Is Overtime “Lean Manufacturing”?

By Lloyd Graff

Is paying overtime rather than bringing in new employees lean manufacturing practice?

For adherents to lean concepts, the question of how to handle a  “bullwhip” effect where companies need to rebuild inventories is a challenge for suppliers. (All this “bullwhip” talk is making me hum the theme song from “Rawhide.” See clip below.) People who were laid off may be unavailable for a call back or may be happily pruned. Overtime is expensive, and eventually core workers get burned out working six or seven days a week or 12 hour shifts.

Temps are often an imperfect answer because they require significant training and may be poorly integrated into a group of standoffish employees who are offended that old employees are not being rehired.

As contract shops reach the “bullwhip” phase of inventory rebuild, how do you think workforce additions should be handled?

Question: Would the Obama $5000 tax credit proposal for new employees be enough to tip you into hiring new people?

Theme Song from the TV Show “Rawhide”

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5 thoughts on “Is Overtime “Lean Manufacturing”?

  1. AvatarNancy

    Rebuilding inventories (bad) but responding to increasing demand in a lean environment should be addressed with part-time workers when OT before OT becomes the norm. The best way would be to call back laid off workers on a part-time basis and hopefully demand is sustained and they becomes pernament full time.
    In a lean environment it it essential to have trust of the workforce so that they understand that productivity improvements would never cost them their jobs only a significant downturn in the business. On the flipside if that happens thats who you bring back first!

  2. AvatarRobert Doshi

    I agree that building inventory in anticipation of orders is not an ideal situation.

    To address whether overtime or bringing in temps to handle the increased work considered lean. It all depends on how “lean” a company really is. A company far along the lean journey will have standardization, 5S, and Poka Yokes in place to handle the temp workers with ease. During times of increased demand, the takt time can be adjusted by having more time available, meaning overtime. If the takt time has been increased for a long duration, then the total value stream map needs to be reviewed to put improvements in place to handle it. Overtime on a long term basis shows opportunities for improvement.

  3. AvatarLen Harder

    No one hires a worker unless they can make effective use of their services. A $5000 credit would be nice, but certainly would not be a deciding factor. It’s very much like the tax incentives we used to get for machine tool purchases. They were nice but only if you needed a machine. Only economic growth and need for additional labor will stimulate permanent hiring.

    What seems to me might be valuable to shop owners would be a subsidy for companies to train new hires. There is hardly a shop that I can think of that doesn’t suffer from a lack of qualified machinists and technicians. I believe that most owners would be happy to take a limited number of trainees at a minimum wage if the government could help by subsidizing that wage rate to a level that would entice that trainee. It would address what is fast becoming our most serious threat and provide gainful employment and a potential career to some who need it.

  4. AvatarMCP Europe

    we agree with nancy on “lean environment it it essential to have trust of the workforce so that they understand that productivity improvements would never cost them their jobs”
    We know that one using Lean manufacturing principles will reduce costs but on the other hand when the workforce feel that feel of insecure job stability it will definitely affect their daily performance not helping production improvement

  5. Avatarrick

    two years ago my factory started “lean manufacturing” and cut all inventory which was understandible on parts with low volume sales. but we have been working six and seven days since last summer and now ontime delivery causes us to tear down on jobs to setup on others to meet ontime delivery. and employees are tired of spending more time with co-workers than there own famlies. OH! did i mention plant manger doesn’t work any weekends. and we are losing many good and skilled workers (all work centers are full all 3 shifts but some have more people with less than a year) so when does inventory outweigh paying overtime (double time for seventh day to boot) just try to understand it?????????


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