A labor standard in the context of business and manufacturing refers to the amount of time it should take a qualified worker to complete a specific task or operation under normal conditions. Labor standards are often used as benchmarks or guidelines to measure efficiency, calculate costs, and plan production schedules.
There are several types of labor standards:
- Basic Time Standard: This refers to the time it takes a skilled worker to perform a job at a normal pace without any delays or interruptions.
- Standard Allowed Minute (SAM): In the garment industry, this is the time it should take a worker to complete a task including allowances for rest, machine downtime, or other interruptions.
- Predetermined Time Standard (PTS): These are developed using time and motion study techniques, breaking a job down into specific movements and assigning a time value to each one.
Labor standards are established through a variety of methods including time studies, historical data, and industrial engineering techniques. They are used to set performance expectations, identify inefficiencies, estimate labor costs, and establish production schedules. It’s important to remember that labor standards should be periodically reviewed and updated to reflect changes in technology, processes, or skill levels.
Example of a Labor Standard
Let’s consider a hypothetical example involving a car manufacturing plant.
In this plant, one task involved in the assembly line is the installation of the car’s windshield. Through various time study techniques, industrial engineers have determined that this task should take a skilled worker 15 minutes to complete. This includes the time it takes to prepare the windshield, apply adhesive, position the windshield, secure it, and clean up.
This 15 minutes becomes the labor standard for the windshield installation task. Now, this standard can be used in several ways:
- Performance Measurement: Workers who consistently take longer than the standard may require additional training or support. If a worker consistently performs the task in less than the standard time, they might be exceptionally skilled or might be skipping steps or rushing, which could affect quality.
- Cost Estimation: If the company pays workers $20 per hour, they can estimate the labor cost of this task as $20 x 15/60 = $5 per car.
- Production Scheduling: If the company needs to produce 100 cars in a day, they can estimate that the windshield installation task alone will require 100 cars x 15 minutes/car = 1,500 minutes or 25 hours of labor time.
Remember, labor standards should be realistic and fair. They should account for all aspects of the job, including setup, cleanup, and necessary breaks. They should also be reviewed and updated regularly to ensure they reflect current working conditions and processes.