Performing a time study
Without a standard the company will find it hard to estimate lead-time on their products. Times very greatly when the employee does not know what the expectation of company is. In order to correct this problem the IE will develop a fair standard expectation for each operation. It has been estimated that 12% of a company's total cost comes from direct labor. Another 43% of cost comes from the material cost. The other 45% is spent in overhead. So the idea that the largest productivity gains can be felt on the floor does not hold up in this light. Standards will be set for all parts of the company not just the operations performed by the direct laborers. The IE will be involved in analyzing and standardizing office work as well.
A good time study will take into account the unavoidable delays, fatigue, and to an extent, outside interferences. Time for wasteful steps, such as searching for tools, will not be included in the final standard. The expectation is that the workplace will be designed to accommodate the work and will be free from this type of waste.
By setting a performance standard the company can look at the schedule for the next year and determine if they have the proper amount of manpower. Prior to establishing standards the company would have to go on their gut feelings about the current capacity and need for additional help.