Aker Philadelphia Shipyard Launches Successful Strategy for Workforce Management with Kronos
Aker Philadelphia Shipyard, Inc. is a mid-sized shipyard located in Philadelphia, Pennsylvania. Occupying 114 acres of the former Philadelphia Naval Shipyard, Aker has implemented a state-of-the-art shipbuilding facility based on parent company Aker Kvaerner's European shipbuilding excellence. The shipyard designs and constructs commercial ships for the U.S. Jones Act market, which stipulates that cargo moving between U.S. ports be carried in ships that are U.S-owned, -built, and -crewed.
In 2003, the shipyard delivered ship 1, the M.V. Manukai, the first new commercial container ship built in an American shipyard since 1992. Aker has since delivered two more container ships for the U.S. commercial shipping market. Commercial shipbuilding is a fiercely competitive industry, one where stringent quality and safety standards go hand-in-hand with narrow profit margins. The key to success lies in developing an efficient manufacturing process that allows employees to work at peak productivity.
Aker began using Kronos Workforce Timekeeper™ as its time and attendance solution when the shipyard was launched in 1998. For several years the company used non-Kronos solutions for HR and payroll, but a lack of functionality and difficulty in sharing information across the different applications presented many challenges. To improve its operational efficiency, the shipyard looked to Kronos and the Workforce Central® suite — adding Workforce HR™ and Workforce Payroll™ to its existing Workforce Timekeeper application. Since implementing the suite, Aker has boosted productivity, reduced costs, and put real-time information in the hands of its managers.
Gaining the advantage of a single vendor
Before selecting its full Kronos solution, Aker was using one vendor for HR, outsourcing its payroll, and using Workforce Timekeeper for time and attendance. The company was hampered by limited functionality in its HR solution, and frustrated by the difficulty of obtaining information and running payroll reports. Aker was also eager to lower payroll costs by bringing payroll processing in house.
According to Michel Boeckx, Aker chief technology officer, the Kronos product demonstration was very convincing. "We saw a lot of functionality in Kronos that we didn't have at that time — like the reporting capabilities and the ability to get a view into our organizational structure. And we felt that having HR, payroll, and time and attendance from one vendor would be much easier — the systems could communicate with each other and we'd have a single source for support."
Getting a clearer look at the workforce
The construction of a large container ship requires more than 10,000 separate labor tasks, all of which Aker must track to learn where labor costs are being allocated. Aker's 800 shipyard employees, as well as the many contractors and consultants who work on each ship's construction and finishing, track their time with Workforce Timekeeper, giving Aker a complete picture of the cost of building these massive vessels. "Contractors are a big part of our labor force," says Boeckx. "Before Kronos, it was difficult to track how much we were using them. To compete with other shipbuilders, we have to have the best price. Tracking labor costs in Kronos has allowed us to be more efficient and competitive."
Supervisors benefit from better access to information, which aids in the scheduling and budgeting processes. Reports compare actual hours worked to scheduled hours and help supervisors stay on top of overtime costs. The Kronos solution also helps the shipyard monitor tardiness and other employee issues that can lead to unexpected, higher costs.
By switching its payroll to Workforce Payroll, Aker gained ownership of critical information. "Before, we didn't own our own database," says Boeckx. "Any time we needed information, we had to make a special request to the vendor, which took time and could be costly. Now we can run reports whenever we need them. It's faster and much easier, and much more cost-effective."
Building ships faster, better, and more cost-effectively
Aker has realized significant cost savings from its Kronos solution. Workforce Payroll saves the shipyard $70,000 annually, and has shortened the payroll process by two days. The shipyard has also reduced man-hours per ship by 40% from ship 1 to ship 2, and an additional 25% from ship 2 to ship 3. While some of the decrease can be attributed to the natural learning curve at a new shipyard, Aker believes that a substantial percentage can be attributed to its Kronos solution. "We need timely access to accurate labor information," says Boeckx.
"With the Kronos solution, we get a real-time view of the shipyard, so we can calculate actual hours and see what parts of the construction are taking longer than others. Then we can reallocate resources to those areas, allowing us to better coordinate the ship's construction, as we reduce costs and improve our efficiency."
Looking to the future
With its Kronos HR, payroll, and time and attendance applications firmly in place, Aker is turning its attention toward additional functionality and enhancements. First up is Workforce Accruals®, which the shipyard will be using to track personal, sick, and vacation time, and monitor compliance with regulations such as FMLA. "This is a big issue for us," says Boeckx. "Right now accruals require a lot of manual effort. We're going to gain at least two days a week with the new, integrated system." The shipyard is also upgrading to the Kronos 4500 Touch ID™ terminal for data collection with biometric technology.
Helping Aker succeed
In the highly competitive world of commercial shipbuilding, Aker has found an advantage in Kronos. By tracking labor costs and efficiently managing HR and payroll, Aker is poised for success. "Kronos helps us succeed in this industry because we can track every minute we spend on a ship. We can then apply that information to a cost analysis of our next ship. Kronos helps us be more competitive. That's why we use it."
David Meehan, Aker CEO, echoes this sentiment, saying, "In this business you are only as good as the next ship you build, so we strive for continuous improvement in every area, from productivity to profitability."
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