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BECKMAN COULTER CORPORATE

Michael S. Gannon Director, BCI-Clinicon Consulting Group, Beckman Coulter, Inc.

The LABIQ Process Labor Costing and Analysis Application permits the user to analyze labor utilization on an activity-by-activity basis for simple laboratory processes with up to 15 labor-consuming steps.

The application generates output for four critical indicators of labor usage:

• Labor mix 
• Productive vs. Non-Productive Time
• Productive vs. Non-Productive Labor Cost
• Activity-Based Cost Model

The last of these, the Activity-Based Cost Model, indicates the fully-burdened labor cost for each step in the process. Fully-burdened cost includes productive, or "hands-on", time and an allocated share of the idle time of the operators assigned to the process. The use of fully-burdened cost is important in arriving at the true labor cost of the process. Use this model to identify activities within the process that would make good candidates for process reengineering.

Follow the instructions below to use the application:

Start with a good flowchart of the process. Instructions for making a particularly useful type of flowchart for labor usage analysis are available with The Workflow Ventilation Diagram.

1. Enter the name of the process followed by the date in MM/DD/YY format
2. Enter the number of scheduled hours per week each of the five pre-defined labor classes is assigned to the process. Be sure to include all the time worked on all three shifts over a seven-day operational cycle. Be careful to subtract out the time spent on breaks and meals and the time the operator(s) are engaged in activities not related to this particular process.
3. Enter the fully-burdened hourly wage rates for each labor class. The fully-burdened rate is the base hourly wage rate plus an adjustment for the cost of benefits.
4. Enter the total number of entities (test request forms, specimens, tests, etc) processed per week by the process.
5. Enter the name of each labor-consuming activity in the process, the number of times each activity is performed over a weekly period (its frequency) and the time it takes to complete one iteration of the activity (its duration) in minutes. Next, select the labor class assigned to perform the activity. You may not enter more than one labor class for each activity. If, for example, responsibility for performing the activity "inspect specimens for errors", which is performed 1500 times per week, is evenly divided between two labor classes, define it as two activities, each assigned to one of the operators, with each activity showing a frequency of 750. Be careful to list only labor consuming activities and use an appropriate and consistent level of detail throughout. The activity "make aliquot" contains several steps. It is not necessary to list each individual step if you are analyzing a high-level specimen processing process as long as the duration of the activity captures all activity. However, if you are cost modeling the aliquoting activity, it is appropriate to drill down to the level of individual actions.
6. Print out the data you entered before proceeding to the dashboard to analyze the output of the application.
7. Print the results. Keep this information on file. As you improve your process over time, you will be able to determine the impact your changes made on labor cost.