It doesn't take a huge investment to find out how to eliminate money-losing activities
December 2, 2009
A time analysis in a fabrication business is much more than just a study of labor functions. When done correctly, time analysis considers the total picture of an operation.
As a management consultant, I visit shops like these quite frequently. One shop had decided to set up a mini service center. The company set up a counter sales area and increased its inventory to support the service. Material storage for the mini service center was 7,500 sq. ft., added to the 35,000-sq.-ft. fabrication facility that housed magnetic drills, a press brake, and a shear. A time analysis showed the company could make some minor physical changes to the fabrication facility that would maximize efficiency and result in a savings of about 8 percent over the first year.
More important, though, the analysis uncovered that the mini service center was running at a net loss. The firm was buying steel and selling it for just 10 percent more than cost. Yet the operational overhead for the mini service center was closer to 50 percent more than cost. The company was losing 40 percent on each sale. The shop quickly raised its mini service center prices significantly, but this scenario illustrates why it’s important to stick to what you know in your business.
Another fabricating client recently called me, concerned that his job bidding wasn’t very effective in this tough economy. He had two estimators and himself trying to bid work, and he wanted to increase the number of jobs they were bidding on.
A time analysis of the bidding procedure showed they were bidding jobs using spreadsheets they had made, but with no real estimating program. I showed him that by just introducing a modest program, they could triple the number of jobs the three of them were bidding. Once set up for their shop, the program would do automatically what they had been doing manually, including checking material prices so the estimator could see at a glance what prices had been in the past, saving cross-checking time. Three estimators now can do the work of six. Now that is using your time wisely.
Time analysis in a fabrication business is much more than just a study of labor functions. When done correctly, time analysis considers the total picture of an operation; plant layout, material flow, management practices, shop functions, and purchasing activities are all areas of concern if you want to maximize your plant’s efficiency.
A fabricating shop has two ways to do a time analysis:
While the mechanical choice is more accurate, it is also more costly. Time clocks or computer punch stations are set strategically around the shop for gathering information. Employees are assigned numbers, as is each job function. Before an employee starts a job, he punches in with the code of the task he is going to do, such as welding. When he has finished, he goes back and punches the clock again so that the computer knows he has finished the task. This data is collected for at least several days, analyzed, and used to form the time analysis report.
Let’s say that since the manual method is cheaper, you have selected to do the study that way. You’ll need a good stop watch and forms for recording the times (see Figure 1). I strongly recommend that the study be done when an actual job is being fabricated. However, if nothing is being fabricated at the time, you will need to get the processes moving. Following is a brief list of some of the material I’ve used for doing an analysis in this situation:
For the most accurate and "real" time results, try not to let employees know you are timing them. When you start the time, be consistent every time. Begin with timing the unloading of material as it is being received. How many people did it take, and how long? Start your time when the first person makes contact with the truck and do not stop the time until the piece is sent into storage and disconnected from the forklift or overhead crane.
Follow this approach for every job done in the shop. Study each job at least five times over several days, at different times of the day, to account for human nature and other factors. If you see an employee stop to talk to another co-worker or to sharpen his soapstone, don’t stop timing the procedure. It’s all part of the process.
After gathering data over several days, add it together to get an average time spent doing each function. Then it’s time to do some research on how long certain jobs should take to do. There are several good books on the topic, and Figure 2 shows a set of benchmarks I have compiled over years of performing time analyses.
The times listed in the books and Figure 2 should be used as a benchmark, not a goal. If your shop can do the job faster, don’t slow it down to match the benchmark time. However, if the difference is significant between your times and the benchmark times—typically more than 25 percent—you need to look at how jobs are being done in your shop.
For example, Figure 2 shows that it should take six minutes to flame-cut and deburr a wide-flange beam. If a time analysis shows it takes your shop eight minutes to do that job, you should try to find out why.
Once you’ve done your analysis and know you need to make some changes, the place to start is the shop, where the most dramatic time savings are.
The first step is to review your current operation. How do you do what you do? What steps do your employees take to perform the various functions? Do they receive material at a distance from the shop and then have to drag or carry it back to the shop, or do they receive the material at a point close to the shop to avoid wasting time moving the material in? Does your material flow logically into the shop? Is it sent to the cutting station first and then over to the fitting station?
