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How do SOPs Help Manufacturers Save Money?

Wenda

Standard Operating Procedures - when they're done right - have the potential to save you a ton of money while making your frontline workforce more efficient.

20 December 2022


Like any business, manufacturers want to work smarter, not harder. That's why they implement Standard Operating Procedures (SOPs) on the factory floor. An SOP is a set of instructions on how to perform a task - they are the most basic and effective tools to share knowledge and ensure repeatable, high-quality results. These standards increase safety and efficiency on the factory floor.


SOPs help manufacturers save money with:

 

Increased productivity. 

Access to standard operating procedures on the factory floor means that frontline workers are able to do their jobs correctly, the first time. This means less time spent correcting errors and less time spent parsing outdated or sub-standard operating procedures. A more productive frontline means more output and more profit. We've calculated that a 20% increase in Overall Equipment Effectiveness (OEE) can translate to a $298,944 profit increase.

It's also been shown that an inefficient production site can pay for 400% more machine maintenance in a year - to the tune of $400,000,000.
SOP cost downtime

Reduced errors and downtime. 

When frontline workers in the factory or in the field don’t have access to a standardized set of instructions, they tend to just “do the best they can.” This guesswork causes human errors and deviations from protocols. Fixing these errors leads to expensive unplanned downtime.

Average yearly cost of unplanned downtime? An eye-watering $50 Billion per year in the manufacturing sector.

FTR SOPs cost

Simplified quality control and compliance.

Reducing errors with SOPs means more than just a better end-product. It also means that results are predictably and consistently compliant with the strict compliance audits and quality controls in the manufacturing industry. Failure to ensure product quality can lead to unbelievably expensive product recalls.Training SOPs

Streamlined training and onboarding.

Having quality SOPs available on the factory floor allows new recruits and seasonal employees to continue to learn-by-doing after the traditional classroom training period. Instead of forgetting this knowledge they’re able to reinforce their new skills (with the right information) and reduce the amount of time until they’re at peak effectiveness. This time-to-effectiveness boost is a huge win for manufacturers looking to onboard more efficiently. 

When you consider that a company will spend an average of $1,071 on training per employee - it provides a huge incentive to reduce training costs and streamline the process.

 

Want a tool to calculate the financial impact of better SOPs on your business? You can try our impact calculator here for free.

 

Better SOPs also empower employees.

SOPs benefit the bottom line in more indirect ways as well. Clear 
processes and instructions empower frontline workers. Think of your own frustration when you get vague instructions for something - on how to fill out a tax form perhaps, or maybe for a new electronic device.
Now imagine having to operate large machinery with such obscure work instructions. Good SOPs boost employee confidence and increase job satisfaction.

 

Your workforce is ready for a change.

Manufacturing processes are continually being developed further using the latest technological innovations. It's important for manufacturers to be flexible enough to handle them. A fixed process is actually a great tool for change. SOPs establish a shared baseline which can then be tweaked and rolled out again. The updated SOP enables the front line workers to implement the most up-to-date standards seamlessly into their daily workload.


Manufacturers use SOPs to increase efficiency, yes. But they also unleash a confident workforce ready for change - the most valuable asset of all.

Still curious about the real ROIs of better SOPs and work instructions? Download our free ROI Whitepaper here.

Wenda

20 December 2022