PRINCIPLES AND TECHNIQUES:MEASUREMENT OF INDIRECT LABOR OPERATIONS

MEASUREMENT OF INDIRECT LABOR OPERATIONS

Most of the advances in work measurement have dealt mainly in the measurement of direct labor. The emphasis during the first half of the 20th century was on controlling costs due to direct labor. Because the indirect components of cost were highly variable and difficult to trace, the quantitative skills needed to analyze many problems associated with the indirect components were not available.

Employees classified under indirect labor include shipping and receiving, trucking, inventory, inspection, material handling, toolroom, and janitorial and maintenance. Expense labor positions are found in office operations such as clerical, accounting, sales, management, and engineering.

The rapid growth in the numbers of office workers, maintenance workers, and other indirect and expense employees is due to several factors. First, the increased mechanization of industry and the complete automation of many processes, including the use of robots, have decreased the need for craftsmen and operators. This trend toward increased mechanization has resulted in a huge demand for electronics specialists, electricians, technicians, and other service personnel. The design of com- plicated machines and controls has also resulted in greater demand for engineers, designers and draftsmen.

Second, the tremendous increase in paperwork brought about by legislation is responsible to a large extent for an increasing need for clerical personnel.

Third, office and maintenance work has not been subjected to the methods study and technical advances that have been applied so effectively to direct labor in industrial processes. With a large share of most payrolls earmarked for indirect and expense labor, progressive management is beginning to realize the opportunities for the application of methods and standards in this area.

6.1. Indirect and Expense Work Standards

The tools used for establishing time standards for indirect and expense work are the same as those used for direct work: time study, PTS systems, and standard data and work sampling. However, because of the high degree of variability characteristic of most indirect and expense work, time would not permit using stopwatch time studies for each and every standard developed. Standards will usually be established using a combination of techniques depending on the nature of the work. Other methods such as queuing theory and Monte Carlo simulation (see Chapter 100 for more on queuing models) are frequently used to determine delays due to waiting time in service facilities such as the stockroom or tool crib.

As for other work, methods analysis should precede work measurement in all indirect work operations. After completion of a thorough methods program, development of standards can be per- formed. Once standards have been developed for most of the common elements used in indirect work, time standards for specific tasks can be calculated quickly and economically.

All indirect and expense work is considered a combination of four divisions: (1) direct work, (2) transportation, (3) indirect work, and (4) unnecessary work and delays.

Direct work is that segment of the operation that discernibly advances the progress of work. For example, in operating a fax machine, the direct work elements may include insert document into paper feed, locate and dial telephone number, press send button. Such direct work can be measured using conventional techniques such as stopwatch time study, standard data, and fundamental motion data. Fundamental motion data systems such as Work-Factor, MTM-2, and MOST have been widely applied in establishing standards.

Transportation is the work performed by movements during the course of the job or from one task to another. Typical transportation elements include walk, carry load, ride elevator, push cart, and ride on motor truck. Transportation elements can be measured using standard data and work sampling.

The indirect work portion of indirect or expense labor is activities that cannot be evaluated by physical evidence in the completed job. It can be further classified into three categories: (1) tooling,

(2) material, and (3) planning.

Tooling work elements include the acquisition, disposition, and maintenance of all tools needed to perform an operation. Typical elements under this category include getting and checking tools and equipment, cleaning tools, repairing and calibrating tools, and returning tools to the tool crib. Tooling elements can be measured using work sampling or standard data.

Material work elements involve acquiring and checking the material used in an operation and disposing of scrap. Examples of material work elements are getting materials, making minor repairs to materials, and picking up and disposing of scrap. Like tooling elements, material work elements can be measured. Use historical data to determine their frequency.

The planning elements represent the most difficult area in which to establish standards. Consulting with the supervisor, planning work program, inspecting, checking, and testing are common examples.

In this case, work sampling is the most practical technique to provide a basis for determining the time required to perform the planning elements.

Unnecessary work and delay encountered in indirect and expense work are mainly due to queues.

