleable product produced
Measuring labor availability
Factors that influence workforce availability and the potential output of equipment and the manufacturing plant include:
- Scheduling the right person with the right skills at the right time to increase the number of productive hours and reduce the need for premium and overtime pay
- Understanding the root causes of production problems — which can include machine downtime, material delays, and absenteeism
Measuring labor performance
Accurately measuring labor performance with OLE can pinpoint improvement opportunities down to the individual level. These opportunities for improvement can include:
- Providing effective skills training to improve the quality of output. A skilled operator can measure work, understand the impacts of variability, and stop production for corrective actions when quality falls below specified limits
- Managing shop floor issues such as worn or misplaced tools, material shortages, or missing processes and instructions to improve labor productivity
Measuring labor quality
OLE can help manufacturers analyze shift productivity down to a single shift, determine which individual workers are most productive, and identify corrective actions to bring operations up to standards. It's important to consider factors such as:
- The training and skills of employees
- Whether employees have access to the right tools to follow procedures
- Employees' understanding of how their roles impact quality
OLE in action
Consider a manufacturer that has full employment, sufficient demand to run the factory at full output, and equipment that is in good operating order. Margins look good, but they could be better. OLE can illustrate how the workforce is affecting profit potential.
- Availability — Utilization is hampered by several items. Absenteeism accounts for a capacity shortfall of approximately two percent each period and poor material scheduling and movement causes one hour of idle time per shift.
- Performance — There aren't enough technicians to set up the equipment so productive output is stalled at every changeover, resulting in lost productive time of five percent.
- Quality — Given the shortfall of productive hours, the supervisor attempts to make up the lost time by running at higher productive rates. As a result, quality begins to slip as the day wears on, and yields drop. The impact is a four percent loss of acceptable product.
The OLE value for the plant is 78.2 percent, meaning that this plant converted only 78.2 percent of the factory's potential for profitable output. OLE uncovers the data that fuels root-cause analysis and points to corrective actions. It exposes trends that can be used to diagnose more subtle problems and also helps managers understand whether corrective actions did, in fact, solve problems and improve overall productivity.
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