HOURS OF WORK IMPROVEMENT GUIDE. Copyright 2010 The Coca-Cola Company P a g e 1
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1 HOURS OF WORK IMPROVEMENT GUIDE Cpyright 2010 The Cca-Cla Cmpany P a g e 1
2 Executive Summary & Hw t Use this Guide The Cca-Cla Cmpany (TCCC) is cmmitted t ensuring that ur entire supply chain, including Bttlers, cpackers, direct & authrized suppliers, is in cmpliance with lcal laws & the values reflected in ur Wrkplace Rights Plicy (WRP) & Supplier Guiding Principles (SGP). Cmpliance with lcal wrk hurs and vertime laws is a fundamental cmpnent f WRP and SGP. In additin t legal vilatins, excessive vertime in the wrkplace can lead t serius peratinal cnsequences as well as disrupt emplyee wrk life balance. Reducing vertime may significantly increase emplyee mrale, decrease quality incidents and reduce vertime labr csts thereby imprving business results and fstering a Great Place t Wrk. We have fund that nce management understand the true csts related t vertime they ften chse t address the issue practively and the results f ding s, as discussed belw, can be dramatic. Overtime can be a cmplex and challenging issue that will nt be slved vernight. This guide is intended t share ur learning t date and be a resurce t help facility management identify and address the rt causes f vertime. The guide includes the fllwing: An verview f the vertime issue Practical strategies t reduce vertime Real case study examples t help facilities drive cntinuus imprvement Belw is an example f hw yu may wish t use this tl: Review entire Hurs f Wrk Imprvement Guide t understand nature and true csts f vertime as well as benefits f reducing vertime If vertime is an issue in yur facility use Drivers f Overtime Sectin t assess rt causes Refer t Strategies t Reduce Overtime Sectin t identify ptential peple, prcess and technlgy slutins t address rt causes Review business results as well as emplyee satisfactin t measure and cmmunicate success If yu have additinal questins please cntact yur reginal Wrkplace Accuntability Manager r wrkplacerights@na.k.cm Cpyright 2010 The Cca-Cla Cmpany P a g e 2
3 Backgrund Scial cmpliance auditrs have identified excessive wrk hurs as ne f the mst cmmn legal vilatins in wrkplaces wrldwide. Wrkplace assessments cnducted by a leading third party audit agency, shwed that f nearly 28,000 wrkplaces audited, as many as 1 in 4 had vilatins related t vertime r rest days. This data is cnsistent with internal findings fr the Cca-Cla system which shw that almst 33% f the bttling peratins and 24% f the suppliers audited had similar vilatins. This rate rises t nearly 1 in 2 wrkplaces in sme develping cuntries. In many f these cases, the emplyees are als nt being given ne day ff in seven during peak seasn, t which they are legally entitled. The fllwing risks have been identified by scial auditrs in cnjunctin with excessive vertime: 1. Reduced wrker prductivity r mtivatin 2. Reduced emplyee engagement 3. Increase in absenteeism r missed wrk due t illness r injury 4. Extra cst incurred by paying premium vertime wages 5. Increased benefits csts assciated with wrker illness r injury 6. Risks t prduct integrity and quality 7. Ptential fr higher emplyees turnver 8. Legal and reputatinal risk All f these elements tgether represent the true csts f excessive vertime. Excessive vertime is a cmmn and ften systemic issue, hwever it is nt insurmuntable. There are numerus drivers t hurs f wrk but mst are cntrllable; sme in the shrt term and sme ver a lnger perid f time. Slutins t wrk hur vilatins will be different frm plant t plant depending n staffing, capital availability and resurces. In sme cases the issue may be as simple as establishing prper recrd keeping in rder t demnstrate legal cmpliance. Hwever, in ther cases, reslving a wrk hurs prblem is cmplex and invlves management making tradeffs. Therefre there is a need t understand the nature f the issue in yur peratins. Cpyright 2010 The Cca-Cla Cmpany P a g e 3
4 Drivers f Overtime Based n an analysis f assessment data, vertime and rest day vilatins are inter-related and are symptms f ther business challenges. N single cause was identified t explain the presence f excess hurs. Hwever, sme key drivers have been identified, including: Lack f sufficient manpwer t prvide needed cverage. Lack f manpwer needed t cver critical r high skill peratins, especially during perids f peak demand, vacatin, r absences (related t illnesses r ther causes) Lack f sufficient machinery, trucks, r ther equipment needed t cver peak demand perids. Equipment availability issues due t maintenance prblems, etc Lack f balance in the prductin prcess i.e. a prcess step frming a bttleneck that creates a systemic need fr excess hurs fr that prcess r in dwnstream prcesses Imprper scheduling practices causing uneven demands, lack f available materials, r prductin f wrng prducts Emplyee interest in earning extra incme Pr recrd keeping practices due t lack f management awareness cncerning