Get a Grip on Your D.C.

4. Budget by Labor Function
Many operations have planned dollar budgets for each month. While dollars can be derived from this, a labor budget shows the number of hours needed for each function based on orders and work flow. Your budget should be planned by month, week and day.

For each of the various flows, identify the major activities: orders, receipts, returns, etc. The starting point for the orders is the projected order flow that marketing is expecting. For receipts, this can come from purchase-order files of expected receipts. Returns can be planned from your expected return rates. Derive production expectations by labor hours from the benchmarks you set for your operation as described above.