Rework: is redoing, correcting or completing extra additional tasks generated due to work that was not done correctly the first time.
Working in a crowded market, with constant and increasing downward pressure on margins we can’t afford to be inefficient.
So how efficient is your team? How many hours do you and your team waste each week doing rework? Ever delivered the wrong product or quantity of product to the right address?
In the typical business, managers and staff each complete around an hour of rework each day. Let’s do the math.
10 staff X 5 hours of rework per day = 50 hours per week.
50 hours of rework X $100.00 per hour = $5,000.00 per week or $250,000.00 per annum.
Why do we value rework @ $100.00 per hour? If we pay staff $25.00 per hour, then with on-costs superannuation, sick leave, holidays etc. the actual hourly figure is closer to $40.00 per hour. Then we double this figure due to the opportunity cost; while they are completing rework, they are not doing other tasks. The $100.00 is just the cost of labour, it doesn’t include equipment, material costs or the cost of stock loss/damage.
But there is not just a financial imperative to reduce rework, there is also a health and safety imperative too. There is a positive correlation with levels of rework and safety. (Production Planning & Control. Volume 29, 2018)
Now, if you lost 250k of stock you would investigate and find out why. Generally, we do not investigate and find out the root cause for the rework which will be due to one of, or a combination of poor:
Operational Excellence (getting rid of the enemy within)
When working with clients we have three horizons for their improvement objectives:
Horizon 1: Operational Excellence. Being efficient and measuring rework reduction as an efficiency KPI.
Horizon 2: Business growth. Improve sales and margins.
Horizon 3: Succession Planning
Two steps toward Operational Excellence.
Here are two steps you could take to reduce rework, improve efficiency and safety.
Step One. Name it and explain it. Meet with staff to explain what rework is and how much it impacts on the business, the stress levels of team members and safety.
Step Two: Measure and provide feedback. Make rework an agenda item at your team meetings. Get your staff to each report on how many hours of rework they undertook for the week/month.
At one client’s business we gave managers and staff a rework diary and asked them to record the number of rework hours they completed, the department/person where the rework originated and the root cause – poor structures, resources, competencies and or commitment.
The result? Rework for the week dropped by 50 per cent! Why? Everyone was being measured!
So, back to the original question, how much rework do you do in a typical week? How efficient is your team?
Put in place the two-step reduction process, because we don’t achieve higher enough margins to do the same job twice.
Note: If you would like a copy of the rework diary template, just send us an email.