The use of time tracking is important for measuring production, it allows for increased efficiency, productivity and increased profits. This case study focuses on a situation where a Cogent Client did not have accurate time tracking in place, and how the client increased production once the solution was implemented.
The company is a metal fabricator that has manufacturing software for the business. However, the software was mainly used for estimating the product for a prospect/customer, but not tracking time for production. This software was very much underutilized. The company was barely breaking even and often shipping the product late. Therefore, we looked at the most controllable cost of any business, labor.
Upon review of the software capabilities and the estimates created in the system by the estimator, the data was available to compare the actual time per operation to the estimated time for the operation. The estimates were quite detailed, but they were not being used in the shop. The next step was creating a process for employees to log in and out of jobs on the computer when they started and finished an operation. The estimated was set up for set-up time, a fixed time for the part, and the run-time, which is variable due to the number of parts to be run. Overall the tracking of time was a simple task since the system is set up for tracking time, and it was a detailed estimate. But it took time for 100% compliance on the shop floor with all employees following the newly established procedure, and it took a lot of time of the Foreman coaching the employees in the new process. As compliance with the process, the information became more accurate and yielded better results for further analysis
Some of the challenges of compliance were:
- Always identifying and logging in separately for set up time and run time.
- To log out of the job for their morning and afternoon breaks, they had previously clocked in and out for lunch, so that was not an issue
- Ensuring the proper count of the number of ‘good’ parts produced, scrap, or bad parts were not counted before.
- Flagging delays in the process correctly, machine break down, lousy material, etc.
- The dwell time between parts is now being tracked, but that does not go to a job.
The employees quickly learned that they were being held accountable for their time, and the data must be accurate, and all exceptions noted adequately. With this realization, the accuracy of the data being collected greatly improved.
Once the data was collected and analyzed, management was able to focus in on areas that required attention for improvement. Some of the areas they found: Some employees struggled with set up time; it was taking them much longer than allocated. The Shop Manager spent time with those employees to improve skills in the set-up process; this became a training issue.
The data also showed there were variances with the run-time. This is an age-old question, was it estimated correctly, or was it a shop employee problem.
Further analysis often showed that material handling was part of the problem. Management worked with the employees to develop better processes for moving material in the shop. After meeting with the employees, the company made additional investment in equipment to make the process easier for the employees — less movement, bending over, etc. which all takes time. The Foreman also coached employees on better ways to layout the material to be more efficient in producing the part with their machine.
Not all the time variances for actual time to estimated time were from the shop floor. With collecting data over a period, some of the estimated time per operation was increased because the original time was unrealistic from the time tracking. This also gave them a more realistic ship date for the customers because the old estimate did not account for a proper amount of time to produce the part.
From the beginning of this process, we explained to the employees; this new process was to gather information to determine areas that were going to plan and areas that require improvements to be more productive and that are based on facts and not just a gut feeling. When material handling was shown to be an issue, and everybody met to discuss ideas for improvement and management committed to investing in equipment to make work easier for them, the company solidified buy-in from the employees. With the added coaching from the Foreman, it indeed became a team effort, and in the end, everybody wins.
With time tracking and improvements from the new processes because of better data, the company is below their budgeted labor costs. This is close to a 12% reduction in their cost. This payout made both the employees and management very happy. Also, the employees know they are being held accountable for their time.
People do what is inspected, not expected. With a gain sharing incentive plan in place, the employees last quarter receive a payment that averaged an $0.83 per hour worked bonus.
Other results have been improvements to meeting the ship date; this is up to over 90% on-time from 70%. The company also has a more accurate count on ‘bad’ parts since all parts are counted and tracked.
With shipping on time, the company can also increase their throughput because it is taking less time than before to produce the parts. Therefore, they have more shop time to sell.
The next step for the company is to fully utilize the purchasing and inventory modules of their software to ensure the material cost is within the estimated value.
At Cogent Analytics, we never stop looking for ways to improve your business and neither should you. So, check out some of our other posts for helpful business information: