Measurement Technique Selection - Work Measurement.

The work activities of humans in automated processes vary depending on the level of system control. Karwowski and Ward (1989) have defined four levels of control: manual, semiautomatic, supervisory, and cognitive, as depicted in Fig. 5.8.1.

The manual system (level 1) shows the operator controlling and monitoring output of the production system. In this nonautomated case, the work measurement technique selection would be more conventional and would depend on quantity produced, length of production run, and type of job function.

Level 2 depicts system control commonly found in modular automation such as a single NC machine tool. In this case, the operator(s) would be performing job functions such as load, unload, monitoring, setup, and maintenance. Therefore, work measurement selection should generally follow the guidelines for low-quantity work.

The supervisory and cognitive systems (levels 3 and 4) are typical of a flexible manufacturing cell (level 3) or a fully automated process plant (level 4) that require human interface only with the controller.The controller then instructs and receives feedback from the production system through computer control and various system-state sensors.The primary activities of the work group include monitoring of the process and quality,maintaining supply, maintenance and troubleshooting, setup and changeover, and other support functions.While all work measurement techniques may have some utility, work sampling and predetermined time systems have the most applicability for automated processes.


FIGURE 5.8.1 Work measurement for different levels of computer-aided automation. (Adapted from
W. Kawawski and T. L.Ward, “Work Design and Measurement: 
Critical Issues for Advanced Manufacturing,” Proceedings, 
International Industrial Engineering Conference, Toronto, 1989, p. 514, Copyright Dr.W. Karwowski, Departmentof Mechanical Engineering,Tampere University of Technology,Tampere, Finland.)

Judgment Estimating - Work Measurement.

As with historical data, judgment estimating is not an engineered work measurement technique. It is the least accurate, but it also requires the least amount of time to establish production standards. Many practitioners dismiss judgment estimating because of its accuracy limitations. Experience has shown that production standards established with judgment deviate from the true standard by at least 50 percent.There is, however, a methodology to improve judgment estimating.

The recommended five-step procedure for developing a judgment estimate is as follows:

1. Subdivide the total job into major activities (tasks).This helps define what has to be done and enhances the estimating process.
2. Clearly understand the physical setting of each activity (task) to be performed (e.g., workplace, tools, equipment to be used and the job environment).
3. Think in terms of producing one unit of output, that is, a production cycle following any setup or get-ready activities.As with all work measurement production standard setting, setup or get-ready activities should be estimated independently.
4. Assume the task will be performed by an average skilled and trained operator.
5. Complete the task time estimate.This can best be accomplished with a process commonly used in critical path scheduling models such as program evaluation and review technique (PERT). These models commonly use judgment estimating to determine the time values for each activity (task) identified within the network. In place of estimating only one value for the total task, three estimates are completed: an optimistic time, a pessimistic time, and a most likely time. The optimistic and pessimistic time estimates require the engineer to mentally establish minimum and maximum time boundaries considering the major factors that could cause variation in task completion.The task time estimate conforms to the beta distribution and can be calculated with the following equations:

Historical Data - Work Measurement.

While not an engineered work measurement technique, historical data is very cost effective for the development of production standards. Historical data are a special, less accurate form of standard data.

Times are developed for work activities from previous actual recorded times (job accounting records). Task times may also be developed by support workers using self-logging times for activities.These time data can be statistically averaged and evaluated.

Historical data–based production standards can be used in any work activity for automated operations. The time and cost to develop standards with this technique are minimal compared with other work measurement techniques.The obvious limitation is accuracy of the resulting production standards.

Work Sampling - Work Measurement.

The Industrial Engineering Terminology Standard (ANSI Z 94.12) defines work sampling as “an application of random sampling techniques to the study of work activities so that the proportions of time devoted to different elements of work can be estimated with a given degree of statistical validity.”The technique can be applied to humans, machines, or any observable state or condition of an operation.The underlying assumption of work sampling is that the sampling percentage of any observed state of nature estimates the actual time spent in that condition.

Work sampling with performance rating can be used in manufacturing, service organizations, and government for cost-effective work measurement.The technique is particularly useful for the following:

● Determining allowances
● Determining machine and equipment and/or facility utilization
● Production standards for indirect and support personnel
● Production standards for long-cycle, higher-production-quantity operations
● Development of standard data

Work sampling can be used for determining production standards for automated processes.

For limited production runs, lower accuracy and greater error limits are designed into the study.

This reduces the number of observations (and time) required to complete the study. Common guidelines for the confidence interval and error limits are 95 percent and plus or minus 5 percent, respectively.However, in all work sampling applications, the engineer must use judgment about the activity or state being observed and the overall accuracy requirements to determine the correct confidence interval and error limits.

Stopwatch Time Study - Work Measurement.

The Industrial Engineering Terminology Standard (ANSI Z94.12) defines  time study as “a work measurement technique consisting of careful time measurement of the task with a time measuring instrument, adjusted for any observed variance from normal effort or pace and to allow adequate time for such items as foreign elements, unavoidable or machine delays, rest to overcome fatigue, and personal needs. Learning or process effects may also be considered.

If the task is of sufficient length, it is normally broken down into short, relatively homogeneous work elements, each of which is treated separately as well as in combination with the rest.” Stopwatch time study is useful for determining more frequent work activities associated with the automated process.

Predetermined Time Systems - Work Measurement.

By definition, a predetermined time system is “an organized body of information, procedures, techniques, and motion times employed in the study and evaluation of manual work elements.

The system is expressed in terms of the motions used, their general and specific nature, the conditions under which they occur, and their previously determined performance times” (ANSI Standard Z94.12).

Predetermined time systems can be classified as generic, functional, or application-specific.
Generic systems are not restricted in anyway and arewidely used bymany types of organizations.
Functional systems are adapted for a specific activity type, such as machining, clerical, or microassembly. Application-specific systems are designed for the operational needs of a particular industry or organization, like aircraft engines, banking, health care, or individual companies.

Numerous predetermined time systems have been developed over the years. Examples include methods time measurement (MTM), work factor, motion time study (MTS), modular arrangement of predetermined time standards (MODAPTS), master standard data (MSD), robot time and motion (RTM), and Maynard Operation Sequence Technique (MOST®).While each has certain features,most of the systems have similarities in their structure.Because of its wide usage, versions of the MTM system will be discussed here for application to automated processes.

Several predetermined time systems are based on a fundamental or detail structure. These are considered first-level generic systems. Higher-level systems are those developed with elements that include multimotions or combinations. For MTM, the fundamental level is MTM-1.

Higher-level generic variations include the following:

● MTM-2: Based on MTM-1 with about twice the speed of analysis, but less accuracy than MTM-1.
● MTM-GPD (general-purpose data): Based on MTM-1 to group common motion patterns.
Less analysis time and lower accuracy than MTM-1.
● MTM-3: Based on MTM-1 with about seven times the speed of analysis and less accuracy than MTM-1. Ideal for long-cycle work.
Examples of MTM functional variations include the following:
● MTM-M: For subminiature assembly completed in a microscopic field.
● MTM-C: Clerical activities.
● MTM-V: Machine tool use data system.

Other MTM outgrowths include micromatic methods and measurement (4M), and Maynard Operation Sequence Technique (MOST). A computerized work measurement system developed at Westinghouse, 4M retains MTM-1 accuracy and element description while providing a faster speed of analysis.The MOST system utilized a larger number of motions in elements than MTM-2 and therefore requires less time for analysis, especially in its computerized version.

Both 4M and MOST represent excellent examples of the positive effects of computerizing a predetermined time system.MOST can be used for all types of cycle time variations.

MEASUREMENT TECHNIQUES FOR AUTOMATION.

