Manpower Calculator Introduction V1.5

Caterpillar Asia Pacific Manpower CalculatorUser Instructions

IntroductionHistorically most service organisations set annual budgets based on a percentage of expected growth over the current year, or in the event of a slowing economy, a percentage decrease relative to the current year. Although, this process is long and detailed, it is primarily aimed towards profit reporting. Labour to support the growth is, in many occasions, very much an educated guess with very little science or methodology behind the final number.

The Caterpillar Manpower Calculator is intended to assist dealers by providing a methodology, to enable prediction of labour requirements for the medium term, i.e. 3 to 5 years. It also aids the identification of required skills, not just perceived skill requirements, a significant paradigm shift for many organisations. If we can successfully achieve a paradigm shift, from believing that only fully trained Technicians can do the bulk of work, then we are better placed to obtain suitable people, reduce training costs, reduce labour costs and reduce attrition through not developing broad based skills that make our people so attractive to other organisations.

The Caterpillar Manpower Projection worksheet can be used at any level, from a single cost centre through to the total dealership. The process starts with a true identification of current labour utilisation for the area(s) to be reviewed. The APM KPI tool - Labour Utilisation.xls is the recommended tool to aid simple calculation of utilisation. It allows the dealer to identify current Purchased, Allowed, Attended, and Billable hours. It further allows for current non-recovered hours in the form of, Training, Policy / Rework, Cleaning, Supervision, Repairs and Maintenance and Standby hours. These non-recovered hours fall into the category of controllable expense and a review should be conducted as to what future reductions may be possible. Reductions in controllable expenses usually take the form of improved standard jobs, planning and attention to process detail. The largest single influencer in requiring additional labour is the poor use and retention of the existing resource.

Stage two is the identification of current performance: - SDCAL, POPS-C, PINS, Market growth, Hours Purchased, Utilisation, Billable Hours, current number of Technicians and Technician attrition rates, for the review period. For dealerships only requiring a simple broad-brush overview of projected service sales and manpower requirements, this is all that is required for projection.

Stage three is to determine the existing skill requirement as matched to current tasks. In today’s environment an analysis of work order task skills by SMCS code will show in all probability, when compared to a manpower skill listing, that we are over training for the tasks that we do. Having 80% of the workforce fully skilled, when potentially only 10% of work activity requires those skills, is not a recipe for maximising profitability, or in providing Technician satisfaction and retention. For

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specialisation areas, a review of current standard jobs would also provide a skill breakdown requirement.

Stage four is for dealerships that wish to go deeper into manpower projections by skill requirement. This requires more detailed input relative to identifying current tasks and matching skill levels, forecasting expected increases in component or general work area increases in billable labour. The outputs at this level will identify not only skilled manpower requirements, but dependent upon training programs, be they a 4 year apprenticeship, or a 3 month basic introduction level, will identify the starting year for these people and so match their projected skill level with the expected demand.

Getting StartedSoftware requirement: - Microsoft Excel 2000 or above.

Determine area to be reviewed, i.e. single cost centre, branch, region, and total Service organisation. It is MOST critical that an accurate value for Labour Recovery is determined for the area(s) to be reviewed before commencement. The accepted formula for Labour Recovery is: -

Billable Hours / Total Service Hours Purchased

Note: Total Purchased Service Hours includes all labour hours recorded in the work order system (all attended hourly allocation reporting, i.e. expense & billable hours)

Step 1 - Sales and Opportunity Worksheet

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Step 1 Sales & Opportunity Variables Work Type Activities Table

Skill Level Descriptions Workforce Profile

Training Profiles Workforce Cost Structure

Dealer Skill Matrix - Desired State Hours Baseline & 5 Year Budget

Non-Technician Guidance Tables

Manpower Projection Report 1 Manpower Projection Report 2

Alternative Projection ( 1 ) Warranty & Assembly Projection

Gross Profit Variance Attrition Cost Tables

CATERPILLAR ASIA PACIFIC - MANPOWER CALCULATOR

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Workbook entry screen.

Note: All Blue field require user entry, all other fields are protection locked.

The user data imputed into this workbook sheet provides the basic information for the program to estimate escalations or reductions in growth for the subsequent five years above the base year. If your current interest is only for a high level assessment of chosen areas, and your required accuracy is not greater than approximately 25% relative to manpower needs, then there is no requirement for you to continue beyond this stage. However, should you require greater accuracy and wish to explore the potential to modify your skill profiles, we suggest that you continue through the workbook.

