HELP! Our INDIRECT labor is killing us!
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  1. #1
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    Default HELP! Our INDIRECT labor is killing us!

    We are a 10 CNC machine shop with 3 Expensive Mazaks and have 4 great machinists and our sales per machinist is actually pretty good, annual sales are about 1.3 mil. BUT we are experiencing profit losses every month. I think it is because of needing more machinists and high indirect costs. Here is an example of our indirect employees: 1. Lead & Setup guy 2. Programmer who also does setup and quoting 3. R&D machinist 4. Material handler expediter 5. Manufacturing Planning assistant (cuts about 2 work orders per day and schedules jobs), 6. QA manager 7. QA inspector 8. Manu. Manager 9. Master Planner Scheduler 10. purchasing agent. Some of the indirect employees spend 20% of their time on other non-machine shop projects.

    We’ve left the running the shop in the hands of our manufacturing manager (amazing engineer and manufacturing mind), but are really questioning the need for 10 admin people for 4 machinists. I am just trying to get feedback on how many people are needed to do the various indirect jobs for a shop our size? Quoter? Programming? Planning and work order management? Any insight you can share is appreciated! Note that purch, QA, Manager, planner will spend 20% of their time in other departments.

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    Yeah.......you're kinda top heavy. $1.3 mil for that many employees? No wonder why it's skinny every month...................

    The first part of your post is not clear...............you have 10 CNC machines? 3 of which are expensive Mazaks? Or just three Mazaks?..........If it's 10 machines, 4 machinists and 10 support people, I'd say your sales are way too low. If it's 3 machines, 4 machinists, and 10 others, your sales are still too low......................too many mouths to feed.

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    Way too many chiefs for that many Indians. Our shop right now has a sales guy, an administrative assistant and a project coordinator/admin/other important sounding word and a part time accounts receivable/accountant for a similar sized business.

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    Easy Peasy...Farm out all indirect labor.

    Now that labor will show up on an different account.

    Heck, it works for the local school districts and their bus drivers.....

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    I feel your instincts are correct

    rule of thumble...no manager with one underling


    axe QA manager, hire experienced QA person.

    expediter and purchasing agent, one has to go

    master planner and manufacturing planning assistant? again one goes

    1.3 million, in turning work?

    Maybe 10000 hours in billable hours......maybe 6 people

    everyone else is extra..........

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    Quote Originally Posted by mrsshoots View Post
    We are a 10 CNC machine shop with 3 Expensive Mazaks and have 4 great machinists and our sales per machinist is actually pretty good, annual sales are about 1.3 mil. BUT we are experiencing profit losses every month. I think it is because of needing more machinists and high indirect costs. Here is an example of our indirect employees: 1. Lead & Setup guy 2. Programmer who also does setup and quoting 3. R&D machinist 4. Material handler expediter 5. Manufacturing Planning assistant (cuts about 2 work orders per day and schedules jobs), 6. QA manager 7. QA inspector 8. Manu. Manager 9. Master Planner Scheduler 10. purchasing agent. Some of the indirect employees spend 20% of their time on other non-machine shop projects.

    We’ve left the running the shop in the hands of our manufacturing manager (amazing engineer and manufacturing mind), but are really questioning the need for 10 admin people for 4 machinists. I am just trying to get feedback on how many people are needed to do the various indirect jobs for a shop our size? Quoter? Programming? Planning and work order management? Any insight you can share is appreciated! Note that purch, QA, Manager, planner will spend 20% of their time in other departments.

    Only the Federal Government is able to deficit spend indefinitely. Way too top heavy in my opinion. QA manager and a QA inspector for that small of a shop? Master Planner/Scheduler and a Manufacturing Manager? Purchasing agent and Expediter? Lead/Setup guy and 4 great machinists?

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    I echo pretty much what everyone has said. QA could be one person,as well as shipping and purchasing. 2 people to schedule things? We have 25 direct laborers, machinists, welders, press brake operator, cutting table operators, and 10 office workers, which 4 of them can run basic programs on the floor as needed. I would stay away from job specialization and those all important titles you display on your desk name plate.

    For a shop that small, its important for most employees to be skilled in more roles than one.

    EDIT: I wouldn't consider us efficient by any means, there is a lot of tedious paperwork that could be solved by using our ERP software to a fuller extent.

