Direct Labor

Direct Labor

 

During the development and production phase of a new item, a supplier typically experiences a heavy design and production engineering effort. These efforts peak and then decrease. As they do, tooling and setup efforts increase, peak, and decline. Machining, assembly, and test efforts then become the predominant users of labor. A supply professional should be cognizant of these factors ad should analyze a supplier’s estimate to ensure that it is based on proper planning, applying reasonable expectations of efficiency in regard. When analyzing direct manufacturing labor estimates, a supply manager should pay particular attention to the following:

 

  • ·        Allowances for rework
  • ·        Geographic variations
  • ·        Variations in skills