Engineered Labor Standards

What are Engineered Labor Standards?

Essential to a workforce’s success are clearly defined expectations. Engineered Labor Standards are a form of work measurement that determines the time necessary for a trained worker, when following the prescribed practices/methods, working at an acceptable pace, under qualified supervision, and experiencing normal fatigue and delays, to do a specified amount of work at a specified quality.

There are three types of performance measurement that are used as standards or goals in a typical production environment:

  • Historical Goals
  • Reasonable Expectancies (REs)
  • Engineered Labor Standards

There are appropriate uses for all three types of goals within different operational environments and over the years Argent has utilized all three types in performance improvement programs and can assess an operation and identify the best type of measurements needed to provide fair and accurate performance feedback for each function.

Historical Goals

Historical Goals are based on just one variable, such as lines, cases or units per hour and are based on existing, and most likely variable, practices that were followed during the time period for which the data is accumulated/evaluated. They are typically arbitrarily determined by management by selecting the minimum performance level that represents the average performance or perhaps a slightly higher level than average. When these types of goals are appropriate, Argent will work with management to collect the historical data needed to develop them.

These goals are relatively inexpensive to develop but they have their shortcomings. For example, as volume increases or decreases, or work content becomes more or less variable and/or complex, these goals generally will not represent a fair and accurate way to evaluate performance. Also, they will most likely result in the lowest level of minimal performance expectation.

Reasonable Expectancies (REs)

Reasonable Expectancies (REs) are the goals for the completion of specific work-cycles or functions. These goals are not based upon historical data and cannot be arbitrarily set by management. They are similar to Engineered Standards in that they are determined through direct observations, generally over several work cycles, with workers following Best Practices, and time and motion studies to calculate the average time it should take to complete a job or group of tasks. REs are realistic and relatively easy and cost-effective to develop. However, they are based on a single work determinant and are not as sensitive to variations in workload or seasonal influences as multi-determinant Engineered Standards are.

Engineered Labor Standards

Engineered Labor Standards are multi-determinant (have more than one variable) and are typically used in environments with changing volumes due to seasonal impacts or growth and are crucial to developing fair and accurate performance measures.  A standard for order selection may use more than one of the following, for example: lines, cases, eaches, inner-packs, shelf/rack, cube, weight and/or travel.

Engineered Labor Standards involve element level data collection and analysis to develop fair and accurate goals. That data is collected through direct observations of workers performing work.

  • They are developed through direct observation of each function, performed following Best Practices, capturing time and motion studies data, or using MOST predetermined factors, for multiple determinants.
  • During the observation and time study, or MOST process, the time for each element within a function is captured. Consequently, they are very detailed.
  • Travel, personal, fatigue, delay allowances and random activities are included in these standards.

Standards and Goals are the heart of any successful labor management system or workforce optimization program. They provide the ability to compare actual performances against planned productivity, quality and overall customer service. Fair and accurate standards/goals are critical in holding both management and hourly associates accountable for their performances. They provide needed performance measurements critical to an effective coaching program and provide a solid foundation for forecasting and labor planning.

There are three major types of measurements that are used as standards or goals in a typical production environment. These include:

  • Historical Goals
  • Reasonable Expectancies (R.E.)
  • Engineered Standards

There are appropriate uses for all three types of goals within different operational environments and over the years, Argent has utilized all three types in performance improvement programs and can assess an operation and identify the best type of measurements needed to provide fair and accurate performance feedback for each function.

When Historical Goals are appropriate, Argent will work with management to collect the historical data needed to develop the goals. Historical goals are based on a single variable and existing methods within an operation.

When a Reasonable Expectancy (R.E.) is warranted, Argent will ensure proper procedures are being followed and collect cycle-time data used to create the goal. R.E.s are typically based on one or two production variables and are fairly simple to track.

Engineered Standards are typically used in environments with changing volumes due to seasonal impacts or growth. When an Engineered Standard is needed to ensure fair and accurate goals have been established, Argent will either develop the standards through Time and Motion Studies or MOST, a predetermined time methodology. Data is collected through direct observations of associates in the workplace. Engineered standards are usually multi-variable allowing them to be more sensitive to fluctuations in volume and impacts of seasonal changes.

What are the Benefits of Engineered Labor Standards?

Engineered Labor Standards are the heart of any successful productivity improvement labor management or workforce optimization program. They are fair and accurate and critical to holding both management and hourly associates accountable for their performances. They provide:

  • An accurate and flexible productivity goal that is sensitive to fluctuations in volume and seasonal changes,
  • Clear performance expectations,
  • The opportunity for associates to feel a sense of mastery in achieving their goals,
  • Healthy competition between associates,
  • The ability to compare actual performances against planned productivity to identify opportunities for productivity improvement and cost savings,
  • A way to estimate the potential impact of process changes, facility redesign or new equipment,
  • The potential to improve efficiency, productivity, customer service and throughput and reduce labor cost by 15% – 20%,
  • Performance measurements critical to an effective coaching program,
  • A solid foundation for improved forecasting and labor planning, and
  • The ability to revise goals for processes that have changed by conducting focused time studies of the changed elements.

What About Data Driven/Machine Learned Standards?

Data driven standards represent an alternative to the traditional engineering approaches described above. They are developed using algorithms that analyze multiple data points derived from existing systems, such as a warehouse management system. 

Data Driven/Machine Learned standards are:

  • Not yet the industry-accepted method for setting standards,
  • Time consuming to develop because massive amounts of data need to be collected over an extensive period of time to be processed through new “Big Data” tools,
  • Only as good as the underlying data,
  • Based on the only the data collected and analyzed over a specific period,
  • Unaware of which associates were following Best Practices,
  • Unaware of which associates were working at an acceptable pace and skill level,
  • Unable to adjust to changes in processes or facility layout or the introduction of new equipment,
  • Not sensitive to volume or seasonal changes,
  • Lacking in the ability to take into consideration unplanned interruptions, e.g., congestion, battery replacement and wait times,
  • Typically set at a level of productivity designed to allow for a stretch goal, which is an arbitrary increase in productivity established by management, and subject to change at management’s discretion, and most importantly,
  • Not as fair and accurate as Engineered Labor Standards.

What Does Argent Offer?

Argent engineers can develop Historical Goals, Reasonable Expectancies or Engineered Labor Standards (which could include XYZ travel calculations) Reasonable Expectancies (REs). REs and Engineered Labor Standards would provide fair and accurate measurements/goals needed to support an operation’s performance management strategy.

To establish Reasonable Expectancies and/or Engineered Labor Standards, Argent will conduct activities such as:

  • Develop a time study plan to ensure data collection is on schedule and within budget, and includes a fair distribution of orders and associates, 
  • Compile a detailed element list for each work function,
  • Perform time and motion studies through direct observations of associates performing tasks,
  • Analyze data and develop standard factors/formulas, and
  • Validate Standards using both system and floor validations.

For operations that already have standards but would like an unbiased resource to evaluate their current program, Argent can audit the current standards to determine if they need adjustment.