Measuring automated processes is necessary to determine the correct human support staffing requirements and to establish a basis on which to evaluate total output performance.The measurement system should provide performance data on the automated process for feedback to the self-managed work group and higher management. The system should be structured and used in a way that permits the application of incentives and enhances motivation. In addition, it should be a dynamic process of information generation whose primary goal is to establish direction for continuing improvement in output productivity, quality, lower costs, improved worker safety and health, and better products and services for timely customer delivery.

The following five categories of work measurement techniques will be briefly discussed:

1. Predetermined time systems
2. Direct observation timing with performance rating (stopwatch time study)
3. Work sampling
4. Historical data (includes accounting records and self-logging)
5. Judgment estimating

The first three are considered engineered work measurement techniques. The last two—historical data and judgment estimating—are often used to approximate standard time values.

However, these techniques offer decreased accuracy and little in the way of underlying theory or standardized procedures and consequently are not considered good engineered work measurement practices.An additional approach—standard data and mathematical modeling—is also useful in the establishment of work standards. The engineer must be aware of the accuracy required for a given production standard or other work measurement application when using any of these techniques.

To varying degrees, all of the foregoing techniques may be used for the measurement of automated work, depending primarily on accuracy requirements, but also considering availability of human resources, time to determine the production standard, and management  objectives. It is important to know the strengths and limitations of each technique.This is useful in technique selection when evaluating the cost of establishing production standards versus the cost of having inaccurate or no production standards.

⇒  Predetermined Time Systems   By definition, a predetermined time system is “an organized body of information, procedures, techniques, and motion times employed in the study and evaluation of...(more)

⇒  Stopwatch Time Study   The Industrial Engineering Terminology Standard (ANSI Z94.12) defines  time study as “a work measurement technique consisting of careful time measurement of the task...(more)

⇒  Work Sampling   The Industrial Engineering Terminology Standard (ANSI Z 94.12) defines work sampling as “an application of random sampling techniques to the study of work activities so...(more)

⇒  Historical Data   While not an engineered work measurement technique, historical data is very cost effective for the development of production standards. Historical data are a special,...(more)

⇒  Judgment Estimating   As with historical data, judgment estimating is not an engineered work measurement technique. It is the least...(more)

⇒  Measurement Technique Selection  The work activities of humans in automated processes vary depending on the level of system control. Karwowski and Ward (1989) have defined four levels of control...(more)

EMPLOYEE INVOLVEMENT: Types of Programs.

This concept is not a new idea. For example, in the 1930s Joseph W. Scanlon developed the Scanlon plan.

Its major purpose was to measure overall productivity improvement and distribute a share of any gains to the employees. In addition, the plan included labor/management committees to effect improvements throughout the manufacturing operation. Beginning in the 1960s and continuing today,behavioral scientists have showed the benefits of democraticmanagement and worker participation.These benefits have been further reinforced by Japanesemanagement practices and European work groups (e.g.,Volvo in Sweden).The outgrowth of this has yielded self-managing (involvement) work teams throughout manufacturing and the service sector.

Types of Programs
Involvement teams have emerged in theUnited States in many forms and are a vital part of successful automation. Several distinct forms range from small problem-solving groups of only hourly workers towell-organized, self-managedwork teams comprising all skills necessary to run the automated system. The work teams have complete responsibility and decision-making authority for their part of the automated system.

Experience has shown that increased involve- ment leads tomore effective decisions inmost complex situations.

Quality Circles. This involvement group usually consists of 8 to 10 members who do similar work and agree to meet on a regular basis to discuss work and quality problems. The group analyzes causes of problems and recommends solutions to management. Group members may also take action to assist implementation of recommended solutions.Quality circle activities usually enhance motivation and the overall quality of work life.

The quality circle leader is commonly a supervisor of all or several of the group members.

In addition, each circle has a facilitator who is responsible for training the members and the leader.The facilitator forms a link between each circle and the rest of the organization, and he or she may also take an active role in the measurement and evaluation of improvements.

Work Teams. This involvement group usually consists of all the workers necessary to totally manage and operate an automated module or system. They are self-managed and are given considerable decision-making responsibility over their work area. Unlike in quality circles, the team is assigned full-time to a specific work area.

Work measurement is essential to properly determine staffing levels by skill type for any self-managed group.

THE NATURE OF AUTOMATION

Automated systems make it possible to transfer physical and mental work from humans to machines.

Properly designed and utilized, they can reduce the unit cost of production. The automated system should also have positive effects on quality, throughput time, and the ability to respond to rapidly changing customer requirements. The level of automation is also influenced by material and energy utilization, operator safety and health considerations, availability of capital and qualified human resources, and the estimated life of the products or services being produced.

Several methods may be used to evaluate possible automation opportunities and to aid in making the final decision. Most of these methods include a cost-benefit analysis comparing the proposed automated system with the existing or previous production technology utilized.

The cost part of the analysis should consider costs of labor,material, overhead, and all capital and other implementation costs.These calculations can be assisted with an engineering economy approach and work measurement analysis.

In addition to the conventional cost analysis, proposed automation system evaluation should include intangibles, or opportunity costs—for example, loss of unproduced units or profits or loss of market share because of system downtime and failure to satisfy customer requirements. Remember, the major objective of automated processes measurement is to realize the maximum potential output of the total system.

Benefits and Concerns
Many factors justify automation in a given work situation.The more common factors include the need to increase production output (market expansion), reduce labor costs, and increase profits.Example benefits that usually have a positive cost impact include reduced throughput time, increased use of standard parts and tooling, and greater utilization of equipment and physical plant.

Major limitations and concerns associated with automation include large capital investment, rapidly changing technology, and personnel problems. The large capital investment has to be amortized into the product or service cost structure.Most automation modules or systems are continuously being improved, and with each design they become more cost effective. Consequently, there is always a risk of obsolescence. Perhaps the most difficult aspect of automation limitations and concerns is personnel problems. The most common human issues associated with automation implementation include resistance to change and training. Developing attitudes to accept automation and training is necessary for all levels of personnel: hourly, supervision, and management.

Common Characteristics
The determination of how to measure automated processes requires an understanding of the system and its impact on specific business needs. The following paragraphs summarize common characteristics of automated modules and systems.

In addition to the aforementioned factors that justify automation, reasons for mechanization include improved quality, greater production uniformity, and safety and health considerations. Facility construction costs place an increasing emphasis on better space utilization by consolidating individual machines or manual operations into an automated system. Human behavioral and safety considerations include automating those elements that are highly repetitive (to prevent cumulative trauma injury) and have a high output volume.

Capital investment is usually very high in comparison with manual or partially mechanized systems. In fact, costs can range from tens of thousands of dollars per worker to a multi-million-dollar installation that is monitored,managed, and serviced by a small work group.

Variability in production is inversely influenced by the number of stand-alone production units.When many common individual units are producing, variability tends to be offset from one unit to another. Thus a certain level of production can be closely predicted and relied upon. Conversely, a single but larger production system is either running or on downtime; it’s either on or off.When on, it may or may not be producing 100 percent good output, but when off, the system produces zero.

Probability of failure or downtime is much greater in a single, highly complex system. For example, if a group of single machines have a 95 percent probability of being in run mode, then 95 percent of a number of those machines will likely be producing. If a single, complex system has several interdependent modules arranged in series, each with a 95 percent probability of running, the overall probability of run time is the product of the independent probabilities. Thus a four-module system would have a probability of running during only 81.5 percent of the shift time.

Investment justification usually requires a high degree of utilization.Typically, this is a two- or three-shift operation, sometimes for seven days a week. Where overtime formerly could  compensate for production breakdowns on a one- or two-shift operation, the new system compresses all variability into one unit running around the clock, and time lost is much more difficult or impossible to replace. Fluctuating production schedules may compound the problem of lost production time and capacity, even resulting in lost customer sales.These facts often necessitate backup equipment, requiring even higher capital investment.

