Gabriel Alvarado
Director
Kronos Latinoamérica
/
Insight

Software Optimizing Global Workforce Management

Tue, 09/01/2015 - 11:23

Optimizing the workforce’s contribution to corporate success requires many factors to be considered, from improving productivity and ensuring compliance with HR policies, to specific labor laws, or benefit agreements with unions. According to Gabriel Alvarado, Director of Kronos Latinoamérica, this complexity creates space for a product that can alleviate the automotive industry’s HR concerns, while motivating employees to be more invested in their work. “Kronos software works with a particular understanding of employee profiles that outline individual productivity statistics of each worker,” he states. “This includes the level of quality to which they are working, their certifications, and their different skillsets and abilities for different production processes.” The company then uses this information to assign the most appropriate staff to the required jobs, in an effort to help automotive companies optimize their labor costs. Another benefit of the software is the cost management aspect, which can outline real-time labor costs for each individual process on the production line. Most companies take the total monthly payroll and divide it by the average monthly cost of production to calculate labor costs, but Kronos’ software can provide a much clearer labor-related cost figure by taking various cost centers into account. For instance, if two different production lines require two workers with varying abilities, the labor costs of each employee can be specified within the system, and daily processes can be tracked in order to provide a much more accurate representation of cost. The benefits of this have also been seen by employees who gain increased job satisfaction and the peace of mind that employees are earning what they deserve in line with their work, skills, and experience. Employees also understand that they will be paid in accordance with their productivity and skills, laying the groundwork for a healthy, competitive working environment. Depending on the customer, it can take between six and nine months to program and implement the solution. During the primary mapping stage, labor standards are established, determining quotas for each workstation. The second stage is to input employee information, and the third is to provide software training and tools to customers. Companies must create training plans to increase the productivity of each employee, which is something that Kronos can monitor through the systems. From a consulting perspective, after the labor standards are created, Kronos is given a clearer outlook on the labor process, enabling the creation of a blueprint of labor processes and labor standards that is agreed upon by the clients. This blueprint is subsequently used to configure the software and at that point testing can begin in a production environment. With these terminals, employees can access features such as vacation requests, benefits checks, and confirmation of the amount on their next paycheck.

The most fundamental platform supplied by Kronos is called Make the Perfect Check, which ensures that all employees are receiving an accurate paycheck, as well as ensuring compliance with any relevant union benefits. Other modules help companies to optimize labor forces based on their own individual supply chain requirements, help to define the daily activities of the workforce, or allow companies and unions to gain full visibility of labor on a companywide scale. Kronos has found that, with the integrated automation of various workforce management processes, productivity can reach anywhere from 5-20% above the efficiency levels that individual processes provided. With a customer-friendly interface that is standardized across all end users, the system also offers language options, meaning that companies can monitor the productivity of plants on a global scale. Kronos has now been implemented in 100 countries, across a range of languages, payroll systems, laws, and cultures, albeit on a fully localized basis. Today, Kronos is covering 47% of OEMs, Tier 1, and Tier 2 suppliers worldwide, and around 38% in Mexico. Some notable clients include Henkel, Autoliv, Bosch, Johnson Controls, TRW and Denso, among others. Brands like GM, Nissan, Ford, Jaguar, Mitsubishi, Hyundai, Volkswagen, Renault, and KIA are also using Kronos for some of their global operations.

Mitsubishi has reported a saving of US$50-100,000 in workforce and labor expenses thanks to its implementation of Kronos and, in just one year, PepsiCo Foods in Mexico reduced its overtime costs at a plant with over 1,000 employees by US$1.8 million. The tactic was not to reduce the number of hours, but to split the hours more intelligently, optimizing resources and efficiency. “One of the things that Kronos can immediately help with is management of overtime,” says Alvarado. “In Mexico, this tends to be managed manually, with decisions made based on personal relationships. Kronos removes this decision from the equation and fairly selects the appropriate person for the job based on skills and knowledge.” With the software’s installation, payroll mistakes and errors can be drastically reduced due to the reduction of human error. The other issue that can cause hemorrhaging of labor budgets is absenteeism, which is a particular concern in Latin America, according to Alvarado. “Absenteeism in Mexico is high, at more than 7.3% of the working year, representing a considerable issue for the companies now entering the country,” he explains. “For example, one minute of absenteeism in a Volkswagen plant costs US$25,000.” Even with the attractive low cost of labor, the impact of absenteeism can clearly have a significant financial impact, effectively nullifying the benefits of a cheap workforce without proper management.