Forecasting versus Flexibility

Forecasts, by definition, will always be wrong. The degree to which they are wrong varies widely – the magnitude of the gap is often a factor of demand planning techniques and tools, market factors, changing customer preferences, and operational strategy. In terms of strategy, many businesses seek to find the “sweet spot” between forecasting and operational flexibility; they ebb and flow across the forecasting-flexibility spectrum with changes in leadership preferences, business models, and enabling technology.

How does demand planning work?

Understanding where the sweet spot lies starts with understanding how demand planning typically works in practice. For most manufacturers, demand planning is a labor-intensive process that often requires full-time dedicated resources. Demand planners tend to rely on a number of factors: firm order book, sales forecasts, market intelligence, industry trends, historical data, and seasonality. These factors are then loaded into statistical models – many of which are very sophisticated – and the results form the basis of the demand plan. The demand plan is then scrutinized by a cross-functional set of stakeholders and will often undergo a number of iterations before being finalized by leadership. The demand plan is often a major driver of the financial budget and guidance.

Despite the level of sophistication, demand planning is always an imperfect exercise and requires a significant amount of judgement and assumption. The process and results are analogous to traders trying to anticipate the financial markets – the projections may be directionally correct but the market is ultimately a random walk.

Finding the Sweet Spot

A robust Sales and Operations Planning (S&OP) should be the primary mechanism by which companies begin to converge toward the sweet spot. It is not feasible for operations leaders to develop a supply plan exactly aligned with the demand plan due to potential implications on inventory, supply chain shocks, capex, and labor costs. In addition, demand plans are typically applicable over one fiscal quarter; given that demand is never constant over a 3-month period, operations leaders have to be prepared to adapt to daily variation across that time period.

Leading companies find the sweet spot by developing capabilities to increase flexibility and agility. Good examples of these capabilities include product platforming, design for manufacturability, supply chain redundancy, postponement, and temporary labor. These capabilities allow companies to neutralize the impact of product variation on operations. At Veryable, we believe that the right approach is a “flexibility first” mentality that then pulls in the demand plan to set the broader boundary conditions. Forecast accuracy tends to decrease as you traverse down to the product/component level so the key is finding the appropriate hinge point where forecasts are credible across a broader category and the remaining variation can be managed with operational flexibility.

Impact on Direct Labor

In a previous blog titled New Take on Temporary Staffing, we explored how temporary labor has traditionally been used to embed higher levels of flexibility and agility in the supply plan. This blog presented some of the challenges and limitations around the current paradigm, namely the fixed period costs, productivity challenges, and lack of choice and availability. These limitations are becoming more poignant by the day as customer preferences evolve faster, delivery expectations become more demanding, and cost pressures increase. Companies do not have the luxury of planning temporary labor 3 weeks out and retaining temporary workers in weekly installments. Direct labor planning ultimately has to give companies the ability to adapt in real time.

At Veryable, we believe the next paradigm shift is bringing labor flexibility down to a very finite level, aligned to daily, or even hourly, production schedules. The on-demand economy gives us the opportunity to introduce these higher capabilities, as well as usher in a whole new set of workforce participants into the equation. Leading companies are starting to think this way and are having much more success adapting to today’s market.

For more information about the on-demand labor for manufacturing and warehouse applications, please view our website: www.veryableops.com

Closing the Skills Gap

The Skills Gap Problem

The manufacturing industry is booming, and soon there will be more jobs than workers.   Where have all the workers gone?  They are retiring at an alarming rate, and the manufacturing industry has failed to appeal to the younger generations.   Traditionally, manufacturers have looked to technical schools, unions or apprenticeship programs to provide skilled labor.  The problem with these traditional models is they aren’t working for the new workforce.  The training and apprenticeship programs are too long, too expensive and have too much turnover.

The Veryable Solution

So how can a business in today’s environment solve their skills gap problem?  There are really only four solutions:

Expand manufacturing to a new group of workers: The Veryable model is already bringing a younger, more diverse group of workers to the manufacturing, distribution, and warehousing sectors.
Increase the capacity of current skilled workers: The Veryable model enables businesses to bring in general laborers to free up the time and capacity of their skilled workers to complete the high value tasks.
Train general laborers for your skills needs: The Veryable Elite Skills Training (VEST)* program is designed to help businesses connect with workers trained specifically for the business’s labor needs.
Pay above-above market rates: Businesses don’t have the ability to pay above-market wages, and the Veryable model doesn’t require them to do so.