Note: Data inputted to this sheet pushes through to other sheets within the workbook. Data does not feed back to this sheet. An example being that the detailed labour projections developed within subsequent worksheets, will not feed back to change high-level projections initially produced by this worksheet.

Enter the Cost Centre, Store, Region, etc that you wish to project for. Set the base year from which your initial data is derived, this will automatically set the projection period, i.e. Base year data 2007, first projected year will be 2008.

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Note: Data should be for the last fiscal or calendar full year.

Parts Sales through Service %This is what we have historically called DCAL and should be entered for the area to be reviewed.

POPS-C (PTOS DCAL)Your percentage of the total Caterpillar parts sales opportunity within the area to be reviewed.

PINSYour percentage of new Caterpillar machines against all equipment sold within the territory to be reviewed

Equipment MARKET GROWTHFor the base year this projection is not required.

PINS UNITSThe total number of equipment sold (includes engines & machines).

Continue projects across all columns and add your expectations for market growth to each of the projection years.

Enter TOTAL Service Labour sales, include customer revenue, internal, warranty, etc.Enter Total Caterpillar parts sales, include both over counter, parts sold through service, TEPS, MEPS dealers and other resellers.

Enter TOTAL hours purchased; include all hours, not just attended hours.

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Enter Labour Utilisation value. Note that this is a critical value and must be correct. For dealers using labour hire it is essential that you allow for their billable and purchased hours, remembering also that non attended hours will not be applicable with labour hire, but should be reflected if you intend to increase your staff to replace labour hire.Enter Billable hours; include customer revenue, internal, warranty, etc.

Enter the current Total of number of hourly recoverable staff; include Leading Hands, Labourers, etc.; for base line year only.

Enter the hourly recoverable staff attrition level for the base line year and estimate attrition for each of the projected years.

Click on MENUE button to return to main screen

Step 2 -Work Type Activity Tables

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For the area(s) under review, select the activity types that are appropriate. The program allows you to delete or modify any of the suggested activities that are BLUE, within the Dealer Modified Activity Breakdown table. Should there be more lines available than required, identify such lines “Not Applicable”. The decisions you make at this stage will flow through the workbook.

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DEALER MODIFIED ACTIVITY BREAKDOWN ORIGINAL CAT SUGGESTED ACTIVITY BREAKDOWN

Engines EnginesTorque Converters Torque ConvertersTransmissions TransmissionsFinal Drives Final DrivesWheel Ends Wheel EndsHydraulics Cylinders Hydraulics CylindersHydraulic Pumps & Motors Hydraulic Pumps & MotorsPM Contracts PM ContractsTM&R Contracts (Not to include components) TM&R Contracts (Do Not Include Component Rebuild Hours)New Equip Assembly (all PDI, attachments, etc) New Equip Assembly (all PDI, attachments, etc)Track Shop Track ShopIdler Weld Idler WeldDealer Input Category Dealer Input CategoryDealer Input Category Dealer Input CategoryWarranty Repairs Warranty RepairsMachining & Fabrication Machining & FabricationElectrical ElectricalField Repairs Field RepairsShop General Repairs Shop General Repairs

WORK TYPES ACTIVITY MASTER TABLE

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Step 3 - Skill Level Descriptions

Skill Levels

Determine your definition of Skill Levels 0 – 4. The Caterpillar definitions are:

Level 0 Labourer / cleaner / Parts washer

Level 1 Trades Assistant - helping experienced service technicians. Cleaning, some R&I and basic preventative maintenance.

Level 2 Some systems knowledge. Component R&I / Subcomponent D&A / basic diagnostic analysis.

Level 3 Activities requiring good system knowledge and soft skills. Test / Adjust / Repair / Diagnosis. (Relates to end of apprenticeship term).

Level 4 Activities requiring advanced system knowledge and excellent soft skills. Diagnosis / Repair / Failure Analysis. Master Technician and/or Field Servicemen. Relates to approximately 2 – 3 years after completion of full apprenticeship.

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Step 4 - Workforce Profiles

Enter the base line head count data for number of employees at each skill level.

Estimate the following for each year of projection

o Current attrition levels against each skill Levelo As Appropriate the percentage of each Skill Level that you

expect to promote to the next level at year-end.o Enter the standard annual purchased hours, includes non

attended time, for each Skill Level, i.e. 40 hours x 52 Weeks = 2080 hours

o Enter the average Overtime worked as a percentage of the standard annual purchased hours.

