Engineering For Lean: Right-Sizing Your Labor Cost Infrastructure With Industrial Engineering

Did you know that the exemplar of lean manufacturing, Toyota, assigns an industrial engineer to each foreman in its plants? It’s true. Toyota has long understood the value of optimizing operations through traditional industrial engineering techniques. For example, the company “stopwatches” each operation to assure that the people performing work tasks can actually accomplish the task in an optimal amount of time. Optimal is defined as the rate feasible to do the task “right the first time” according to the Toyota standard method (for quality purposes) and to be economically efficient in the traditional manufacturing cost paradigm. If the time assigned to an operation is not “optimal,” then the workers receive additional training or the operation time is adjusted. Assigning an industrial engineer to each foreman has other benefits – work flow management, cycle time reduction, work methods and the like.So, how does the Toyota approach – clearly feasible for a multibillion dollar global corporation – relate to the small to medium size enterprise (SME)? The message of the Toyota example is rediscovery of the lost art of industrial engineering and its use in making an SME company lean and cost-effective. Certainly few if any SMEs can afford to have an industrial engineering staff like the one Toyota has, but industrial engineering talent can be obtained in many ways and employed just as effectively,WHY BOTHER WITH INDUSTRIAL ENGINEERING?Why indeed you may ask? Isn’t labor cost reduction passe with labor costs per unit amounting to six or seven percent of the sales dollar? Does it make sense to try to squeeze an extra quarter second out of an operation by changing the way some one moves their left hand when turning a dial? Furthermore, isn’t labor a variable cost that fluctuates with production requiring us to staff up and down as needed? The answer to all these questions is no. Let’s look at each of these questions and then visualize some benefits from industrial engineering in a twenty-first century style.Low unit labor costs. It is true that direct and indirect labor on a unit basis is lower than it has ever been in recent memory but, labor is often the single largest non-material total dollar expenditure for most manufacturing companies. It therefore behooves management to insure that the labor force is trim and is not growing out of proportion to the level of sales revenue.Squeezing the additional quarter second out of the process. The additional fractional time reductions and fractional people reductions (we saved one-third of an employee by doing this!) associated with traditional industrial engineering were no doubt meaningful to cost reduction in the first half of the twentieth century when labor forces were orders-of-magnitude larger. These fractional savings, in fact, added up to actual dollar labor savings back in the day. They have almost no similar value today except to comprehend how jobs may be combined to eliminate duplication or non-value added activities.Labor variability. One of the enduring myths of the twentieth century (and the twenty-first as well) is the notion that labor varies in direct proportion to output. Labor is now part of the manufacturing company infrastructure and must be managed as a controlled resource and not assumed to be a variable resource. The distinction between controlled and variable is an important one. Controlled implies that as production rises, the labor compliment need not increase if we seek alternative ways to organize and manage the infrastructure. Similarly when output declines, the force may not decline if we are tight on indirect labor in non-production areas and can shift people to such non-value added but necessary, and deferrable, work. In actuality, labor should increment and decrement in “plateaus” or “steps” along the production curve and the increment/decrement plateaus should be actively managed.Industrial engineering facilitates the management of all of these labor issues. It is now focused on the phenomenon of the “infrastructure” and labor as a significant cost of the infrastructure (hence the title of this article). Stop-watching and labor efficiency variances and comprehension of fractional work can now be used to inhibit the impulse to “hire as a first resort.” If, for example, every time a new direct or indirect labor hire was contemplated, an industrial engineering analysis of the presumed need and the related work in the area was made, work re-engineering and worker redeployment could