Tenix Looks to Kronos for More Accurate Time Capture and Job Costing

Sydney-based Tenix Pty Limited is the parent company of the Tenix Group, one of Australia's largest privately owned companies. Growing from its construction company roots in the 1950s to a naval shipbuilding business in the mid-1990s, Tenix is now the country's largest locally owned defence and technology contractor, delivering a broad range of products and services to defence and commercial markets in Australia, New Zealand, Fiji, the Philippines, and the U.S. Tenix has 4,500 employees and earns annual revenue of around AUS$1 billion.

Responding to the challenges of growth

In the past several years, Tenix has significantly expanded the scope of its operations through a series of acquisitions. Nowhere is this more true than in its defence business unit's Land and Marine divisions that employ hundreds of people across the region. The Marine division is a major designer and builder of ships in Asia-Pacific, using modern shipbuilding and manufacturing techniques throughout its shipyards. It has delivered more than 200 naval, paramilitary, and specialist vessels from its shipyards in Williamstown (Victoria), Henderson (WA), Darwin, Cairns, Brisbane, Sydney, and New Zealand.

Although the acquisitions have enabled Tenix to expand its presence in the defence market, they have created significant operational challenges as well. Each acquired company had its own finance, HR, payroll, and time and labour systems. For example, there were eight separate general ledgers across three separate software packages. According to Tim Smith, manager of business systems and technology for the defence business unit, and Chris Wilson, business systems manager in the Land division, effectively managing time and labour became an increasingly important priority.

"From a technology perspective, we wanted to implement a single solution for time and labour that could use online PC interfaces for our white-collar engineers and a robust clock-based solution for our blue-collar workforce," explains Wilson. "We have thousands of employees and knew that we had to move beyond manual timecards being filled out by employees and supervisors."

Carefully tracking labour activities

Operating and maintaining a manual time and labour system meant that the administration departments faced an unacceptably labour-intensive process to manually enter data from paper timecards. Complicating matters further were the tens of thousands of job codes that stretch to 10-15 characters each. These codes correspond to highly specific work tasks. They enable Tenix to carefully track its operations and represent a rich historical record that is used to create estimates and bids for future contracts.

"Unfortunately, many of those job codes were less than accurate," says Smith. In a workshop environment it can be very difficult for an employee to write down the correct code for their activity. With thousands of codes, the chances of error are quite high - and we needed to reduce those errors dramatically."

The other challenge lay in providing project managers and cost controllers with daily visibility into the hours being charged to particular cost centers. To achieve that, Tenix was manually entering labour data each day, producing daily paper reports, and circulating those reports to supervisors and cost accounting managers who would find and correct errors (perhaps even checking with individual employees). This cumbersome process had to occur every day, which defocused the organisation from more strategic objectives.

More accurate time capture and job costing

"Given our project-based business model, the disparate systems we'd accumulated through acquisitions, and the slow processes that governed them, we decided to source a complete workforce management system," Wilson says. "Our goal was to get a better handle on labour costing by adding granularity to our cost accounting data capture."

After a careful evaluation, Tenix selected Kronos' Workforce Central® suite, including the Workforce Timekeeper™ time and labour application and Workforce Activities™ for labour activity tracking. Workforce Timekeeper applies complex pay policies with the utmost accuracy, and provides managers with real-time labour data along with the tools to control costs and improve productivity.

Workforce Activities provides extra levels of insight into labour events to help Tenix better understand how labour is used in its business. It provides visibility into what tasks the workforce performs and provides timely, granular cost-accounting data.

"With Workforce Activities, we can collect and analyse labour data across a wide range of criteria such as employee, job code, department, and project." says Wilson. "This insight, combined with detailed activity-by-activity data, gives us much more control over productivity, labour costs, and billing.

"Our implementation in the Land division has 900 employees currently using the system," says Smith. "Soon, we plan to expand to our Aerospace division and that will bring another 320 users into the system as well."

Achieving greater accuracy in labour data

"The most tangible benefit is immediately apparent," Wilson says. "We're achieving an optimum level of accuracy in tracking labour cost, particularly in our use of overtime. When we were operating Kronos in parallel with our older systems, we had many discrepancies between the two sets of data. When we investigated, we found that Kronos was getting the numbers correct. But Kronos is also helping us focus on where we can achieve even further increases in accuracy. It's showing us processes that are masking some inefficiencies that have a detrimental effect to our bottom line.

"One area, for instance, is the variability of different jobs," Wilson explains. "For instance, if we have to repair 30 identical vehicles, we'd previously assume that it took the same time and the same cost to repair each one. But, of course, some of those supposedly identical jobs take longer than others. Kronos gives us some insight into how to investigate and improve our work practices, which will give us and the customer a longer-term benefit."

Moving forward, Tenix expects to use its Kronos data to optimize its work processes in the defence business unit by exposing the true nature of various workloads and facilitating smarter, more accurate workforce plans. "As our implementation expands, we're looking to optimize how we move more of this valuable, accurate data to various other systems in our business," Smith says. "We think it holds the potential to deliver additional opportunities for improvements."