STAFF SIZE AND BENCHMARKS. By Kelly Walker President & Owner, Kelly Walker Associates 214/

Transcription

1 STAFF SIZE AND BENCHMARKS By Kelly Walker President & Owner, Kelly Walker Associates 214/ Excerpts from Master of Advanced Equipment, Fleet and Shop Management Training and Reference Manuals. Copyright 2002 Kelly Walker. All rights reserved. Printed with permission. 379

2 SHOP CONTROL STAFF LEVELS STAFF TO THE VALLEYS. OUTSOURCE THE PEAKS. 1 Introduction: If the shop is staffed at optimum levels, then at least 25% of labor cost and activities must be outsourced to supplier specialists. Remarks: 1. Some fleets and shops staff to the peaks and make work for the valleys. This over staffing problem is typical in utilities, governmentals and industrials. 2. If the fleet and shop department focuses on preventive and predictive maintenance activities only, then with effective planning and scheduling, a significant reduction in baseline mechanic manhours can be achieved. 3. The following illustration presents the baseline inhouse mechanic manhours required concept. Illustration Baseline Inhouse Mechanic Manhours Outside Supplier Manhours Consumed On Major + Specialized Repairs + Annual Compliance Inspections 25% of Total Manhours and Cost Total Manhours Consumed Typical Fleet Employment Level Inhouse Mechanic Manhours Consumed On Major + Specialized Repairs 25% of Total Manhours and Cost Baseline Inhouse Manhours Labor Contractor Level Inhouse Mechanic Manhours Consumed Including Management, Preventive and Predictive Maintenance, Minor Repairs and Interim Compliance Inspections 50% of Total Manhours and Cost J F M A M J J A S O N D STOP 380

3 2 STAFF SIZE 18 BENCHMARKS USE MRUs TO COMPUTE STAFF SIZE AND NUMBER OF SHOP BAYS. Introduction: Maintenance repair units (MRUs) are an easy benchmark to apply when computing optimum staffing levels. Remarks: 1. In a typical fleet, a car consumes annually twenty (20) hours of mechanic maintenance and repairs. 2. Other fleet asset categories' mechanic manhour consumption are expressed as ratios of cars / 20 hours. For example, medium-duty trucks consume annually 3.0 times / 60 hours of mechanic maintenance and repairs versus cars consume annually 1.0 time / 20 hours. For example, construction equipment consumes annually 8.0 times / 160 hours of mechanic maintenance and repairs versus cars consume annually 1.0 time / 20 hours. 381

4 STAFF SIZE 18 BENCHMARKS USE MRUs TO COMPUTE STAFF SIZE AND NUMBER OF SHOP BAYS. 3 Remarks: from the previous page. 3. The following illustration computes number of full-time mechanics required for six (6) asset classifications. The following information is provided. Six (6) asset classification mechanic manhour consumption ratios (ex: 1.0, 1.5, 3.0, 5.0, 8.0,.5) Six (6) asset classification mechanic manhour consumption per unit (ex: 20, 30, 60 manhours, 100, 160, 10) Total annual mechanic manhour consumption by asset classification (ex: 2000, 3000, 6000, 10,000, 16,000, 1000) Number of full-time mechanics required by asset classification (ex: 1.3, 1.9, 3.9, 6.5, 10.3,.65) Total units, mechanic manhours and full-time mechanics (ex: 600 units, 38,000 manhours, 24.5 full-time mechanics) Illustration Compute Staff Levels Using MRUs. Total Annual Annual Mainte- Mechanic No. of Mechanic nance and Manhours Units Manhours 1 Repair 1 Consumed In Consumed Mechanic Equi- MRU Per Asset By Year In Mechanics Asset Classifications valents x Equals = Unit x Class = Class Hours Required 1. Cars 1.0 x 20 = 20 x 100 = Light Trucks 1.5 x 20 = 30 x 100 = Medium-Duty Trucks 3.0 x 20 = 60 x 100 = Heavy-Duty Trucks 5.0 x 20 = 100 x 100 = 10, Construction Equipment 8.0 x 20 = 160 x 100 = 16, Small and Handheld Equipment 0.5 x 20 = 10 x 100 = Totals 600 = 38, Note: 1 mechanic year in hours = 1550 hours Computation: 2080 hours minus (paid vacation, paid sick and miscellaneous time, paid holidays, paid training days, paid break, cleanup and restroom time, etc.) equals 1550 hours approximately. 382

