HELP! Our INDIRECT labor is killing us! - Page 3
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  1. #41
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    Quote Originally Posted by CarbideBob View Post
    You sort of missed this in your original posting. You should have lead with this.
    1.3 in sales. 90 percent of that elsewhere.
    So now we have $130,000 total produced by your machining staff of four or 10 million plus in sales.
    Which is it?
    I suspect the latter and you are trying to pry a small piece of value added separate from the "whole" company due to support needed.
    Do the in your head and spreadsheet eliminating all the in-house machining.
    Now do all all those overhead people stay and get paid? How much of this can you cut and keep the 90% alive? A guess would be near zero.
    If so you can not charge them to this side regardless as to your guess as to how much time they spend on one side or the other.
    You are mixing apples and oranges, your original overhead verse production workers is absolutely meaningless.
    Bob.
    If you look into the OP's only other topic, you'll see the Missus
    seems to know allot about the business of importing from China.

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  3. #42
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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.
    This is supposed to be a joke but sounds like your reality.

    “A Japanese company and a North American company decided to have a canoe race on the St. Lawrence River. Both teams practiced long and hard to reach their peak performance before the race.

    On the big day, the Japanese won by a mile. The North Americans, very discouraged and depressed, decided to investigate the reason for the crushing defeat.

    A management team made up of senior management was formed to investigate and recommend appropriate action. Their conclusion was the Japanese had 8 people rowing and 1 person steering, while the North American team had 8 people steering and 1 person rowing. So, North American management hired a consulting company and paid them a large amount of money for a second opinion.

    They advised that too many people were steering the boat, while not enough people were rowing.

    To prevent another loss to the Japanese, the rowing team’s management structure was totally reorganized to 4 steering supervisors, 3 area steering superintendents and 1 assistant superintendent steering manager. They also implemented a new performance system that would give the 1 person rowing the boat greater incentive to work harder.

    It was called the ”Rowing Team Quality First Program“, with meetings, dinners and free pens for the rower. There was discussion of getting new paddles, canoes and other equipment, extra vacation days for practices, and bonuses.

    The next year the Japanese won by two miles. Humiliated, the North American management laid off the rower for poor performance, halted development of a new canoe, sold the paddles, and canceled all capital investments in new equipment. The money saved was distributed to the Senior Executives as bonuses and the next year’s racing team was outsourced to India.”

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  5. #43
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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.
    I'll try and be more serious than I was in my last post although I still think you are just pulling our collective legs.

    On the assumption that you do have 4 "great machinists" why do you need QA etc.? QA is for very large corporations to check up on suppliers, not "in house" work.

    I'd also imagine that planning and purchasing could be done with one person. All that I'd consider necessary is someone to take orders and sell.

    Someone to take care of book keeping and keep an eye on things and that's that, at least for a shop your size. I get that to 4 + 3.

    I'm still at a loss to figure out what you in fact make with the set up you have.

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    Hello mrsshoots,
    Gordon's analogy is quite true. Our industry is obviously in a "growth mode", otherwise you would not have as many clip board jockeys on your shop floor. For most shops employing 4 or more machinist a QA guy/gal is a good idea, QA should also be in charge of shipping/receiving. At least 2 of these 4 machinist should do the cnc programming for all cncs. The next position should be a General Manager (usually the owner)this position will take responsibilities for Quoting, Job Planning, Payroll, Purchasing, securing new orders and dealing with existing costumers.

    This is where it gets interesting; This General Manager along with the QA should be in charge of ALL shop maintenance, yes that includes cleaning the restroom.

    Did anyone notice that there is no receptionist, that is because no calls are answered.

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    Quote Originally Posted by Comatose View Post
    Are you losing money... overall... or just the machine shop portion?

    If you're making money overall but you have a money pit of a machine shop with way too much overhead, why not cut the machine shop entirely and just contract out for the parts you need? If you're doing 90% of your sales and more than 100% of your profits from other areas, you don't need it. Keep one guy and one machine for R&D and spin the rest off with three machinists, the head guy, one programmer, one QC and one support staff. It'll sink or swim on its own.
    Yep. Find a quality honest shop and your costs will go down. Build a relationship with them. There are plenty of small shops with 3-4 guys and only one indirect labor guy.

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    More or less everyone else suggested the right fixes.

    4 machinists + 1.3M$ in total turnover suggests about 2-3 people total to do all-other-work.
    So, from the 10, 7 need to go- or the turnover needs to double to 2.6M$ for 3 to go.

    The case of 3 people doing all-else usually needs one very competent shop manager.

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    No update from the OP.......................big surprise.................

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    Quote Originally Posted by david n View Post
    No update from the OP.......................big surprise.................
    Too busy sending more work to China.....

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    Quote Originally Posted by digger doug View Post
    Too busy sending more work to China.....
    Cuz the overhead is too high here.........................

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    So a big import side and a US support side.
    Is the US side paying for itself may be the OP's question.
    I sort of get this.
    You need the overhead for the bigger section. The overhead is spending lots of time supporting the smaller end.
    Now the math gets complicated.
    I could give a shit less that he buys some or even most elsewhere.
    Bob

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