Tenix Looks to Kronos to Control Labor Costs and Improve Productivity
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 defense and technology contractor, delivering a broad range of products and services to defense 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 its operations through a series of acquisitions. Nowhere is this truer than in the defense business unit’s Land and Marine divisions. The Marine division is a major designer and builder of ships in Asia-Pacific that has delivered more than 200 naval, paramilitary, and specialist vessels from its shipyards in Williamstown (Victoria), Henderson (Western Austrailia), Darwin, Cairns, Brisbane, Sydney, and New Zealand.
While the acquisitions have enabled Tenix to expand its presence in the defense market, they have created significant operational challenges. Each acquired company had its own finance, HR, payroll, and time and labor systems. For example, Tenix used eight general ledgers across three software packages.
According to Tim Smith, manager of business systems and technology for the defense business unit, and Chris Wilson, business systems manager in the Land division, automating manual processes is an important priority. “From a technology perspective, we wanted to implement a single solution for time and labor 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.”
Carefully tracking labor activities
A manual time and labor system meant that the administration departments faced an unacceptably labor-intensive process to enter data from paper timecards. Complicating matters were tens of thousands of job codes of 10-15 characters each, corresponding to specific work tasks. These codes enable Tenix to carefully track its operations and represent a rich historical record used to create estimates and bids for future contracts. “Unfortunately, it can be very difficult for an employee to write down the correct code for their activity,” says Smith. “With thousands of codes, the chances of error are high — we needed to reduce those errors dramatically.”
The other challenge lay in providing project managers and cost controllers with visibility into the hours charged to particular cost centers. Tenix was manually entering labor 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 distracted the organization from more strategic objectives.
Greater visibility and control over labor-related metrics
“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 labor 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 labor application and Workforce Activities for labor activity tracking. Workforce Timekeeper accurately enforces complex pay policies and provides managers with real-time labor data along with tools to control costs and improve productivity. Workforce Activities provides extra visibility into labor events to help Tenix better understand how labor is used in its business. It also provides timely, granular cost-accounting data. “With Workforce Activities, we can collect and analyze labor 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, labor costs, and billing.”
“Our implementation in the Land division has 900 employees currently using the system,” says Smith. “We plan to expand to our Aerospace division, which will bring another 320 users into the system.”
Matching labor to volume to control costs
“The most tangible benefit is immediately apparent,” Wilson says. “We’re achieving an optimum level of accuracy in tracking labor cost, particularly our use of overtime. Kronos is also helping us focus on where we can achieve additional increases in accuracy. It’s showing us processes that are masking inefficiencies and having a detrimental effect on our bottom line.
“One area, for instance, is the variability of jobs,” Wilson explains. “If we have to repair 30 identical vehicles, we’d previously assume that it took the same time and cost to repair each one. But some of those supposedly identical jobs take longer than others. Kronos gives us insight into how to investigate and improve our work practices.”
Moving forward, Tenix expects to use its Kronos data to improve workforce productivity in the defense business unit by exposing the true nature of various workloads and better matching labor to volume. “As our implementation expands, we’re looking to optimize how we move more of this valuable, accurate data to other systems in our business,” Smith says. “We think it holds the potential to deliver additional opportunities for improvements.”
Tenix summary
“With Workforce Activities, we can collect and analyze labor data across a wide range of criteria such as employee, job code, department, and project. This insight, combined with detailed activity-by-activity data, gives us much more control over productivity and labor costs.” - Chris Wilson, Business Systems Manager, Tenix Land Division
Business Type: Defense and Technology Contractor
Employees: 4,500
Products: Workforce Timekeeper™ and Workforce Activities™
Kronos Incorporated 297 Billerica Road Chelmsford, MA 01824 +1 800 225 1561 +1 978 250 9800 kronos.com
©2011, Kronos Incorporated. Kronos, the Kronos logo, and Workforce Central are registered trademarks, and Workforce Timekeeper and Workforce Activities are trademarks of Kronos Incorporated or a related company. All other product and company names mentioned are used for identification purposes only and may be the trademarks of their respective owners. All specifications are subject to change.
All rights reserved.