Workers need to stand in line at the tool crib, the stockroom, or the fax machine, photocopy machine, or some other equipment. Through the application of queuing theory, analysts may be able to determine the waiting time incurred in such activities as well as determine the optimum number of service facilities to improve service quality.

Where maintenance and other indirect operations are numerous and diversified, efforts have been made to reduce the number of time standards for indirect operations through universal indirect labor standards (UILS). The principle behind UILS is the assignment of the major proportion of indirect operations to appropriate groups (Niebel and Freivalds 1999). Each group has its own standard, which is the average time for all indirect operations assigned to the group. For example, the following indirect operations replacing defective part, replacing limit switch, and repairing door may represent group A. The standard time for any indirect operation performed in group A may be set at 45 minutes.

This time represents the mean (x) of all jobs within the group and the dispersion of the jobs within the group for ±2cr is some predetermined percentage of x.

Three principal steps in introducing a universal indirect labor system, called time slotting, are:

1. Determine the number of standards (groups or slots) to do a satisfactory job. (20 slots should be used when the range is up to 40 hours).

2. Determine the numerical standard representative of each group of operations contained in each slot.

3. Assigning the standard to the appropriate slot of indirect labor work as it occurs.

The first step is to determine good benchmark standards, based on measurements of an adequate sample of the indirect labor for which the UILS system is being developed. A relatively large number of standards (200 or more) that is representative of the entire population of indirect needs to be established. Competent analysts can develop these measured benchmarks using work measurement techniques.

After the benchmarks are established, they are then arranged in decreasing order (from shortest to longest time). If there are 20 slots, and if a uniform distribution is used, the time standard for the first slot (UILS one) is computed by calculating the mean of the first 10 benchmark standards. Similarly, the value of UILS two is taken by the mean of benchmark standards 11–20. Succeeding UILS slots will be calculated on the successive 10 benchmark standards. Hence, the UILS 20 would be equal to the mean of benchmark standards 191 through 200. Engineers have used this procedure extensively in the development of UILS.

Another approach to designing a UILS system is cluster analysis (Knott 1992). Here, given a distribution of job times, the time boundaries and slot times can be determined to give a priori criterion. This might be, for example, absolute percent error calculated over a time period of one week.

Investigations have shown that the distribution of job times in practice is not normal but has a ‘‘positive skew’’ (Knott 1992). A typical distribution of job times is shown in Figure 13. A simple slotting scale has been constructed into this distribution.

To establish standards on indirect and expense work, Table 18 is presented as a guide for choosing the appropriate method.

6.2. Advantages of Indirect Work Standards

Applying standards on indirect work offer distinct advantages to both the employer and the employee. Some of these advantages are:

1. Installation of standards leads to many operating improvements.

2. Establishment of standards results in better performance.

3. Indirect labor costs are related to the workload, regardless of fluctuations in the overall workload.

4. Labor loads can be budgeted.

5. The efficiency of various indirect labor departments can be determined.

6. The costs of such items as specific repairs, reports, and documents are allocated.

7. System improvements can be evaluated prior to installation.

8. The establishment of incentive wage-payment plans on indirect work is allowed.

9. Accurate planning and scheduling of indirect labor leads to timely performance.

10. Employees require less supervision with the establishment of standard measures of perform- ance.

Since indirect labor operations are difficult to standardize by virtue of their nonrepetitive char- acteristic, they are infrequently subjected to methods analysis. Consequently, this area usually offers a greater potential for cost reduction and increasing profitability through methods and time study than shop-floor operations. Methods improvement, along with employee training, makes it possible and practical to establish standards on indirect labor operations.

7. SELECTED SOFTWARE

ErgoMOST (1997), H.B. Maynard and Co., Pittsburgh MAST (1998), Applied Research Laboratories Division of Bausch & Lomb, Inc., Rochester, NY MOST (1997), H.B. Maynard and Co., Pittsburgh MTM Link (1998), MTM Association, Des Plaines, IL