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Indirect labor - the bane of automation.

Manufacturing engineers and managers--in their search for ways to improve manufacturing efficiency and raise productivity--are told the only viable way to save America's faltering metalworking industry is by implementing forms of advanced tecnology, including computer-integrated systems.

Yet an increasing number of experts are saying you had better do more than just superimpose a management-information system over existing shop operations, or simply spot a few robots here and there. The real problem stems from decades of evolutionary, haphazard, unplanned growth of facilities, according to Robert L Callahan, president, Ingersoll Engineers. Such growth has resulted in an inefficient flow of products through the shop and is the primary cause of excessive burden and overhead costs.

The approach when automating shop operations has typically been an attempt to reduce direct labor costs, observes Callahan, but real savings should come from reducing indirect labor costs. Value is added to material at the machining operations. Excess time and costs are incurred between these value-adding operations by any number of traditional, poorly conceived practices that should be abolised.

In a subscription was news letter offered by Harbor Research Corp, Boston, MA, it is suggested that manufacturing management rethink production processes from the ground up, even though it has become increasingly difficult for management to reassess familiar manufacturing techniques.

The firm says that some of the US production facilities that are coming on line now could easily be classed as the best 1984 implementation of 1953 production thinking in the entire world. Companies cannot automate manufacturing systems that are fundamentally ill-conceived. Harbor points out that, while Toyota has achieved five percent of its cost reductions from its Kanban system, it has achieved 80 percent of its cost reductions from redesign of plants and machines in order to reduce indirect labor.

Harbor states flatly that no company can hope to accomplish its productivity goals if it can't reduce the amount of indirect labor expended. American manufacturers have buried this problem in one of the slickest accounting misrepresentations of all time. A forklift truck operator, for example, is counted as indirect labor, and his existence is sanctified by developing a magic ratio to direct labor. As long as the ratio is in line, no one bothers to question those labor hours. Harbor Research observes that indirect labor, used for moving material and information around our factories, is, in effect, our current data communications network.

The research firm advises that, to properly automate shop operations, electronic communications are needed that get all the way down to the gray boxes on the shop floor and captures all data about material flow and value-added processes from the process steps themselves.

There is simply no other viable choice.
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Author:Green, Dick
Publication:Tooling & Production
Article Type:editorial
Date:Jun 1, 1984
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