So you say your team worked a little overtime this week, eh? You must be busy? Had to get the orders out? What was the least productive thing your overtime workers did this week? Non-routine maintenance, clean up, rework, coming back late from break? Or was it nailing down some unique specs that were not quite clear on that new order?

 

When pricing new products the assumptions are generally set higher than reality. Assumptions about yield and labor, in particular, are overly optimistic — it’s understandable, the competition can be stiff on jobs and you don’t want to lose a bid over a couple percentage points. That’s not the worst thing in the world.

 

So what is the worst part? The worst part is when you don’t follow up within your plant to ensure you are hitting those expectations and don’t make moves toward improvement on future jobs. This would be a great time to remind your team on a few points about non-value add labor and overtime. If your team is working overtime, it’s easy to justify the important work and getting the job completed, shipped and invoiced on time. I won’t miss ship dates nor should you be working with unsafe equipment or under poor conditions. But, it’s also important to remember that the overtime of high dollar employees may not have been necessary with better planning, communication or a lean preventative maintenance schedule based on mean time to failure. 

 

The lowest value project your team works on is THE job that is being done at the highest wage rate. Think about it, if your 45 hour week didn’t include 2 hours of waiting and 3 hours of rework, you wouldn’t be working any OT. Don’t forget this, and don’t let your team forget this. If you quoted the job…know your yield, know your team’s capabilities, and know your margin. 

 

All invoiced jobs are on a continuum of profitability. There are some that that are good and some that are lousy.  Keep your team in the loop of why you have each and use the good AND the bad as tools to learn how to minimize the losers. Be willing to put your own mistakes on the table as well. You will gain the trust and support of your employees if you are occasionally willing to acknowledge your own mistakes that may have led to unsuccessful jobs — don’t shy away from this. Be forward thinking, look at the past as an opportunity to improve the future.

 

Go get ‘em.