hurs f wrk requirements Lack f regular management versight and apprval fr the vertime that is being wrked Staffing based n cnvenience rather than need. Pr sales frecasting by custmers and in planned prmtins t drive sales by Bttlers Drivers f Imprvement N ne slutin has been identified t eliminate hurs f wrk vilatins. Hwever, sme f the key drivers that have been identified include: Map ut prductin flw and identify bttlenecks Increases manpwer t cver peak perids, vacatins, ther absences, etc. Crss training t increase manpwer available fr critical skills Implementatin f absence cntrls Adjustments t shift patterns, prductin flr layut, t help reduce bttlenecks Increases in inventry t help level demands Cpyright 2010 The Cca-Cla Cmpany P a g e 4
5 Educatin f managers and assciates cncerning the legal restrictins and csts f vertime Implementatin f mnitring and apprval prcesses Bttlers and suppliers that were able t reduce vertime nted the fllwing: The reductin in vertime ccurred ver a perid f time, nt immediately The reductin appears t have been driven and/r supprted by a senir perating leader s decisin that vertime culd and shuld be reduced r eliminated Once initiated management seems t drive far beynd the vertime reductins that wuld be required t reslve excess vertime and rest day vilatins, suggesting that a significant cst/benefit has been identified Outcmes f Reducing Overtime: When management has tackled the issue f excessive vertime the results have been significant. Belw are a few example highlighting the prgress made in tw cuntries: An average reductin f 86% n hurs f wrk acrss Cuntry A system Near cmplete eliminatin f vertime in ne Cuntry A plant A 95% cst reductin in ne plant in Cuntry B, and An average cst reductin f 50% acrss 22 plants in Cuntry B in just ne year. In the prcess f addressing the rt causes f vertime, wrk hur and rest day vilatins are als being reslved. Please refer t Appendix fr detailed case studies and utcmes. Cpyright 2010 The Cca-Cla Cmpany P a g e 5
6 Strategies t Reduce Overtime: Managers can use this sectin simply t get ideas n hw t reduce vertime r use it as a tl by inserting an X by each tactic nce reviewed and cmpleted as applicable Fcus Area: PEOPLE Strategy Tactics Mark X if cmplete Build crss functinal awareness and cmmitment t manage OT Prperly educate and cmmunicate with emplyees / unins Determine impacts f each functin and their prcesses t manage Build lcal business case t set and achieve targets Build understanding that all functins play a rle / have respnsibilities Ensure wrk hur requirements are part f emplyee cntracts and handbks. Prmte as an imprved and healthy wrk life balance Share OT findings with emplyees. When explained against law r targets, peple understand that change needs t happen. Build emplyee engagement Ensure OT is vluntary Encurage emplyee invlvement t achieve targets suggestins n prcesses / practices and grievances Understand impact n emplyees and develp strategies t reinvest part f savings t ffset (transitin, ne time payments, review f base rates) invest in emplyees thrugh training t create crss training and increased skills fr emplyee prmtin and wrk flexibility Pst results fr emplyees t see imprvement Ensure emplyees understand value prpsitin t them and t the plant Measure and track emplyee feeling in engagement surveys Cpyright 2010 The Cca-Cla Cmpany P a g e 6
7 Fcus Area: PROCESS Strategy Tactics Mark X if cmplete Ensure legal requirements are understd and built int deplyment prcesses (scheduling, shift plans, crew plans, rute planning etc. ) Understand / disseminate current legal requirements, including special restrictins fr yung wrkers r ther situatins as well as ensuring at least ne day ff in seven Determine wrk prcesses that direct time planning and incrprate Understand gvernment waivers that can be available and apply fr/ maintain as needed Assess current situatin Survey, self audit, cnduct wrkplace assessment, review internal data Segment data t cre activities (distributin, prductin / warehuse and administratin) Determine impacts/csts (quality, prductivity, grievances, absenteeism, injury rate, head cunt, cntractrs, cst) Assess timekeeping methds and recnciliatin Ensure time recrds reflect actual wrk hurs (fr instance wrkers shuld nt clck-ut and then be required t stay fr a prductin meeting r, cnversely, wrkers shuld nt clck-in 20 minutes prir t start time and then prceed t have an unpaid meal) Ensure timekeeping identifies regular and OT hurs Replace master methd with specific tracking Recncile any differences with emplyee sign ff Incrprate frmal advance OT apprval by persn Track and manage OT t a plan Track Hurs, OT Hurs, Quality, Prductivity, Injury data n OT versus regular time, absenteeism, cntractr hurs, unplanned stppages Establish OT budget and plan with mnthly tracking t recncile variances Establish management rutines / review data and imprvements Establish advanced apprval rutines t senir plant leadership Cpyright 2010 The Cca-Cla Cmpany P a g e 7
