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The 7% solution – Contingency allowances – Tip 3 - Hilton HPS

It’s well within your reach to deliver half of your 7% solution if you follow the first two tips in this series. Firstly, use your higher performers as the benchmark and look to improve performances at the lower end of the scale. Secondly, validate your production targets. Don’t assume that because you see a ‘normal’ distribution of low and high performers that this means your targets must be ok.

Contingency Allowances

Moving on to the next segment and the next productivity improvement step towards the 7% solution, let’s now look at contingency allowances.

When Industrial Engineers develop Standard Minute Values (SMVs) we are not just looking at the time it takes to do a repetitive task. In day to day operations there are usually a number of infrequent, unpredictable, but regular ‘events’ for which we know we also have to account. These contingencies have to be included in the measurement of task times. Due to their irregular and infrequent nature they are accounted for by a percentage adjustment called the contingency allowance.

Examples could be;
• Re-work due to an error in the previous process
• Interruption for servicing or maintenance of equipment
• Conferring with a supervisor regarding a work issue

A contingency allowance is normally set at around 3% and would therefore add around 15 minutes across each 8 hour shift onto the ‘standard’ working time. It would be easy to assume that these elements of work are insignificant and can therefore be left alone. However, occurrences can act as an alert signal during the observation phase.

The 7% solution TIP #3

Your focus should not be trying to reduce or eliminate this allowance of time. It is much more likely that the actual time being lost is in excess of 15 minutes per shift. You should be looking at how to improve the management of operational support processes to minimise interruptions.

For example, your packers may be losing time if you haven’t got the replenishment of your consumables managed effectively. I once took observations in a department where a ‘water-spider’ was allocated that task. In practice, he spent most of his time out of the department transporting stock. Instead of the packers having to make replenishments by exception, as a contingency, each packer was spending 15 minutes each day just on this single activity.

Take the time to see if things are happening as you would expect them to. Talk to your operatives and find out whether contingencies that should be infrequent are happening more regularly. Look for root causes so that the resolution of issues will provide long term benefit. Removing obstacles to the continuity of direct work is a valuable way of reducing lost time.

Note that you will not be able to identify the time spent dealing with contingencies from your WMS transactional data. This will be a team effort, requiring collaboration to identify, troubleshoot and resolve process issues that will cut cross departments.