Labor content in highly mechanized processes is low relative to depreciation or amortization costs, which continue even during a shutdown. Consequently, measurement must focus on system uptime, not just on individual workers.

Maintenance support is critical for any automated process.The failure of a single component (even minor) can cause shutdown of the module or entire system.Maintenance costs are higher in automated systems than in less mechanized operations because of the need for higher technical skills, longer shutdowns during production runs, and around-the-clock troubleshooting availability. If the maintenance service reports to someone other than the production manager, this will likely be a source of functional and jurisdictional difficulties. The best management approach is to include maintenance personnel in the automated module or system work group.

The Human Component
Knowledge and human know-how is vital to the successful operation of any automated module or system.

Therefore the work environment must be structured to ensure employee involvement and team building.

Examples of work activities that strongly influence the overall productivity of the automated module or system include the following:

1. Monitoring and control to preserve the level of quality engineered into the product or service.
2. Maintaining rawmaterial supply, inventory, and waste disposal conditions to extend run time.
3. Exercising online preventive maintenance to avoid downtime through minor servicing and
adjustments that do not require shutdowns.
4. Troubleshooting as quickly as possible whenever breakdowns occur to minimize down-time.This requires maximum knowledge and communication among operators and maintenance or other service people.
5. Changing products or machine setups as quickly as possible to avoid excessive downtime.

This requires maximum communication and cooperation among members of a work group or among several groups and rendering effective assistance to coworkers or other specialized service staff during scheduled maintenance periods.

The Need to Measure Automated Processes.

If it has been correctly determined that a process should be automated, then a work measurement approach to determine the production output is clearly justified.A false belief, still held by some engineers and managers, is that the more automatic a production system is, the less important it is to measure it or to expend resources or provide motivation or incentives for the operators involved.The simple rationale for this false belief is that human operators have little or no influence on the output of computer-controlled, machine-paced processes. This rationale will almost always lead to low equipment utilization (excessive downtime), poor-quality output, and high system maintenance costs. Often, a combination of these inefficiencies will so adversely impact costs that the predicted economic justification for the automated system is not realized.

Experience has shown that, after installation, several automated systems have had higher unit costs than the production processes they replaced.Most of these situations can be avoided with the proper application of work measurement and human motivational techniques.

WORK MEASUREMENT IN AUTOMATED PROCESSES.

The main objective of measuring automated processes is to enhance overall productivity. In this chapter, the rationale for measurement is explained, along with common characteristics of automated systems.Examples of work activities that strongly influence the overall productivity of automated systems are outlined, including the importance of employee (human) involvement. Five categories of work measurement techniques are briefly discussed: predetermined time systems, direct observation timing, work sampling, historical data, and judgment estimating.Guidelines for technique selection are provided based on the level of system control.

Typical uses of work measurement standards are outlined. Changes in work measurement for automation in the future are identified.

Automated processes today include a wide variety of computerizedmechanization.Automation is found in varying degrees throughout manufacturing industries, the service sector, and government.The degree of mechanization may range from very little, for example, one piece of automated equipment in a discrete componentmanufacturing setting, to a very high level that would be found in a completely automated controlled process plant. Today, automated processes are utilized by companies producing both low and high volumes of output.Automation is found in large corporations and in small companies producingmany different kinds of goods and services.

The main objective of measuring automated processes is to enhance overall productivity.

The principal components of mechanization include a diverse range of computer software and hardware, sensors, machine tools, robots, automated material-handling and positioning equipment, and other mechanized machinery. Most automation designs require modules of intelligent control linked to machinery that performs work tasks. In larger-scale automation, these modules are interfaced to form a total system.

⇒ The Need to Measure Automated Processes

MAINTENANCE OF ENGINEERED LABOR STANDARDS.

Purpose of a Standards Maintenance Program
Methods changes require revisions in labor standards. Some of the changes are readily apparent, in which case the adjustment of standards becomes a routine function. Other methods improvements are much less obvious, including categories such as:

● Combined operations to reduce handling time
● Informal design and development of simple jigs or fixtures developed in the shop
● Modifications to existing jigs or fixtures through informal revisions for easier part insertion or removal
● Workplace layout changes by operators or supervisors
● Manual functions that were external to machine time are changed to internal functions.

Definition of a Standards Maintenance Program
To protect the investment in developing and implementing labor standards, it is imperative that a periodic maintenance program be instituted.Methods improvements are necessary and desirable to reduce costs and stay competitive. It is virtually impossible to update every standard as each method change occurs; therefore, a hurdle rate is used to measure when a change is significant. If the labor standards accuracy is ±5 percent, then a significant change will have occurred when the current method differs from the standard method by more than ±5 percent.

Organization and Resources
In addition to passively adopting reported methods changes, the industrial engineering department should periodically audit the standards on the floor.A good standards audit program will cover a reasonable number of the active standards in a year.Without cooperation from the people involved with the work and a proactive audit program, the standards will steadily deteriorate until they lose credibility and become useless. It is the responsibility of employees to control costs and improve productivity by keeping the standards and methods in line.

Scope and Frequency of Audits
The goal of the periodic audit program should be to review operations with established labor standards every 6 to 24 months.This will fall into four fairly distinct categories of auditing frequency:

1. A certain number of standards will become obsolete within 24 months and be replaced by new standards.This can vary greatly from organization to organization and from industry to industry.A fairly stable industry can expect to see a 20% turn-over while a more dynamic industry might see a 100% turn-over on standards within 24 months. This would represent the Y intercept on the graph shown below.

2. A fairly small number of the remaining standards will represent 20% of the total direct labor hours.This means that a small number of standards will have at least 20% of all direct labor hours reported against them.These standards should be audited every 6 months.

3. Another fairly small number of standards will represent the next 20% of hours.These standards should be audited every 12 months. This means that in aggregate, for a stable company that has a 20% turn-over in 24 months, standards representing 60% of all direct labor hours should be audited within a year.

4. The standards that represent the remaining 40% of direct labor hours should be audited within two years.

This approach is similar to the Pareto approach, and can be represented graphically as in Fig. 5.7.6.

The standards to be audited can be preselected or selected on an availability basis, but should satisfy the established frequency of the audit.

Preselected Audit: advance selection of the jobs you will observe for the audit.


Available Audit: selection will be determined by what the plant is running. This is easier than the preselected audit since there is no long wait for the predetermined job to begin production.

FIGURE 5.7.6 Standards auditing frequency.

Auditing Procedure
Once the list of potential standards is developed, the following steps should be followed to
conduct an audit in a company using standard data or time study to set labor standards.

1. Determine the elements or suboperations that account for 80 percent of the standards selected.

2. Observe the methods of these (the 80 percent) elements and compare with the existing elemental analysis.Use the following process to determine the accuracy of each standard.

● Validate using methods comparison. It is important to note that validation should be consistent with the method of measurement. If a predetermined system was used to develop standards, they were set based on work method.They should be validated in the same way.The majority of validation studies should focus on elements that occur at least once per cycle. It is recommended that both setup and run operations are selected, but not necessarily an equal portion of each, and that operators are selected whose performance is near normal (100 percent) for these studies.Observe the frequencies of the ele- ments that have frequencies of less than 1 and compare with the standard. Resolve any differences and update the frequencies applied in the time standard as required.
● Observe the operation and record observed methods performed by element. If changes have been made to make the operation more efficient and with equal or better product quality, the analysis should be updated to reflect that method. If changes are observed that make the method less efficient, the industrial engineer should verify that the original method is still feasible and notify the department supervisor to instruct the operator accordingly. Observe feeds and speeds, gauges, process conditions, and times to determine if changes have been made. Check to see if machine or engineering specifications have changed, or if there have been any design changes to the part or product being produced. Verify, through a watch check, the machine/process time—if applicable. If the operator is using substandard methods and/or machine process times, corrective action should be taken.

