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labor efficiency
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  #1  
Old 25th August 2008, 08:32 AM
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Question How to Measure Labor Efficiency?

Hi,

We are currently working on a new Six Sigma project to improve the 2-way internal communication in our factory. It was decided that one of the key metrics to be used is "Labor Efficiency" since improving internal communication will by default improve the "Labor Efficiency" which is one of the major factors that will influence productivity.

I found while surfing the Internet that some calculate it to be:
  • Labor Efficiency = Units produced / Labor hours
  • Labor Efficiency = Standard labor hours / Actual labor hours
The problem by using one of the above equations is that they will not obviously provide us with improvement in Labor Efficiency and Moral due to improvement in internal communication?!!

So how to measure Labor Efficiency?

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Old 25th August 2008, 08:47 AM
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Re: Labor Efficiency

Quote:
In Reply to Parent Post by Ramizz View Post

Hi,

We are currently working on a new Six Sigma project to improve the 2-way internal communication in our factory. It was decided that one of the key metrics to be used is "Labor Efficiency" since improving internal communication will by default improve the "Labor Efficiency" which is one of the major factors that will influence productivity.

I found while surfing the Internet that some calculate it to be:
  • Labor Efficiency = Units produced / Labor hours
  • Labor Efficiency = Standard labor hours / Actual labor hours
The problem by using one of the above equations is that they will not obviously provide us with improvement in Labor Efficiency and Moral due to improvement in internal communication?!!

So how to measure Labor Efficiency?
Another problem I see is a potential difficulty in addressing either of the above as a 6S project. Producing a unit could involve several steps or even separate processes. Expectations would need to be set for each of them, so as to know at just what point a "bottleneck" is occurring that needs to be addressed.

My other concern is using the term "standard labor hours." What is the standard, and where does it come from?

You haven't described how much has been done to make sure the labor factor is the valid target. Are all the tools and materials available, in good order, easily identifiable and within comfortable reach? Is there adequate instruction available? Is the environment favorable--that is, not too hot or noisy to concentrate?

Notice how I haven't even addressed the labor aspect. That's because I prefer to address the process, and labor - the human element - is just one part of it.

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Old 25th August 2008, 09:02 AM
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Re: Labor Efficiency

Manpower productivity (we call in our steel plant; tons of crude steel produced per man-year) depends on many factors, communication is one of those factors.

If I understand correctly, your project should look into CTQ measures of 2-way communications, rather than labour efficiency, which is an indirect measure.

Regards,
M Rama Krishna
Thanks to munagada for your informative Post and/or Attachment!
  #4  
Old 25th August 2008, 10:52 AM
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Re: Labor Efficiency

Yes, I think (and maybe I am wrong) that communication is one of the factors that will improve employment efficiency which is by itself a factor that will improve productivity.

Productivity factors could be (supervision, work methods, utilization of resources, workforce efficiency, etc.). While workforce efficiency factors could be (motivation, recognition, training, internal communication, etc.), and the internal communication part is our Continuous Improvement project.

Maybe Six Sigma is not the write methodology for these type of projects, although DMAIC cycle seems to be the best way to achieve the target!

The "Standard Labor Hours" which I found somewhere on the Internet is maybe the optimal working hours without the considering absenteeism and overtime.

By the way, we are using other CTQ measures such as:
  • Meeting effectiveness
  • Suggestion system awareness & participation
  • Feedbacks given after idea processing
So what type of 2-way communications CTQ do I need to measure, and shall I ignore the the Labor Efficiency (which is an indirect measure).

Thanks.
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Old 25th August 2008, 11:13 AM
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Re: How to Measure Labor Efficiency?

It sounds as though this subject is becoming too complex. I am wondering if the question is about labor, or if it is about process efficiency?

My focus on labor efficiency is to first make sure that the only thing being evaluated is the labor: all the other factors have been simplified, standardized, explained, streamlined and problems resolved so the only thing left is how well an employee perfoms the tasks.

I expect that, if all those process things were done correctly, labor (the actual hands on aspect) would become much less of a problem.

So: are you inquiring about process efficiency? That could be measured as a ratio of units of output per employee or machine hour. It would incorporate all the factors, including personnel labor.

Or are you inquiring about job performance efficiency? That could be measured as a ratio of the time it takes persons A, B and C to do a task as compared to a baseline time set by a skilled operator.

This works best when all the factors besides the hands on stuff are the same. That could even include the ability to reach all the needed points of the process: is Person A taller or have longer arms than Person B? If we're talking about hands on labor, such things need to be considered because even reaching for an item takes perhaps a second longer for me than it does for my son, and that adds up.

So, I caution to use great care in defining just what you want improved, and make sure that variation in only that factor is being addressed. Otherwise, improvements may be made without knowing how - that can make successes harder to repeat.

I hope this helps!

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  #6  
Old 26th August 2008, 02:26 AM
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Re: How to Measure Labor Efficiency?

Thank you Jennifer,

Yes, my inquiry was about job performance efficiency. What is important in the project is to be able to measure the improvement in the performance as a result of improving some systems such as internal communication, reward and recognition, competency, etc.

For example, if we've improved our suggestion and feedback sub-system (which is part of the internal communication), how this will reflect on the employee's moral and behavior. Of course he would feel satisfied after he suggests some great idea then he gets a feedback, and this would reflect on his performance, correct?

My questions are:

Is this a Six Sigma project?
What type of 2-way communications metrics do we need to measure?
Shall we ignore the the Labor Performance Efficiency metric (which is an indirect measure)?

Last edited by Ramizz; 26th August 2008 at 03:56 AM.
  #7  
Old 26th August 2008, 06:03 AM
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Re: How to Measure Labor Efficiency?

Quote:
In Reply to Parent Post by Ramizz View Post

Thank you Jennifer,

Yes, my inquiry was about job performance efficiency. What is important in the project is to be able to measure the improvement in the performance as a result of improving some systems such as internal communication, reward and recognition, competency, etc.
If my understanding is correct, you want to measure the decrease in MIS-communication due to improvement of your communication system. You want to relate this to labor efficiency because mis-communication may mean somebody has to do the job all over again. If this is the case, i suggest you measure 2 things:
1: Cases of mis-communication per defined and regular period/interval
2. Cases of re-work due to miscommunication.
If your new system is really effective, both these should decrease.

Note: Much better if you can translate 1 & 2 in positive terms (% correct communication/understanding per day, etc...)

Hope that helps

>>Reynald

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  #8  
Old 26th August 2008, 11:52 AM
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Re: How to Measure Labor Efficiency?

Good input from Reynald.

I would not make this a 6S project. However, I would do it as pragmatically as is reasonably possile, so I could repeat the effort elsewhere.

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