5 4 STAFF SIZE 18 BENCHMARKS USE MRUs TO COMPUTE STAFF SIZE AND NUMBER OF SHOP BAYS. Remarks: from the previous page. 4. Using MRUs, the fleet in the above illustration requires 24.5 mechanics. Perhaps, eighteen (18) full-time inhouse mechanics and 6.6 mechanics outsourced, a 75% inhouse and 25% outsource ratio. 5. The following illustration computes number of shop bays required using a range of possible scenarios. Illustration Compute Number of Shop Bays Required Using MRUs. 1. In the previous illustration, the 600 fleet units required 38,000 mechanic hours annually for inspections, maintenance, repairs, compliance, etc. 2. Therefore, 24.5 full-time mechanics are required. (38,000 manhours 1550 manyear- hours = 24.5 mechanics) 3. Using the 75% inhouse and 25% outsource rule-of-thumb, compute the following. 75% inhouse x 38,000 manhours = 28,500 inhouse hours 1550 manyear hours = 18.4 or 18 inhouse mechanics and.4 inhouse mechanics outsourced. 25% outsource x 38,000 manhours = 9,500 inhouse hours 1550 manyear hours = inhouse mechanics = 6.5 supplier mechanics. 4. Compute the annual number of days the shop is open: 250 days. 52 weeks x 5 days per week = 260 days. 260 days -10 company-recognized holidays = 250 days. 5. Compute the annual number hours one (1) shop bay is available: 2000 hours. 1 shift: 250 days x 8 hours per shift = 2000 hours. 2 shifts: 250 days x 8 hours per shift x 2 shifts = 4000 hours. 3 shifts: 250 days x 8 hours per shift x 3 shifts = 6000 hours. 383

6 STAFF SIZE 18 BENCHMARKS USE MRUs TO COMPUTE STAFF SIZE AND NUMBER OF SHOP BAYS. 5 Remarks: Illustration continued from the previous page. Illustration Compute Number of Shop Bays Required Using MRUs. (cont'd) 6. Compute the number of shop bays required to perform 38,000 manhours of work annually. 1 shift: 38,000 manhours 2000 shop bay hours = 19 shop bays 2 shifts: 38,000 manhours 4000 shop bay hours = 9.5 shop bays 3 shifts: 38,000 manhours 6000 shop bay hours = 6.3 shop bays 7. Compute the number of inhouse shop bays required to perform the 38,000 manhours of work, if the 75% inhouse and 25% outsource rule-of-thumb is applied. 1 shift: 38,000 manhours x 75% inhouse = 28,500 manhours inhouse 2000 shop bay hours = 14.3 shop bays 2 shifts: 38,000 manhours x 75% inhouse = 28,500 manhours inhouse 4000 shop bay hours = 7.1 shop bays 3 shifts: 38,000 manhours x 75% inhouse = 28,500 manhours inhouse 6000 shop bay hours = 4.8 shop bays 8. Others 384

7 6 STAFF SIZE 18 BENCHMARKS USE MRUs TO COMPUTE STAFF SIZE AND NUMBER OF SHOP BAYS. Remarks: Illustration continued from the previous page. 6. The following illustration computes the difference between the number of mechanics and number of shop bays required, and mechanic to bay ratio. Illustration Compute Mechanic to Shop Bay Ratio shift: 75% inhouse x 38,000 manhours = 28,500 inhouse hours 1550 manyear hours = 18.4 mechanics 2. 1 shift: 75% inhouse x 38,000 manhours = 28,500 inhouse hours 2000 bayyear hours = 14.3 shop bays mechanics shop bays = 4.1 shop bays 4. The 4.1 shop bay deficit is caused by the fact that mechanics are in shop 1550 hours annually and shop bays are available 2000 hours annually, a 450 hour or 22.5% difference. 5. Compute the mechanic to shop bay ratio: 18.4 mechanics 14.3 shop bays = 1.3 mechanics to 1 shop bay. 385

8 STAFF SIZE 18 BENCHMARKS USE MRUs TO COMPUTE STAFF SIZE AND NUMBER OF SHOP BAYS. 7 Remarks: Illustration continued from the previous page. 7. Adjust the mechanic to shop bay ratio using the impact factors listed in the following illustration. Illustration Use Mechanic to Bay Ratio Adjustment Factors. 1. Vacation schedules 1 time per year shutdowns or staggered throughout the year 1a 1b If all mechanics take vacation at the same time, then increase number of shop bays computed. If mechanic vacation schedules are staggered, then keep number of shop bays computed. 2. Scheduled versus unscheduled performance scheduled maintenance and repairs require less shop bay space than unscheduled maintenance and repairs. Unscheduled activities cause excessive lost time associated with waiting on parts, special tools, etc. 2a 2b 2c 2d 2e 2f Scheduled maintenance and repairs requires 1 shop bay per 1 mechanic. Unscheduled maintenance and repairs require 1.5 shop bays per 1 mechanic. If inhouse-performed maintenance and repairs are 100% scheduled, then keep mechanic to shop bay ratio. As the percentage of inhouse-performed unscheduled maintenance and repairs increases, then increase the number of shop bays. If planned maintenance and repairs are performed inhouse and unplanned maintenance and repairs are outsourced, then keep mechanic to shop bay ratio. Others 3. If high-performance fleet management models are applied, then assets are disposed at optimum points. 3a 3b 80% of maintenance and repairs are scheduled. Keep mechanic to shop bay ratio. 4. If low-performance fleet management models are applied, then assets are well beyond optimum points. 4a 4b 80% of maintenance and repairs are unscheduled. Increase number of shop bays. 386

