Operational Efficiency
All businesses are under pressure at the moment, there seem to be so many things conspiring against small, medium and even large companies trying to build a future. It is therefore essential to question everything and to operate your business as efficiently as possible to create value and to maximise the benefits from your expenditure and efforts and the income from your products.
The “Efficient Operation” concept ensures that you monitor and question every aspect of your operation and make the best use of everything you put into the business
You should measure everything against “perfection”, there is no point in adding in “allowances” because that just allows you to mislead yourself into thinking you are doing better than you really are. You need to be constantly challenging your results and striving to be doing better.
This article can only be an overview because each business will have individual issues and sensitivities. Above all else you have to challenge every assumption and seek out every loss.
What is “Perfection”, amongst other things:-
- 100% of all dry base ingredients and packaging “as purchased” accounted for in finished goods or non-consumables (eg nut shells), essential cleaning losses, recycled scrap, etc.
- All recyclable materials identified, accounted for and recycled as quickly as possible
- Exact compliance with recipes, process condition, moisture contents, packaging material usage, etc.
- Exact compliance with product weight and size requirements – no “give away”
- Available output calculated on the basis of assuming manufacturing operations operate 24/7/365. Whist this is not likely to be the case, this demonstrates the potential output of your existing facilities
Usages and Losses
The basis for this examination is your recipe or formulation. You should be able to translate this into inputs on a dry basis and an actual (as purchased) basis related to product output
This should then allow you to calculate the expected dry basis and actual outputs from your process. It should also allow you to calculate the number of products you should have produced from those input ingredients and the amount of packaging material you should be using.
These are not actually difficult calculations, although they do become more complicated if you want to increase the detail by separating out specific components such as fat or protein.
This calculation system is known as a Mass Balance and is very widely used in the process industry generally based on a spreadsheet calculation. Here is a simplified example for a caramel.
This calculation can be used in a number of different ways to understand the efficiency with which you are using your raw and packaging materials. It can help to understand:-
- Losses in materials handling
- Poor weight control of ingredients vs recipe
- Loss of output due to poor control of moisture content
- Losses due to cleaning
- Losses due to scrap or product which is unacceptable
- Production of less than the theoretical number of units due to poor weight control and losses at cutting
- Losses of packaging materials due to machine problems, damage in handling, etc.
It is extremely unlikely that your actual figures will approach the theoretical, if you get a dry basis efficiency of better than about 90% you are actually doing fairly well.
This is a simple tool which can be adapted and used for your particular product, constructing it on a spreadsheet is only basic arithmetic with some understanding of your process and ingredients. It allows you to readily monitor ingredient usage and will help you to identify losses, where you are throwing away those expensive ingredients and packaging