likely result in avoidance of adding another person to the payroll.OPPORTUNITIES FOR COST CONTAINMENT/REDUCTIONUltimately, industrial engineering in the modern sense (the Toyota approach) is about keeping the labor cost infrastructure “right-sized” to the revenue of the enterprise and the elimination of waste. With this in mind, we can examine some ways to reduce costs necessary to right-size and to contain them as growth occurs.Supervisory span of control. A common but misguided practice is to have too many supervisors in relation to the number of direct labor employees supervised. The textbook ratio of foreman to direct laborers is 1 to 20. If you are at 1 to 19, not to worry but if you are at 1 to 10, the span of control is worth a look.Unbalanced lines. Line balancing is one of the basic tenets of industrial engineering. In the “old days” of extensive manual operations, it had much to do with stop-watching of individuals but now it is directed toward balancing around a machine constraint in a production cell. Frequently, line balancing can result in lower crewing of cells by having workers move back and forth around the constraint device.Timed operations and earned hours. While the concept of “earned hours” according to engineered standards is often misunderstood and misused, measuring the overall efficiency of large operations over relatively long time periods is a good indicator of real crewing needs. The caution here is not to calculate labor efficiency variances by individual shop orders or small departments by the day but rather to calculate it and report it for an entire department of perhaps twenty-five people in periods of no less than one week.Extended meal break time frame to limit “floaters.” In shops where machines pace the plant, floaters are employed to substitute for machine tenders on scheduled breaks for meals. The number of such floaters is often dictated by the period in which the meal break is taken and, of course, the number of employees and machines. For example, if meal-breaks on the first shift are taken between eleven AM and one PM, more floaters will be needed than if the meal-break period was extended to two PM and fewer floaters could cover multiple breaks sequentially.Cellular organization. Much is written about cellular organization lately. Re-engineering the plant into product cells is the modern equivalent of old-fashioned plant re-layouts. The labor cost advantage is that workers can multitask in “U” or “J” shaped cells instead of being chained to a particular station and operation. And, if workers can move around and multitask in a cell, you need less of them.Set-up reduction. Rarely do we hear that set-up reduction can have an impact on labor costs but it does. Similar to the economics of cellular organization, set-up reduction avoids the waste of additional labor infrastructure by contributing to a high rate of machine utilization and thereby requiring fewer people waiting on set-ups. Reducing set-up time is a fine example of industrial engineering value in eliminating wasted time with consequent lower cost and greater throughput.Create cost containment metrics. The keys to successful use of metrics are threefold: controllability of the processes being measured by shop management, a feeling of accountability to senior management for achieving numerical success and, connection to financial results. There are metrics that express labor cost utilization and containment – here are some to consider: first time quality, machine uptime as a percentage of scheduled uptime, shop order due date performance. These and other metrics measure the underlying cause of the need for labor. Machine uptime, for example, tells us if we are wasting the labor resource by having machines idle and the workers assigned to them idle as well.Do it right the first time. There is probably no greater waste of labor (and other) resources than rework. Enforcing a first time quality ethic can result in lower labor cost by avoiding this egregious form of waste.So where are you in the labor cost continuum? If you feel the pinch of lower profitability whether felt in less sales per employee or a cost creep that seems to be encroaching on your revenues or a higher break-even point, you may be a candidate for right-sizing your labor infrastructure to fit your revenue base. Toyota, always the leader in manufacturing management methods, has reinvented the idea of industrial engineering in the modern era to, among other things, contain labor costs. Perhaps, your labor infrastructure can benefit from an industrial engineering diagnosis as well.

