Do you want to know how long a job really takes to manufacture? Ever wondered what percentage of a quote is labor costs and how profitable customer orders are? These are topics covered in our March webinar where I dove into understanding true labor costs.
If you would like to watch the recording of the webinar click on the image below.
I have also put together an article outlining what was covered in the webinar. Here goes:
Let’s start with quoting software. Many companies use them and it is a fantastic tool to help you produce quotes quickly and efficiently. However, it will only tell you the time it will take to do a specific operation/group of operations based on what you put in. In other words, it will only output what you input.
Each database is set up differently depending on who built the database and the business requirements. It will contain several labor types that are used depending on what options are selected. It is very important to understand that this labor type and time may not suit your factory.
What happens on the factory floor?
Your factory is yours and how you produce a product will be unique to your factory, your processes and the skill of your staff. It is important to analyse your production process and tell the quoting package how long it takes you to complete jobs.
The whole picture
As mentioned before the software will only tell you what you put in. If you put in that it takes five seconds to make a cut, the software will just calculate five seconds per cut and output a total time. Is that the whole picture? No.
For example: do you hold stock? Does the employee on the saw pick the stock himself or do you have another process to do that? Does he cut from a sheet of paper and mark off the cut progress and then make the piece they just cut? All these processes add time to the single ‘cut’ that the quoting package has a set/formulated time for. You should consider this when looking at your times in the quoting package.
Another factor is efficiency. What tools or machines do you have? How good is your equipment? All these points make a difference to the time that is set and are unique to your operation.
And another point to consider is that if a worker must move from their work area (e.g. to unload a truck) they are not performing their allocated task. This should not be factored into the labor time in the quoting software, as this is non-billable time (covered more in-depth later).
Why is time keeping important? An old saying goes ‘you can’t improve what you can’t measure’ and in production this is important on several levels, including knowing:
- how long a process takes, to allow you to analyse it and improve the process.
- how much time you spent on tasks, to give you a true cost of labor.
These 2 points are important for the health of your business. The second point is important for your bottom line, you know your true cost for glass, aluminium, hardware and so on, but labor is really an estimate.
These are the three main ways to record the time it takes to manufacture a product:
1. The stop watch
This is where you have a stop watch, clipboard and you time each worker performing each task. This can be a time-consuming way to collect the data and also only gives you the exact time to do a process if all the conditions are right, and this will vary between jobs.
2. The timesheet
The worker records the time spent on a task or total job. Recording this adds another process to production and is prone to errors, allows people to add extra time, and someone has to collect all the information and add it up.
3. Time tracking software
There are programs that can be set up to track the time spent on a task and can report on time spent on billable or non-billable time. These are great, as the process is automated and not time consuming. It is less prone to errors and can capture non-billable time.
Non-billable labor time are tasks that are not in the quoting package but are important to the production process. Examples include cleaning at the end of the shift, loading or unloading deliveries and attending meetings.
Best practise for factory processes
There are a few important practises that will improve production. From my experience in the industry, I have found a combination of a few of these practises get the best results:
1. The production manager
The production manager is someone who works the floor with hundreds of three to five-word sentences or questions. This manager makes sure everything is available, so the workers can just get on with doing the task at hand. They will say things like: “here is the glass”, “what are you doing next?” and “is the metal ready?” This practise keeps everything on the floor ticking away nicely.
2. You get out what you put in
The factory needs the correct information at the start. Incomplete information adds confusion and more non-billable labor time. Workers must stop work to ask questions to get the information they need to manufacture the product.
Lean is the process of minimizing waste in the manufacturing process, waste of materials and time. It is also about increasing value to your customers with fewer resources. A mind shift and change management process is needed to implement a lean system.
Having processes is important in production or even a series of actions to achieve a result. Having processes documented makes training staff easy and allows staff to work independently and still produce high quality work. Documenting your processes is the start of a quality management system.
5. Factory layout
Factory layout is important to minimize movement around the floor. A good design manages space and flow, allowing processes close to each other. There are a few different ways to manufacture a window or door:
- a production line where each process is broken down and performed along an assembly line.
- a cellular approach where processes are grouped into work cells and produced.
The main difference in these are the assembly of the product. All manufacturing starts out as an assembly line through cutting and machining. After that stage you could screw a frame together and move it onto the next station continuing the assembly line method. Or if you could have a worker complete the assembly of the frame and sashes then moves it onto glazing, this is a cellular method. Each layout has its pros and cons.
6. Scheduling software
The scheduling software allows workers to log in and record the time it takes to do a job from a tablet on the factory floor. They select start when they are about to start working on a job and select finish when they have completed that part of the order. The software associates the time to the item/job they submitted.
For example, the worker on the saw logs in on the tablet at 7am and starts to cut the first job of the day. At 8.30am he has finished cutting the job and goes back to the tablet on the floor selects his name, the job he worked on and the work he performed. The software then associates the hour and a half to that job/quote.
Now, from the software you can run a report on a job to see how much time was spent manufacturing it and what the true cost of your labor is.
The software allows employees to pause the job they are working on to perform tasks like attending a meeting, unloading a truck or having a break. This also gives you visibility on the non-billable labor and how resources are being used.
These numbers allow you to understand where you can make efficiencies on your floor and allows you to adjust your quotes to accommodate the actual time it takes to do tasks.
Bringing it together
To understand the true cost of labor for each job (and for the business) it’s good to break down all the processes and work out the best way forward. Do you need to change the layout of your floor, do you need your office staff to send certain information to the factory, look at ways to reduce waste and how you can manage factory workers’ time and time keeping more effectively? Is it time for something else or to look at installing software to make things run smoothly? These are important questions to ask.
I hope this article has provided you with good take-away points and that it will help you run your business more effectively to promote growth. If you have any questions about understanding the true cost in manufacturing windows and doors please contact me via email email@example.com or on my mobile +61 490 504 933.
Stewart has over 20 years experience in the window and door industry. He’s designed and tested windows, doors and hardware, has consulted on factory layouts and manufacturing best practises, and has visited hundreds of manufacturing sites, bringing with him a wealth of knowledge.