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Managing Labour Efficiently: A Guide to Maximising Operational Margins

Labour costs often represent the highest expense for businesses, typically ranging from 40% to 60% of operational revenue, particularly in labour-intensive industries. However, despite this significant expenditure, many businesses struggle to effectively manage their labour resources. While some may believe they are handling labour management well, it’s crucial to assess whether they are truly optimizing their resources.

Common Challenges in Labour Management:

One prevalent issue we observe is businesses quoting jobs with a projected gross profit margin of 25-30%, only to realise a much lower margin of 5-10% in actual earnings. This discrepancy is frequently encountered in businesses with turnovers ranging from $100 million to $600 million. The root causes of this problem often include:
While there is no “General AI” capable of resolving all these issues, artificial intelligence can play a valuable role in providing insights to aid operational decision-making. However, it’s essential to recognise that AI cannot replace the human touch in labour management.

The Role of AI in Labour Management:

AI can provide valuable information and insights to operations teams, enabling them to make timely and informed decisions. This can directly impact the bottom line of the business by enhancing efficiency and productivity.

Steps to Effective Labour Management:

By empowering operations teams with the tools to manage labour and activity data in real-time, businesses can optimise costs, enhance customer service, and prevent revenue loss. Even small adjustments, such as reducing 15 minutes of overtime per shift per operator, can lead to significant savings.
For more information on how to optimize labour management and maximise operational efficiency, please don’t hesitate to contact us. Let’s work together to achieve your business goals.
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