Overhead keys that aged out of the plant

Overhead keys feel permanent because changing them ripples into inventory valuation. Plants therefore keep machine-hour or headcount keys long after automation or outsourcing changed the shape of the floor.

Warning signs

• One cell produces most of the volume but absorbs little overhead
• A highly automated line still inherits a labour-heavy key
• Outsourced finishing remains in the pool “because it always has”
• Product-cost meetings argue about allocation before they argue about yield

A modest comparison beats a slogan

You do not need a perfect academic model. Take last quarter’s volumes and recompute absorption under one alternative key that operations already believes in (for example, runtime hours from the historian, or good units). Put both results beside the current method. The conversation becomes concrete.

Our overhead allocation check is designed as a short, fixed-scope pass for exactly this comparison.