Excessive overtime is a major issue, especially in Asia. It is often considered as business as usual by both factory management and workers. But it is not only an issue per se, it has important downside in terms of safety, productivity, quality and attractiveness of the sector to young workers. Numerous studies exist on the topic, such as Stanford’s one published in 2014, which shows a decline in productivity above 49 hours work per week.
So, what are the causes of overtime? We listed 5 of the most frequent we encountered while running our supportive projects and what can be done to act upon it.
1 – Factory does not manage the production capacity
Overcapacity is one of the main causes for overtimes. If your supplier accepted too much orders compared to its production capabilities at a given moment, he will have to either recruit or have its workers working overtime, the latest being most likely to happen. In some cases, over capacities can be due to the inability for the factory to properly evaluate the production time. A typical example is the industry with a piece-rate pay system. In that context, the management does not feel the need to supervise working hours and will mostly evaluate in working days. They usually leave total freedom to workers to organize their time. If it gives a relative sense of emancipation to workers, it can lead to an important amount of overtime during production peaks.
It’s utterly important to ensure that your partners have the capacity to manufacture the goods within the given delay. As always you should keep an open dialogue and try to understand your partner’s challenges. If they do not have the production capacities either momentarily or permanently but they are an important partner of yours, you can try to find a middle ground in terms of delays and production dispatch.
If they are not able to assess the production capacity, you can support them in setting up indicators to measure their productivity.
2 – Unreasonable production deadline are imposed
A second reason for overcapacity, and this is likely to happen in post COVID crisis time, is that the supplier feels compelled to accept very short delays to avoid losing the business or breaking the commercial relationship. This is symptomatic of an unbalanced business relationship in which the manufacturer does not feel he has the possibility to discuss the terms and conditions.
And even if terms have been fixed at the beginning of the relationship, it is important to leave the door open to discussion. Indeed, external events may occur such as a wrong evaluation of the production time when dealing with a new product or the sudden departure of an important number of workers. As an example, last year in India due to a prolonged monsoon, millions of workers stayed in their farms longer than usual to support the harvest. In that case, you would prefer your supplier to inform you and renegotiate the terms rather than jeopardizing the health and safety of the workers and the quality of the goods with excessive overtime.
Making sure that your suppliers feel confident enough to talk to you at any time will avoid big last-minute surprises. It can also be useful to have local contacts which can help you understand the situation in faraway countries, in order to initiate the discussion with your suppliers about hot topics.
3 – Factory production and raw materials management is not optimum
Internal factory organization is of course a key to ensure a stable production capacity. We are talking not only about the overall premises’ layout and available space, but also the management of production bottlenecks. Indeed, we often observe important overtime on processes where products have to be handled individually such as decal application or packing. It requires that the factory put enough manpower on those strategic position and does not rely only on temporary workers. There might be a need to support your partner factories on those aspects and help them to set up leaner production process.
Then, as much as production process organization is important, a proper stock management is also essential. We came across many factories which have chronic last-minute overtime because of raw material shortage, either due to late delivery or quality issues. It is thus important to ensure that your supplier as a good grip on the rest of the chain and a professional team to handle the procurement. Here again you can bring some support to help professionalizing suppliers’ team and process on those topics.
4 – Workers “request” to work overtime
Moreover, as strange as it might sound to some, when asking factory owners why they have chronic overtime the answer is often “if they do not allow their workers to work overtime, they would leave for another factory”. This is linked to several aspects of workers conditions. Precarity is one, as in some area such as India or Maghreb the minimum salary might not be enough to cover the basic needs. This will require the breadwinner to work extra hours to sustain the family. For others, such as for migrant workers who live far away from their families, the goal is not to establish but to earn as much as possible in a short amount of time. Hosted in crowded dormitories, there is often no hobby or interest outside of work for those people.
A way to change to paradigm is to better value productivity over excessive working hours. A study from 2020 showed that re-designed the compensation system in apparel industry can increase productivity by up to 10% and reduce quality defects. Of course, this might require to support workers in improving productivity with changes in the production organization or process, but at the end, it is beneficial to everybody, workers, factories and brands.
Finally, bettering living conditions for migrant workers is also a very important point to foster a work life balance. Allowing family reunification being a cornerstone, whenever possible. On the top of that factories can provide leisure area and activities to enable workers to enjoy their off time. We came across factories providing gyms or private theater for free to workers, but it can be as simple as a basketball field or pool tables. (You can refer to our previous article)
5 – Purchasing practices and client organization is not optimum
Last but not least, brands organization maturity and professionalism also have a big role to play in avoiding overtime. Every decision taken at client level regarding the product will directly affect the work of the factory. As an example, it sometimes happens that changes are requested even after the final sample was validated, in terms of material or design. This can have an important repercussion both financially and organizationally for the factory, but they might not necessarily communicate openly about it and will try to find solutions on their own. The best way to avoid this situation is of course to agree on detailed specifications at the very beginning of the procurement process and stick to it. Quality control plans can be another source of disruption in the process, especially DUPRO (during production). It should thus be carefully scheduled to avoid slowing production down and hinder workers movement.
Thus, no, chronic and excessive overtime is not a fatality! But getting your factories to reduce it, is not an easy thing and it requires time and close collaboration. Especially when you only represent a small share of their business. Finally, this is all about first adopting good practices on your side, as a buyer and then supporting your partner factories to also set up better practices. This in order to increase the overall performance and well-being.
