Pre-calculation of labour cost in a steel furniture factory 1

[nilsht]

I was recently hired as a production engineer for a factory which design and produce office and shop furniture, mainly made of steel.
There is per today no procedures for calculation of direct cost in the production. One of my duties will be to create and implement a system for calculation of the cost of each component in the production. By breaking down each finnished product to simple componets. I will then try to see how much each operation (such as welding, drilling, bending, shearing etc.)will cost for each component.

My question is: Is there any standard system for calculating the cost of operations such as cost per mm TIG welding on a given type of profile? If there is, does this standards differ between industrial work and fine finnish?

Can anyone give me a tip or atleast give me an idea about litterature about the subject? [sig][/sig]

 

[bwood2800]

This is simply my opinion; however, I would not trust using standards written by someone else relating to an operation that may be "similar" to yours. Your operation is similar to many probably, yet unique in its own way. I recommend setting time standards for each of your work stations yourself. If you have time standards for each of your work stations, you route a given product through your facility, and this should give you the labor hours (broken down by separate processe) for the product all the way through your operation. In addition, you should set up your materials usage for each product. This should cover your labor and materials cost estimates every time.

Hopefully this helps you.. good luck.

 

[days]

I would suggest that you start by compiling a process route for each component. Then for each operation within the route a standard minute value must be calculated or timed. As I'm sure you need to implement the standards before any oportunity to time every operation, therefore I suggest you use MOST (Maynards Operational Sequence Technique). This is a system which can be used to predetermine a Basic Minute Value for an operation, allowances (relaxation, conditions etc)are then added to the BMV to give a Standard Minute Value (SMV). If you have, and I'm sure that you do, many similar components with similar processes then try compiling a table or graph to generically determine other SMVs from those already calculated with MOST.
An integrated computer system is the next logical step. All of the Bills of Materials and Routes could be entered and the system would calculate costs, capacities, manning requirements etc.
The system used at my company is SAP which can be very labour intensive to set up (or expensive if skills not available). However, I'm sure other more specifically targetted software is available for your needs.

 

[griffengm]

You can work out the time & material factors for an inch of weld and there are several spreadsheet type programs to do this. The problem is that 10 welds one inch long do not equal one weld ten inches long nor do they equal ten one inch welds spread over a meter square.
I built such a system for our company to use for costing proposed products since many new items use the same processes and equipment as the old.
An advantage of doing this is that it also gives a very good feel for bottleneck locations within your plant. You will likely find several years worth of improvement projects so grab the stop watch and get your data.
The costing process we assembled used workstudy data and statistics to develop time standards and identify critical determinant factors such as part weight, number of components and process. It allows us to compare cnc punching to shear/punch operations before material is cut or even purchased.
By adding new data to the data base as it is available, the system continues to evolve and improve.

 

[omar12]

base on your request you are looking to set up a standard cost system. Depending on the size of your organization, the cost system can be as simple as you developing a spreadsheet using excel. Your first step is to copy your indented bill of materials into your excel spreadsheet. It appears that you do not have process sheets developed. As far as determining your labor cost for fabricated parts, you'll find that a lot of them may be purchased items. I find hard to believe that your company does not have access to costed indented bill of materials already! As it was suggested above, MOST is a good program to developed your labor rates. I am an old I.E. and I used to develop my own rate sheets using established machining formulas that allowed you to develop your labor standards for fabricated parts. The subassembly and assembly rates can be developed ( in addition to using the sofware) by using W.O.R.K.F.A.C.T.O.R. or M.T.M. tables.Overhead- see accounting. Check out book by Dr.Oswald- Cost Estimating. Dr. Oswald used to teach in Colorado University. He is listed as Who is Who in Cost Estimating. This is a must have book!

 

[griffengm]

I just noticed one item in your original post that made me pause and concider.
One place you will need to check is which items your company expenses and which are applied in BOMs. For example, our company expenses welding gas but direct costs welding rod used in oxy-acetylene welding. In a brazing operation, we expense both gas and rod.
Check with your accounting department to find out which materials are handled which way.
For some processes, it makes sense to expense (Ahh, poetry in engineering! Don'cha just love it!). In other words, don't spend a lot of time figuring costs on points that may not apply in the first place.

Griffy

 

[mcorker]

What I would suggest is that the fist order of business is to implement some "Lean" initiatives to cellularize, reduce setups and organize the shop for "one piece flow". Once this is well under way an integrated erp system is the next step. For the furntiutre industry you would wbe looking for a package oriented towards make-to-order that can handle parametric and dimensional attributes of the furniture industry.

Once in place you can institute shop floor data collection to collect labor time by cell and compare this to the estimated labor from the ERP system. Adjust when variances are repeatable.

Mark Corker

http://www.seradex.com

 

[apayams]

Hi,
Logically you should start studing the operation time using one of the time study methods eg. Direct Observatio, MTM MOSt depends on nature of operatioon , but If it's all about welding I would recommend you start "Work Sampling " Procedure , and creat your own Pre-Determine data sheet.
You should breakdown the operation into small / measurable elements , then define standard paramethers such as length of welding , type of melting metal ,...
then commit to work sampling wich would be direct time measurement,
once it's finished,the statistical methods will pop in,

Payam