Work Measurement Specialists and Consulting Engineers: Improve Productivity, Reduce Costs, Improve Profit
Indirect labor is defined as work or tasks performed by personnel that do not produce products. Indirect labor costs are costs that cannot be specifically linked to the physical construction of specific products, but are necessary for producing those products.
Some examples of indirect labor are janitors or housekeeping personnel, utility workers, tool crib attendants, inspectors, material handling personnel, shipping/receiving personnel, clerical workers, fork lift drivers and maintenance workers. Indirect labor can also apply to the salary workforce in the office, whether clerical or executive.
There exists a pervasive belief that you cannot measure indirect labor or jobs. The usual explanation is that these types of jobs are non-repetitive and are therefore impossible to measure. Other rationales are that indirect operations may involve groups of people, the unit of output appears difficult to define, the job may entail numerous sub operations, the work cycle is long, and the operation constantly changes geographic locations.
ITI consultants have extensive experience in analyzing this often overlooked area of indirect labor. Our consultants will perform an evaluation of your indirect labor operations and detail the work content and the time it takes to perform the given jobs. Recommendations are also presented for improvements and cost reduction. Consequently, the indirect labor area usually offers a great potential for reducing costs and increasing profits through evaluations, methods engineering, and time study.
Advantages of an indirect labor evaluation can include operating improvements and better worker performance, and labor loads can be budgeted. The efficiency of indirect labor areas can be determined and accurate planning and scheduling will facilitate getting the job done on schedule.