3. A written summary of the audit should always be prepared by industrial engineering and reviewed with the responsible supervisor and/or production manager. Regular standard audits are a requirement for the maintenance of the labor standard system and should be part of each industrial engineer’s weekly duties.

Updating Standards
In those cases where observed manual methods or process times are more efficient than the documented standard methods, it is necessary to analyze the effect of the changes on the standard and to revise the standard in accordance with the policy of the company and union contract.

Implementing Updated Standards
Any changes to existing standard that result due to industrial engineering audits should be communicated first to the supervisor directly responsible for the area. Many union contracts state that no changes are to be made to existing labor standards until the cumulative effect of method changes exceeds a threshold, typically 5 percent. New method sheets should be posted and communicated to the employees in the same manner as they would be during the original implementation.This includes not only communication with employees
and operations management, but also constant communication with the finance and costing departments.

Consequences of Not Maintaining Standards
Managers with extensive experience in cost control functions believe that as much as a 40 percent decrease in productivity is possible without a carefully applied systematic control plan.

Even with a sound basic plan, there may still be gradual standard erosion. Even qualified supervisors are often unable to detect the possibilities of “creeping” methods change due to the combination of methods effectiveness and work pace.

This will result in rising labor costs (often experienced through escalating incentive earnings, decreased employee productivity, and increased overtime), inaccurate product costing, and the inability to accurately schedule customer orders.Often these changes are gradual and quite frequently the cause of these symptoms is not even recognized.The first place to check is always the labor standards maintenance program.

Office Implementation.

Accuracy and usefulness are the two cornerstones of a managerial implementation.A proper implementation involves showing management that the standards will provide them with accurate information that will enable them to make good business decisions. A proper implementation also guarantees that a reporting system is in place to ensure that management receives this information in a timely and usable format.

Accounting. One of the most important areas for a successful implementation of engi- neered standards is the financial side of the business.Active participation by cost accounting will be crucial to fully realizing the benefits of engineered labor standards. For instance,while reduced labor costs will be realized through better utilization and management of labor resources, the full benefits of engineered labor standards are much more wide-ranging.

Cost Implications. Reduced labor costs will naturally result in increased profit, but this benefit can be used in more strategic ways. Increased labor utilization, once fully realized, can be transferred to more accurate product costing, which can then be directed according to the business strategy of the company.An increased profit margin may, indeed, be the goal.Additional possibilities include an increased competitive pricing advantage leading to increased market share, room in the profit margin for increased options or enhancements, and so on.

More accurate product costing practices will make these possibilities available to upper management.

Labor savings are often compounded by overhead allocation methods. Many traditional cost accounting systems allocate overhead on the basis of labor costs. It is crucial that cost accounting understand the impact of labor savings to accurately determine the effect on the total cost structure. As more companies move toward lean manufacturing, the relationship between finance and industrial engineering is becoming more important.

Variance Analysis. Caution should be exercised that theoretical labor savings not be confused with actual labor savings. Engineered labor standards will often result in variances between actual labor and standard labor. This is often because problems that were previously disguised by loose standards are no longer masked. For a more complete discussion on accounting systems see Chaps. 3.3 and 3.6.

Variances are one of the biggest opportunities to result from the implementation of engineered labor standards. They make evident root causes of problems that may not have been obvious prior to implementation of accurate standards.The stigma that negative variances are bad often leads to inaccurate product costing because products are either overcosted to hide the negative variances (often through arbitrary accounting factors) or undercosted by claiming theoretical opportunities before they have been attained. Either situation will hinder the fulfillment of true opportunities. Variances should be recognized as the opportunities that they are.

Variance Accounting. While realizing that these opportunities to fix broken processes exist, actual savings should not be claimed until after the opportunity has been realized. Imagine claiming a 10 percent increase in sales because of a proposal that was submitted.Actual revenue would not be claimed until the contract was rewarded.

Many companies recognize the difference between historical actual (or prior standard and engineered standard costs through the use of budgeted variances. In this manner, historical costs are fully budgeted, but in two pieces. The first component being engineered standard labor costs, the second being the difference between historical actual (or prior standard) and the engineered standard, or budgeted variance. These budgeted variances are often depreciated through the year.

For instance, if historical actual labor cost was $100,000 per period, and engineered standard labor cost is theoretically $50,000 per period, by allowing 10 periods to realize the $50,000 opportunity the labor budget in Fig. 5.7.5 would be typical. This example assumes straight-line depreciation of the budgeted variance. The exact time period over which the opportunity is allowed to be realized and the method for declining the budgeted variance will vary depending on the situation and magnitude of the opportunity.

Systems Interfacing. All engineered standards should be dynamically integrated with the labor reporting system.This will often result in a transfer of standards into a system such as a manufacturing resource planning (MRP) or ERP scheduling system, and should also incorporate any separate cost accounting systems.

In incentive environments, it is also vitally important to integrate payroll systems with the new standards.This system should be checked to ensure that all systems are functioning properly prior to going live with the new system. Prior to implementation, all systems should be checked for compatibility and compliance. Integration might also be required for load and capacity planning systems, scheduling systems, or capital justification packages.

Performance Analysis. The primary problem that will be encountered in managing to engineered labor standards is that some operators will be unable to meet standard production requirements. This will often be due to a lack of training in the standard method and should be easily overcome through retraining (the amount of training required obviously depends on the complexity of the job). Occasionally, a worker will not meet standard due to poor effort.

Poor effort is defined as one or more of the following: a dispirited attitude, a slowed-down working pace, many false motion and unnecessary activities, “killing time,” poor housekeeping, or lack of interest in the work.

Several steps can be taken to overcome poor effort. First, the situation must be addressed.

In a case of poor performance, the supervisor must document any instances of substandard performance. Note the day, time, work center, part number, and number of pieces produced by the operator for every instance where the occurrence of poor performance is noticed.This is the keystone of labor reporting.

If a trend is observed, transfer the operator to another work center, and replace the oper- ator with another, average-skilled worker. Preferably this worker would be one who has the trust of other workers on the floor and is well respected by all parties. Instruct the new operator on the required method per the method description sheet and have the new operator begin to produce parts. Count the number of parts produced to determine the ability of the new operator to meet the required rate. It may take some time for the new operator to achieve standard, depending on the complexity of the method to be learned.

Once standard is being met, discuss the issue with the original operator explaining that others are able to produce parts at the required rate. The first operator should be informed that he or she will be given one more chance on the next shift and that if the required rate is not obtained then appropriate disciplinary action will be taken.

Another difficult issue, especially in a day work environment, is motivation. Supervisors (and industrial engineers, to a lesser extent) must become coaches and motivators in this situation.There are six keys to motivating employees in this situation:

1. Ask for performance. Describe how the job is to be done, explain the expectations of the job, and do not accept less.

2. Extend personal, positive reinforcement.Thank people for performing at or near the standard. Praise them every time they improve further.
 
3. Build relationships. Do not be afraid to show respect for individuality and trust for inten-
tions.

4. Understand the operator’s point of view.Make a habit of listening to people and listen with an open mind.

5. Model what you want.Approach work with a sense of urgency. Show employees through example that the job and the company’s success really matter, quality is important, and deadlines are real.

6. Refuse to accept poor performance.Demonstrate that the standards matter by being prepared to tell employees their performance is unacceptable. Sometimes this may require a reprimand.

FIGURE 5.7.5 Variance depreciation table.

