The coronavirus pandemic brought on one of the most sudden shifts in US economic history. From record low unemployment and continuous economic growth to tens of millions of unemployed and trillions of dollars in economic loss within major manufacturing industries, the fortunes of the US economy shifted in just a few short weeks.
While there have been signs of recovery, there have also been signs that at least part of the current recession’s losses could become permanent – a long term hill for the US economy to climb. That result is a significant amount of economic stress that companies must absorb at the same time that they are implementing health containment initiatives and new processes to protect employees and keep their doors open.
To that end, many are now attempting to capture savings wherever they can to reinvest in those initiatives. Whether coronavirus remains for six months or years to come, it’s vital that systems be put in place that protect against the kind of losses that many have suffered this year.
Technology’s Role in Funding Health Containment
For the last several years, digitization has been a vital component of the ‘next step’ for many manufacturers – a stepping stone on the journey to greater automation, worker empowerment, and efficiency on the front line.
Today, technology offers this and more. Companies that embrace digitization and digital transformation to improve their health containment initiatives are protecting against potential issues well in advance of those issues occurring. The cost of managing paper checklists, manually reviewing processes, and following up with potential cases of COVID-19 without software support can be immensely burdensome for organizations. Technology addresses these issues directly.
Digitization can lead to immediate process improvements that help fund the journey. Andonix has worked with dozens of companies to help realize these savings. In one case, FCA’s Mexico plant saw a nearly 9x ROI almost immediately by shifting away from paper checklists and implementing real-time data collection. The resulting productivity gains come from:
- Digital Work Instructions
- Digital Checklists
- Digital Andon Cord
- Digital Contact Tracing and Reporting
By shifting away from paper-based processes, empowering workers, and automating the process, not the work, companies are seeing significant savings quickly that can help keep them ahead of the curve into the future.
Three Major Process Improvements from Digitization
One of the most effective ways to realize cost savings in economic conditions like what we are currently facing is to augment processes and remove inefficiencies. Technology enables companies to do this faster than ever before. Instead of months or even years spent implementing bulky systems that require a complete overhaul of your organization’s processes and retraining of your employees, it’s now possible to make changes in just days or weeks and realize savings almost immediately. This impacts businesses in three key areas
Health Containment Efficiency
Before the pandemic, the CDC estimated that US businesses lost $225.8 billion per year from absenteeism due to illness and injury. That was with an average of 7 days per year of sick leave. In the new normal of COVID-19, employees are being sent home for 14-days or longer to quarantine if they are exposed to COVID-19 or have a positive test and must recover.
The result is incredibly costly, but health containment initiatives can help reduce those costs. By implementing digital containment initiatives to capture employee temperatures, perform contact tracing in the event of a positive test, and quickly quarantine and clean areas of the facility, it’s possible to reduce the risk of illness in the workplace.
Training is a major expense for all organizations, with labor inefficiency ranging from $4,000-$8,500 per worker over a 6-12 week training period. This can account for as much as $5M annually for companies based on average hiring and turnover rates every year. In current conditions that number is likely to be even higher as new processes are being implemented to protect both new employees and trainers.
Digital technology is addressing these costs by supporting the implementation of new processes around onboarding, digital work instructions use, and standardization of instruction.
The Cost of Paper
Paper is a costly, outdated resource that can be replaced, leading to massive savings for an organization in a short period of time. By connecting workers digitally, companies realize 60% faster problem solving and a 50% reduction in downtimes. And deployment can be up to 10x faster for new workflows compared to those managed by paper. The result is that we’ve seen up to a 6% increase in company-wide productivity for those that leave paper behind.
Because paper is so inefficient, difficult to track, and time-consuming to manage, it results in costs through quality recalls safety impacts and general production. Shifting away from paper can save an organization hundreds of thousands of dollars every year.
And in the current situation, paper can greatly slow down the tracking of employees entering and exiting facilities and lead to potentially higher risks of contamination and illness, which in turn increases sick days and potential downtime.
The Next Step in Reducing Costs and Improving Operations with Digital Technology
Whether your organization is still largely using paper for health containment, training, and checklists, or you’ve only partially made the shift to digital technology, the potential for cost savings is significant.
Learn more about the costs being incurred by labor-intensive organizations and how to start addressing it fast in our eBook, How to Capture Savings Fast with the Right Lean Technology.