– Supply Chain Insight –
Fishbone Friday: High (or Increasing) Overtime Rate
High (or Increasing) Overtime Rate
Welcome supply chain leaders, to the seventh edition of Fishbone Friday!
If you missed last week’s edition where we discussed possible root causes for a failed system implementation, you can find it here.
Let’s get into the topic of the week: a high (or increasing) overtime rate.
For even the most refined and efficient distribution operations, a certain level of overtime is unavoidable. However, an unusually high overtime rate or a rate that’s steadily increasing is a prime symptom of a sub-optimal process or inefficiency within the operation. Overtime rate is typically calculated by reviewing total hours worked or dollars paid by employee and isolating the percentage of hours worked or dollars paid at the overtime rate.
Limiting overtime, of course, means reducing unnecessary labor costs, but it can also mean improving customer service levels in terms of delivery performance by making sure orders are shipped on time.
So, without further ado, here are some possible root-causes for a high (or increasing) overtime rate.
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