How to Change the Work Shift Mode in Manufacturing in COVID-19 Conditions
by Viktoria Kondrashuk
Keywords:
COVID-19, MANUFACTURING, PRODUCTION PLANNING, COST OPTIMIZATION, LABOR RESOURCES MANAGEMENT, ENTERPRISE RESOURCE PLANNING, ERP, CONVEYOR LINE, AUTOMATION.
Description of the Business Problem. Why Does It Matter?
The pandemic of the COVID-19 virus has affected many sectors of the economy. According to research by the Institute for Supply Management, the manufacturing sector contracted in April 2020, as the Purchasing Managers Index (PMI) registered 41.5 percent, 7.6 percentage points lower than the March 2020 reading of 49.1 percent. The PMI recorded its lowest level since April 2009, when it registered 39.9 percent. The 7.6-percentage point decrease in the PMI is the largest one-month decline since a 9-percentage point decrease in October 2008. Among the big six industries, only food, beverage, and tobacco products expanded. For the second month in a row, all of the PMI subindexes show a strong negative impact due to the ongoing coronavirus pandemic. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
Some companies have reduced production due to lower demand. In other companies, the reduction in production was influenced by the requirements for compliance with sanitary standards for production in COVID conditions. First, it is a reduction in the number of people per work shift to maintain social distance. Second, new operations were introduced in the production cycle: additional washing of hands and treatment with an antiseptic, monitoring the temperature of workers before the start of a shift, additional cleaning of the premises, and disinfection.
We discussed changes in the organization of labor and the production processes under the COVID-19 conditions with the business to find out what problems production companies faced and how quickly they were able to adapt to new working conditions.
This is a common case all over the world as an example:
“The implementation of WHO recommendations on the organization of labor in a pandemic were the bottleneck in our factory. We had to introduce new operations into the production cycle, such as additional handwashing and antiseptic treatment, and temperature control of workers before the start of the work shift. Also, for social distance, we were forced to reduce the number of workers in the shift, due to which labor productivity decreased and volume of production. We were not able to plan production in such a way as not to reduce production volumes. As a result, our production decreased by 1.5 times.”
Effective Ways to Solve the Problem
The most effective method of maintaining production volume during COVID is the introduction of adding work shifts if production technology allows adding new work shifts.
Manufacturers that work on a single 8-hour or 12-hour work shift can additionally introduce a 2-night work shift for continuous production. Adding a new work shift will increase the direct costs and variable costs of products because night shifts are paid at a higher rate than day shifts. But additional production will reduce indirect costs and fixed costs per unit of production.
Manufacturers that operate continuously in two 12-hour work shifts and are forced to reduce the number of workers in a work shift can reduce each shift to 8 hours and introduce an additional third work shift. As a result, a decrease in labor productivity will be offset by a reduction in the number of working hours per work shift, and more workers will be involved in the production process.
How to Implement the Solution in Practice
To increase the number of work shifts at the enterprise as quickly and efficiently as possible, the following steps are suggested:
- To describe the technological process, appropriate resources should be allocated to optimally draw up schedules for workers to work shift, plan jobs, and plan the shipment of goods.
- Provide training to employees to understand how their activities will change in the new working conditions and how they have to perform production operations. The sharp change in the production process hurts productivity during the transition period. The human factor will affect the volume of production. This is due to changed working conditions, new operations will appear and previously formed teams of workers will be redistributed. The transition period for the manufacture of shoes was three weeks. The transition period for the reinforced concrete products company was two months. Employees had to learn a new technology while one worker was working on one product at a time instead of three workers before the pandemic.
We discussed working under COVID-19 conditions with business executives to find out how labor productivity has changed after introducing additional work shifts:
“To implement the WHO recommendations on labor organization, we had to reduce the number of people per work shift which negatively affected labor productivity and production volume. Previously, we had eight or nine workers in each team. Before the pandemic, three workers reinforced the products, three workers molded concrete products, one worker made loops and spirals for the products, one worker was responsible for steaming the products and removing them from the molds, one worker sent the products to the finished goods warehouse and one worker prepared the concrete. To implement the WHO recommendations on compliance with the sanitary norm, we had to leave one worker for reinforcement and molding operations. We changed the mode of work to compensate for the reduction in the number of people per work shift. We used to work in two shifts of 12 hours, but now we work in three shifts of eight hours. As a result, our production volume decreased by only 23% versus 45% if we had not introduced an additional third shift. The production of additional products made it possible to reduce indirect costs and fixed costs per unit of production.”
After the introduction of the ERP-system, it became possible to quickly draw up new optimal work schedules. The transition to a new mode of operation and the preparation of an optimal schedule made it possible to obtain the following performance indicators (Table 1):
Due to the increase in the number of shifts, output decreased by only 23% against a predicted 45% loss. Variable costs per unit of production of item N increased due to an increase in the number of workers, but fixed costs decreased due to an increase in the quantity of output. Thus, operating profit after switching to three work shifts increased by 32%. Also, the company managed not to reduce staff but to increase the number of work shifts and reduce their duration.
Conclusion
The working conditions created by COVID adversely affect the global economy and the economy of individual enterprises. In the new working conditions, companies will survive if they quickly adapt to new working conditions and make innovative management decisions. The introduction of additional work shifts reduces indirect costs and fixed costs by increasing the volume of production, which positively affects the growth of margin.
