Labor costs are one of the essential items in a manufacturer’s budget, so controlling labor costs is critical to profitability.
However, tracking labor costs, tracking where employees spend their time, and identifying efficiencies to save labor can be difficult and time-consuming. And if you’re using pen and paper or Excel spreadsheets to manage your labor costs, you’re probably wasting your time and inefficiencies. Tracking work manually can slow down your company’s day-to-day operations and take time to balance work. In addition, your employees may find themselves waiting idly for you to tell them what to do and which job to do next.
Increasing Labor Cost – A Continuous Headache for Businesses
Labor costs are rising rapidly this year as employers raise wages to attract and retain talent to fill millions of jobs. This has been a boon for the U.S. worker, whose wages have lagged inflation for the past year and a half, but for Fed policymakers, it is a boon to eradicating decades of inflation. But, as a result, businesses feel pressure to do more with fewer people, fewer resources, and less budget. So you may wonder what you can do to tackle the labor cost problem head-on and find a solution.
Labor costs can account for up to 70% of total project costs. This includes wages, benefits, salaries, and other related taxes. But Paycor research shows that HR professionals spend only 15% of their time managing labor costs. However, paying attention to your annual operating expenses (especially now) will prepare you for the financial future.
What to do for Better Expense Allocation?
Ultimately, it’s all about assigning (or distributing) costs that each job is jointly responsible for. But the cost must also be proportionate to this responsibility. Understanding how to find that balance is the art of overhead allocation. Use the Labor Cost Allocation SuiteApp to allocate labor costs to profitable target programs or functional areas. Most organizations must categorize all expenses into functional areas, which are fundamental to financial management and reporting.
In an organization, employees typically work on tasks in different functional areas. Labor costs should therefore reflect the functional area in which the employee worked.
Labor Cost Allocation SuiteApp allows you to allocate labor costs by employee rate or employee wage transaction. Use Employee Rates to define employee rates for calculating labor cost allocation. On the other hand, employee payment transactions create and use these transactions for payroll cost allocation.
Benefits of Using Labor Expense Allocation
The key benefits of using the Labor Cost Distribution SuiteApp are:
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- Allocation of personnel costs, including salaries and benefits, to beneficiary programs or functional areas.
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- View and report total direct costs.
How to Allocate Your Expenses according to your Roles?
The following diagram illustrates the tasks performed by different roles in the Labor Expense Allocation SuiteApp using employee rates:
The following diagram illustrates the tasks performed by different roles in the Labor Expense Allocation SuiteApp using employee pay transactions:
Introduction of NetSuite Workforce Management Solution
NetSuite Suite People Workforce Management is a new offering from Oracle NetSuite. SuitePeople Workforce Management aids businesses in controlling labour expenditures and profits. The system raises employee engagement by automating regular processes like employee scheduling, tracking working hours, and wage computation. Additionally, it offers exceptional workforce planning advice to assist businesses in achieving their objectives.
By integrating shift forecasting, Payroll, and scheduling with employee attendance, Payroll, and financial systems, SuitePeople Workforce Management assists enterprises in ensuring timely and accurate financial data. Approved payroll hours are seamlessly processed by SuitePeople Payroll, and they are then automatically posted to your general ledger. This enhances accuracy and streamlines the entire workforce management process. Giving managers immediate access to sales and labor data also enables managers to make more informed decisions. Organizations can enhance the following using SuitePeople Workforce Management:
Scehduling: Visual methods for scheduling shifts do away with the requirement for separate scheduling programs and spreadsheets. To construct workforce schedules, teams can also integrate projections, employee schedule templates, labor expenses, and labor cost lists.
Monitoring Attendance: SuitePeople Time Clock offers your staff a versatile mobile time and attendance tracking tool. Additionally, it has capabilities for photo capture and biometric fingerprinting that prevent a person from leaving work early or checking in on another employee’s behalf.
Calculating Wages: To assist enterprises in lowering their compliance risk, the Payroll Rules Engine automates the computation of regular working hours, overtime, and vacation compensation. This lessens billing mistakes and does away with manual reconciliation.
Work and Operational Metrics: Real-time dashboards let managers view and contrast daily active measures, including sales, pay, and predictions. Thanks to this transparency, managers may make data-driven decisions about labor costs and profitability.
Engagement: Employees may track their hours, replenish, replace, finish shifts, and talk with management using mobile apps. Additionally, it makes it simpler for managers to respond when a worker skips or abandons a scheduled shift. Mobile apps can increase manager and employee engagement and productivity through these interactions.
How can NetSuite Workforce Management Solution Help Your Business Reduce Labor Costs?
Implementing the NetSuite Workforce Management Solution significantly increases operational efficiency and labor savings.
Automation of administrative processes reduces costs and frees managers and employees from productivity-enhancing tasks.
Overpayments are the most common human error businesses can make. With a time-tracking system, data can be imported directly into the system and retrieved as needed. The NetSuite Workforce Management Solution ensures your data is always accurate and doesn’t negatively impact your bottom line. With the NetSuite Workforce Management Solution, you can monitor downsizing, hiring freezes, schedules, budgeting, and forecasts to meet operational needs and improve short- and long-term ROI. In fact, businesses can reduce operating costs by up to 5% by automating processes.
NetSuite’s workforce management solution enhances control with real-time information to monitor workforce deployment, analyze budget performance, and control labor costs while improving production and profitability.
Wrap Up
One component of NetSuite SuitePeople is workforce management. A human resources management tool called NetSuite SuitePeople integrates personnel data with NetSuite to break down departmental barriers. This enhances communication and speeds up and ensures the safety of staff planning and decision-making. Employees can use SuitePeople to seek leave, access employee schedules, use organizational charts, keep track of forthcoming leave, and commend other team members for a well-done job. Managers and HR specialists may streamline employee information, onboarding, promotions, and salary changes using SuitePeople as a single solution. Additionally, SuitePeople US Payroll offers a full-service solution that fully automates payroll and syncs Payroll with NetSuite Financials.