8 Determine shrt term cntractr needs thrugh transitin perid (if any) Determine hw t allcate available vertime permanent versus cntract wrkers Review shift start and hand ver times and time use n change vers Benchmark results between plants t identify imprved practices Bank nn-critical wrk t free up resurces fr peak activity and prvide tasks in dwntime Use the standard cst system r Bill f materials system t ease tracking Fcus Area: TECHNOLOGY Strategy Tactics Mark X if cmplete Ensure timekeeping technlgies track and reprt n paid time with emplyee G beynd basic in / ut security based systems Ensure bth emplyee and manager apprval Frmal recnciliatin f any differences between emplyee and manager acknwledgement Track and assess OT impact f unplanned stppages / breakdwns bth plant and fleet Integrate hur requirements int rute planning Fcus areas, preventative maintenance include OT csts and impacts in fix r buy planning Determine impacts in run up r start peratins after line shut dwn Ensure a factr in Radshw technlgy Maximize in stre wrk / breaks in high traffic times in rute planning Cnsider duble shifting fleet where viable (majr metrplitan areas) Ensure IT systems prvide suitable reprting Track hurs t plan and analyze variances Track related impacts / causes such as unplanned stppages, Cpyright 2010 The Cca-Cla Cmpany P a g e 8
9 change-vers, absenteeism, accident rates, quality (defects / lsses) etc. Identify and ensure cmmissined emplyees are wrking within time requirements Include wrk hur requirements int sales peratin planning (r DRP / MRP) planning Minimize change-vers, in windw schedule changes, extra prduct handling Integrate FIFO rules int prmtin planning Manage inventry cunts arund available regular time labr tls Cpyright 2010 The Cca-Cla Cmpany P a g e 9
10 APPENDIX A CASE STUDIES Cuntry A Initial assessments at bttling plants in Cuntry A highlighted vertime and rest day vilatins in a number f plants. As a result, a wrking grup was established t evaluate why the vilatins were ccurring and what actins culd be taken t reslve them. The wrking grup identified the fllwing issues: Lack f cverage fr absences and vacatins Lack f manpwer t cver critical jbs Disruptins due t external factrs, traffic, etc. Pr frecasting f demands Equipment breakdwns and pr maintenance planning They identified that 80% f their vertime was the result f manpwer availability issues, mst f which were cntrllable thrugh imprved scheduling, crss-training, r the hiring f additinal staff. Management demnstrated cmmitment and fllwing actins were taken t address the issues: Adjusting manpwer plans t allw fr cverage f emplyees n vacatin hiring staff t meet thse requirements Crss-training staff t prvide cverage fr bttleneck peratins and avid such peratins frm impacting prductin capacity Building attendance int the peratins perfrmance bnus s that emplyees get incentive bnus based n attendance Negtiating changes t when certain hlidays are bserved, and mving them ut f peak seasn Systemic Prductin Planning, t avid running lines n public hlidays Prjected preventive maintenance in the ff seasn In ne test plant, which had been wrking t reduce vertime since 2005, the wrking team fund that vertime had been reduced by ver 90%. The team tk what had been learned frm that plant and develped a summary apprach that was shared with the HR managers fr all f the plants. The result has been significant reductins in vertime acrss almst all f the plants. Fr example, in the Nrthern Regin there was a 2/3 reductin in vertime csts acrss the 9 plants between 2007 and Cpyright 2010 The Cca-Cla Cmpany P a g e 10
11 Cuntry B Rt Cause Analysis Prject Glbal Wrkplace Rights, wrking with the lcal Business Unit in Cuntry B, initiated a rt cause analysis prject in 2008 t identify why vertime and rest day vilatins were ccurring, hw they culd be crrected, and t try t develp a recmmendatin fr use acrss all bttlers. The prject was cmpleted n manufacturing areas. Data was gathered frm a questinnaire and a number f bttler visits t scpe the issue. The data identified a wide range f causes fr vertime: Industrial Operatins and Sales Prductin capacity des nt supprt nn-seasnal and seasnal demand Prductivity decreases because f the time spent n maintenance and setups Prductin and Sales d nt always wrk tgether t balance sales t prductin capacity and capability Lw accuracy f the sales plan(mnthly / weekly) with many changes and impact n prductin plan Cncentratin f sales in the secnd half f the mnth generating mnthly seasnality There is n planning (special cntingency plan) t supprt expected strng seasnal demand Excessive number f exchanges f line (SKU's) with equipment setups and cnsequent lss f prductin time Prductin plans have a lt f changes Sales and prductin plans d nt cnsider the stck at distributrs and distributin centers The stck des nt wrk as buffer (the prductin wrks n demand and nt under rders/n the jb) Annual strng seasnal demand culd nt be met by the current mdel