*The Veryable Elite Skills Training (VEST) Program

The VEST program is a new program designed to help businesses connect with workers trained specifically for the business’s labor needs. Veryable has partnered with Meritize to offer free training programs to the workers on the Veryable platform in skills such as welding, machining, and commercial driving. How are these training programs different than traditional training programs or apprentice programs?

Cost: Free to both the workers and the businesses.
Time: Training programs can be completed in as little as 6-8 weeks.
Skills: Training programs are geared toward the specific needs of the business.
Commitment: Workers must remain in the VEST program for a minimum of one year.

As you can see, the Veryable model is able to solve the skills gap problem for businesses using a multifaceted approach.  For more information about Veryable on-demand labor model or to learn more about the VEST program, please view our website at: www.veryableops.com.

Building a Better Workforce

WHAT DO BUSINESSES REALLY WANT FROM THEIR WORKERS?

In order to succeed in the manufacturing, distribution, and warehousing sectors, businesses must be focused on one thing…consistency.  Whether it’s in their processes and procedures, supply chain, distribution channels, or the final product, consistency must be maintained for the business to reach its full potential.  With that said, you can’t have consistency in your business without consistency in your workers.

So what does a “consistent” worker look like?  According to a study conducted on behalf of Career Builder, consistent workers have the following traits:

Work Ethic:  Businesses want workers who strive to get the job done with little oversight in their daily work activities.

Dependability:  Businesses want workers they can rely on to show up to work on time and ready to work every day.

Self-Motivation:  While it may be a manager’s job to keep their employees motivated, it makes the manager’s job a lot easier if their employees are motivated each day to get the job done on their own.

Good Attitudes:  No one wants to be around a person with a bad attitude, and bad attitudes can bring down the morale of the entire team.

So how do you find those traits in your potential workers?  The traditional employment model of reviewing resumes and interviewing candidates doesn’t work, because it is unable to assess the qualities that lead to a consistent worker.  In fact, Inc. predicts that the job interview model will soon be extinct. The good news, however, is that there is another way…Veryable.

THE VERYABLE SOLUTION

How is Veryable able to help businesses build a better, more consistent workforce when traditional employment and staffing companies have failed to do this for so many years?  It’s simple…The Veryable model leads to a workforce that is:

Rated:  Much like your Uber driver or your favorite restaurant on Yelp, the workers (we call them “Operators”) on the Veryable platform are rated.  Each time an Operator completes their work, the business is required to rate their performance in four categories:  quality, safety, attitude, and timeliness.  This rating system allows the business to know exactly what type of worker they are getting before the Operator shows up to work.

Accountable: The Veryable rating system requires Operators to perform well at each work opportunity in order to get good ratings.  Good ratings lead to more work and potentially higher pay.  Because of this, Veryable Operators have a better work ethic and are more dependable and motivated.

Driven: The Veryable model encourages flexibility for workers on the platform.  According to Forbes, flexibility leads to a more efficient, focused, and innovative worker.  Driven workers are dependable workers.

Satisfied:  Veryable Operators are able to take charge of their careers by choosing when and where they want to work.  Each time an Operator accepts a work opportunity, they are making an affirmative decision to work for that specific company on that specific day.  This leads to the Operator having more control over their career, and thus, a more satisfied worker.

Diverse:  The Veryable model allows a new group of workers to participate in the manufacturing workforce, and this group is both younger and more diverse than traditional manufacturing workers.   Having workers that are diverse in demographics, personas, and skills has been shown to improve employee dependability, motivation, attitudes, and work ethic.

Building a labor pool full of workers that are accountable, satisfied, and diverse will lead to a better, more consistent workforce.  If your business is looking for consistency in its workforce, it’s time to try a new method.  To get started building your own labor pool of Veryable Operators, visit our website at: http://www.veryableops.com.