Drummond's Time Standards for Lean Manufacturing

I was first exposed to the art of estimating labor costs for a truss plant in the early 90’s.  The company I was with was installing new design software, and the labor estimation part of the program needed to be set up.  I had no idea how to approach that task, but I observed a senior salesman who was doing the setup.  He assigned various time values to elements such as board footage, lineal footage and numerous other factors.  He would then adjust the computed figure based on his feel for the job.  He was satisfied with his results, because on “average” it worked out.

Most truss shops use one of the following factors for estimating labor…

We all try to make allowances for the given complexity of each order.  We try to factor in whether there are numerous setups or the board footage changes based on cord size.  However, can we say with any honesty that we are consistent?  We all make the same mistake over and over by telling ourselves that what we are looking at is the average rate.  To make maters worse we try to measure individual groups on a daily basis that does not relate well to the “average.”  Intuitively we know that none of the measurement tools really works on the individual level, but that is all we have had to work with. Bottom line averaging is a flawed method for individual work order labor cost and should be always avoided in lean manufacturing facilities.

What does the average have anything to do with the individual labor estimation of a single order or even a single truss?  Well what about the labor estimation of the single truss have to do with the individual activities of that truss such as cutting or building time? Well you should be telling yourself it has nothing to do with it.  Does it really matter knowing how long it should take to actually do the individual activities such as cutting and building?  In one word, YES!

Knowing how long the individual activities should take, by doing time studies, is called Time Standards.  Time standards have a long history in development of the practice.  Even Benjamin Franklin did his own time studies.  Toyota really made it mainstream with the practices of Lean Manufacturing.  If you say you are practicing Lean principles than time standards, at the activity level, is a must.  In the truss industry we commonly refer to this as the “Houlihan” method of measurement.(Man-Minutes, R.E., or S.U.) John Houlihan was an Industrial Engineer who preformed time studies for companies who hired his services. (See previous article http://www.sbcmag.info/past/2004/04dec/houlihan.php)  What he did was use time and motion standards and applied them to truss manufacturing. 

Proper time standards are not derived from knowing what has been done, but knowing what should be done.  It takes many hours of tedious number crunching and watching people work with a stop watch.  Note this should not be thrust upon an individual, such as a designer or salesperson, with no prior labor time studies understanding.  This type of work cannot be done in a few hours or even in a few days and it requires a great deal of effort.  

 What are clear time standards?

1. They are measurable time elements (Man-Minutes, R.E., or S.U.)
2.  They can be measured consistently
3. They are broken down to the lowest denominator so when they are all added up over various groups the total time remains true.

The time standards should have a reference to real world variables.  For instance the 100% standard could equal what is expected by an experienced individual (e.g. three years experience), You might expect an inexperienced individual to perform 50 or 60% of the standard.

Ok so now your asking yourself what does it really matter whether your know how long it takes to do the individual activities.   Industrial Engineers are educated with the following…

 For Most Manufacturing Shops - Gains Expected from Clear Time Standards

• No Time Standards = 60% of performance*
• With Proper Time Standards = 85% of performance*
• With Proper Time Standards and Effective Incentive Program = 120% of performance*

*All performance figures have a normal deviation range of +/- 10%  *Source from case studies with Industrial Engineering Consultants Mitch Fein and Fred Myers.  These studies have remained consistent across various other bodies of work and are considered statistically valid.

This is the secret of the Houlihan Truss Standards system.  Industrial Engineers understand the gains any truss manufacture would obtain in the manufacturing facility if they employed proper time standards for their components.  On average, most manufacturers gain a 42% increase in productivity by simply employing proper time standards.  ((85% - 60%); divided by 60 = 41.7% gain) In order for this type of expected gains of productivity in a manufacturing shop, there are five basic performance principles that I provide with my time standards.

What manufacture would not like a 42% gain in productivity?  You could expect an even bigger gain in productivity by implementing a proper incentive program with proper time standards.  For any manufacture labor is a serious large part of the cost of doing business. 

Todd Drummond Consulting, LLC. now provides Truss Manufacturing Time and Motion Standards

See reference page for statements by general managers and owners about services.

 ============================================

1. Lean Manufacturing Principles explained and demonstrated, tailored for the roof truss and wall panel manufacturing industry   
2. Common methods that could be used to gauge efficiencies among different facilities
3. Proven and practical methods of increasing efficiencies and productivity
4. Time standards for labor estimation of truss production   

• Increased Profitability
• The ability to implement a time standards system in your production facility (Better known as “Houlihan”);
• Better communication and cooperation between different departments
• Proper lean principles that would be the foundation to apply in every location and department