“Lean Thinking” to Managing Workforce James Thomas Country Manager – India Operations Kronos Incorporated 1

The new age employee. the new work ethic The new age employee..the new work ethic..social convergence…different attitudes…quantity over quality… how do we value? how do we manage?

Control

Obstacles to Continuous Improvement

“Implementing Lean concepts and principles is not a technological issue, it is primarily a management and human resource issue.”

Seven Wastes of Lean – Focus on Labor Transport Unnecessary movement of people due to unexpected events like call-ins Inventory More people than required for current work Motion Manual paper processes, such as timekeeping, leave that can be automated Reporting system that requires individuals to check information regularly instead of automatically alerting them when action is required Waiting Scheduling an individual who is not available due to conflicts Unplanned absenteeism Insufficient skills or experience to efficiently perform a process To help employees identify waste in today’s manufacturing environment, provide communications — via various media — with updated descriptions to make them more directly applicable to information-based processes. This table provides an expanded Seven Wastes of Lean list that includes information- and labor-centric wastes. By providing clear communications that describe familiar workplace situations, companies make it easier for employees to identify and eliminate waste — even in information- and labor-centric processes.

Seven Wastes of Lean – Focus on Labor Overproduction Using a person too highly skilled (at corresponding higher pay) for a specific role Providing too much information to employees so they have to search through detail to find the data they need Over-processing Entering the same data multiple times into different systems Decisions that are made, questioned, and reviewed again due to ambiguous supporting information Defects Payment to employees that is not intended Expired or missing employee skills and certifications that cause quality and performance issues, safety hazards, or regulatory infractions

Where the Time & Money Goes Labor Utilization Overtime Paid time-off errors Unplanned absence Time abuse Administrative Poor decisions Compliance exposure Time and cost performance variance Quality defects Safety incidents

Where the Time & Money Goes Labor Utilization Overtime Paid time-off errors Unplanned absence Time abuse Administrative Poor decisions Compliance exposure Time and cost performance variance Quality defects Safety incidents

Wilful waste Brings Woeful wants!!

Lean Labor: Placing your bets Absence Management - Planned vs Unplanned absences - Unmanaged absenteeism – “culture” - “Just in case” to “Just in Time” - Cost of Replacement

Lean Labor: Placing your bets Balancing Labor & Demand - Predictable Variability - Controllable Unplanned Variability - Uncontrollable Unplanned Variability

Once Current Operations are Optimized, Flex to Demand Understaffing Overstaffing Inaccurate Planning 14 12 10 8 6 4 2 5:00 AM 7:00 AM 9:00 AM 11:00 AM 1:00 PM 3:00 PM 5:00 PM 7:00 PM 9:00 PM 11:00 PM Headcount) Time (Minutes) Days of Week Months of Year And when labor exceeds demand, you have overstaffing, which cuts into margins and causes stores to exceed their earned labor hours.

The Difference: Plan Accurately Sat 6 am 6 pm 12 Sun Forecasted Workload Open Open Open Open Open Open Open Open Open Open Open Open Open Open Open Sophisticated optimization algorithm converges on “best fit” coverage Key Benefits Control Labor Cost Minimize over coverage

Lean Labor: Placing your bets Managing the Entire workforce - Contract management - Field Employees/Warehouses/DCs - Inclusivity - Employee Morale and Retention - Safety & Compliance

People are Dearer than Machines or Material!!

Lean Labor: Placing a Value on Workforce Unit Labor Cost = Labor Cost Number of Units

A Common Measure of Productivity ? OLE – Overall Labor Effectiveness Labor Availability: % effective utilization Labor Efficiency: % potential output Quality Performance: % of ‘good’ product per labor unit Example: 85.8% x 95% x 96% = 78.2%

Overall Labor Effectiveness™ Delivers the Entire Labor Picture What OEE does for equipment, OLE does for labor PRODUCTIVITY ■ Individual ■ Cumulative OLE 95% 96% 78.2% Effective Labor Use 85.8% 125 Units INR500 Contribution Margin INR62,500 Total   

Modest Changes Make a Big Difference 3.2% Increase In Margin INR2000 PRODUCTIVITY ■ Individual ■ Cumulative OLE ■ Increase 2.2% 80.3% Effective Labor Use 95% 96% 85.8% 78.2% 129 Units INR500 Contribution Margin INR64,500 Total

OLE Acts as a Benchmark Ensure one change doesn’t impact other areas Performance vs Quality Did the training pay off? Is the increase in turnover hurting performance? Is overtime being effectively used?

Increasing labour utilisation by 7% Pointers… Increasing labour utilisation by 7%

Visibility and Control Pointers… Productivity Visibility and Control Compliance Workforce Quality + 2.7% conversion rates Optimization increases Deli Sales “Double-digit” productivity gains .58% reduction in labor % to sales 25% increase in customer satisfaction Greater consistency across stores Minor age employee work rules Meal, break, and key-holder coverage Union contracts 30% reduction in turnover $1.4m annual savings 900 applications processed in 4 days

The most strategic asset…People. Workforce…. Happy worker The most strategic asset…People..Workforce….Happy worker..Engaged worker.. Innovates..Ideates..Raises the bar….Let’s focus on Workforce...Lean on them!!

Thank you