A Standard Kind of Story – Q4 – 2025
I was out on the warehouse floor when the golfcart dropped by to pick me up. My boss had told me a couple of days earlier that I might be called to participate in the meeting with our largest customer, who was visiting today.
A new warehouse customer had flooded us with all kinds of small assembly, repack and kitting jobs. These types of activities had to be done before the order could be shipped the next day, usually to a major retailer. We were doing the work and getting the orders out on time, but there was a big problem. We were not yet billing the customer for these jobs and had just sent them a price list for the various activities. The price list was based on some time and motion studies I had recently completed in order to establish standard labor times for each job, measured in fractions of an hour.
As I entered the conference room my boss was taking care of the introductions, with a little information about me. I found a seat and proceeded to turn on my laptop computer. About that time, one of the senior management members of the visiting customer team made a comment that the pricing list we had sent them was incorrect and this would lead to overcharging them to complete an assembly of a given product. They explained that they had one of their associates measure the time to complete the assembly in question and it was 30% less than the time that we were using to charge for the job. Immediately, all eyes turned towards me as I was the source of the soon to be “over billing”.
I asked the customer how many trials or measurements did they take or gather in order to establish their stated time for the activity. Without hesitation the customer said they had taken one measurement. I then informed the group that while their one measurement they had taken was probably a valid measurement, it was just that, one measurement. Further, I further explained that in order to do a valid time study to establish a standard time for labor purposes one needed to gather between 15 to 20 measurements. I went on to say that this number of measurements were necessary to capture the variation with the task and this type of variation is only part of the overall variation that one must consider. In addition, I added that it was even better to time multiple individuals at 20 trials a piece for the same activity to capture the variation which could be attributed to different people doing the same task. After all, no one could guarantee that the same individual would be the only person to do the activity on an exclusive basis.
I concluded my remarks indicating that I had measured 3 different individuals at 20 trials each in order to establish my standard labor time we used for billing purposes. My boss thanked me and asked the customer group if they had any questions for me. When I say all of them shaking their heads to indicate a “no” answer, I powered down my laptop and left the room.