9 8 STAFF SIZE 18 BENCHMARKS USE MRUs TO COMPUTE STAFF SIZE AND NUMBER OF SHOP BAYS. Remarks: Illustration continued from the previous page. Illustration Use Mechanic to Bay Ratio Adjustment Factors. (cont'd) 5. When making number of shop bay decisions, lean toward less inhouse shop bays. 5a 5b If shop bays are fully-utilized, then outsource more and/or add a workshift. For most companies, shop facilities are noncore assets, therefore, financial and personnel investments should be minimized. 6. Others STOP 387

10 STAFF SIZE 18 BENCHMARKS DEALER SERVICE MANAGERS USE 8 STAFFING LEVEL BENCHMARKS. 9 Introduction: Sophisticated vehicle and equipment dealer service managers make shop staffing level add and delete decisions using up to eight (8) benchmarks. Remarks: 1. These eight (8) dealer service manager benchmarks are listed in the following illustration. Illustration Profit-Driven Suppliers' Shop Staffing Level Benchmarks 1. Franchise Requirement Vehicle and equipment dealer shops may have minimum mechanic staffing levels as required in the manufacturer-dealer franchise agreement. 2. Minimum Profit Threshold Vehicle and equipment dealers will add mechanics as long as each additional mechanic earns a minimum profit threshold level annually (i.e., marginal profit analysis). 3. Excessive Overtime If the total cost to add a mechanic is less than paying overtime, then adding mechanics is considered strongly. 4. Lost Business / slow turnaround times / dissatisfied customers If lack of mechanic availability is causing lost service revenues and customer dissatisfaction, then adding mechanics is considered strongly. 5. Higher Volumes Forecasted Dealer anticipates increasing demand for shop services caused by the following. 5a 5b 5c 5d 5e 5f Dealer is expanding rental fleet. Dealer adds new vehicle or equipment product line. Dealer adds new parts and services offers. Customer maintenance and repair outsourcing is increasing. Local economy is improving. Others 6. Shop Revenues to Headcount Ratio Total annual revenues generated selling shop products and services divided by total shop headcount. Note: Total shop revenues includes mechanic revenues, parts revenues and other services revenues. 388

11 10 STAFF SIZE 18 BENCHMARKS DEALER SERVICE MANAGERS USE 8 STAFFING LEVEL BENCHMARKS. Remarks: Illustration continued from the previous page. Illustration Profit-Driven Suppliers Shop Staffing Level Benchmarks (cont'd) 7. Labor Revenues to Mechanics Ratio Total annual maintenance and repair mechanic labor only revenues divided by total mechanic headcount, the acid test of mechanic-generated revenues. 8. Parts Revenues to Parts Personnel Ratio Total annual parts revenues divided by total parts department headcount, the acid test of parts personnel-generated revenues. 9. Others 2. In general, dealer service managers evaluate a combination of the eight (8) benchmarks when making mechanic staffing level decisions. 3. Bottomline: If adding mechanics increases profits, then mechanics will be added. STOP 389

12 STAFF SIZE 18 BENCHMARKS TURNKEY LABOR CONTRACTORS USE 9 STAFFING LEVEL BENCHMARKS. 11 Introduction: In general, turnkey shop labor contractors' staffing practices can be defined as world-class because onsite labor management is their core business. Remarks: 1. Turnkey onsite fleet and shop labor contractors frequently utilize the nine (9) shop staffing level benchmarks listed in the following illustration. Illustration 9 Onsite Labor Contractor Staffing Level Benchmarks 1. 25% Less Mechanic Heads Rule Labor contractors assume they can perform the same scope and volume of work with 25% fewer mechanics than governmental and utility fleets. Why? 2. 50% Less Management and Staff Heads Rule Labor contractors assume they can perform the same scope and volume of work with 50% fewer managers, staff, clerks, etc., than governmental and utility fleets. Why? 3. Shop Revenues to Headcount Ratio Total annual revenues generated selling shop products and services divided by total shop headcount. Note: Total shop revenues includes mechanic revenues, parts revenues and other services revenues. 4. Labor Revenues to Mechanics Ratio Total annual maintenance and repair mechanic labor only revenues divided by total mechanic headcount, the acid test of mechanic-generated revenues. 5. Parts Revenues to Parts Personnel Ratio Total annual parts revenues divided by total parts department headcount, the acid test of parts personnel-generated revenues. 6. World-Class Staffing Level Computations use the following variables. Highlystandardized fleets including interstate trucking fleets, UPS-type delivery fleets, etc., utilize the following variables to make optimum staff level decisions. 6a 6b 6c 6d 6e 6f Number of annual work orders completed Time-to-complete expectations applied to all repetitive work orders Quality Redo and comeback rates Total number of mechanic hours required to complete work orders Average annual mechanic manhours worked Billable time in manhours Others 390