Shop Floor Implementation Method.

Employee acceptance requires that they see the program progressing at a good pace.There should be no delay in implementing standards in one area after all concerns in the previous area have been addressed.This will show the shop floor employees that management is committed to the program and that they consider it a priority.

Pilot Area. The implementation of standards works best when the new/updated standards are first implemented in a pilot area.The selection and implementation of this area will be covered in later sections.

Selection of Pilot Areas.
An area or department should be selected as the pilot project rather than attempting to cover an entire facility at one time.This will allow the engineers to have a quick implementation and success prior to rolling out the program into other areas.

The pilot area should be selected based on a combination of the following factors.

PROBABILITY OF SUCCESS: The pilot area is an excellent opportunity for establishing initial success. This will build a reputation for credibility that will continue through later steps and areas. Momentum is a very important factor in a successful implementation program.

Quite often a success in the pilot area will enable the team to weather any rough spots in successive departments. Some questions that should be asked include,“Are the employees in this area supportive?” “Is supervision in this area experienced and trusted?” “Have there been any ongoing disciplinary issues in this area?”






COMPANY COST IMPACT: The pilot area should have a noticeable impact on company costs so that progress can be readily identified. The implementation of properly engineered standards will often result in a decrease in standard costs. Some questions that should be asked include,“How much of an impact will a 10 percent to 15 percent reduction in labor costs in the pilot area have on the total product costs?”

SCHEDULE FACTORS: Similar to company cost impact, the pilot area should also have a significant impact on the process flow in the department. At the same time, a pilot area should not be scheduled for reengineering in the near future. The pilot area should be able to show sustainable results. Some questions that should be asked: “Is this a bottleneck department?” “Would an improvement in cycle time have a significant effect on the overall product schedule?” “Is engineering investigating the purchase of additional equipment to increase productivity?”

PERFORMANCE FACTORS: The pilot area should have employees that are fully trained and able to follow standard methods. Employees should not feel like they have to work harder to meet the new standards. Some questions that should be asked include, “Does this area have problems achieving current performance to schedule goals?”“Do the employees seem to constantly exceed their performance goals?”

NEW PROCESS OR PRODUCT LINE:
It is always beneficial to install standards in a new area.

This will allow employees to attain the standard and to establish the credibility of the measurement.This will be of great benefit when addressing any concerns over the comparison of previous standards to new ones in successive areas and/or products. Some questions that should be asked: “Is new equipment being considered since this facility has problems achieving current performance to schedule goals?”“Is the company management considering ‘farming out’ work since full capacity appears to have been reached?”

Implementation in Pilot Area. After the selection of the pilot area, implementation can begin.This will involve the following steps:

DEVELOP INFRASTRUCTURE: Prior to implementation, all components required to make standards successful should be in place.This includes

Time and production reporting systems. Any new time cards, reports, and/or counting devices or procedures should be in place prior to implementation.A typical operator production reporting card is shown in Fig. 5.7.3. Similarly, any reports necessary for supervision to manage the area should also be developed.

New equipment. Any new equipment that is required for standards implementation (signals, counting devices, etc.) should be installed and ready for operation prior to implementation of the standards.

PROVIDE METHODS TRAINING: If any new methods were developed in the course of standards development, all operators affected by the changes should be trained in the new method prior to implementation of the standards. All operators should be able to perform tasks according to prescribed methods and without hesitation. This may require a period of practice. Sufficient time should be allowed for all operators to familiarize themselves with the prescribed methods before implementing standards.

FIGURE 5.7.3 Operator production reporting card.
 
PROVE STANDARDS: Standards in each area must be accepted by the shop floor employees as valid measures.This is done through an initial validation. Employees must believe that all aspects of the job have been accounted for.Methods on which the standards were developed should be posted at each affected station and distributed to all employees in the affected area.

A posting of methods with adequate opportunity for question and answer will address this.

An example of a typical methods sheet is depicted in Fig. 5.7.4. Implementation and validation of standards by shop floor employees must not be taken lightly. This is one of the most crucial aspects of a successful implementation.Care should be exercised to validate standards based on the form of measurement used. For example, if a predetermined system has been used to develop standards, using a stopwatch to validate the standards will not address any concerns. In a predetermined measurement system, work method was used to develop the standards, and documented work method should be validated.This is accomplished by a careful comparison of the method documented and used to develop the time standard with actual shop floor conditions. Extra care must be taken to ensure that “infrequent” activities are accounted for. In the illustrated example, the loading of the thread is an infrequent activity.

Any variances between documented and actual conditions must be addressed at this time.

This may result in method improvements on the shop floor, additional training for operators, or, less frequently, some modification of the standard. Representatives from the industrial engineering group, supervision, and upper management should take part in this process. Workers must know that the new standards are being taken seriously. The workers must be assured that they have input into the validation of the methods studied, and their concerns must be addressed during this period.

Standards should be validated with supervisors in the same manner that they are validated with shop floor employees—in a manner consistent with the method of measurement used. A predetermined system focuses on work method, and the validation should involve the same procedure.There should be minimal adjusting of standards at this point; the majority of validation will have occurred during the data development process. It is important, however, to give supervisors and upper management the opportunity to perform additional validation.

While minimal correction may be required, the gains to be realized from a management team that fully believes in the accuracy of the standards will make any investment well worth the time.This will be especially beneficial when addressing the concerns of the workers during the initial implementation period.Validation with the management team should take place prior to any shop floor implementation.

FIGURE 5.7.4 Operation method report.
 
 
ENSURE ACCOUNTABILITY: After validation has addressed any concerns over methods, standards must be enforced.The test area should show that standards are fair and consistently attainable. This may take a period of time, especially in areas where methods have been changed or standardized, or where prior standards were loose.

Rollout. After the test area has shown success, further departments should be covered in the same manner.This will require increasing levels of support as each new area is converted to the new standards. Building on the success gained in the pilot area, a similar approach should be followed in each subsequent area in which standards are implemented.

Review, Follow-up, and Modifications (Reporting and Feedback). Following the issuance of standards to the shop floor, it is normal to expect some period of time when performance to standard does not meet expectations. This could be because the new labor standards are lower than the previous standards, or when no prior labor standards exist, the operators are not used to producing at the higher output level. In either case, the standards will come under close scrutiny by both the operators and factory supervision. It will be important to convince both groups that the standards are realistic and achievable.

This can best be accomplished through the use of a feedback system, where the following steps are used:

1. The operator, after deciding the standard does not accurately reflect the work content, work area layout, or other conditions, will notify his or her supervisor.

2. The supervisor will review the posted method description for any missing or misapplied elements. Should any be found, the industrial engineering group should be notified to change the standard.

3. The supervisor will review the method being used by the operator to ascertain whether they are following the method prescribed by the standard.

4. The supervisor will check any equipment process time(s) to make sure they are within the specifications set forth in the standard. In the same manner, the supervisor will check  the operation of the equipment to ensure that it is within the specifications set forth in the standard. If they are not, the industrial engineering and maintenance groups should be notified so that root causes can be determined and corrected.

5. The supervisor will check the sequence of method steps.

6. The supervisor will then check for extra steps added by the operator, determining whether they are necessary steps.

7. The supervisor will evaluate the operator’s skill level: good, average, fair, poor.

8. The supervisor will then evaluate the operator’s effort level: good, average, fair, poor.

9. Should the preceding steps not result in a root cause being identified, the supervisor will investigate and decide whether the conditions presented by the employee are sufficient to justify assistance in getting a change in the appropriate standard(s).There should be a potential to obtain at least a 5 percent variance from the existing standard to justify requesting any investigation by industrial engineering.

10. Industrial engineering will schedule a standard review.The review should first look at the application frequency, then work content and process times, and finally, overall operational cycle time.

