Human Resources: Focus on performance, efficiency to improve parlor profitabIlity

By Felix Soriano

What is my parlor operating cost? Labor cost? Labor efficiency?

I was recently asked these and other questions by a client trying to reduce operating costs. Due to low milk prices, he wanted my opinion about implementing changes in the milking routine and milking process.

Understandably, many dairy producers are trying to cut costs – any way and place they can. However, before making any drastic decisions, it is important to have a good knowledge of parlor operating costs, performance and efficiency.

Excel at monitoring parlor performance, productivity, efficiency and operating cost.

The saying that “you can’t manage something that you can’t measure” is true for good parlor management decisions. By closely and periodically monitoring parlor performance and efficiency, you can:

1. Better evaluate the potential impact of any management change (going from 3X to 2X milking in a low group).

2. Better evaluate your current parlor operating process, efficiency and profitability.

3. Motivate change among employees by showing parlor and milking shift data.

It is important to identify periodic parlor monitoring parameters used to define or implement key performance indicators, make management changes to improve parlor productivity and profitability, and communicate with employees to set up goals and expectations.

What should be monitored?

Keep things simple, but at the same time obtain the necessary information to help make better decisions. Performance indicators should be related to productivity, efficiency and profitability. Parameters I encourage my clients to monitor weekly and monthly include:

1. Cows per hour/turns per hour. A major component of parlor efficiency and labor productivity, it is determined by the number of cows milked per hour or the times each side is filled in one hour. A typical benchmark is four turns per hour, with a goal of five turns per hour. However, this target may vary depending on the type of parlor, number of employees and other parameters. Work with your consultant and parlor manager to define benchmarks and goals. Once you establish these numbers, monitor them periodically and communicate with your employees about how things are going.

2. Milk flow in the first 15 seconds and first 30-60 seconds. Useful as monitors of milk letdown and udder preparation, these parameters allow the parlor manager to evaluate proper parlor procedures and routines. (See www.apndairy.com for more detailed information.)

3. Somatic cell counts. Monitor bulk tank SCC daily, posting the information for employees. Communicate benchmarks and goals. Everyone should be focused on improving milk quality, and every employee should have a basic understanding of the meaning and importance of having low SCCs. Milking team training and refresher programs can be helpful. If necessary, work with a consultant who can communicate in your employees’ native language.

4. Pounds of milk sold per full-time employee. A major component of parlor efficiency, this should be evaluated at least monthly, depending on type of parlor and operation. Although a standard benchmark should be in the range of 800,000 to 1 million lbs. of milk per worker, highly efficient parlors should strive to obtain >1.5 million lbs. of milk per employee.

5. Revenue per full-time employee. This is calculated by the total income of milk sold divided by the number of full-time employees. A benchmark and challenging goals should be established. Find areas that can be improved, and areas where costs can be reduced.

6. Income over parlor operating cost. A major component of parlor profitability, this is calculated by the total income of milk sold divided by total parlor operating costs. Detailed information of parlor operating costs is important for an accurate assessment.

The most effective way to control costs is often by focusing on resources. Remember, the most important resources in the parlor are your employees. To improve parlor efficiency, you need an efficient and hard-working labor force. Work on your employees’ attitudes, skills, knowledge and motivation. The milking crew must have a clear understanding of their jobs and roles.

Questions

Here are some questions I ask dairy producers to help evaluate their workforce:

• Do you have a defined milking routine and standard operating procedure (SOP) for both milkers and cow pushers? When was the last time you reviewed your SOPs and tried to improve the process?

• Are all your employees properly trained? Do they understand the importance of doing a consistent job and always following the SOPs?

• When was the last time you had a meeting with your employees to discuss parlor performance, benchmarks and targets?

• When was the last time employees shared any ideas to make their job better and the parlor operation more efficient?

• Do you have an orientation program in place for new milkers and cow pushers? Who is in charge of training new employees? Are they trained in how to be a good trainer?

If the answer to one or more of these questions is “no,” there is work to do.

Summary

The dairy economic crisis as an opportunity to review parlor performance and efficiency. Find common goals for your parlor team to improve milk quality and reduce operating costs.

Have monthly employee meetings to discuss parlor performance and efficiency goals, providing feedback on how they are doing and what needs to improve.

Use an outside consultant, if necessary. Their experience with other dairies may provide a different perspective on your dairy’s parlor process, identifying areas for improvement.

FYI

Felix Soriano is a labor management and human resource consultant with APN Consulting LLC, Warrington, Pa. Contact him via phone: 215-738-9130, e-mail: felix@apndairy.com or visit www.apndairy.com.


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