Feb 26 2015

The Temps

Published by at 3:26 pm under management,quality

Bill Tobin

I was at a client’s for a multi-day gig. One morning I arrived along with a large mini-van holding about a dozen people. They got out and entered the plant. When I asked about it the answer I got was “Oh. They’re temps. We get charged about $30/hr/head but it’s cheaper than hiring them.” Upon further questioning, these ‘temps’ got about a third of the fee AND they had to pay $20/day for the transport from the center of the city.

OK, I’m not running that circus, but let’s think for a bit:
Question #1. What kind of person do you get who’ll make only slightly more than the guy at the hamburger joint?
Answer: Most of them were the chronically unemployed or from the Prison Work Release program. — We’re not talking about a crew of rocket scientists or hungry students.

Question #2. Why hire temps?
Answer: Obviously using contract temporary workers, so long as the work requires no skill and is highly repetitive, for a short term need, is the ideal solution. But when do you stop this behavior?

Injection molding, by definition, is a high volume technology. While I’ve been to some excellent short run shops, most molders have a difficult time showing a profit with three runs a year of 100 units/run. Molders like runs that start with a half million units and go up from there.

When JIT came out, most molders laughed at it. They thought of it as a ploy to have them take on the warehouse responsibility for their customers. The concept of SMED is laughable because it is size limited – small molds as inserts in a larger base are practical. There’s a huge capitol investment, with little payoff when you standardize the mold bases for all your products and install one of the (very spendy) quick change systems. Even with that, while you can change out tooling (with a well trained crew who are all available when you need them – Ha!) in 20-30 minutes, but you still have to change out the material.

We hire temps to do the mundane stuff – critical cosmetic inspections, specialized packaging etc. In my client’s case he’d landed a huge contract for lipstick and blusher cases. Truth be told the war paint ladies put on costs a few pennies for the lipstick and less for the blusher. The case assemblies might cost a few nickels, but the pay up to $20 to buy the stuff! His clients had a fetish for cosmetic appearance on the part. It had to look PERFECT to command the price, even though it got immediately banged up once it was dropped into a handbag, jeans pocket or backpack.

So what did the temps do? There was a line of tables with them 100% inspecting for the slightest visible flaw under 10X magnification.

His contract was in the tens of millions units, so the ‘temps’ were probably able to count on a paycheck for better than 9 months.

But let’s take a look at Question #2 with the eyes of a completely naive MBA with a degree in ‘plastics!’

OK, let’s do the math.

12 temps/shift at $30/hour (we’ll ignore shift premium), three shifts per day, six days/week, for about 39 weeks. Assuming no additional contracts, no increase in orders and no PO cancellations that’s a tad more than $2,000,000 spent on temps!

A HUGE problem in automation is building specialized robots. Yup they work, but they’re also a One Trick Pony. They do one thing well and are stored in the warehouse when a different job comes up. We also tend to build robots to replace people – a second big mistake. Don’t make mechanical people – Automate the job!

The Vision System people got their technology from the Spy Satellites. A vision system can measure to a fraction of a thousandth of a inch and find a cosmetic defect the size of a spec of dust!

Generic automatic packaging systems have been around for decades. The semi-conductor industry has figured this out years ago – how not to have your packaging robots scratch your parts.

If we bought a generic vision system AND a generic packaging system, complete with all the bells and whistles adapted to this one purchase order, including the ‘road trips’ to the vendors, training of our personnel and various tradeshows all over the world we’d ‘have to’ research before we made the purchase decision; The base price could be generously
budgeted at $175,000 and the customized end of arm tooling could also be generously
budgeted at $80,000.

ZOWIE! We saved $1.7 million off the bat. Plus we saved ‘stupid scrap’ – good parts that were rejected, bad parts that were accepted, good parts damaged during packaging. Stupid scrap savings on yield alone is probably more than the original savings.

OK, so why not do it?
1. ‘We don’t have the money’ – management’s generic answer even if the question is ‘ Is it raining?”
The return on investment is very good. More importantly, designing the system properly allows the base units to be used elsewhere with the only additional cost being reprogramming the vision system and swapping out the removable end-of-arm tooling with something new.

2. “We’ve always done it this way” – management’s second generic answer to avoid change.
Wouldn’t it be better to have skilled people doing profit enhancing things, than having to baby-sit a group of adults who get bored in less than 10 minutes?

Yup, change is a bit scary. But this kind of automation allows you to have your customer pay for capitol improvements in the long run. And as a bit of incentive, if you’re really good, you make it a “lights out/hands off” manufacturing cell. Your customer will be pounding down the door trying to give you more business because he knows you’ll provide consistent quality.

Take a look at your plant. A few years ago everybody outsourced to China because labor rates were cheap. The smart guys automated so labor costs didn’t matter any more. Darwin’s Survival Of The Fittest said it wasn’t the biggest, strongest or most intelligent that survived. It was those who could adapt to changes who would rule the world.

It’s your choice. Think about it.

One response so far

One Response to “The Temps”

  1. Douglas Bryceon 27 Feb 2015 at 7:17 am

    Bill, I have always appreciated your “no holds barred” approach and here it is again. I like the fact that you address an issue head on without trying to dress up the verbiage or use politically correct language.

    I have used the same basic “cost” arguments to convince my clients to bring the overseas work back home. It makes perfect sense to eliminate the labor cost through automation (even on low volume work) than to outsource to another country to get lower labor cost.

    Thanks for another straight forward article. I look forward to reading others.

    Douglas M. Bryce

Trackback URI | Comments RSS

Leave a Reply

  • Jobs

  • Writing

  • Jobs