Food Operations Reliability and Cost Optimization
Manufacturing operations function on a slim profit margin. Operations revenue must pay for everything that happens within the confines of the manufacturing facility. In some instances “cost of goods” includes a cost inefficiency which erodes profit margin. Operations by nature will experience inefficiencies from various sources, however, sometimes determining the root causes and associated costs are not always well understood. Facilities often have improvement projects to determine methods or mechanisms that will reduce operations cost such as increasing throughput, reducing personnel, modifying ingredient specifications, delaying equipment maintenance for a few more cycles, expanding sanitation cycles, etc.
Causes of Waste, Increased Operating Cost and Eroded Margins
Companies can improve their profit margins by reducing waste in the production process and not have to depend entirely on the traditional approach of increasing throughput, reducing personnel or expanding support activity task cycles. Some of the waste reduction opportunities are associated with materials, product and processes and are categorized as:
All of these examples occur routinely in an operation, in all departments, add cost to an operation and erode the profit margin.
Routinely, these situations happen in short time frames and facilities do not account for and consequently over time the true cost impact to the operation is not recognized. The challenge is to identify these and properly assign this cost as a function of revenue. With the assistance of the company Finance department this can be accomplished and operations management can establish a benchmark, prioritize improvement activities based on impact to the company margin and then track progress in terms of profit contribution.
ACET personnel have extensive experience assisting companies with improving operating profit margin, reducing the cost of Rework, Recycle, Re-do activities and Rejects (4 R’s). ACET will ensure all departments are involved with improvement activities and inter department dependencies. One outcome of the improvement initiatives is to document a company Manufacturing Operations Plan that encompases the critical operation control points in the production process.
Causes of Waste, Increased Operating Cost and Eroded Margins
Companies can improve their profit margins by reducing waste in the production process and not have to depend entirely on the traditional approach of increasing throughput, reducing personnel or expanding support activity task cycles. Some of the waste reduction opportunities are associated with materials, product and processes and are categorized as:
- Rejection by the Customer
- Reworked or Recycled in the facility
- Redoing sanitation or maintenance tasks
- Unscheduled equipment downtime
All of these examples occur routinely in an operation, in all departments, add cost to an operation and erode the profit margin.
Routinely, these situations happen in short time frames and facilities do not account for and consequently over time the true cost impact to the operation is not recognized. The challenge is to identify these and properly assign this cost as a function of revenue. With the assistance of the company Finance department this can be accomplished and operations management can establish a benchmark, prioritize improvement activities based on impact to the company margin and then track progress in terms of profit contribution.
ACET personnel have extensive experience assisting companies with improving operating profit margin, reducing the cost of Rework, Recycle, Re-do activities and Rejects (4 R’s). ACET will ensure all departments are involved with improvement activities and inter department dependencies. One outcome of the improvement initiatives is to document a company Manufacturing Operations Plan that encompases the critical operation control points in the production process.
Options
2 Days Option
Day 1 – Introduction of the Cost Optimization plan, explain the process, provide instruction, training and education on how to determine reduction opportunities, then with the Client staff discuss and agree on workshops for Day 2.
Day 2 – Workshops will be performed and focus on obtaining information related to number of incidents of Rework, Recycle, Re-do activities and Rejects (4 R’s). Then prioritize the situations that resulted in Rework, Recycle, Re-do activities and Rejects (4 R’s) in order to determine actual operation cost of the waste as a function of revenue.
Finally, a plan will be discussed and agreed on for establishing objective benchmarks for the improvement activities.
3 Days Option
Day 1 and 2 – the same as above
Day 3 – The activities will include establishing benchmarks and measurement processes for the various waste reduction opportunities, discussing and illustrating how to document a practical Manufacturing Operations Plan that includes all operating departments and the inter department dependencies.
2 Days Option
Day 1 – Introduction of the Cost Optimization plan, explain the process, provide instruction, training and education on how to determine reduction opportunities, then with the Client staff discuss and agree on workshops for Day 2.
Day 2 – Workshops will be performed and focus on obtaining information related to number of incidents of Rework, Recycle, Re-do activities and Rejects (4 R’s). Then prioritize the situations that resulted in Rework, Recycle, Re-do activities and Rejects (4 R’s) in order to determine actual operation cost of the waste as a function of revenue.
Finally, a plan will be discussed and agreed on for establishing objective benchmarks for the improvement activities.
3 Days Option
Day 1 and 2 – the same as above
Day 3 – The activities will include establishing benchmarks and measurement processes for the various waste reduction opportunities, discussing and illustrating how to document a practical Manufacturing Operations Plan that includes all operating departments and the inter department dependencies.