OVERVIEW

Reducing scrap to offset smaller economies of scale

A specialized US foodservice packaging company that promotes its customized solutions for both front-end and back-end food service packaging sought to reduce its scrap waste while maintaining high customer satisfaction. The company provides a variety of packaging solutions ranging from compostable plastic grocery bags to portion control bags. Because orders are customized, the company works on smaller economies of scale.

HOW WE HELPED

The relatively small economies- of-scale make cost savings through managing scrap waste and throughput essential for the company’s growth and vitality. Following a four-week assessment, we estimated a 1-year savings potential of $400K by reducing scrap.

RESULTS
  • Improved Training & Best Practices
  • Standardized Reporting
  • Increased Throughput
  • Exceeded Target Savings

Challenges

During the four-week assessment we found that some shifts and operators were more efficient (resulting in less scrap) than others, which highlighted the need for discovering best practices and training all operators to use them.

Solution: improving reporting and creating standardized processes for all operators and shifts

One of our first steps was to improve the reporting process so that all operators could visualize progress and opportunities for improvement. Reporting tools were updated from fixed templates to flexible tools such as Excel Pivot, which allowed teams to identify and resolve a broader range of scrap-driving issues. The company held lunch-and-learn trainings to empower more users to utilize these tools and visual management aids such as boards and scales allowed teams to visualize progress and opportunities for improvement.

Converting is driving scrap per hour to beat set targets. Escalating targets were set for each line to manage scrap (by pounds) from the operator to lead to supervisor to maintenance. Weekly workstream-specific reviews helped standardize project management across all four workstreams, and all shifts were trained to work with the same scrap efficiency as the best shift using a new training matrix that utilized best practices recorded from top operators. A focus on training and supporting underperforming shifts resulted in a rapid increase in savings.

Being able to push more extrudates through a system can positively impact small economies-of-scale like the ones faced by this specialized company. To increase the output of products, it became necessary to increase throughput, also, while maintaining the highly customizable options this company offers to its customers.

Solution: increasing throughput

To date, improvements in extrusion are primarily driven by throughput improvements. Throughput was increased by 7 percent, and the increased pounds per hour for work lines ranged from 8 percent to 24 percent. The initial savings of $135K per year for increased throughput were initially offset by an increase in scrap, with plans for the company to address this issue using the converting process that was used in standardizing processes between shifts and operators.

Discrepancies in the amount of scrap generated between lines and shifts could partially be attributed to differences in the set-up and scheduling of the manufacturing process. Rules for product specifications need to be defined in logical ways that capture the major drivers of variance.

Solution: improve set-up and scheduling

The company is in the process of developing a tool to quantify setup targets based on a ‘from-to’ product. The tool will include scheduling capabilities to assist in optimizing sequences, a display that will help operators with their setup targets, and will allow for the differentiation of produced scrap (scrap produced from setup vs. extrusion, etc.). This solution is still in process.

Outdated machinery for sinewave lines and T-shirt lines may produce more scrap than updated versions would.

Solution: increase machine efficiency

We looked into replacing machines on the sinewave lines and T-shirt lines with C-25 lines. Replacing the sinewave lines was a no-go because the engineered scrap increase more than offsets the 50 percent labor decrease. Replacing the T-shirt lines got a green light because it could provide an annual savings of $125K. This solution is still in process.

FTE Performance’s Output

We were able to assess the causes of excess scrap production, recommend solutions and aid implementation of these solutions, which are ongoing. The $615K in savings to date is more than the initial target savings of $400K.

Addressing discrepancies in scrap production across shifts and operators was a top priority. By investigating how top operators were identifying and solving problems, we were able to develop a training matrix and target underperforming operators and shifts, which resulted in a rapid impact on converting. Standardized processing accounts for $270K in savings to date, with a targeted cumulative savings of $860K, although some of the savings is offset by converting scrap.

Likewise, investigating the differences in the ways setup and scheduling were handled between lines is providing detailed information that can increase efficiency in the future. Preparing and deploying the tools to help with this is still underway, but savings are project at $115K.

Addressing small economies-of-scale issues was addressed by increasing throughput, although the initial in-process savings of $135K is offset by increased scrap production. The company will address this using the converting method, which uses escalating targets to help operators keep scrap production under control. Replacing T-shirt machines to increase efficiency and decrease scrap production requires a $250 capital investment and provides a two-year ROI of $125K (minus $50K depreciation).

Overall, we were able to help this company realize to-date savings of $657K, with a projected cumulative savings of $1.24 million. In the process, we initiated better training protocols that will help increase operator efficiency and began integrating computing tools into the scheduling and setup process to reduce error and scrap production margins. Continued progress could result in $800K annual savings.

SERVICES PROVIDED