11. Following the review of the standard, the industrial engineer should discuss the results of the standards review with the supervisor, employee, and union representative (if required by contract).
 
12. Any identified changes to the standard will be carried out by industrial engineering in a
timely manner.

Rarely will a change progress to the industrial engineering group as long as periodic standards maintenance is performed.

Shop Floor Implementation.

Shop floor implementation is defined by a systematic ap-
proach ensuring that three broad questions are fully addressed: (1) Who will be affected by the standards? (2) What will be required to implement the standards? and (3) How will the standards be implemented? Note that while the term shop floor is used in this chapter, the same technique can be applied to service, white collar, or any other standards implementation.This technique is in no way limited to manufacturing environments.

Areas Affected

Industrial Engineering. Full-time dedication of engineering resources is important to a successful labor standards program. Part-time involvement tends to diminish the impact of the program.The momentum of one full-time engineer will exceed that of two half-time engineers. Part-time support may be necessary due to resource constraints, but should be avoided.

Industrial engineering support must be readily accessible to answer questions. It is typical to expect questions regarding noncyclical activities. For instance, 15 fasteners may be required to assemble each part covered by a standard. Reloading these parts to a workplace may take place every 1500 fasteners. Employees will need reassurance that this has been accounted for in the standard.

Hourly Employees. Hourly employees are particularly sensitive to a change in labor standards when an incentive system is in place.Communicating the reasoning behind any changes is a prerequisite to gaining the acceptance of hourly employees.As new and/or updated standards often mean changes (sometimes drastic changes) for shop floor employees, they must understand that these changes are based on business facts and objective reasoning.

Shop Floor Supervision. The role of the supervisor in any implementation is as a communicator.The supervisor must be at the core of the team that ensures employees understand the standards. It is critical that supervisors from the shop floor take an active part in the validation of standards prior to implementation.Validation is requisite to the supervisors believing in the information that the standards provide.Belief in the standards will allow management to more effectively supervise and manage the performance of the employees.

Union Representation. In many situations where labor standards are used, the employees will be represented by organized labor. In this situation it is important to involve the union representation in the implementation process. Contract language must be respected.This will often include any Right to Change clause in the negotiated contract. The union representatives must understand the methods used to develop the standards and also understand the ramifications of any new standards.

Resources Required. Sufficient resources must be allocated to the labor standards project to ensure that the time between the start of the program and the full implementation of labor standards does not exceed a reasonable time.A reasonable time depends on several variables for each department. Among these is the variability of product through the department, number of employees represented, number of separate workstations, and number of standards to be implemented. The resources required can be split into four general categories: technical resources, reporting and performance management, communication, and training.

Technical Resources. Technical resources will include personnel, equipment, and procedures. Personnel such as industrial engineers, supervisors, shop floor representatives, and any required programming personnel must be dedicated to the implementation process to facilitate a steady rollout and encourage a long-term belief in the system.

Equipment will include any new fixtures identified during the methods improvement phase of standards development, any refurbishing of machines required to bring their cycle times up to standard, and any new tools for reporting and communication. The latter could represent everything from a schedule board to a new program for performance reporting.

Procedural changes required to facilitate the implementation of the new standards will need to be instituted in a methodical, logical, and clearly defined manner.While much of this will involve training and communication, the technical details of the processmust be developed first.

Performance Management and Labor Reporting. While it is crucial that timely and accurate data be collected from the floor, it is even more crucial that management be able to view, analyze, and interpret this data on an ongoing basis.The process of transforming data into useful information in this manner forms the foundation for performance management.

TOOLS: The most important tools to the supervisor are efficiency or productivity reports.

There are several variations of and uses for these reports.Two of the most common uses are incentive pay and performance.An example of a performance report is illustrated in Fig. 5.7.1.

This report indicates the actual results from a production period for a series of work centers versus the expected results for the same period. In this particular case

Column A indicates the measure used (net pieces produced).
Column B represents the run hours, or hours during which pieces were actually being processed.
Column C represents the hours charged to delay.
Column D represents the total hours worked at each station. It represents not only hours spent on standard (column B) and reported delay time (column C), but also unreported delay time and nonstandard hours.
Column E indicates the scheduled hours for the area.
Column F represents the earned (or standard) hours for the production quantity during the time period. This is calculated by multiplying the standard time per piece by the total pieces produced.

FIGURE 5.7.1 Management production report.

The control indices listed on the performance report are the most important tools management has for controlling production. This is true in any environment: union or nonunion, piecework or day work. 

Standards provide a valuable data source, but without proper interpretation, application, and feedback, little value will ever be realized from a standards development project. Listed here are the most common control indices and guidelines and their interpretation.

PERFORMANCE: Performance measures the actual hours worked on a task in relation to the standard hours allowed for that task. Performance of less than 100 percent indicates substandard performance. 

Performance of greater than 100 percent indicates performance above what would be expected of an average-skilled, trained operator working at normal pace.
Either situation should be immediately analyzed by the supervisor. Trends in both below-normal and above-expected performance will often signify a need for retraining in either work methods or time reporting procedures.


The specific instances where performance levels would indicate a need for research can be graphically represented as shown in Fig.5.7.2.The actual control limitswill vary depending on the accuracy specified when designing the standards. For more information on choosing accuracy levels.
COVERAGE: Coverage measures the efforts of the IE department tomeasure all shop floor activities and supervisors to schedule work. This index can be affected by any offstandard production runs (i.e., trial runs,experiments).Acceptable coverage should exceed 90 percent for a weekly reporting period. Setup times should be measured for machine controlled operations when coverage falls below 90 percent in those areas for a given production period (typically a week).

FIGURE 5.7.2 Performance control limits.



PRODUCTIVITY: Productivity measures actual production against the overall production goal. It represents the combined efforts of labor and management.Evaluation of productivity should take into account utilization and performance indices.


DELAY: Delay measures the percentage of total time that is not spent on productive activities.Time reported to delay must be closely monitored by management.Delay time indicates activities that should not occur on a regular or recurring basis. Companies will typically have several different delay codes that are used (i.e.,machine down,materials shortage,meetings).
The aggregate delay time should typically be less than 5 percent. Note that most standards have an allowance for minor unavoidable delays built in. It is important that delays covered by this allowance not be reported as a separate delay.This typically means that any delay less than 6 minutes in duration is not reported as a separate delay.


UTILIZATION: Utilization measures the percentage of time a worker spends on productive, standard work in relation to overall clocked hours.


The supervisor must then ensure that reporting from the shop floor is consistent and accurate.
Some implementations fail because data collected from the floor does not accurately depict what is happening at any given time.

Ensuring accurate data collection ranges from simply making sure that time cards are filled out properly to guaranteeing that proper maintenance activities are performed on gauges and readers to make sure they are working properly. The exact nature of data collection will vary depending on the nature of the process under consideration and the degree of technology required for reporting purposes. Typically, longer cycle tasks will require less complicated reporting processes. For example, a plant that produces 10 grommets per day will require less sophistication than one that produces 100,000 widgets in the same time period. Typically, the more sophistication required, the more computerization required.This can range from a hand-calculated matrix at the extreme simple end of the spectrum to a complete enterprise resource planning (ERP) system at the opposite end. Reporting should be done as frequently as resources permit, but at least on a weekly basis, preferably daily.Timely and frequent feedback minimizes the number of corrective actions required, and maximizes the effectiveness of any such actions.

Communication. Communication is the key ingredient to a successful program in any environment.Upper management must visibly support the initiative for long-term success to be possible.This support will flow through the entire organization if upper management communicates that support.

Upper management should first meet with any union representation to explain the program and any foreseen impact on a negotiated labor contract. It is vitally important for the union representation to support the new system if the shop floor employees are to be expected to perform to the new standards.

