24×7 Shift Operation
Making the Change to a 24×7 Shift Work Schedule
by Jim Dillingham, Partner, Shiftwork Solutions LLC
One of the most common reasons that companies contact us at Shiftwork Solutions is that they need help designing and implementing a schedule that will cover 24×7 (twenty-four hours a day, seven days a week.) Most of these companies are on a 5-day schedule and want to increase their coverage to seven days a week. This type of change has a broad impact on an organization, and should not be taken lightly. It should always be carefully orchestrated to ensure a smooth transition.
Who Is Going to a 24×7 Operation?
There are many reasons for going to a 24×7 operation. The more compelling the reason, the easier it is to make the decision to do so. The following is a list of typical reasons for having a continuous 7-day schedule:
- Startup and shutdown costs make closing down the facility on weekends prohibitively expensive. A pretzel plant was suffering significant losses during its weekly shutdown on Friday and start-ups on Monday. In addition to product loss, everything had to be perfectly clean for the weekend as anything left on a machine for a weekend turned to stone. Nearly 10% of all labor costs were attributable to cleanup requirements that would not exist if the plant ran seven days a week.
- The cost of capital equipment is very high. The semi-conductor business is a good example of this. A machine that would fit in your living room may cost over 5 million dollars. A semiconductor company will have a building filled with these types of devices. It is a simple economic decision to run this equipment for as many hours as possible each week. This reduces the amount of equipment that must be purchased. For example, a company could run 5 machines for seven days a week or they could buy two more machines and then run 7 machines five days a week. The more expensive the equipment, the more obvious the choice becomes.
- Companies frequently find that they have run out of room. The cost of capital equipment becomes less of an issue when one realizes that even if the equipment were free, there would be no place to put it. Under this scenario, going to a 7-day operation is only one of several choices. There are many factors that must be considered:
- What is the cost of expanding the current facility?
- What is the cost of building/purchasing a new facility?
- Since growth is a typical reason for expansion, is the current need for expansion based on a long term forecast or will orders drop off again in a few months?
- Is outsourcing an option?
- How will the workforce respond? In a tight labor market, this is clearly a major issue.
- Responsiveness to customers can cause a company to consider 7-day operations. An order placed on Friday afternoon may not be filled until Monday with a 5-day schedule. On a 7-day schedule, that order can be filled while the weekend is still young.
- Depending upon the fill/draw characteristics of local warehousing, a 7-day schedule may reduce the average volume carried on-hand without reducing the buffering effect an inventory creates. Typically, shipping takes place during the weekdays. To be prepared for Monday shipping, a 5-day operation will make sure the warehouse is sufficiently stocked by the end of Friday. This stock is then carried throughout the weekend, with no return on the investment made to create the stock. A 7-day schedule can allow stock figures to go low during the week because the weekend can be used to replenish the warehouse by Monday.
- Some companies implement 7-day schedules to be worked in conjunction with 5-day schedules. This can happen for a number of reasons. One of the most unique examples of this was when a company realized that in a tight labor market, they needed to offer more than one type of schedule to attract employees. Some employees prefer weekends off while others prefer more total days off and the increased income that many 7-day schedules offer.
There are certainly many other reasons for implementing a 7-day schedule. More often than not, it is a combination of several issues that eventually result in the decision to become a 24×7 operation.
How Will the Workforce React to a 24×7 Schedule?
If you were to ask the average person on the street “How would you like to start working on your weekends?” you should expect a nearly unanimous “No way!” But, ask the same person if he or she would like 10% more pay (more information) and 78 more days off and you would get a completely different response. The point here is that the shiftworkers’ response will be based on what they know (or think they know.) Ideally, they are getting a complete picture of what their options are.
Information is the key to gaining the support of your workforce. The more the better. To better understand what type of information the employees need, you must first understand their concerns.
- Employees may feel that the company is going to a 7-day schedule more for convenience rather than for a realistic, compelling, economic need. If the business case for a 7-day schedule is justifiable, then it should be presented to the workforce in a manner that has meaning for them.
- Employees will be concerned about the unknown components of the 7-day schedule. What will happen to overtime? How will holidays work? Who will provide coverage for absenteeism? Granted, there is no way to completely eliminate all of the unknowns short of actually working the schedule. A lot can be done to clarify those things that are known. If you know what the anticipated overtime level will be on the new schedule, tell the workforce. If you have a new holiday policy ready to go, let people know about it.
- Many people will focus on only the negative aspects of a 7-day schedule. Most employees are not aware of the fact that 7-day schedules can offer up to 78 more days off a year than their current Monday through Friday schedule. The most common 7-day schedules also pay 10% more than Monday through Friday schedules (this is largely due to the overtime built into the schedule.) Another plus is that a 7-day schedule offers time off during the week – lines are shorter almost everywhere.
What Other Issues Must Be Taken into Account Prior to Implementation?
Implementing a 7-day schedule is easier said than done. Even with compelling rationale for such an action, the logistics involved in such a change can be overwhelming. The biggest problem is typically one of bringing everything together. The following is an example of some of the disparate issues that need to be resolved:
- Employees need to be communicated with. What is going to happen? When is it going to happen? Who is it going to happen to?
- The product flow through the facility may change dramatically. Will stockpiling occur? Whose cost center is responsible for it? Will the customer (internal/external) be impacted? What about the suppliers (internal/external)?
- It is very likely that current employee policies will not support a 7-day schedule. For example, on a 5-day schedule, a holiday that falls on a Saturday is typically recognized on a Friday. On a 7-day schedule, holidays should be recognized on the days that they actually occur. Disability, vacations, military duty, etc. will all need to be reviewed for appropriateness. If you have a union, an addendum to the contract may be required.
- Staffing levels will be a major factor. 7-day schedules require approximately 33% more employees than 5-day schedules, depending upon your target for overtime. Creating an even distribution of skill sets may require breaking up some of the current crews.
- Supervision generally increases in proportion to headcount.
- Maintenance scheduling can no longer consist of “We’ll get it done this weekend when the plant is shut down.”
- Support functions may need to be extended into the weekends.
- Quality, maintenance and supervision will almost certainly require weekend components.
- Shipping/receiving, food services, payroll and human resources may also require some weekend representation.
- Productivity standards will need to be recalculated. Most plants become more efficient once shutdowns and startups are eliminated. Adding two additional production days to a week will also have a major impact (7-day schedules have 40% more hours than 5-day schedules.)
The Finish Line
There are a lot of potential benefits associated with a 7-day schedule. The path to get there is filled with hazards and should not be taken lightly by someone who has not gone there before. Our job is to help you successfully navigate these waters.
Once you have successfully implemented a 7-day schedule, you will begin to see the benefits of your efforts. The workforce will eventually become accustomed to the schedule. Productivity will be up and costs will be down. Best of all, you need not go through this monumental effort again – if you did it right the first time. So do it right the first time.