The next step—and a highly important one—is to lay out on paper the shop flow and equipment layout. Drawing your layout gives you the opportunity to work out the shop flow. You can change the equipment layout without disrupting actual shop operations.
Be sure to get your shop people involved in the process and listen to their ideas about ways to save time. At one shop, the employees and I moved the scaled equipment around on the sheet to get a better material flow. One of the fitters came up with the idea of putting a small door through the side in front of the cutting tables so that material could be put on a conveyor outside and moved into the building’s cutting area. Previously material was coming in through a side overhead door and swung up onto the conveyor.
This minor change allowed the yard men to use the overhead crane to pick up the material from the storage area, put it down on the conveyor, and feed it inside. The time saved was 19 minutes each time they put a piece into the shop for cutting. Imagine how much time that would save your shop!
Next, you’ll need to answer several questions:
For many shops, the answers to these questions often are negative. The material flow is unproductive; the material has to be handled numerous times before it is fabricated and during the fabrication process itself. Remember, the more you handle the material, the more money you lose.
One way to increase efficiency is to prefabricate as much of a job as possible while you wait for the final approved drawings. Prefabricating such items as clips, stiffeners, and base and cap plates will save time when the fabrication actually begins. When the job starts, you won’t have to play catch-up. Try standardizing all your clips so that you can have a small stock ready at all times. I used to make use of drops that were too short for anything else just for this purpose.
Make sure your shop is conducive to steel fabrication. Material should not be moved over employees’ heads unless absolutely necessary, so that everyone does not have to stop working while material is being moved around. And don’t forget to look for other blockades to efficiency. Something as simple as having a water cooler in an easily accessible part of the shop can save the company money over time, as employees spend less time walking to get a drink.
Make sure you have a production report for your fabrication activity. How can you see where you are going if you cannot see where you have been? Even a simple report is better than no report at all. The shop foreman can write down the item worked on and check off what was done to it. With that, the office can see what was done and not done and what is ready for the next step in the process.
The daily report gives you a way to check your shop’s efficiency. It also gives you a starting point for estimating your shop’s production capacity. The project manager can use the report to see how long it took to fabricate an item and then compare that to his estimate.
A good steel management software program can provide you with a snapshot of what is working in the shop at any given time. You can make decisions about fabrication schedules, production times, and shipping/receiving schedules from these reports and spot problems long before they are brought up by employees or jobs start falling behind in production.
How activity flows through the office can impact the shop positively or negatively as well. One immediate consideration should be estimating software. One estimator working with good structural steel estimating software can do the work of three estimators working the old-fashioned way because the software does multiple functions at one time. It also can do advanced calculations that are difficult to set up in a homemade spreadsheet. Job tracking software and programs that accept advanced bills of material (ABM) also can save time and, as a result, money.
When looking to save time in the office, don’t forget the simple things, too, like adding an easily accessible copy machine in the area where the estimators work. Setting up an accurate inventory system on the computers also can increase your bottom line, because the inventory can be seen by the estimators, production people, and purchasing employees and no one needs to be sent out into the yard to check it all the time.
Speaking of inventory, your shop can save money by reducing inventory through outsourcing. With the market as it is, you don’t want to carry a large inventory. Let the service centers carry it for you. The same goes for letting the service center cut some of the material for you before it ships it to your shop.
Studies show you can save 5 to 8 percent when ordering material if you buy the beams and tube steel already cut-to-length. When starting a new job, buy the material cut-to-length and compare it to what you would spend cutting it yourself from stock lengths.
I used to stock a minimum of standard "bread-and-butter" beams, like W8s and W12s, for my counter sales activity, but I relied on several nearby service centers to supply me with material on short notice. Shops should stock some commonly used, standard angles, plate, channels, and flat bars—a 15-day supply is a good rule of thumb.
Doing a time analysis is more than just timing how long it takes to do a certain job. It involves using that information to find ways to change how work moves through the shop and office for better efficiency. Fabricators who have the insight to make those changes will see payoffs in real time and real money.