The plant manager should hold an informational session with all affected employees prior to implementation. This session should cover the following topics:

1. The reason for the program
2. Confirmation that union representation has been notified of the program and any effect on a negotiated labor contract
3. Estimated time of program
4. Departments affected
5. Selection process for a technical team to support the program
6. Introduction of the team responsible for data development and labor standards development.
For larger facilities where meetings are not possible, the plant manager should post plantwide memos, or display videotaped messages outlining the preceding six items and hold a departmental meeting with the first department to be scheduled for new labor standards to allow for a question and answer session.

Resources should be dedicated to ensure that full interaction and communication with affected employees is possible throughout the implementation process. These resources should include both industrial engineering and shop floor management or supervision. It is crucial that supervision take ownership of the standards, it cannot appear as if labor standards belong to the engineering group. Industrial engineering must be a support function to the standards, but management must take full ownership.
Training. Supervisors should have a thorough understanding of the methods represented by the standards and also understand the output that should be expected by an employee working to standard. It is important to note that all tools should be ready and supervisors trained in their use prior to implementation.This may require a training session for shop floor supervisors who are not used to managing performance.

Standards Implementation: The Shop Floor and the Office.

There are two areas in which engineered standards must be implemented: the shop floor and the office.The individual areas will be discussed separately.

Shop Floor Implementation.   Employee acceptance requires that they see the program progressing at a good pace.There should be no delay in implementing standards in one area after all concerns in the previous area have been addressed.This will show the shop floor employees that management is committed to the program and that they consider it a priority. Pilot Area. The implementation of standards works best when the new/updated standards are first implemented in a pilot area.The selection and implementation of this area will...(more)

Office Implementation.   Accuracy and usefulness are the two cornerstones of a managerial implementation.A proper implementation involves showing management that the standards will provide them with accurate information that will enable them to make good business decisions. A proper implementation also guarantees that a reporting system is in place to ensure that management receives this information in a timely and usable format. Accounting. One of the most important areas for a successful implementation of engi- neered...(more)

IMPLEMENTATION OF ENGINEERED LABOR STANDARDS.

Definition of a Successful Implementation
A successful implementation of engineered labor standards is simply defined as having all levels of the organization believe in and use standards on an ongoing basis to run the business and make wise business decisions.This happens only with the full support of the organization from the top down.The simplest way to ensure trust at all levels is an ongoing commitment to communication and involvement.The steps necessary for making this happen are outlined in the following sections.

The Link Between Development and Implementation
A certain level of credibility should have already been established prior to implementing a standards program.A proper development program will have involved the employees on the floor as domain experts, the supervisors as sources of information, and upper management as guides and decision makers.As such, everyone concerned will be aware of the program prior to any impact on the day-to-day workings of the company, and a level of commitment will have already been established. This is important to the implementation program because a certain level of credibility should already be in place. This communication and involvement must then continue in the rollout or implementation of the standards.

Standards Implementation

The Use of Labor Standards.

Companies use labor standards for several reasons. From a shop floor perspective, standards can be used to help determine staffing levels and distribution, measure employee performance, influence and control incentive systems, provide detailed methods documentation, and/or provide employees and supervisors with output goals. From a management perspective, standards provide measurement data for staffing and production, scheduling, reward and discipline, and forecasting. From a financial perspective, standards provide a yardstick for success as well as data for costing, and ultimately decisions affecting margin and profitability.The impact of properly engineered labor standards are illustrated in the following examples:


1. Product cost assessment
Accounting procedures in most companies use labor standards as a basis for developing
product costs.Accurate standards allow products to be properly costed and budgets to be
realistically set.

2. Scheduling and production flow analysis
Labor standards can be used for machine load planning and for scheduling of orders through the shop. Properly installed labor standards, along with a good maintenance program, will allow overtime to be minimized, and promote timely production and efficient facility utilization.

3. Labor planning

Regulating labor totals to schedule workload is a necessary step in securing satisfactory performance. Properly installed and maintained labor standards will ensure the confidence of management and worker alike, providing a common ground for business decisions regarding staffing.

4. Labor variance tracking and elimination
Properly engineered and installed labor standards provide management with a solid basis for setting production expectations. These expectations can then be used for budgeting.

Variance from any production goal or budget will indicate problems in the short run with performance, and trends in labor variance will indicate more systematic problems in the long run. Identifying these variances will allow management to take action not only to improve performance, but to make the overall production system more efficient.

5. Cost estimates
Standard data lends itself to the development of estimates for sales purposes.Accurate labor costs are requisite for proper marketing decisions. The traditional method of apportioning factory overhead and burden on the basis of direct labor makes this accuracy that much more significant.Recent trends in activity-based cost (ABC) accounting will reduce this impact.

6. Cost reduction possibilities
In many cases, new equipment justification, layout revisions, and methods changes involve comparisons with existing standards. Product design improvements require cost estimates.

Accurate labor standards will increase estimate accuracy, and give management a powerful justification tool.

This section provides guidance on standards application for managing a business, or “tells you what to do with the standards once you have them.” Standards development, no matter how expertly accomplished, does not provide a manager with information crucial to running his or her business. The interpretation of, belief in, and use of standards mark the transformation of data into management information and ultimately knowledge necessary for wise decision making. The goal of this chapter is to explain what is necessary to make this transformation take place and thrive.

IMPLEMENTATION AND MAINTENANCE OF ENGINEERED LABOR STANDARDS.

Setting standards is only the first step to improving productivity.There must be a coordinated, organized plan for implementing and enforcing standards. This includes communicating standards to the shop floor employees, managing performance through the operations management structure, and implementing new standards throughout the organization by coordinating labor standards with financial costing systems.
 

Maintaining a work measurement and performance management program is critical to realizing long-term benefits.A planned and regularly scheduled standards auditing program is the keystone to program maintenance. 

INTRODUCTION
Webster’s Ninth New Collegiate Dictionary defines a standard as “something that is set up and established by authority as a rule for the measure of quantity, weight, extent, value, quality or time.” Labor standards are used as a guide to evaluate the amount of time that should be taken to perform an operation by an average-skilled operator following a prescribed method anD working at a normal pace. 

The best work measurement and performance management program will not deliver any helpful information to the organizational management until factory management has accepted the concept and bought into the benefits of the program. Commitment to the new standards is essential.Development of a structured approach, gaining management support, and communications are the cornerstones of installing a work measurement and performance management program. Labor standards are an integral part, but nonetheless, only a part of this program. It is important that training be conducted at all levels of the organization to introduce new ideas, measures, and processes developed as part of the new labor standards.The employees should be included in the process and can, as a group, be one of management’s strongest supporters.
 

Changes in methods, equipment, materials, designs, and processes will continue to occur and may not always be apparent.A good labor standard requires that the employees agree that it reflects the production process and provides an accurate measure of the true time the operation takes. A regular assessment of the labor standards through application audits, methods evaluations, and labor reports will keep the work measurement program performing permanently at the level of accuracy for which it was designed.

Attributes of Computerized Standards Systems.

A good computerized standards system should consist of

● Flexible filing methodology
● Easy input of method data
● Automatic calculations
● Online help and training
● Quick storage and retrieval of data
● Mass update capabilities
● Simulation of updates
● Data transfer functionality
● Report customization
● Security settings

Flexible Filing Methodology. The filing methodology should be flexible and allow an organization to properly create and store data in an efficient, logical order.The number and type of fields used to store this information should be customizable, yet fixed once a system is running to ensure consistency and continuity.

