What should be manpower cost % against net sale value for manufacturing company (plastic industry)?
From India, Pune
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From India, Pune
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Dear Rahul,
There is no hard and fast rule for the manpower cost against net sales value. The manpower cost depends on the following:
a) The volume of the operations. The higher the volume, the lower the manpower cost.
b) Capacity of the capital equipment used and their quality also.
c) Maintenance of the capital equipment used. If there is unreasonable downtime, then the cost of manpower will go up.
d) Quality of the manpower. How skilled are they? To assess skillfulness, find out what percentage of the time is spent on rework. The higher the rework, the higher the manpower cost.
e) Availability or non-availability of the raw material. If there is downtime because of the non-availability of the material, the cost of the manpower will go up.
f) Manpower cost also depends on how the orders are scheduled. If the right mix of production scheduling techniques like FCFS, EDD, LPT, etc., is used, the manpower cost comes down.
Measuring the Effectiveness of Manpower
One of the metrics for measuring the effectiveness of manpower is the calculation of HCROI. I have previously provided a detailed explanation of the concept of HCROI. You may refer to it https://www.citehr.com/598564-outcom...ml#post2390975. The points outlined from (a) to (f) above will enhance the HCROI.
Thanks,
Dinesh Divekar
From India, Bangalore
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8042There is no hard and fast rule for the manpower cost against net sales value. The manpower cost depends on the following:
a) The volume of the operations. The higher the volume, the lower the manpower cost.
b) Capacity of the capital equipment used and their quality also.
c) Maintenance of the capital equipment used. If there is unreasonable downtime, then the cost of manpower will go up.
d) Quality of the manpower. How skilled are they? To assess skillfulness, find out what percentage of the time is spent on rework. The higher the rework, the higher the manpower cost.
e) Availability or non-availability of the raw material. If there is downtime because of the non-availability of the material, the cost of the manpower will go up.
f) Manpower cost also depends on how the orders are scheduled. If the right mix of production scheduling techniques like FCFS, EDD, LPT, etc., is used, the manpower cost comes down.
Measuring the Effectiveness of Manpower
One of the metrics for measuring the effectiveness of manpower is the calculation of HCROI. I have previously provided a detailed explanation of the concept of HCROI. You may refer to it https://www.citehr.com/598564-outcom...ml#post2390975. The points outlined from (a) to (f) above will enhance the HCROI.
Thanks,
Dinesh Divekar
From India, Bangalore
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