Shop-Floor Data Collection: It's About Time

"Only 5% of the time and attendance market has been tapped by VARs and systems integrators," says William (Bill) R. Allen, president of International Data Technologies Corp. (IDT) (Atlanta). This 5% equates to about $200 million in sales in the time and attendance market. Can you imagine the money still to be made selling automated time and attendance and related data-collection applications? Allen has done more than imagine; he's gone after his share of the market.

Allen's company, IDT, integrates its own software with data-collection hardware. IDT's customers include American Standard Corp., Raytheon, and Lever Brothers. IDT concentrates on selling to companies that have between 100 and 20,000 employees. "But, despite their size, all of our customers need automated time and attendance. Why? Because time equals money." Even for the pizza shop with seven employees, payroll represents one-half of the business' monthly expenses. Allen's pitch to his customers is simple: "If you can't measure it, you can't manage it."

Measuring More Than Hours Worked
Allen helps his customers track more than the amount of time people work. He sells his customers on the benefits of job costing and shop-floor data collection — the process of tracking operational activities in real time. Shop-floor data collection incorporates various technologies including man-to-machine integration (including bar-code scanning) and machine-to-machine integration," explains Allen. "Moving information through to an enterprise resource planning (ERP) system is the backbone of shop-floor data collection.

"Basic time and attendance systems track employees' hours worked," says Allen. "You know you've had a warm body on site for X number of hours. The systems also flag exceptions to basic payroll rules and regulations, such as overtime and jury duty, and they calculate payroll. But there is more to it than that." Beyond tracking warm bodies on-site, shop-floor data collection, as a process, take into account and measure the following:

• Labor distribution – This function assigns employees' labor to departments. "Charlie spends four hours in an indirect labor activity (i.e. shipping) and is paid $10 per hour. He works four hours as a direct-labor machine operator and is paid $12 per hour," says Allen. "The time and attendance and integrated labor-distribution system calculates the rates of pay and charges them to the two respective departments."

• Job costing – This function ties into production. For example, 10 different manufacturing operations may be involved in the production of a chair. Job costing measures each operation – how long each task takes and the materials used. More specifically, job costing tracks how many chairs were produced, which employees produced them, and how many chairs were scrapped and the reasons why. "This information is used by manufacturers to develop job quotes for future jobs based on real production costs," says Allen.

• Dynamic scheduling – "Although dynamic scheduling was primarily designed for the hospital, hotel and retail environments, our customers, such as Westinghouse, have been creative and innovative in using it in the manufacturing environment," says Allen. Westinghouse uses dynamic scheduling to schedule temporary summer employees.

  "This feature helps companies schedule employees around peak periods of activity," explains Allen. "A hotel with convention facilities, for example, relies on many part-time workers. With dynamic scheduling, users can easily split shifts and update schedules as needed for an event. Hospitals, with a 24-hour, daily-scheduling requirement, also benefit from dynamic scheduling. It's not unusual for a hospital with 500 employees to have 10 people call off sick every day. Dynamic scheduling helps shift employee schedules to cover absences."

Selling The Benefits Of Shop-Floor Data Collection
So, how is Allen marketing shop-floor data collection to his customers? "We don't advertise. Instead, we rely on word-of-mouth referrals from our existing customers," he says. Allen also attends at least two trade shows each year — Retail Systems and ScanTech.

One of Allen's first responsibilities to new customers is helping them overcome their fear of payroll. "Payroll is treated like a big hoary monster or as a necessary evil," says Allen. "Payroll is done in a closed-door office down the hall somewhere, or it's done by a bank. People don't understand it," Allen says. "I have customers who have automated their purchase-order system and can tell you who ordered 10 pencils last week and at what cost. But their payroll clerk completes 500 math calculations every day to prepare the weekly payroll. It doesn't make sense."

Allen is quick to point out the ineffectiveness of paper-based systems. "Employees will manually record what they think management wants to see. For example, Charlie normally scraps 11 chair legs every day during production. This is an acceptable number by management's standards. Based on what, we're not sure. So when Charlie starts his shift, he automatically records 10 or 11 chair legs as scrap on his daily worksheet. He then simply scraps that same number during the course of the day. This happens a great deal and is easily corrected in the shop-floor data collection process," contends Allen.

"It's often only when management starts observing employees' actions that the need for automation becomes clear," says Allen. "One IDT customer, a manufacturer with 7,000 employees, was frustrated because his employees lined up to punch out 30 minutes before quitting time," says Allen. "It apparently took too long for all 7,000 employees to punch out. That company clearly needed a more efficient way for employees to clock out."

Using A Project-Management Approach
When making a sale, Allen uses a project-management approach that includes an implementation schedule. "Big or small, all of my customers go through this," says Allen. "The process helps manage customers' expectations and keeps the project on track. The implementation schedule identifies who is responsible for what task. It also gives deadlines for tasks to be completed and estimates and budgets the time to complete the tasks. A designated person from the customer site is one project manager. An IDT project manager is assigned as well. The project managers communicate directly with each other."

"We expect the customer to destroy the timeline, as budgeted timelines rarely equal actual timelines," says Allen. "For example, we determine how many hours it should take for the customer to set up a database. If it's not done on schedule, the IDT project manager talks to the customer project manager to find out why. It helps the customers realize their responsibility. It may sound like overkill for a $10,000 time and attendance system, but I won't take an order unless a customer commits to this process."

Allen feels it's important to recognize the five phases of user acceptance during the implementation. These phases are sabotage, resentment, passive acceptance, excitement, creativity and innovation. At the start of an installation, employee sabotage is common. Sabotage can be as subtle as a supervisor refusing to use dynamic scheduling software. It can also be as blatant as an employee damaging system hardware. "The last two phases, creativity and innovation, are exciting," says Allen. "That's when users maximize a system's capabilities."

Customers Increase Profitability With New System
When all the pieces fall into place – when the installation is completed – Allen says his customers are often surprised by what they learn. One of his customers, a bindery facility, is one such example. Even after the installation, the owner of the company wasn't completely convinced the system was a good idea. "He was wrong," says Allen. "The system not only tracked employees' time, it measured their productivity and how much it cost to complete each job. With real-time data available, the owner realized 80% of his production jobs were either losing money or breaking even. Only 20% of the product lines were profitable. As a result, the bindery dropped half of its customers. The business aligned itself closer to the 80/20 rule, where 80% of the profits is generated by 20% of the customers."

Allen is following the same rule, concentrating on companies with a desire to automate more than just time and attendance. "It's not a question of whether a company can afford to automate time and attendance and shop-floor data collection. It's a question of whether a company can afford not to automate," says Allen.

Knowing that, are you prepared to grab your share of the time and attendance market?