Example filing information for standards might include

● Description of standard or operation
● Part number
● Part name
● Location (workcenter, department, etc.)
● Identifier of the standard

Easy Input of Method Data. Data can quickly and easily be input into computerized systems by using drop-down menus, point and click applications, computerized pick-lists, and drag and drop functionality.Engineered standards can be developed with little software training because most systems are mouse and keyboard friendly, and even contain rules on when and how to use data appropriately.

Systems are available that have predeveloped work measurement elements, which can increase the speed of work measurement by three to four times that of a system without predeveloped elements. In addition, these elements will have generic method descriptions attached,which further speeds up the data development process and simplifies the data input process.

Automatic Calculations. Any calculations should be performed automatically and be programmed or defined by the user as desired.While there are standard calculations included with most computerized systems, the flexibility to add, delete, or alter the formulas is a more useful attribute than standardized formulas.Automatic calculations generally include

● Normal time
● Manual time
● Process time
● Allowance time
● Standard time
● Pieces or cycles per hour

Online Help and Training. The system should be easy to use for computer literate applicators, and provide help as needed.Training should be available from the system provider, both in online help within the software, and in the form of a tutorial or instructor-led guidance.

Storage and Retrieval. By storing information in a computerized system, applicators have the ability to develop an organizational system to efficiently label data and quickly retrieve it when needed. Allowing users access to the data from personal computers greatly increases the speed of creation, storage, and retrieval of the information. The shared database, especially in a client/server application, allows many users to access and use the standards as they are needed from any computer linked to the database (local area network or wide area network).

With the advent of web-based technology, computerized systems now allow users to e-mail data from one system to another.This is particularly powerful for companies that have multiple facilities that perform similar tasks but maintain different databases.

Mass Update Capabilities. In addition to storage and retrieval in a central database, computerized labor standard systems should allow the applicator to perform mass updates. This means that the entire database, or a portion, can quickly and easily be changed automatically rather than manually. For instance, if a new conveyor system is installed, and each operator on an assembly line must push a button after completing a cycle, and time for this activity needs to be included in each standard, the question is how much time should it take to update the standards? Manually, this may take several days, depending on the number of standards.

Using a computer, this would take a matter of minutes or hours, depending again on the number of standards and the size of the database.Likewise, if the conditions change, such as methods, layout, or tooling, the standards will most likely change. Using a computer’s ability to quickly change an entire database, or selected items within a database, will improve the applicator’s consistency and speed in maintaining standards.

Simulation of Updates. The ability to simulate changes before updating the standards data-base can be a powerful timesaving feature. Rather than making the changes directly, a simulation can be run prior to the update to ensure that proper changes will be made. Simulations can also help optimize line balances and facility layouts, product and labor costs, and illustrate the results of improvement proposals or conditional changes. For example, if a proposed engineering change is made on a product, and four pushpins are to be used for assembly rather than two pins and two screws,what is the time that is saved? A simulation of this change could be performed in a matter of minutes, and the information could then be used to make a more informed decision prior to implementation.

Transfer of Data. While a database contains all the necessary information for the standards system, there should be a method of transferring the data to other systems, such as manufacturing resource planning (MRP), enterprise resource planning (ERP), or simulation systems.

One way is to use one database for all applications.Another way is to use a transfer function that outputs the data into a widely recognizable type, such as ASCII code.The benefits of this functionality are numerous, but revolve around usability of the data in scheduling, planning, and costing systems.This benefit of using a computer to organize, create, and maintain labor standards and the ability to quickly transfer the information to another computer program, applicator, or even a different facility is vital. The transportability of the data, all stored in a central database, ensures accuracy, consistency, and efficiency in creating, storing, retrieving,
using, and updating standards.

Report Customization. While the data resides in a common, shared database, and can be transferred out or linked to other systems, report writing functionality is a necessary feature.

Many systems contain various reporting formats and the ability to preview and print desired reports. In addition, data should be accessible for customized reports, either in the software or

through the use of another program.Typical reports include a combination of any or all of the following:

● Filing information
● Method steps
● Time values
● Internal method steps
● Manual and process times
● List of standards by product, part number, etc.
● Operator instructions

Security Settings. Computerized labor standards systems should contain security-setting features.Only those trained in the use of the work measurement tool and the software system should have access to changing the database.User identification codes and passwords are typically assigned by a system administrator to ensure system integrity. In addition, high-level standards systems often include levels of privileges, such as create, read-only, administrative, and update.

Comparison of Manual and Computerized Labor Standards Systems.

There is little difference between a standard developed manually and a standard developed using a computer. Both represent the time to perform a specific task under specific working conditions. Both manual and computerized standards can be used to verify a method, plan a schedule, determine costs, and even measure performance. Although the result may be the same, there are major differences in the process of achieving these results.

There are many benefits to using computers to measure work as opposed to performing the task manually. Foremost is the ability to create and store all information electronically in a central location, typically a database. This database can be shared among users and accessed throughout a facility or over a wide area network. Shared data promotes more accurate, consistent, and efficient development of standards, and simplifies data maintenance.

Manual procedures for developing standards oftentimes lead to inefficient data development because engineers tend not to share the data between departments or facilities. This results in the same or similar work being measured many times over—sometimes with different results.This in turn adversely affects the credibility of all the standards.

When comparing manual and computerized methods for standards development, several factors should be considered, specifically:

● Speed of application
● Ease of standards development
● Consistency and accuracy of standards
● Standards maintenance

Speed of Application. A primary benefit to investing in a computerized labor standards system is the increased engineering efficiency gained by the speed of application. Computerized systems are most effective when used in conjunction with a standard data approach.This combination speeds the development of standards by enabling engineers to reuse data elements rather than remeasuring work. (See Chap. 5.3 for more information on standard data concepts.)

Standard data concepts can be used when developing standards manually, but the benefits realized are not nearly as great due to the limitations of a physical filing system, as opposed to an electronic one. Field studies indicate that computerized applications are three to five times faster than manual applications, depending on the number of standards being developed.

Using manual methods and filing systems to create, store, and maintain standards can be effective if the total number of standards is small. If the purpose is to create 10 or 20 standards, a manual system is probably the most viable option. However, if the total number of standards required is much larger or method and process changes are expected, a computerized system will be more efficient, both in the up-front development and long-term maintenance of the standards.

Ease of Standards Development. Computerized standards systems allow engineers to
develop standards in a fraction of the time it would take them manually. “Drag and drop”
functionality and advanced database queries allow engineers to find and/or add data elements
much faster than manual systems. User-friendly icons, online help, and useful functions such
as custom report options, consistent filing information, and automatic calculations make using
a computer faster and easier than manual standard-setting procedures.
Manual methods for standards development are very clerical in nature and do not provide
a good mechanism for standards tracking and maintenance. Computerized systems eliminate
the clerical aspects by automatically calculating time values, adding allowances, tracking stan-
dards history and performing mass updates.

Consistency and Accuracy of Standards. The use of computers greatly improves the consistency and accuracy of work measurement and standards development. Computer data entry, automatic calculation of standards, menu-driven drop-down lists, and application rules contained within a system all help applicators develop standards consistently and accurately.

These functions eliminate wasted time spent reworking standards, re-creating lost standards, and searching for data.

When using manual systems, engineers are more likely to make simple arithmetic mistakes and also have a much greater chance of misapplying a work measurement rule. It is very difficult to eliminate these types of errors in a manual system.

Standards Maintenance. One database containing all necessary information is much easier to maintain than paper-based filing systems.The amount of time wasted physically searching, filing, and retrieving will often justify the implementation of a computerized system.Applicators can quickly search the database, determine if a standard exists, and have the ability to use, update, replace, or delete the standard.By correctly identifying and using or revising the existing standard rather than creating a new standard, the applicator saves time, and the system remains easy to maintain and use.The result is a smaller and more manageable set of unique standard data and standards.