Presentation on theme: "EICC Working Hours Taskforce KPI Scorecard"— Presentation transcript:
1 EICC Working Hours Taskforce KPI Scorecard May 2010
2 Potential KPI Cause and Effect Diagram KPI Impact Interaction Matrix OverviewObjectivesPotential KPI Cause and Effect DiagramKPI Impact Interaction MatrixKPI Reporting GuidelinesExamples of Recommended Methodologies*KPI Development Progress ScorecardSummary* 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 ObjectivesProvide 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 trendReturnSatisfaction ratingOvertime payImpactTraining cost deltaProductivity# of workers exceeding working hours limitReporting# of workers without 1 day/wk off in 7 daysAttrition rateOrders outside of lead timeRoot CauseMaterial delivery / safety stock levelResource planning accuracy
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 shortagePotential excessive working hours created by life cycle volume inaccuracy
8 KPI Development Methodology – Example Working Hours Elements of KPIPrimary owner (for reporting metric) HR, FinanceMethod – Trend AnalysisManagement Influence – Sales, planning/forecasting, HR/workforce planning, operations, materialsType of Indicator – LaggingPotential Causes – Orders exceeding capacity, unexpected demand, lack of required workforce resources, material availabilityComments – Requires accurate weekly/monthly data reporting from time and attendance systemSteps to takeEstablish methodology to extract time & attendance dataCollect and report out working hour and rest day data on weekly basisAnalyze working hour (and rest day) data to determine whether it meets EICC and local legal requirementsIdentify potential trends and root causes of work hour overages; implement plans to address root causesContinue to track performance against EICC/local legal requirements and address overagesWork 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 KPIPrimary owner- Suppliers’ Material Management and Brands’ PurchasingMethod – Waterfall Chart, Trend AnalysisMgmt Influence – Sub-tier suppliers, PlanningType of Indicator – LeadingPotential 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 takeEstablish % flexibility of production in contractEstablish material lead timesEstablish % material to be held in buffer/safety stockEstablish material delivery planTrack performance to planMeasure results using number of units short of plan and time to recovery with and without over timeDetermine course of action keeping in mind elimination of excessive working hoursMaterial shortage begins to drive need for additional work hours
10 KPI Development Methodology – Example Life Cycle Volume Accuracy Elements of KPIPrimary owner- Brands’ Sales and Marketing & Communications Teams, Retailers, End Customer, Supplier’s Production and Shipping TeamsMethod – 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 TeamsType of Indicator – LeadingPotential Causes – Fluctuating Retail Demand (Retail / End Customer), Overly Aggressive Forecasting (Brand), Inadequate Resource Planning (Supplier), *Unusual or Emergency SituationsComments – Requires monthly reporting of clearly defined and agreed upon metricsSteps to takeEstablish a trusting business relationship with clear and transparent communication between all partiesPlan to EICC working hours requirementWith 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 ManagementCustomer Demand Planning, Supplier Production PlanningProcurement, Sub-tier Supplier PerformanceTBDWorking HoursKPIsOver WH LimitOne Rest DayLCV AccuracyMaterial Availability(Based on root cause analysis)Evaluation Process EstablishedData CollectedResults AnalyzedImprovements IdentifiedIndicators:Implement-ation StepsResponsible for reporting
12 How Do I Start? Be proactive! Engage senior management Identify the root causes of excessive working hoursSelect KPIs and gather dataEstablish a regular, formal KPI review process to create accountability across the organization, monitor progress and take corrective actionEnsure that all departments and organizations which contribute to the conditions for excessive overtime take ownership for reducing working hoursShare your challenges and progress with your customersCollaborate with customers to address brand-related factorsThe most important thing is to get started! Establish your baseline, and track your progress.