f shifts, manpwer and equipment Shifts d nt prvide sufficient manpwer t meet weekly demands Strng physical activities in prductin area during lng hurs increasing fatigue and ccupatinal diseases and decrease prductivity impacting the team s prductivity Maintenance Cnstant crrective maintenance n the line because f equipment bslescence Preventive maintenance plan cannt be implemented because f lack f equipment availability Human Resurces and Management Manpwer / head cunt (planned in budget) is nt cmplete Difficulty in recruiting because lcal manpwer is nt qualified Shift cnfiguratins need changes t legal patterns Cnfiguratin f shifts with amunt f labr insufficient fr weekly seasnal demand High turn ver There are emplyees that d nt register their time sheet/wrk recrds Accunting and finance activities cncentrated at the end f the mnth Cpyright 2010 The Cca-Cla Cmpany P a g e 11
12 Distributin and Lgistics Cmmissined emplyees have extra hurs but are nt cunted(lng shifts ccur in the distributin in excess f tw hurs, althugh they are supprted by unin agreements) Fleet f trucks insufficient r pprtunities t run trucks in shifts are nt fully seized Lng Distributin Rutes have emplyees wrking lng hurs (pr driving can damage t the image and reputatin f the cmpany ) Strng physical activities in distributin area during lng hurs increase wrker fatigue and illness,and decrease prductivity Cncentratin f deliveries in the secnd half f the mnth generating mnthly seasnality Lw accuracy f time f travel and attendance (custmer service) Set the system f rutes fr distributin using the average f time f travel and attendance creates distrtins Cause & Effect (Fish bne) diagram Overtime The study als identified that significant amunts f mney are being spent n vertime as a result f these drivers, sme f which are easy t cntrl and ther which will be mre difficult. Bttlers were cmmitted t cmmunicate n a quarterly basis the hurs f wrk per mnth cmpared t the previus year, as well as the ecnmic impact. Results frm infrmatin received frm 11 Bttling grups have identified that Bttlers, that have implemented apprpriate actins n each facility, have represented a significant imprvement: Cpyright 2010 The Cca-Cla Cmpany P a g e 12
13 Impact n mre than emplyees Net result 86% reductin in Overtime and USD$ 3.8 MM annual system savings Main actins implemented t reduce hurs f wrk are: 55% hired mre full time staff 36% hired subcntracted wrkfrce / utsurce 64% imprved their prductin planning systems 54% imprved their distributin rutes Impact n the business: 73% reprted financial saving (cst avidance t pay vertime premiums) 36% reprted imprved quality 55% reprted imprved Occupatinal & Safety perfrmance (fewer injuries) 18% reprted reductin n emplyee turn ver 55% reprted reductin n audit fees and r fines, claims frm Labr Ministry 63% reprted increase n their prductivity 45% reprted emplyee engagement (mainly driven by the reductin n incme) Hw the savings were used: 36% used savings t hire full time staff 27% increased emplyees salaries 45% prvided additinal training t their emplyees 73% reprted sme financial savings fr the cmpany Cpyright 2010 The Cca-Cla Cmpany P a g e 13
14 Cuntry B One plant in Cuntry B underwent an initial assessment in September The assessment identified vilatins f vertime and rest day regulatins, and fund that adequate break time was nt being prvided t the wrkfrce. Plant leadership undertk an analysis f why they were wrking excess hurs and identified the fllwing issues: They did nt have the right number f peple in the right places at the right times t allw the wrklad t be cmpleted during a nrmal day. They did nt have adequate inventries in place t smth prductin and allw shrt term disruptins t be managed withut the requirement f extra wrking time. Supervisrs had n way f knwing when an individual emplyee was in excess f r ging t exceed legal allwances The plant tk the fllwing actins t fix the issue: They added inventry t cver mre disruptins They added staffing in places where analysis shwed they were shrt They changed shift structures t allw increased cverage at nn-vertime cst t cmplete regularly required tasks that were previusly being cmpleted n vertime They changed their scheduling sftware s that it highlights if an emplyee will exceed legal allwances when a supervisr tries t schedule an individual As a part f the discussin the plant als decided that they were wrking t much vertime and there was an pprtunity t reduce their csts in additin t cming int cmpliance with lcal laws. As a result, they als initiated a regular review f vertime used during leadership meetings. Finally, the general manager reserved the apprval right n all requests t wrk vertime and refused all withut a reasn he accepted as valid. The result was a 98% reductin in the hurs f vertime wrked between January 2007 and December Cpyright 2010 The Cca-Cla Cmpany P a g e 14
15 Cpyright 2010 The Cca-Cla Cmpany P a g e 15
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