13 12 STAFF SIZE 18 BENCHMARKS TURNKEY LABOR CONTRACTORS USE 9 STAFFING LEVEL BENCHMARKS. Remarks: from the previous page. Illustration 9 Onsite Labor Contractor Staffing Level Benchmarks (cont'd) 7. Budget Level Frequently, fleet and shop staffing levels must remain within a maximum annual shop payroll budget. 8. MRUs Maintenance and Repair Units Each vehicle and equipment classification consumes annually different levels of mechanic manhours. Computation: Number of Vehicles Annual Mechanic Manhours Total Mechanic in a Classification x Consumed per Vehicle = Manhours Average Annual Mechanic Number of Manhours Worked = Mechanics Required Note: MRU computation includes an interim step presented in a previous topic. 9. Span of Control Ratios The ratio of worker bees to nonworker bees. Total Nonmechanics in Equipment, fleet and shop department Total Mechanics (pull wrenches more than 50% of the time) 9a 9b 9c 9d 9e Some power utilities' equipment, fleet and shop departments have very top heavy 1 to 1 nonmechanic to mechanic span of control ratios. Most governmental fleet and shop departments have top heavy 1 to 3 through 1 to 5 nonmechanic to mechanic span of control ratios. Most onsite labor contractors have very lean 1 to 8 through 1 to 12 nonmechanic to mechanic span of control ratios. In the same universe, the same fleet and shop is being managed using very top heavy 1 to 1 span of control ratios and very lean 1 to 12 span of control ratios. Why? How? Others 10. Others 2. Bottomline: If adding mechanics increases profits, then mechanics will be added. STOP 391

14 STAFF SIZE 18 BENCHMARKS SPAN OF CONTROL RATIOS 13 Introduction: Most USA companies are using world-class software to eliminate middle managers and clerical employees, thereby, increasing span of control ratios from 8 to 1 up to 16 to 1. Remarks: 1. Span of control is defined as the ratio of direct management to direct labor. 2. Kelly Walker Associates expands the definition of the span of control ratio to include the ratio of direct labor to direct management and staff or worker bees to nonworker bees. 3. There is a wide range of span of control ratios found in USA companies. Examples include the following. U.S. Postal Service span of control is 5 workers to 1 manager. Clinton / Gore reinvent government program objective is 15 workers to 1 manager. Most Rust-Belt manufacturers' span of control is in the 8 to 1 range. Most Japanese manufacturers' span of control is in the 15 to 1 range. 4. Worker to manager ratios in the 5 to 1 range are indicators of corporate cultures with the following characteristics. Strong command and control management philosophy Fundamental distrust of worker productivity levels without close supervision Multiple layers of management is an indicator of a bureaucratic organization which is political, less flexible and slow to change. Others 5. Management policies, practices and procedures impact span of control ratios. Comprehensive written management policies, practices and procedures given to workers and aggressively enforced results in less managers required to insure these rules are followed. Frequent and effective two-way communications between workers and managers results in less managers required to convey information. Daily meetings to give instructions and receive feedback reduces number of managers required. Comprehensively written work orders reduce worker instructions and questions which reduces managers required. 392

15 14 STAFF SIZE 18 BENCHMARKS SPAN OF CONTROL RATIOS Remarks: from the previous page. 6. Well-trained workers require less management. There is an inverse relationship between worker skill-level and managers required. The higher the worker skill level, the lower the number of managers required. The lower the worker skill level, the higher the number of managers required. 7. Rules for reducing mechanic and staff level follows. If span of control ratio is 5 to 1, then for every 5 workers eliminated there should be 1 manager or staff eliminated. If span of control ratio is 10 to 1, then for every 10 workers eliminated there should be 1 manager or staff eliminated. If span of control ratio is 15 to 1, then for every 15 workers eliminated there should be 1 manager or staff eliminated. It is important to note that this opinion tends to cause controversy. During typical corporate downsizings, why is management and staff the last to go? 8. Performance-based compensation plans require less management. Financial incentives motivate workers to be self-directed, therefore, less management is required. Compensation based on longevity does not motivate workers, therefore, more management is required. 9. World-class fleet and shop software systems with paperless options require less nonworker bees to input raw data because initial data capture is electronic, therefore, less clerical staff is required. STOP 393