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Note: The Utilisation value displayed within the PINK protected cell reflects your input to the Sales & Opportunity Variables worksheet.

Apprentice / Trainees

For dealerships operating four year apprenticeships or traineeships, enter the quantity of each by year of training, i.e. Level 1 is for the first year, Level 2 is for the second year, of a 4-year program.

Enter your expected attrition, promotion to next level, standard hours and overtime hours and utilisation for each of the projected years.

Enter the number of apprentices / trainees you expect to take on for each of the projected years. In order to satisfy your total skill requirements from the completed workbook, you can amend these values later to better satisfy your needs.

Note: the PINK cells highlighted compare the original labour total entry made within Step 1 – Sales Opportunities & Variables. Should there be variation between the sum of all currently identified employees on this sheet – Step 3 and the entry in Sheet 1, then an error message will display alongside these cells.

For dealerships operating apprenticeships or traineeships of One, Two or Three years duration, please proceed with Step 5 – Training Profiles.

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Step 5 – Training Profiles

You can establish default training profiles for training programs that have a duration of either One, Two, or Three years. It is intended that these programs be used for extensive training programs only.

Note: For training typical allowances for items such as, NPI, NMI, keeping skills current, or other of internal or external training of a “normal” budget nature, that would routinely apply to all technical skilled staff, the Labour Utilisation % factors from Step 1 - Sales and Opportunity Variables should include such “allowed hours expense”.

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160 80 Sick Leave 40 Other 20 300

Year of Program Starting Level

Attrition %

Promote to next Level %

STD Hours

O/T Hours %

Purchased Hours

Training Weeks

Other Allowed Hours

Target Utilisation

%

Per Man Billable Hours

Adjusted Utilisation

% Finish Level1 Trainee 10% 100% 2080 5% 2184 12 300 75% 1225 56% Production Worker1 Production Worker 10% 100% 2080 5% 2184 12 300 75% 1225 56% Mechanic


Attrition %


STD Hours

O/T Hours %

Purchased Hours

Training Weeks

Other Allowed Hours

Target Utilisation

%



% Finish Level1 Production Worker 10% 100% 2080 5% 2184 30 300 75% 554 25% Mechanic2 Mechanic 10% 100% 2080 5% 2184 20 300 75% 926 42% Technician


Attrition %


STD Hours

O/T Hours %

Purchased Hours

Training Weeks

Other Allowed Hours

Target Utilisation

%



% Finish Level1 Trainee 10% 100% 2080 5% 2184 40 300 75% 181 8% Production Worker2 Production Worker 10% 100% 2080 5% 2184 30 300 75% 554 25% Mechanic3 Mechanic 10% 100% 2080 5% 2184 20 300 75% 926 42% Technician

2007 2008 2009 2010 20111 Year 5 6 7 8 91 Year 10 11 12 13 142 Year 15 16 17 18 193 Year 20 21 22 23 24

Training Profiles for training durations of : One, Two & Three years

Total Hours

Non-Training Allowed Time Profile - In Hours

Targeted Training - Training Load ( allowed lost time: classroom / training time) Less Than One Year

Targeted Training - 2 Year Profile - Training Load ( allowed lost time: classroom / training time) Two Years

Targeted Training - 3 Year Profile - Training Load ( allowed lost time: classroom / training time) Three Years

Public HolidaysAnnual Leave

Training Profile

Intake YearPlanned Yearly Starts by Training Profile

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Establish Default “Allowed Hours”

Input dealer default values in hours for:

Annual Leave,Public Holidays,Average Sick Leave, (use an estimate, or average of previous years sick leave paid to all service technical staff).

The “Other” category can be used to accommodate other legal, social, or community allowances, where the company would normally allow a technician paid time. For example this might include:

Long Service Leave,National Service,Community Disaster Response ( Bushfires, floods, etc),Jury Duty.

Establish Profiles for Apprenticeships / Traineeships

For each year of each training profile estimate the following:

o Attrition levels against each skill Levelo As appropriate, the percentage of each Skill Level that you

expect to promote to the next level at year-end.o The standard annual purchased hours, includes non attended

time, for each Skill Level, i.e. 40 hours x 52 Weeks = 2080 hours

o The average Overtime worked as a percentage of the standard annual purchased hours.

o Total weeks of training to be delivered in the year to achieve the desired training outcome.

Note: You will need to complete the above information for each type of program your dealership conducts; One Year, Two Year or Three Year. Also please note that you can accommodate two different profiles for training programs of less than one year duration.

