Tracking Data Saves Millions

March 1, 2011

Armed with data, Aker Philadelphia Shipyard changed its work practices and saved $2 million in medical insurance costs.

When it takes 10,000 labor tasks and 1.2 million labor hours to build one product, tracking costs is quite a task. Aker Philadelphia Shipyard, a leading U.S. commercial shipyard constructing vessels for customers including the U.S. Navy, employs 700 full-time and 500 contractors to build 2.8 ships per year.

Managing such a large workforce requires complex tracking system. "Before you start collecting data, make sure you know how you will use that data," advises Michel Boeckx, Chief Technology Officer at Aker Philadelphia Shipyard. Boeckx deftly used safety data he collected, via software company Kronos, in order to improve work practices. The company saw 41% fewer eye incidents over a year as well as other improvements. These collective improvements enabled the company to reduce medical insurance by two million dollars.

And tracking labor costs is no small feat for Aker. Contract labor is a high cost for the company as it must bring in expertise from around the world. The company was able to move away from separate paper-based contracting systems used for full-time employees and contractors into one system under and was able to reduce the contact agency invoice reconciliation time from four days to one hour.

Another savings was realized by reducing payroll service bureau and error filing fees when the company was able to use systems that allowed for performing tax calculations required by the various countries on employees' wages. Annual fees for errors were reduced from $90,000 per year to $5,000 per year.

Data collection was also instrumental in allowing the company to increase its throughput from 2 ships annually to 2.8 ships. This was accomplished without having to increasing the size of the facility. "The increased visibility into our costs gave us the tools we needed to increase productivity," said Boeckx. He cites that by using overall labor effectiveness (a measurement created by Kronos) he reduced hours per ship by 30%, or over 300,000 hours. That translated in to a savings of $3 million.

Aker was able to allow supervisors to move teams from operation to operation within an electronic schedule. The company used performance and quality reporting at the individual level and group level on a daily basis which could both identify underperforming contractors immediately and move under-utilized resource to other operations. The steadier pace relieves rush (and cost) at the end, explains Boeckx.

"The key to success was our rigorous and disciplined analysis which was able to provide direction to our IT investment. Combining best of breed can deliver competitive advantage that the ease of a single system cant deliver," says Boeckx.

For more details on Aker's success listen to IndustryWeek's webinar entitled,
"Best of Breed Strategy: Lean Labor Results."

About the Author

Adrienne Selko | Senior Editor

Focus: Workforce, Talent

Follow Me on Twitter: @ASelkoIW

Bio: Adrienne Selko has written about many topics over the 17 years she has been with the publication and currently focuses on workforce development strategies. Previously Adrienne was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck? which made the Cleveland Plain Dealer's best sellers list. She is also a senior editor at Material Handling & Logistics and EHS Today.

Editorial mission statement: Manufacturing is the enviable position of creating products, processes and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I find manufacturing interesting: On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world.