A new way to think about budgeting labor costs for 2016

by Jim Zimmerman

Many executives within the manufacturing and distribution industry are facing a budgeting process that will ultimately make or break their company’s 2016 earnings. Now is the time to think about what strategies will deliver desired results.
New regulations and a changing business climate are creating an environment that forces a company to find prosperity in innovative ways.

One area often overlooked but with excellent savings potential are departments with labor intensive production. Operating costs associated with labor intensive operations are a paramount concern for companies operating in the U.S.   Whether it is the uncertainty of regulations associated with the Affordable Care Act (ObamaCare) or increasing legal risks associated with staffing companies and labor unions, many American industries will need to rethink their labor strategy.

A trending new alternative to traditional labor strategies has been started by a U.S. company, nGROUP performance partners. nGROUP encourages executives to group employees by type of function, then evaluate if there is better way to drive results for each group.

For example, nGROUP has coined the term ‘Human Logistics’ to describe the groups of employees who do repetitive tasks to move product from A to B.  Not the trucks and boat logistics, but the people who do the work pre and post transportation.  They are often general labor workers that assemble products, pick and pack products, stack and unstack the pallets, load and unload the trucks, hang and tag garments, perform quality control, etc.
As a specialized 3rd party human logistics (3PHL) provider, nGROUP is leading the way in facilitating changes by providing midsize companies and major corporations with an alternative, more cost effective, human logistics strategy.

Instead of assuming the universal burden of budget cuts, nGROUP’s 3PHL model enables companies to outsource specific work cells or facilities. This allocates budget cuts into manageable units that do not sacrifice productivity and quality.  This ‘a la carte approach reduces the burdens of labor and production in the areas they choose.

With this alternative strategy, companies can partner with nGROUP as a consultant or vested outsourcing partner.  nGROUP applies a data driven lean manufacturing philosophy, 6Sigma principles and specialized workforce management technologies to improve performance metrics and drive down unit labor costs 10-25%.

In a recently published study, nGROUP revealed how one company’s adoption of the 3PHL model produced record breaking results in not just one facility – but three facilities.


*Per man hour

What strategies could companies consider for 2016 to make it a record breaking year? Perhaps an alternative strategy that goes beyond being cost effective, such as the 3PHL model from nGROUP, that will produce the quality, speed, flexibility and scalability that are vital for companies to be successful in the upcoming year.

To read more nGROUP Case Studies, click here.