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Where to find your food manufacturing efficiencies to save OpEx

Home » Insights » Consulting » Where to find your food manufacturing efficiencies to save OpEx

Tony Moses, PhD

Fellow, Product Innovation

Niranjan Kulkarni, PhD

Sr. Director Consulting Services

Food manufacturers grappling with the impact of inflation can improve operational efficiency to achieve a substantial victory for both your budget and overall financial performance.

In today’s tough economic environment, manufacturers face the challenge of making the most out of investments. With prices for raw materials and labor on the rise due to inflation, producers’ profits have been squeezed. Additionally, higher interest rates have driven up the cost of financing capital purchases, like procuring new equipment or expanding facilities. Finally, as consumers are becoming more cost-conscious, buying only the necessities to cope with inflation, overall sales have gone down. But there are still some OpEx wins to be had, if you know where to look.

Food manufacturers should look inwards to fine-tune operations, sharpen efficiencies and maximize existing assets to control their operating budgets. Tony Moses, PhD, Director of Product Innovation, puts this topic to our resident Lean Six Sigma Master Black Belt, Niranjan Kulkarni, PhD, with questions on how and where to find these efficiencies within your operations. In the following Q+A, they delve into the ways you can maximize the potential of your current assets.

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How do you determine manufacturing efficiency in food production?

Great question, and an essential place to start. Efficiency comes down to your ratio of output to input. The higher the output, the higher the manufacturing efficiency, but your input is limited. For example, you have a fixed number of hours a day and you are also limited by a finite set of resources—equipment, headcount, space, utilities, etc. So, how can you get more output working with these limited inputs?

When looking at the efficiency of a food or beverage manufacturing facility, we look at several areas:

Equipment – Is the equipment running optimally? We use overall equipment effectiveness (OEE) to measure the operational efficiency of equipment. This is a function of availability, performance and quality.
Headcount – Is the headcount appropriate and are employees being fully utilized? Employees’ efficiency is determined by the proper use of the skills a person has. We also want to ensure optimal scheduling of activities and training to maximize the use of available employee time.
Space – Is the space being used for its intended purpose? If it’s not, we examine what it’s used for instead, and we interrogate if the root cause is an inefficient layout.

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There are several tools and strategies we use to find and support manufacturing efficiencies, including modeling and simulations, space planning strategies, Six Sigma principles, and lean manufacturing strategies, such as value stream mapping to identify the seven wastes found in manufacturing known as TIMWOOD (Transportation, Inventory, Motion, Waiting, Overproduction, Overprocessing, and Defects).

What is an example of manufacturing efficiency improvements for food and beverage producers?

Take your changeovers as an example: How can you reduce the duration or the frequency of changeovers? This is an essential, non-value-added activity that reduces your manufacturing efficiency. If you can leverage a product wheel to minimize the length of the cleaning process or even eliminate cleaning cycles, then you are making the facility more efficient. Reducing the frequency of changeovers could also reduce cleaning cycles, which reduces the amount of product sent down the drain, cleaning chemicals, water consumption and water waste. Increasing your cleaning efficiency will also have a positive impact on your facility’s sustainability.

What signs could I spot on a plant walk, or in my daily metrics, that may indicate my facility is not running efficiently?

This is a great question. If you are adjusting your production schedule more frequently than expected or you see excessive unplanned downtimes, those should raise a red flag and prompt immediate investigation. But there are other signs that may be a little more subtle. The next time you walk your plant, keep your eyes peeled for material stacked on the floor. If your staging space is filled with materials, that is a sign that something is not working. Other strong indicators are spills on the floor, control system alarms regularly going off, excessive forklift activity going back and forth, waiting trucks sitting outside of the plant or a sudden spike in utility bills.

What are your suggestions for some of these common manufacturing issues:

I have an area of my plant where everyone seems to be tripping over each other. What should we do?

Perform a spaghetti mapping exercise to help you figure out where the traffic is going and where the traffic jams occur, and then turn to scheduling to help manage the traffic.
Start with these questions: Are we trying to do everything at the same time? Is there a way we can schedule this differently? Could we develop temporal segregation and operational strategies to reduce congestion?
A pick and place strategy could help manage flows. This is a much more cost-effective solution than expanding the space

I’ve had difficulty with a drying operation. Are there ways to optimize my existing equipment?

Look at your air flows, heating and humidity conditions. Computational fluid dynamics (CFD) is an excellent tool to help you explore the efficiency of your equipment, identify the problem and determine what adjustments need to be made to mitigate it.
Look at the equipment design itself—is it allowing you to achieve the correct parameters for those three factors? Also, though it may seem obvious, are you using the design intended for the product at hand?
In some facilities, staff may try addressing drying issues themselves by increasing drying time or putting less product in the dryers, both of which reduces throughput, which has a direct impact on your profit margin, or increases drying temperatures, which can adversely impact both product quality and direct costs.
You can also use CFD to evaluate the efficiency of new drying equipment so you can choose the best model for your facility. For example, while assisting with a major capital expansion, we used CFD to model the drying efficiency of three different smokehouses. The team was able to see that a lower cost smokehouse dried the product under the target time. This saved substantial capital on the project.

I’m seeing inconsistency across my products. How can I improve those without further capital investment?

Quality issues can mean your equipment specs are off. First, determine if you are following the right maintenance and operating procedures identified by the original equipment manufacturers (OEMs).
Human intervention commonly causes inconsistency in products. Solving this may be as easy as implementing or improving employee training.
Consider if you’ve changed any raw materials. The output may be incorrect because there is something wrong with the input. For these scenarios, we leverage discrete event simulation and Six Sigma practices, which allow us to quickly find the root cause of the inconsistencies. This is critical to maintaining your profit margin by reducing the costs of quality rejects and discards.

I’m about to expand my plant, and my contingency is really tight. How can operational efficiency help me make better decisions to minimize risk of overspend?

Do you really need to expand? You can potentially eliminate or reduce the need for expansion by optimizing your existing plant. Leverage simulations and run ‘what-if’ analyses to identify your bottlenecks, find resource-sharing opportunities, and identify what equipment is needed for optimal efficiency. You can then use this information to design equipment specs, figure out the appropriate level of automation to reduce OpEx and develop strong production scheduling policies.

I’ve got approval to buy a new piece of equipment to expand my capabilities. Is there a way that operational efficiency can help me chose the best model?

Absolutely. Again, I would suggest running simulations to find your optimal efficiency and to identify (or mitigate) bottlenecks. If the new equipment is intended to fix an existing bottleneck, you’ll need to define takt times and other operational parameters, such as OEE. It’s also important to know if and where the bottleneck moves as a result of the new equipment.

Hiring consultants sounds expensive, especially with my limited capital budget. Is there a low-risk way for me to engage a manufacturing efficiency expert?

The cost of an operations improvement consultant is relative to the issue you are facing, and ultimately, how that issue impacts your bottom line. Typically, an efficiency study unlocks future savings, meaning that bringing in a consultant pays for itself in just a few months.

Finding your food manufacturing efficiencies

Efficiency is crucial right now for food and beverage manufacturers. Your profits can be thin, and with changing customer preferences, you might be producing a wider range of products. This variety can squeeze profits even more due to the need for different equipment, increased product changeover and longer production times. And we know that the labor shortage only exasperates the situation further. But there are ways you can get more out of your assets with leaner manufacturing operations. Efficiency isn’t just a goal – it’s a smarter strategy for success in the competitive world of food and beverage manufacturing.

Ready to enhance your facility’s performance, but unsure where to look? Reach out to our team of consulting and design experts to unlock your next big win.

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