SA8000: Overtime & Lead Time

Q & A with SAI Lead Trainer Sanjiv Singh 

July 2012

Question: How do auditors determine whether or not suppliers are given adequate time to complete purchase orders based on their capacity? Is this indicated via high instances of overtime?

Sanjiv Singh: To determine why overtime is high, auditors should go back and determine turn around times for a particular product once an order has been placed. Sourcing, design and quality assurance departments have a fair idea of how long it will take a particular factory to turn around goods - they book their order based on this fact and the reliability in delivering on time is an important factor.
 
Manufacturing in the electronics industry is sometimes comparable to the apparel industry and requires putting together components that may or may not be manufactured by the prime supplier where an order is placed; often delivery dates depend on how soon sub-suppliers can supply components. Brands therefore seek suppliers who manufacture similar products and can possibly retain some inventory of the components that are required to put together a final product. It works both ways - the supplier wants commitment in terms of a minimum number of pieces over a period of time from the brand and the brand wants finished goods that meet both quality and delivery requirements.
 
For example, in India, we are working with a major brand whose social compliance division in India engages with suppliers that can meet both quality and delivery as well as the social obligations that are expected from a supplier towards employees. The merchandising and social compliance departments work very closely with suppliers and pass on a consistent message that meet realistic objectives. Overtime does take place but is in control and is monitored very closely.  

When overtime is high it will be important for an auditor to delve back and note a few factors: 

• What products are made at the factory? (similarity between the components that go into making the product/common suppliers for different components)
• How long they have been working with the brand?(the length of the relationship)
• How many orders are booked at the facility?(number of pieces and delivery dates) 
• Percentage of businessthat the particular brand represents in the factory

Have a question? Send it to SAI Communications Manager Joleen Ong (JOng@sa-intl.org) for consideration in the next newsletter.