Factory can increase profit by reducing helpers - how to prove this?
I have started my career as an Industrial Engineer in a Jeans manufacturing company. In past few weeks I had gone through nearly all of your articles on IE on your blog and it has been a great help for me. But, I need some additional advises and I thought your help would be best for me.
I have been given an assignment to reduce helpers in the sewing department. Managers have observed that in many operations together with a machinist, a helper is also provided. Thus, this increase cost and consume time as the helper could have been placed to work as a machinist. Therefore, I want to know what method to use to show the line managers that it would be more profitable to reduce helpers from the floor. ... asked by Tashreen from Mauritius.
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Tashreen I appreciate your bold step that you have taken to show line managers that by reducing unnecessary helpers from the line, you are actually improving the performance of the factory. Read my answer to find a way.
First thing first, look into some theories.
You can analyse profitability of a line by using two measures - Labor Productivity and Line Efficiency.
Reason#1: Higher the productivity lower is labor cost per garment
Reason#2: Higher the line efficiency lower is labor cost per garment
And a reduced cost brings a higher profit
Additionally you can measure labor cost per garment. From the labor cost figure you can directly show the benefits of reduction in helpers from the sewing floor.
Next, you have to record few things to calculate above measures. Instead of two measures you can work on one measure only. Collect following information for a sewing line
- Number of helpers allocated
- Number of operators
- Daily production
- Working hours
- Garment SAM
- Helpers salary/day, OT payment, other Bonus if applicable
Prepare for a demonstration: You can show good figures to your manager by changing numbers here and there. But that would not work without practical demonstration. I would suggest you to pick one line for experiment (Pilot Line). Focus on that line only. Followings are the process to demonstrate it.
Step#1: Collect data for the above parameters.
For example, suppose number of helpers 15, number of operators 25, daily production 400 pieces, working hours 8 hourly daily.
Step#2: Calculate labor productivity with the existing manpower (operators + helpers). In the example total number of labors is 40 (25+15).
Labor productivity = Production per day / Total manpower input
Existing labor productivity = 400/40 = 10 pieces per labor
Step#3: Calculate labor cost per garment produced = (Total salary paid for the day / Total garment produced)
Calculate labor cost using actual figures from your factory.
Step#4: Action plan
Find what kind of jobs operators are actually doing in the line? Are they just assisting sewing operators by trimming chain of threads, aligning garment components after stitching or doing manual operations? In case operators can do his/her operations by their own, remove helpers from those workstations. Instead of removing all helpers on the same day, you can go step by step. It doesn't mean that you need to fire your helpers from the factory. As you said you can train them and employ them as operator.
Suppose you have reduced 5 helpers from the line. Now only 10 helpers are working in the pilot line.
Give operator time to practice working without helpers. Once they are habituated working without helpers capture production data. After reduction of the helpers you may or may not find slight reduction in production. Assume that you get same production as before i.e. 400 pieces.
Step#5: Calculate Labor productivity of the pilot line after helper reduction. Calculate labor cost per garment also.
From the above example, Current Labor Productivity = 400/35 = 11.42 pieces per labor.
Step#6: Now compare the labor productivity and labor cost per garment. Possibly, you will find that current labor productivity is higher than existing labor productivity. You can expect in reduction of labor cost when labor productivity goes up. This way you can show your managers, that reducing helpers is beneficial for the line. It reduces labor cost per garment and factory will earn more profit.
Improvement in Labor productivity = (11.42 -10)*100/10 = 14.2%
From this much improvement of productivity you will get minimum 14.2% reduction in labor cost.
Note: When you are removing helpers, you might need to train operators and change their habit. You might need to push them to keep production as per target.