Using Man-Minutes to Manage Your Labor
Industrial engineering – “The branch of engineering that is concerned with the production of industrial goods, especially by the design of efficient plants and procedures and the management of materials, energy, and labor.” (Source: The Free Dictionary)
Many of the elderly people in our industry have heard of the “Houlihan System.” Way back in the ‘70s, John Houlihan (and later, Don Ullmer and Frank Zientarski, industrial engineers [IE]), helped bring attention to what many considered a new system. This Houlihan system proved that truss manufacturers would have noticeable and worthwhile gains in productivity when properly applied (explained in detail below). What is the
Houlihan Drummond System? Well, quite simply, John—and yours truly—simply added our names to a method of applying short scheduling measurement using time standards based on man-minutes for truss manufacturing.
One must first begin with reliable units of measurement of time. During my studies in industrial engineering, I performed time studies to develop proper time units for roof truss manufacturing. Any IE will tell you that the units of board foot (BF), linear foot, or piece count for truss manufacturing do not stand up to true industrial engineering principles of task-specificity, normal deviation criteria, and repeatability of results. Proper units of time for time-standard units are referred to as man-minutes (MM), man-hours (MH), realistic expectancy (RE), or scheduled units (SU), which are all measurements of time.
I asked Keith Myers of Woodhaven Lumber and Millwork in NJ, “Are you using the time standards for MM that I provided you during the consultation and, if so, how have they worked out for you compared to BF?” Keith replied, “Your time standards are perfect. They are far more accurate than BF. We are much more comfortable with the MM for the estimation of labor for both the pricing and shop scheduling. BF is just too unreliable for our needs.”
The most common units of measurement used in the truss industry are board footage and material cost, and both units are easily derived from truss engineering programs. If you use BF for your labor estimation, how is it that a large agriculture project (high BF, low setup time) versus a custom home (low BF, high setup time) does not have a consistent ratio correlation of BF per hour? The same can be said about material cost versus labor cost; as material costs vary, it has nothing to do with the amount of labor needed for the projects. The exact same problems occur when trying to use linear footage or sales dollars. As the complexity of the project changes, the factors that add labor are not properly reflected by these well-known units. None of them have any direct correlation to man-hours, so you end up using fudge factors to account for the discrepancies. Using fudge factors means your labor estimation accuracy becomes less and less consistent on an individual job basis.
If BF, linear footage, material cost, and sales dollars do not provide a consistent unit to establish labor rate, what about piece count? If you are going to use piece count as the unit factor, you will need to add the “average” setup time to each piece. The best way to understand piece count labor estimation is to use actual numbers. So, let us use an estimated time to cut on an automated component saw (all time rates are for example purposes only).
Setup saw time = 1 MM for a crew of 2 (30 seconds for saw setup)
Cut rate time per 2x4x8 piece = 0.17 minute for a crew of 2
Quantity 2 = (1 setup minute) + (0.17 * 2) = 1.34 minutes total = 0.67 per each piece
Quantity 20 = (1 setup minute) + (0.17 * 20) = 4.4 minutes total = 0.22 per each piece
A 300% difference!
If you use only a piece count with an “average” setup time added to each piece, for projects with very short runs, your labor estimate will be too low because not enough setup time is added. For projects with long runs, your labor estimate will be too high because too much setup time is added.
John Houlihan made a name for himself in our industry by christening the short scheduling time-standards system the Houlihan system. The method involves simply recording and measuring how well each assembly crew is performing every hour or two based on the estimated MM versus the actual MM the assembly crew accomplished. (MM, RE, or SU) Once each assembly team understands that they are being measured and closely monitored, there is a natural gain in productivity—according to industrial engineering statistics, it is an average of a 42% gain. This is no different than measuring how fast a runner can run a mile or how many pushups one can do in two minutes. Your company may not see a 42% increase, but just think about what even a consistent 5–10% jump in capacity would mean to your bottom line!
I know what many of you are thinking right now; “Oh, but Todd, we are doing great right now using our current methods, why should we change things when they have been working for us?” Modern cognitive theory states that people tend to perceive reality in light of pre-existing expectations and will ignore large amounts of contrary data before finally changing their minds (Psychology Studies, author & source unknown). That is the problem with human nature. If you think about it a moment, when do most people (or businesses) make serious behavior and practice changes? When they have no other choice. When things are going well, we are virtually blind to areas that could be improved upon. Everything stated in this article can be proven prior to mass rollout and has yet to fail when properly implemented. What is stopping your company from obtaining better results? What is preventing your group from implementing the Drummond Time-Standards System?
Keith Kylmala of Kylmala Truss stated, “…all I can say is Todd’s time standards are scary accurate! Once we set up the labor configuration file based on our equipment and practices, our truss software estimates the labor time and cost in a spectacularly accurate way. We love how many options there are to choose from with Todd’s time standards labor document. No more educated guessing for our costing and pricing.”
Cost savings and net profit gains that usually take months or years can be accomplished in weeks or months with Todd Drummond Consulting (TDC). Ask about TDC’s proven time standards that can be purchased with or without a consultation. Whether you are a new or a longtime operation, save your company a great deal of time and money by getting professional help and training for effective implementation of lean manufacturing and time standards from the number-one expert on reducing costs and improving productivity in all departments of the wood truss and wall panel manufacturing industry using proven, practical lean manufacturing practices combined with industrial engineering principles. Before you buy equipment, get TDC’s advice! TDC does not receive referral fees from any equipment or plate vendors, so you can trust TDC for unbiased vendor and equipment recommendations shaped by the vendors’ customer experiences. Don’t take my word about TDC’s services, though. Read the public testimonials that so many current and past clients have been willing to give: https://todd-drummond.com/testimonials/.