Business Case Solutions - 21 - Performance Tracking
Business Case Solutions

Labor performance tracking can help determine if a project or customer is profitable for your business and if the product is priced correctly.  Poor labor performance can turn an otherwise profitable project into a money loser.  Inversely, it may also identify projects that can be priced more competitively while maintaining profit targets and goals.
 
Companies often take one of four approaches for their labor performance tracking:

  1. Bottom-line or absent - Some companies look at overall profitability at year end to determine if they have been pricing their products profitably and are making money.  They do not track individual job performance.  While this is the "low-cost" option because it requires no additional overhead for tracking labor performance, it does not provide enough details to direct improvements or identify unprofitable projects and customers.  This "low-cost" solution may actually be one of the most expensive in terms of lost business from over pricing, and lost profits from underpricing.

  2. Paper based tracking - This is a common method used in manufacturing because it is quick and easy to implement and requires little money for data collection systems.  It is simple to setup any workstation for data collection and employees can take their time sheet to any work station.  However, it is very easy for employees to make mistakes.  They can either forget to record their time, or record their time against the wrong jobs.  Additionally, it is time consuming to enter the data into a system manually, or to analyze the data on paper.

  3. 3rd party tracking - Many companies use a 3rd party time tracking system to collect project labor information.  This 3rd party system may already be in place and give users the ability to record time against projects and analyze the results.  However, it either requires redundant project information in the 3rd party system, or the creation of a link between systems to allow data sharing.  The same may be true of analyzing the results.  This may require workers to leave their work station as they change jobs within the system.

  4. Integrated tracking - An Integrated tracking system allows users to collect project labor information from within the shop floor control system.  This integration verifies that projects are valid and active, and keeps real-time information readily available.  It also prevents the unnecessary creation of project information in multiple databases.  However, depending on terminal availability, it may require workers to leave their work station as they change jobs within the system.