One Year Program

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160 80 Sick Leave 40 Other 20 300Total Hours

Non-Tra ining Allow ed Tim e Profile - In Hours

Public HolidaysAnnual Leave


Attrition %


STD Hours

O/T Hours %

Purchased Hours

Training Weeks

Other Allowed Hours

Target Utilisation

%



% Finish Level1 Trainee 10% 100% 2080 5% 2184 12 300 75% 1225 56% Production Worker1 Production Worker 10% 100% 2080 5% 2184 12 300 75% 1225 56% Mechanic

Targeted Training - Training Load ( allowed lost time: classroom / training time) Less Than One Year

Two Year Program

Three Year Program

Note: the PINK cells display calculated and derived values as per the following:

o Purchased Hours – calculated from Standard and Overtime hours you input in each training profile.

o Other Allowed Hours – sourced from Step 5 – Training Profiles – Establish Default Allowed Hours.

o Target Utilisation % - source from Step 1 – Sales Opportunities & Variables, by year of projection.

o Per Man Billable Hours – Total hours remaining available for normal Service activities after accounting for; Training Hours as input in Step 5 – Training Profiles ( for One, Two or here year programs ) and Step 5 – Training Profiles – Establish Default Allowed Hours.

o Adjusted Utilisation % - Represents maximum utilisation that can be achieved for each year within each program. The calculation is (Per Man Billable Hours / Purchased Hours ).

Enter the number of apprentices / trainees you expect to take on for each program for each of the projected years. In order to satisfy your total skill requirements from the completed workbook, you can amend these values later to better satisfy your needs.

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Attrition %


STD Hours

O/T Hours %

Purchased Hours

Training Weeks

Other Allowed Hours

Target Utilisation

%



% Finish Level1 Production Worker 10% 100% 2080 5% 2184 30 300 75% 554 25% Mechanic2 Mechanic 10% 100% 2080 5% 2184 20 300 75% 926 42% Technician

Targeted Training - 2 Year Profile - Training Load ( allowed lost time: classroom / training time) Two Years


Attrition %


STD Hours

O/T Hours %

Purchased Hours

Training Weeks

Other Allowed Hours

Target Utilisation

%



% Finish Level1 Trainee 10% 100% 2080 5% 2184 40 300 75% 181 8% Production Worker2 Production Worker 10% 100% 2080 5% 2184 30 300 75% 554 25% Mechanic3 Mechanic 10% 100% 2080 5% 2184 20 300 75% 926 42% Technician

Targeted Training - 3 Year Profile - Training Load ( allowed lost time: classroom / training time) Three Years

2007 2008 2009 2010 20111 Year 5 6 7 8 91 Year 10 11 12 13 142 Year 15 16 17 18 193 Year 20 21 22 23 24

Training Profile

Intake YearPlanned Yearly Starts by Training Profile

Step 6 - Workforce Cost Structure

Technician Cost Table.Enter the cost labour rate for each of the four (4) skill levels shown below.

Note: The hourly sell values are automatically generated for the information you entered in Step 1 – Sales Opportunities & Variables, they are calculated from your billable hours and invoiced amount input.

The Current State, Desired State and Gross Profit Benefit tables should be reviewed at completion of the workbook and will show positive or negative cost changes relative to changes you make to your desired future skill base.

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Skill Level Description Cost Sell Gross Profit $ GP %0 Trainee 16.00$ 71.43$ 55.43$ 78%1 Production Worker 18.00$ 71.43$ 53.43$ 75%2 Mechanic 21.00$ 71.43$ 50.43$ 71%3 Technician 24.00$ 71.43$ 47.43$ 66%4 Master Technician 26.00$ 71.43$ 45.43$ 64%

Technician Cost Table

Step 7 – Dealer Skill Matrix – Desired State

The Activity Type Matrix is developed for you previous input into Sheet 2 – Worksheet Activity Tables and Skill Levels defined in Step 3 – Workforce Profiles.

Note: A suggested precursor to this activity is to implement a work order segment analysis using SMCS codes to identify work order skill requirements against the existing labour force skill levels. In all probability, you will identify that you are over training your people relative to the majority of work order requirements.

Determine your desired mix of skills by percentage across each of the Activity Types. If the sum of your skill level breakdown, by Activity Type, does not equal 100%, the program will display the error code shown below.

