5 Tips to Improve Your Labour Cost Tracking
The difference between making a good profit or a bad loss on your manufacturing projects can be as simple as effectively tracking your staff labour hours to accurately determine the true labour cost attached to each project. To improve your labour cost tracking involves several elements, including correctly measuring staff time and staff cost on a job-by-job basis, and getting it right will save (or make) you tens-of-thousands of dollars each year.
From an industry wide perspective, working to improve your labour cost tracking is an integral part of growing the manufacturing industry in Australia.
If you are still tracking the profitability of your business or individual projects using spreadsheets there is a pretty good chance they are extremely complicated and out of date which makes getting an accurate picture of how much time is spent on each project very difficult.
Effective measuring profitability for project management and manufacturing business requires a thorough understanding of your true people costs, with labour costs allocated correctly to each job and task – as it’s performed.
So, How Do You Improve Your Labour Cost Tracking?
- Break down jobs into tasks. Breaking down a large job into smaller parts will let you understand the variety of labour tasks required and record and allocate time accordingly. You may be able to identify any inefficiencies and most certainly will be able to provide more accurate future estimates. This will also assist with forecasting job completion times by accurately accounting for the amount of labour required.
- Use the data wisely. Tracking your labour costs effectively will give you plenty of information. How you use that information can have a big impact on your production costs and hence profitability. Are you capturing all of your direct and indirect labour costs? Is the total time related to your payroll being reflected in the time logged in production? There may be a good explanation for differences but you now will be armed with an accurate picture of how much you’re charging for labour costs. Reconciling your labour against production may result in you rethinking your past assessment of job or item profitability.
- Budgeting and forecasting. Compiling a complete budget will help control your costs and allow you to measure progress and adjust as required. Utilising labour cost management will ensure more accurate forecasting for labour requirements and associated costs.
- Forecasting rosters and overtime. Efficient forecasting of rosters will help reduce an expense that most businesses seek to minimise: overtime. As well as boosting the bottom line, you may be able to suit your employees strengths in job allocation, reduce labour wastage and maximise efficiency and profitability.
- Integrated time sheets. Modern job management software provides easy solutions to enter labour input data, usually with customisable fields and templates to ensure the flexible entry of required data, suited to your needs.
WorkGuru solves tracking your labour costs
WorkGuru’s all-in-one business operations platform provides a number of powerful features which enables you to run your manufacturing or engineering business efficiently.
Integrated timesheets, accessed through a web kiosk, allow all your staff to enter their timesheets and material usage directly against any project they are working on, with the added benefit of providing a real-time snapshot of staff productivity and project profitability.
Making the right decisions depends on accurate and timely information. Viewing actual labour costs as they occur allows you to adjust project rosters through close tracking tools.
Live analysis of labour costs combined with superior workforce management functionality increases your productivity and reduces labour wastage. WorkGuru allows you to track what’s going on in your workshop, who’s working on it, and when it’s supposed to be finished.
Seamless integration with Xero allows approved timesheets to be collated and incorporated into your payrun.
Built for Australian businesses, WorkGuru is incredibly easy to use, provides support for you to make the right decisions and allows you to get on with running your business with a minimum of fuss.