1. EICC Working Hours Taskforce KPI Scorecard
May 2010

2. Potential KPI Cause and Effect Diagram KPI Impact Interaction Matrix
Overview
Objectives
Potential KPI Cause and Effect Diagram
KPI Impact Interaction Matrix
KPI Reporting Guidelines
Examples of Recommended Methodologies*
KPI Development Progress Scorecard
Summary
* The root causes included in this presentation and in the KPI guidelines are examples only and are not based on actual root cause analysis data or results. Each situation is unique and should be addressed accordingly with the Root Cause Analysis Tool provided as part of the Working Hours Task Force toolkit.

3. Objectives
Provide high-level understanding of the various Key Performance Indicators that may be of value when addressing possible root causes of excessive working hours.
Provide an understanding of the interactions between departments within an operation that may impact working hours performance.
Recommend review process for KPIs.

4. Cause and Effect High-Value KPIs: Excessive Working Hours
Total cost trend
Return
Satisfaction rating
Overtime pay
Impact
Training cost delta
Productivity
# of workers exceeding working hours limit
Reporting
# of workers without 1 day/wk off in 7 days
Attrition rate
Orders outside of lead time
Root Cause
Material delivery / safety stock level
Resource planning accuracy

5. KPI Impact Interaction Tool

6. KPI Reporting Guidelines

7. Three Examples of KPI Development Tool in Use
The following examples are intended to illustrate use of a KPI Scorecard to track specific indicators of, or contributing factors influencing excessive working hours.
Identification of working hour overages or lack of rest days (includes both EICC and China OT legal requirements)
Potential excessive working hours created by material shortage
Potential excessive working hours created by life cycle volume inaccuracy

8. KPI Development Methodology – Example Working Hours
Elements of KPI
Primary owner (for reporting metric) HR, Finance
Method – Trend Analysis
Management Influence – Sales, planning/forecasting, HR/workforce planning, operations, materials
Type of Indicator – Lagging
Potential Causes – Orders exceeding capacity, unexpected demand, lack of required workforce resources, material availability
Comments – Requires accurate weekly/monthly data reporting from time and attendance system
Steps to take
Establish methodology to extract time & attendance data
Collect and report out working hour and rest day data on weekly basis
Analyze working hour (and rest day) data to determine whether it meets EICC and local legal requirements
Identify potential trends and root causes of work hour overages; implement plans to address root causes
Continue to track performance against EICC/local legal requirements and address overages
Work hours and rest days meet EICC requirement, but fail to meet China OT legal requirement for Feb – Sept.

9. KPI Development Methodology – Example Material Availability
Elements of KPI
Primary owner- Suppliers’ Material Management and Brands’ Purchasing
Method – Waterfall Chart, Trend Analysis
Mgmt Influence – Sub-tier suppliers, Planning
Type of Indicator – Leading
Potential Causes – Force Majeure, Cost Pressures, Incorrect or poor data inference.
Comments – Impact to working hours occurs when material is not available and then a catch up schedule is introduced to match revised availability.
Steps to take
Establish % flexibility of production in contract
Establish material lead times
Establish % material to be held in buffer/safety stock
Establish material delivery plan
Track performance to plan
Measure results using number of units short of plan and time to recovery with and without over time
Determine course of action keeping in mind elimination of excessive working hours
Material shortage begins to drive need for additional work hours

10. KPI Development Methodology – Example Life Cycle Volume Accuracy
Elements of KPI
Primary owner- Brands’ Sales and Marketing & Communications Teams, Retailers, End Customer, Supplier’s Production and Shipping Teams
Method – Market Research, Trend Analysis (historic, present and future), Communication of Demand (Brand) Production & Shipping (Supplier)
Management Influence – Brand’s Planning Teams, Retail Forecasting Teams, Supplier’s Production, HR and Purchasing Teams
Type of Indicator – Leading
Potential Causes – Fluctuating Retail Demand (Retail / End Customer), Overly Aggressive Forecasting (Brand), Inadequate Resource Planning (Supplier), *Unusual or Emergency Situations
Comments – Requires monthly reporting of clearly defined and agreed upon metrics
Steps to take
Establish a trusting business relationship with clear and transparent communication between all parties
Plan to EICC working hours requirement
With the Code in mind, define terms & conditions for the Retail/Brand relationship and the Brand/Supplier relationship (upside flexibility, lead times, committed capacity etc)
Establish agreed upon reporting metrics (forecasting signals, production planning methods, shipment plans)
Ensure adequate resources are in place to meet demand (Supplier)
In an *Unusual or Emergency Situation, Supplier tracks any excessive working hours as a result (per worker, per week)
Set up formal review of excessive working hours KPI data (Brand and Supplier)
Supplier develops a recovery plan to meet EICC requirement for excessive working hours
*Definition of Unusual or Emergency Situation - Per EICC Working hours Guidelines:
Unpredictable events that require overtime in excess of legal or EICC limits. Such events cannot be planned for or foreseen.
Equipment breakdown, power failure or other emergency resulting in prolonged shutdown of a production line. 
Unforeseen raw material or component shortages or quality issues that shut down production.  Excessive overtime is then needed in both situations to recoup lost production time and meet customer commitments.

11. Sample Scorecard for Implementation of KPIs
Supplier Production Management
Customer Demand Planning, Supplier Production Planning
Procurement, Sub-tier Supplier Performance
TBD
Working Hours
KPIs
Over WH Limit
One Rest Day
LCV Accuracy
Material Availability
(Based on root cause analysis)
Evaluation Process Established
Data Collected
Results Analyzed
Improvements Identified
Indicators:
Implement-ation Steps
Responsible for reporting

12. How Do I Start? Be proactive! Engage senior management
Identify the root causes of excessive working hours
Select KPIs and gather data
Establish a regular, formal KPI review process to create accountability across the organization, monitor progress and take corrective action
Ensure that all departments and organizations which contribute to the conditions for excessive overtime take ownership for reducing working hours
Share your challenges and progress with your customers
Collaborate with customers to address brand-related factors
The most important thing is to get started! Establish your baseline, and track your progress.