PRODUCTIVITY: SOMETIMES HUGH SAVINGS ARE RIGHT UNDER YOUR NOSE

By Mark Porter

A new year and companies are continuing to look for ways to increase productivity and decrease costs. There are many ways to increase productivity and decrease waste which we will discuss in various issues this year.

1. Accountability
2. Inter Company Communications
3. Customer Communications
4. Access to Information

One of the best ways to maximize peoples producttivity and minimize waste is to demand accountability from all employees.

It does not matter if you are the President of the company or the floor sweeper - if you have to account for every minute of your day and every material you use you will be more efficient and less wasteful.

If accountability produces even a small 5% increase in productivity and decrease in waste this can add up to some very large savings.

Lets look at your shop floor - by far the greatest costs are incurred here. Depending on the size of your business your plant will expend millions of dollars in labor and material. If we took a plant that processes $2 million of costs per year then even that small 5% productivity gain will result in $100,000 of savings.

How do you achieve accountability ?

First employees must record their activity throughout the day. Whether that is by writing it on a time sheet or bar coding into shop data sharing stations. They must record the start and stop time for each activity they perform from the time they clock in until they clock out for the day. This is not just job based activities but all activities - doing a makeready, running a job, waiting for an ok, maintenace of a machine or no work. They can also record materials used at this time as well.

An employee writing their time on the back of a job bag is not sufficient. You are not making the employees accountable because you can not piece together a time sheet accounting for evey minute from clocking in to clocking out for the day.

Depending on your method of collecting the data - you can analyze it many ways.

It maybe enough for you to review each employees time sheet to ensure that makeready and run times look right.

You may want to calculate % efficiency of each machine and each employee and compare it to standards you expect to achieve or compare on an employee by employee basis to evaluate which employees need more training.

You may want to compare your estimate vs actual costs on each job to identify problems.

You may want to evaluate your % Chargable time to Non Chargable time on an employee by employee basis. If an employee has less than say 75% chargable time we have to take action.

You may want to note that your makeready or repair time is increasing on certain machines and those machines are becoming less efficient.

Accountability can be a powerful tool but Management must be 100% behind it. Like punching in and punching out - if employees don't do it they don't get paid. Management must take the same approach with time collection, with ALL employees, or it will not work.

But getting it to work can provide tremendous savings.

MORE ACCURATE STANDARDS LEAD TO GREATER PROFITS

By Mark Porter

Often standards that are used in post press industry estimating are developed for the sake of expediency. It is vital that customers get their quotes quickly and therefore in order to meet that need owners and estimators have taken their knowledge and condensed it into simplier factors.

This is seen in many processes when standards such as $3 per M are applied or if the cost for running the process includes material. An example is laminating where say the cost of $125 per M includes the laminate.

This may get the price to your customer quickly but does it maximize your chances of making money on the job or minimize your risk of losing the job because your price is too high.
If your method of estimating does not allow you to take into account different conditions and materials then you maybe getting the pricing to your customer quickly but you are greatly reducing your chances of maximizing your profits.

Let's look at a couple of examples to see how changes in conditions or materials can dramatically change the price of a quote.

Last issue we talked about estimating cutting and we used the example of cutting sheets of 60lb and 100lb paper. (Please see the November issue of our Blog)

Lets say that we had settled on a price of $12 per M sheets cut because we didn't have time to look up calipers, calculates sheets per lift, number of cuts etc. On our 5000 sheets cut 2 out we would have gotten 5 x $12 per M or $60. As per our example though the 60lb stock would have cacluated to $50 and the 100lb stock would have been $75. This is a $10 to $15 dollar swing on 5000 or a $100 to $150 swing on 50000. The variances get greater with thicker and thinner stocks and based on the number of peces cut out.

Lets look at a laminating example where material is included in the running price. On a 10000 sheet run of a 19x25 sheet at $125 per M we would calculate $1250.

But the laminate material could vary from 1.2mil Gloss Polyproplene at $.065 per MSI to 1.2mil Matte Polyester at $.300 per MSI. The cost difference is significant.

If we say the labor cost is 10000 shts / 2000 speed = 5 hours x $100 / hr that is $500 in labor plus our material cost for 1.2mil gloss polyproplene is $309 (19x25x10000/1000x$.065) and the 1.2mil matte polyester is $1425 (19x25x10000/1000x$.300).

This now gives us a swing of $1250 - $ 809(500+309) = $441 limiting our chance to get the job or $1250 - $1925(500+1425) = $675 in loss on the job.

The more accurate your standards the better your chances are of maximizing profitability. If your estimating method compromises profits for the sake of speed you should examine your estimating metods.

CHARGABLE EXTRAS - A SIGNIFICANT REVENUE STREAM

By Mark Porter
When was the last time you produced a job without any changes ? Are you capturing the revenues for these legitimate extra charges or are they falling through the cracks ?. If not more revenue then at least avoid costs. If a job is changed during production and you did not collect the extra revenue for it then you propably incurred more cost.

Finishers/Binderies provide quotes for customers and customers submit orders. The normal process is to ensure that the job submited and the quote provided are significantly similar that you can approve the production of the job. Once that approval has been given any customer driven changes to the order should be chargable. But how do you track these changes and bill your customer so that they feel compelled to pay but more importantly allow you to collect the charges without damaging your relationship with that customer.

You must follow a procedure to record all changes to jobs, chargable and non chargable, to ensure that that nothing falls between the cracks and is forgotten. But just recording changes will not allow you to collect your legitimate extra charges. The changes must be documented as to date, time, employee and reason the changes were made to provide the maximum support for your claims.

Documentation is not enough. The changes must be communicated to the customer at the time they are requested. The changes must be recorded as having been submited in writing to the customer, warned that they were chargable and that a price was quoted.
When the job is completed a full listing of all changes should be supplied to your employee in charge of invoicing. They can then decide which charges should be accepted, changed or deleted . The invoicing decisions are determined and the invoice is submited to your customer. If the customer questions these extra charges you can support your claims by providing the customer with the who, what where, why and costs details.

Hopefully your customer will start to provide you with better information when the jobs are first submited. Either way your company is in a better position because you are either collecting legitimate extra charges or avoiding the additional costs of providing those changes without charging for them.

Brief Job Changes Mgmt On-line Demo