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What is indirect labor?

Indirect labor is labor that is not directly related to the production of a product. Just like direct labor costs, it’s important to track indirect labor costs. With indirect labor, though, the expense is tracked as overhead, not as cost of goods sold. While standard practice for most larger manufacturers, even smaller manufacturers can benefit from tracking both direct and indirect labor costs. Some of the benefits include:

• More accurate financial reporting

• Better budgeting

• More accurate product pricing

Indirect time tracking examples

Do you need to track indirect labor time in production to help increase productivity and manage manufacturing output in real time? Here are a few examples of indirect time tracking:

• Changeover and teardown

• Maintenance

• Material setup

• Scheduled maintenance

• Unplanned maintenance

• Waiting for material

• Break

• Department meeting

• Company event

What are indirect time tracking codes?

An indirect time tracking code is a customer-defined string value recorded against reported operator touch time in production. (Operator touch time is the amount of time someone spends actively working on an assembly—an important metric used in calculating overall labor costs.) 

In Production, a shop floor operator can select a tracking code from a drop-down to start indirect time tracking at the current operation within the currently selected batch.  

Create an indirect time tracking code

1. Log into the NPI client application.

2. Select System Configuration > Indirect Time Tracking Codes.

3. Select the Add Indirect Time Tracking Code button.

4. Enter a name for the code (Maintenance, for example), then select the check mark button to confirm.
   
   The new code is displayed in the list.
   
   

5. Select one indirect time tracking code for material setup by selecting the Auto Track Material Setup check box next to the tracking code—only one code may have this check box selected.

6. Select Save in the lower-right corner of the window to save the new indirect time tracking code.
   
   
   

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Indirect time tracking gadget for operator interface templates

In the NPI client application, you can add the Indirect Time Tracking gadget to an operator interface template by dragging and dropping the gadget onto the template as shown in the following illustration. (See Operator Interface templates for more information.)

Indirect time tracking in Production

After adding an indirect time tracking gadget to an operator interface template, the shop floor operator in Production can select one of the tracking codes to start indirect time tracking at their current operation within the currently selected batch.

When an operator in Production selects a single indirect time tracking code, the processing records the current date and time as the Indirect Tracking Start Time. If the operator selects a different tracking code within one minute of the Indirect Tracking Start Time, the Indirect Tracking Start Time remains intact—the tracking code associated with it is updated to the newly selected tracking code, allowing incorrectly selected codes to be corrected before anything is recorded and saved in the FactoryLogix database.

The system records the date and time as the Indirect Tracking Finish Time when:

• The selected tracking code changes (more than 1 minute after the Indirect Tracking Start Time).

• An attempt to start a WIP transaction is made the system (regardless of whether the WIP transaction starts successfully).

• The operator closes the operation.

• The operator logs out of Production directly from within an operation.

When an Indirect Tracking Finish Time is noted, the system records an entry in the TransactionTouchTimes table using the Indirect Tracking Start and Finish Times plus the selected indirect tracking code, operator ID, operation ID, and the BatchRouteId that identifies the operation in the batch where the operator is working. The selected tracking code in the operator interface template gadget is deselected at this time and the quantity and comment values are cleared.

If the operator enters an operation and is directed into FactoryLogix Material Setup, the processing records the current date and time as the Indirect Tracking Start Time. When the operator exits Material Setup, the processing records the date and time as the Indirect Tracking Finish Time. The processing locates the indirect time tracking code flagged as the Material Setup tracking code. If such a record is found, a TransactionTouchTimes entry is recorded where the indirect time tracking code is the one flagged as the Material Setup tracking code. This entry uses the Indirect Tracking Start and Finish Times the system recorded. This TransactionTouchTimes record is recorded—regardless of whether the operator UI includes the new Indirect Time Tracking gadget.