Manufacturers miss a trick on turning waste into profit

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Too many food and drink companies are missing out on huge potential "hidden" cost savings in their operations, a expert in lean manufacture has claimed.

Rather than concentrating on the large amounts of raw material and finished product waste they generate or give away unnecessarily, far too many food manufacturers focus on more visible targets such as labour costs, claimed Steve Roger, group md with consultancy Lauras International.

Speaking at a seminar last month titled 'Silos kill value', organised by European Food and Farming Partnerships and Lauras, Roger said: "What people don't do is deal with the hidden opportunities, which is often a bigger part than the known opportunities."

He noted that manufacturing excellence was all about combining the skills and capabilities of individuals with a systematic evaluation of operations to develop a continuous improvement culture. "It's all about the process of improvement,"​ he added.

Quite often, he remarked, people could get a lot more out of their existing assets before they needed to invest in new capital equipment. This could be by reducing downtime or slow running of production lines, or by reducing the amount of poor or non-specification products made. "With the right specification every time, we know we can do a better job,"​ he said.

"The key thing for me is that a 5% improvement in raw material costs can equate to a 10–30% improvement in labour costs, yet we invest significantly to reduce labour costs rather than raw material costs,"​ said Roger.

Roger presented examples of companies he had worked with in Australia to reduce hidden waste. These included a pastie maker that saved £180,000 a year by reducing giveaway; a ham processor that saved £750,000 by cutting waste through an improvement in the temperature control of its raw material; and a flour mill that also made huge savings by overcoming a problem of 'bridging' in silos by improving the consistency of the flour handled.

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