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ACTIVITY TYPE TraineeProduction

Worker Mechanic TechnicianMaster

Technician ERROREngines 10% 13% 27% 44% 6%Torque Converters 10% 13% 27% 44% 6%Transmissions 10% 13% 27% 44% 6%Final Drives 10% 13% 27% 44% 6%Wheel Ends 10% 13% 27% 44% 6%Hydraulics Cylinders 10% 13% 27% 44% 6%Hydraulic Pumps & Motors 10% 13% 27% 44% 6%PM Contracts 0% 0% 100% 0% 0%TM&R Contracts (Not to include components) 10% 13% 27% 44% 6%New Equip Assembly (all PDI, attachments, etc) 10% 13% 27% 44% 6%Track Shop 15% 65% 20% 0% 0%Idler Weld 0% 0% 100% 0% 0%Dealer Input Category 0% 0% 0% 0% 0% <100%Dealer Input Category 0% 0% 0% 0% 0% <100%Warranty Repairs 10% 0% 10% 30% 50%Machining & Fabrication 10% 0% 15% 35% 40%Electrical 5% 15% 5% 20% 55%Field Repairs 0% 0% 33% 33% 34%Shop General Repairs 15% 15% 20% 30% 20%

Matrix to be populated to dealer desired state

Matrix to be populated for dealer "Desired State" Skill Mix

SKILL LEVELS Hour split by skill by %

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Step 8 – Hours Baseline & 5 Year Budget

Note: This is the most complex sheet to complete within the workbook and requires significant analysis of the area(s) you are reviewing. Failure to obtain accurate data for each field of input will significantly distort the final manpower recommendations.

The total Billable Hours and New Equipment Assembly qauntities for Base Year, are obtained from input made within Step 1 – Sales & Opportunity Variables.Enter the Billable hours and quantities recorded during the Base Line Year for each of the activities listed.. For components the worksheet will automatically display the average billable hours per unit of build.

Shop General Repairs field will automatically display the difference between billable hours entered and hours displayed in the Total Billable Hours field.

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For projected years you have the opportunity to allow the program to automatically produce projections, based on the projected growth variables entered in Step 1 - Sales & Opportunity Variables. Alternatively, and recommended, manual projections for each projected year can be made.

Manual projections allow for changes in volume beyond average percentage growth values. They also allow for a change in mix and for efficiency improvements. Examples of which could be a change in mix of engine from 3400 to 3500 and therefore a change in the average hours to process although the quantities could remain constant.

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Step 9 – Non-Technician Guidance Tables

This table allows you to determine manpower ratios for training, seniority and functional process roles. The table provided is populated with generic values, which you are free to change. For Warranty and SOS laboratory staff, we ask that you identify current process volumes and manpower. If you are not comfortable with current staff volumes in these areas, please increase or decrease, to a level that you are satisfied with. The program will then project manpower requirement at your current ratio.

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Technician to Apprentice / Trainee Ratio Description 2006 2007 2008 2009 2010 2011

Technician + Master Technician 4 4 4 4 4 4

Apprentice 1 1 1 1 1 1

Leading Hand Description 2006 2007 2008 2009 2010 2011Leading Hand / Team Lead 1 1 1 1 1 1Team Size 8 8 8 8 8 8

Supervisor Description 2006 2007 2008 2009 2010 2011Supervisor 1 1 1 1 1 1Leading Hands / Team Leads 8 8 8 8 8 8

Manager Description 2006 2007 2008 2009 2010 2011Manager 1 1 1 1 1 1Supervisors 8 8 8 8 8 8

Warranty Description 2006 2007 2008 2009 2010 2011Claims in 2006 1,000 1,100 1,210 1,331 1,464 1,611Claims Officers 3 3 4 4 4 5

Technical Support Description 2006 2007 2008 2009 2010 2011Tech Communicator 1 1 1 1 1 1Machines / Techs ? 100 100 100 100 100 100

SOS Laboratory Description 2006 2007 2008 2009 2010 2011Samples per Year 120,000 132,000 145,200 159,720 175,692 193,261Laboratory Staff 4 4 5 5 6 6

Other General Manpower Guidance Tables

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Reporting 1 – Manpower Projection Report 1

Automatic Growth & Current State Skill Mix compared to Manual Growth & Desired State Skill Mix tables

The historically Baseline data is derived from your input into: Step 4 – Workforce Profile , Step 6 - Dealer Skill Matrix Desired State Step 7 – Hours Baseline & 5 Year Budget

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Documents

Manpower Calculator Introduction V1.5