Ten Important Things To Keep In Mind Before Starting An Online Business

These ten factors may not necessarily appear in the same order as listed below but certainly, they are vital for the issue at hand.HERE ARE THE TEN QUESTIONS TO ASK YOURSELF:1. What type of online business do I want to engage in?
2. What do I have on offer that will be better than my Competitors in my niche?
3. Do I need to prepare a business plan for my business?
4. How much will it cost to set up my business?
5. Is my business online based or BOTH online and offline?
6. Do I need a dedicated website for my business and how much will it cost?
7. How will I market my business whether online or offline?
8. What is the right strategy to use to market my business?
9. Am I getting value for money in advertising my business?
10. Am I reaching the right audience with my advertising?Having a positive answer for all these questions can only lead you to the next stage of your pursuit of running an online business.Engage yourself in research into the business you want to get involve in and have a go at it. Take for instance, the Mobile Phone Industry. Statistics have shown the total number of mobile phone users worldwide from 2013 to 2019. For 2017 the number of mobile phone users is forecast to reach 4.77 billion. Customers and potential customers use their mobile phones to browse the internet for Products and Services more than a Laptop or Desktop computer, so it make sense for business owners to utilize this piece of technology for marketing their products and services. This could suggest that there is an opportunity to tap into the mobile app industry to meet the needs of these businesses requiring mobile apps.Millions of apps for almost anything you can think of, are now in circulation whether for free download or at a cost. You might ask, why don’t I have a slice of the pie and start a mobile app business? The excitement kicks in, but one has to have some kind of knowledge about the whole App design process. This will probably force you to dig deeper into your research on the whole aspect of mobile app development. With this being established, my first question is answered; through study and research, you have made an informed decision to get involved in Mobile App Design and Development. But, what will you be offering that will be better than your Competitors? This is not a simple question to answer, but to say the least, strive to offer quality products and services to customers, and simply make your Products and Services more affordable while maintaining quality.Starting a business without some kind of a business plan is like driving onto a very long motorway with 1/4 tank of fuel, with the hope that it will take you to the next service exit. The business plan will give you a breakdown of what you need for the business even though success is not guaranteed, as there are a number of opposing factors along the way.There are a lot of businesses with little or no startup cost as opposed to other businesses with huge startup cost. It also depends on whether your business will both be online and offline. You have to decide if the business you want to indulge in, has minimal startup cost.To setup an online business, does not have to cost an arm and a leg, if you take the time to do extensive research into the business you want to get into.If your business is online based, advertising it to the right audience can be a huge task. Finding the right sources to advertise your business, can be quite challenging and risky as this is where you can spend huge sums of money to advertise, but yet get little return on investment if the advertising strategy is wrong.Advertising a business to a targeted audience involves a number of factors like;1. Google Indexing
2. Search Engine Optimisation (SEO)
3. Domain Authority (DA)
4. Page Ranking (PR)
5. Back links
6. Social Media
7. Joining Forums
8. Blogging
9. Google AdWords
10. Google Analytics
11. Keywords ResearchTo do all of these stuff can be demanding and boring, but if you need success in any business, you just have to get on with the task at hand.Handing over this challenging task to an SEO Expert can be quite expensive. If you put the time and effort in and do your research and utilize the available SEO tools on the Market, believe me, you can bring your online business to life without ‘breaking the bank’.

Build a Strong Online Business

When it comes to online business, there is no certainty that everything will be a success. This is also true in offline businesses. We are all living in a competitive world wherein we fight for survival. This also applies to an online business. Marketers have found a new way to advertise, promote and market their products, they have seen the Internet as a good way to reach more people in their target market. A very fast and efficient method of marketing that can do wonders for them and their business.The Difference of Online BusinessEngaging in online marketing is not that easy as it seems. Doing business online is a totally different field that we cannot easily venture in. The difference in doing business online is that we have to work hard on our strategies in order to be successful. We basically need a website or a blog in order to represent the company and everything under it. We are battling with time, interest level and other competitors in the same market we are in but we only have one goal, to be on top of our chosen niche.PreparednessNo matter how prepared we are if we do not have the skill to handle instant challenges that may hamper our growth and sales, we would definitely be headed to failure. It takes a lot of courage and experience in order to handle unexpected situations that may be encountered along the way. If we are able to survive this then making adjustments would not be a problem for our business endeavors.StrategiesA lot of strategies can be used in an online business. One of the most popular ones is SEO or Search Engine Optimization. In using SEO tools, we are making our business more visible on the Internet and making our business popular in the niche we are in. When we say SEO it includes a lot of strategies. Article writing, promotions and linkbuilding are some of the strategies under SEO. It can either be done by business owners themselves if they are adept with SEO or can hire an SEO expert to do it for their business.Social Media Advertising which includes the use of sites like Facebook and Twitter can also be a good strategy in online business. Many ads are popping up on these sites. They are actually paid advertisements. Marketing on these sites can be done through fan pages, creating a company account and then posting links as well as related topics on these accounts for users to check out. This is one way to drive more traffic and sales for the business.Blogging, Forum Posting and Social bookmarking can also be considered as strategies in online marketing. Not to mention Affiliate Marketing which can also gain much for online businesses these days.How To Maintain an Online Business?With the strategies mentioned above, we have the choice on what strategies to use and what will be best for our business. It is up to our hands on how to maintain an online business. We may have a big budget for online marketing but if we do not do it right, surely we will loose much. If we are pretty new to online marketing but still we want to push through with our online business then we can seek the help of experts in this field to help us out.One thing to remember, we should not put ourselves in a situation wherein we do not have an idea about. Total lack of knowledge will lead our business to doom.We should never engage in an online business unless we are willing to risk every thing. Make wise business decisions most especially in an online business. Market online but do it right. Build a strong online business.