Benefits of Using a Cost Per Unit Model for Lean Management

Lean management is all the rage these days, and the supply chain industry is no exception. Many operations and HR managers in warehouses wonder how they can implement lean management principles without adding upfront exorbitant costs to their operating budgets or even more time to their already overloaded plates.

It is not only a tedious and time-consuming process, but also an expensive one. However,  tried and true workforce solutions could provide you with the necessary general warehouse staff at a much lower cost. A cost-per-unit (CPU) model is undoubtedly one of lean management's most reliable warehouse staffing solutions. This post explores the benefits of using a CPU model for lean management.

Lean Management Concept

The goal of lean management is to increase value for the customer while reducing waste. In other words, it helps businesses operate more efficiently by streamlining processes, eliminating waste, and improving quality. As a result, companies can achieve their desired outcomes in a shorter period and with less effort.

There are many ways to obtain lean management, yet one of the most effective is using a cost-per-unit (CPU) model. It is a system that focuses on building a more productive environment without compromising quality. Think of it more like making your workforce lean.

What is a CPU Model?

A CPU model is a pay-for-performance system in which workers are paid based on the number of units they process. In other words, the more units a worker can process in an hour, the more they will be compensated. It moves away from the traditional hourly wage model, in which workers receive a flat rate regardless of their productivity.

When implementing this system, it is crucial to set a reasonable and attainable productivity goal for each worker. Instead of hiring a warehouse staffing agency, consider a CPU model. It may be more beneficial as it has the necessary resources and expertise to help you set a feasible goal. 

What are the Potential Benefits of Using a CPU Model for Lean Management?

Several benefits of using a CPU model for lean management include the following;

Encourages Productivity: Employing a CPU model encourages workers to be productive. Because they are paid based on their productivity, they have a financial incentive to work quickly and proficiently. Naturally, this can boost your overall productivity as a business and enable you to accomplish your lean management goals.

Reduces Costs: A CPU model can help lower your costs. With this system, you only have to pay employees for the actual units they process. Hence, this can save you money on labor costs, as you are not paying workers for their time, but only for their output.

Improves Quality: Quality is always paramount in lean management. With a CPU model, you can enhance the quality of your services, since your workers will be incentivized to do a good job and produce high-quality work.

Boosts morale: Another benefit of using a CPU model is that it can promote morale among your workforce. Staff who feel like they are being fairly compensated for their efforts are likely to be more motivated and engaged. For this reason, they tend to be more positive and productive, which can have a knock-on effect on your business.

Using a CPU Model to Support Lean Management

If your final goal is to apply lean management in your business, then a CPU model could be an effective route to take. Several ways are available in which you can approach this type of staffing solution. You could use a company that specializes in general warehouse solutions; and for your inbound loads, you could consider using lumper services to supplement your in-house team.

Common Challenges Warehouse Staffing Departments Face

Most HR departments in warehousing grapple with retaining good workers as the industry is quite demanding and challenging. In fact, most logistics and warehousing managers face the following difficulties;

• Having to maintain high accuracy levels while ensuring products are delivered on time.
• Improving efficiency to remain competitive and keep costs down constantly.
• Managing and motivating a large workforce, often in challenging circumstances.
• Being able to adapt to change quickly, as the logistics and warehousing industry is continually evolving.

These issues can get in the way of implementing your lean management strategy. Rather than hire a warehouse staffing agency, a CPU model could help you develop the appropriate long-term staffing strategy. It can also assist you in overcoming some common challenges associated with the industry, while offering workforce people solutions.

Benefits of Using Cost-Per-Unit Company

Instead of warehouse and industrial staffing agencies, a CPU model can be instrumental in enabling you to reach your lean management goals. It can provide you with the necessary staff to meet your demands at a fraction of the cost of traditional methods. This enables you to focus on the core issues of the business without worrying about the day-to-day management of warehouse staff. Other advantages of using warehouse temp services through the CPU model rather than manufacturing staffing agencies, include; 

• Access to a larger pool of potential candidates
• Saves time and money
• Gets the best candidates
• Reduces turnover
• Flexibility to meet your needs during peak and slow seasons 

The Eclipse IA Managed CPU Solutions 

Managed cost-per-unit workforce solutions could be integral to your lean management strategy. The Eclipse IA Managed CPU model is an excellent example of such a system. It allows you to monitor and manage your entire workforce with one partner. 

Not only does this make it easier to identify the areas that need adjustment, but also simplifies training and development. Consequently, you can ensure your workers have the skills they require to be productive and efficient.

When using this solution, you'll see increased productivity, reduced costs, and higher retention for all the industrial athletes (what we call our warehouse workers). However, since the model employs a team payment approach, employees must support each other. This way, weaker athletes on the team are not dragging the whole team down. It leads to a more dynamic and competent workforce, ultimately.

Partner with Eclipse IA For all General Warehouse Solutions

A cost-per-unit model can support your lean management initiatives and general warehouse solutions by helping you to understand where your inefficiencies and waste are. Minimize costs and boost your bottom line by analyzing your data and applying a cost-per-unit system.

Please get in touch with us if you would like assistance in implementing a cost-per-unit model or improving your supply chain staffing efficiency. We specialize in helping companies achieve their lean management goals.