Velvac Relies on Kronos for Integrated Solutions

Velvac Inc. (New Berlin, WI) is a place where the owners hand out paychecks and the door to the top office is always open...a place where 20-year employees like MIS Director Robert Otto are not uncommon.

Located in a suburban industrial park in New Berlin, Wisc., 20 miles west of Milwaukee, the $35 million, 64-year-old, privately owned manufacturer is known especially for its heavy-duty truck and recreational vehicle mirrors. And its modest growth over the years has now expanded to 225 employees and two linked buildings. A building addition is on the drawing boards during the next 12-24 months and a company restructuring is in the works—creating two separate divisions for OEM and retrofit or after-market sales—that is expected to result in a sharper focus and faster growth.

A place where self-reliance is prized, Velvac developed all its own software internally without the help of contractors or consultants and, as the company upgraded its computers, the MIS staff simply patched the software to make it work, Otto said.

By the 90s, however, Velvac recognized that an integrated software package that linked shipping, receiving, inventory and production together was critical to the future growth of the company and replaced 90% of its own software code with a packaged application from JBA (now System 21) running on the AS/400. But it retained its own payroll system.

Then, in the spring of 1996, Velvac realized that its computerization still had two shortcomings that needed to be addressed:

• the manual time and attendance system required keypunching individual cards which was too time-consuming and too limited in reporting and analysis capability, prompting Velvac to consider outsourcing its payroll all together; and
• the job costing estimates varied as much as 50% for the manufacture of some parts. With 12,000 components for 4,000 parts, Velvac knew it had to find a more accurate way to quantify the labor factor in order to find out when it is more cost effective to manufacture parts and when to outsource them.

The payroll people thought they just needed a time and attendance system instead of adding up punch cards, and decided to outsource it to ADP. "But we checked again and realized that they wouldn't answer our data collection questions and job costing," said Otto. "Let's see if time and attendance and data collection can be done together, and interface to our payroll system." And they called Kronos.

"Velvac's motivation in deciding to automate with Kronos was to gain speed, accuracy and more information," Otto added, "Kronos was diverse enough to handle everything in one system instead of multiple systems. And it was on the right platform," he said. "In addition, Kronos interfaces smoothly with Velvac's JBA business software, eliminating the need for dual entries."

"Velvac can still go back and forth between Kronos and JBA, retrieving JBA work orders and costing reports just like Velvac did previously, and the front office doesn't have to know what we did to make it happen," Otto said. "But the bottom line is we don't have to look in two places for the same information."

While payroll still may ultimately be outsourced to ADP, Velvac began converting its time and attendance to Kronos' Timekeeper/AS System in June 1997. "Unionized labor was the most straightforward and easiest to convert because the workers all were on straight hourly pay," he said. "The non-union force was more complicated to adapt to Kronos because the pay rules are different and have more leeway for special circumstances," he said.

Personnel assistant Sandi Grages said it used to take her 9 1/2 to 10 hours on Monday to process payroll each week because she had to calculate 175 or more time cards by hand. Now she can usually spot an error with a quick glance and perhaps five hours or so of the time block can be spent doing other personnel-related tasks, she said.

"The centralized system definitely gives supervisors more information on scheduling, especially time and attendance," Otto added. "They can do a better job of scheduling their departments and...can compare how jobs are done in different sites and reconcile how (an employee) is spending the work day."

Due to other pressing IT tasks such as Year 2000 conversion, however, Velvac is only about 40% through the second step of Kronos' implementation: job costing.

"With the job costing module, employees simply swipe their badges and the bar codes of their work orders when starting and ending each job, he said. These work hours will be recorded against the work orders in the JBA database, giving Velvac accurate cost figures and specific dates when jobs are started and completed," he said.

Timely, Accurate Information

"The benefits? Information access will be faster and more accurate and will conform to standard pay rules," he said, "Supervisors will be able to view pay histories online to improve overtime equalization and other pay matters and will be able to perform better cost analysis," he said.

"We're trying to look on a global scale, identify where our problems are and correct those problems," Otto said. "We're not doing this to save money but to eliminate unknowns and make intelligent decisions...like deciding whether to make or buy something, setting realistic work schedules and determining our true profit margins," he said.

Velvac also was on the verge of purchasing an elaborate, expensive security system to control building access during off-peak hours, Otto said. But the company was persuaded to buy a more affordable Kronos module instead that worked with the existing cabling and clocks, verifying identification with employee badge swipes. "Kronos gave us what we were looking for: a way to control who can and cannot come in at odd hours of the day, using the same badge for time and attendance," he said.

Submitted by Kronos Inc. (Waltham, Mass.). Phone 617-890-3232. Web site: www.kronos.com