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    You have enough overhead for 10-20 machinists, depending on the number of pieces per order. How many of the folks are family? What exactly happened that the front office is so large with respect to the shop?

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    "profit losses"
    Is that to say that there are profits, but they are getting smaller all the time?


    I'm bett'n that those few swell machinists have something to say (at least amongst themselves) about the mouths that they feed!

    Only way that there should be more people up front than in the back is if you are an engineering company.
    If you get paid only by product that goes out the door - you're lucky to still be open for business.
    (Those guys MUST be really good!)


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    Ox

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    Dang, 10 people doing the work of 4.

    Responsibilities need to be reassigned based on the capabilities of the individuals; jobs like quoting, taking the PO, creating the work order, and making the schedule should be done by one person in a company that small. He should also be ordering the material and consumables.

    Programming and inspection could be one guy, etc.

    Lead man/setup guy has time to run parts too. Why do you need a R&D machinist? Or a Master Planner Scheduler? What is the Manufacturing Manager doing?

    I would say sit down with the Manufacturing Manager and have a heart-to-heart. Show him the money you're losing, and ask for his help in re-organizing the structure. Make it clear it will be restructured- with or without his help...

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    I guess it's going to boil down to:

    Having 4 machinists fussing about the top heavy front end and still losing $.

    Or

    Having 4 warm bodies up front - bitching about "Dooing the work of 2 (3?) people" - and making money.


    That whole "dooing the work of...." line always pisses me off.
    Well, if one person can git it done, then it was overstaffed to begin with!

    Maybe doo to slower times?
    Bigger qty orders?
    New software?
    New folks that actually know how to use the software? (that's not me)

    ???


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    1.3 million in total sales and 14 employees does not make a lot of sense in today's economy, 1978 yes, now .......
    One could count setup, programming, and inspection as direct labor if you tracked it this way so that would put 7-8 on the "floor".
    The total dollars don't add up well, assume there is some rent, HLP, raw materials, maintenance parts, tooling that have to come out first which does not leave a lot of payroll, taxes,healthcare, etc. for 14 people.
    Confused as to how this works or how you are not bleeding red ink like crazy.

    Not sure what a "Material handler expediter" is or does and on this volume you have a dedicated "purchasing agent"?
    Full time "Master Planner Scheduler"? You must have a huge mix and be 1-2 piece very low bill per part running.
    So many things here don't add up with the original info unless some of these are part time "side" jobs or pay rates are much below average.
    Something is fishy.
    Bob

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    14 people in my company would need to make things work with $3million in sales just for status quo.

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    This will be one of those threads with only one post from the OP and all of us knuckleheads rambling on and on..................and on.................

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    What are you making?
    Own product?
    Sub contract?
    ISO or AS approvals?
    Aerospace/commercial yada yada
    and yes, with that amount of equipment and people, you should be looking at 3mill P/A

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    Quote Originally Posted by david n View Post
    This will be one of those threads with only one post from the OP and all of us knuckleheads rambling on and on..................and on.................
    I'm still curious - kinda....

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    Are you always doing hoards of onesey, twoseys and no repeat orders? I supervised, programmed, ordered material, tooling, helped with scheduling, and even had time for an occasional CNC tech repair for a 10 CNC Swiss department and we had the latest 7 axis machines at the time. Most jobs were on the machine at least a minimum of half a shift, but a lot ran for up to weeks. I did come in up to an hour before shift and leave an hour late. In a shop that small people that aren't running production need to wear multiple hats. I have a feeling your indirects are working inefficiently or not very hard or both.

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    Quote Originally Posted by david n View Post
    This will be one of those threads with only one post from the OP and all of us knuckleheads rambling on and on..................and on.................
    No, the Op has made ONE other posting....very good peek into their operation.

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    The machine shop is a small portion of our total sales. But a huge portion of our overall overhead, worry and resource allocation. So as an example our purchasing agent, planner and manager use 80% of their time to support the shop the rest to support our other assembly product line. We were not getting quotes done in time or work orders turned in time, so we brought in more staff. Funny we are still not getting quotes turned or work orders out in time. I am loving getting feedback from all the experience on this forum. There are no family in the operation.

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    We do a lot of repeat orders. Wow amazing one person could do all that. Totally agree with your assessment. Thanks for your insights!


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