Cost and efficiency: the mere mention of these two words is enough to see any manufacturer break into a cold sweat. They are the two forces that impact every manufacturing sector in Australia, and globally. So how can manufacturers successfully optimise cost and efficiency to improve their bottom line?
Australian manufacturers are under growing pressure to improve efficiency and lower costs. Traditionally this has meant struggling to find the delicate balance between cost-cutting and product quality. This is made even more complex with the high line speeds and frequent line changeovers – both of which are becoming more common as manufacturers keep trying to push productivity to the limits.
A large part of the solution lies in internally optimising processes and equipment. To see how this works in action, let’s take the example of product ID and inspection process and equipment:
1. Reduce total cost of ownership (TCO)
You can save money, increase your coding equipment’s performance and improve your workforce’s productivity all by simply understanding the life-cycle costs associated with equipment ownership. In fact, there is a genuine opportunity for manufacturers to dramatically reduce cost of ownership and improve their bottom line. But what is TCO and how can it be calculated?
Total costs cover both visible and hidden expenses, and should generally be measured over a 3-5 year period. Visible expenses for labelling and coding equipment, for example, would include:
- installation costs
- consumables over the period
- routine maintenance
- corrective maintenance
- service contracts
- spare parts
Studies by Bill Kirwin, the father of TCO at Gartner, suggest that around 85% of lifecycle costs are actually hidden:
- downtime if the equipment breaks down
- downtime due to routine maintenance tasks
- shipping if the servicing is return-to-base
- operator training
- training time
- time for product changeover
- financing costs if equipment is leased
- cost of disposal
By understanding the true cost of your labelling and coding equipment, you can take proactive steps to reduce the TCO and improve your bottom line. A big part of this is choosing the right equipment provider in the first place. (See here for some thoughts on that.) For example, the right provider can regularly inspect and maintain the coder, labeller or inspection equipment, with fixed-price service contracts, and provide the proper operator training. (You may find this blog, setting out the difference between preventive maintenance vs breakdown repair interesting — it may be a surprise to know that the true cost of a machine breakdown has been estimated as between 4 to 15 times the maintenance cost!).
You also need to weigh up the coder’s capital cost versus its ongoing running cost – a low capital cost but high running cost is a hidden TCO.
Discover more tips on how to lower your TCO here.
2. Improve productivity and efficiency
The more efficient a manufacturer, the higher the potential for profit. That much is simple – but in our increasingly competitive business environment, the challenge for Australian manufacturing companies is to find effective ways to be more productive without compromising the quality of the products going out the door. The second you start waiving quality and overlooking regulatory and compliance standards, you say goodbye to customers.
But there are ways to improve productivity while maintaining your high quality and compliance:
- Vision inspection systems: automating quality control provides major cost savings, due to reduced rework and more reliable product quality. By using vision technologies to automate quality control of your coding and labelling, you will reduce the potential for human error and enable greater transparency throughout the process. (See more here about vision inspection systems.)
- Checkweigh: By inspecting portion control of a packaged product, checkweighers make sure that all packs leaving your factory door are within the specified weight range, thereby eliminating unnecessary product waste and reducing costs. Sitting at the end of a product line, checkweigh technology can provide precision weighing at high throughput speeds and remove overweight/underweight products from the line. It can also help manufacturers detect any issues with product filling on the production line, allowing them to correct the problem quickly and save costs. (See here for more on check weighing.)
Manufacturers can spend a significant amount of time, energy and money in checking products manually, but checkweigh and vision inspection systems allow for checks to be done automatically and accurately. Investing in or upgrading your product ID and inspection equipment is a proven way to streamline your existing processes and improve efficiency. (Here’s an explanation of how and which vision inspection and checkweighing solutions can benefit you on the production line.)
3. Measurement and visibility
How can you know where to improve efficiency if you haven’t got visibility of your production line? Overall Equipment Effectiveness (OEE) is a best practice metric used by many manufacturers to measure productivity. OEE identifies the percentage of planned production time that is truly productive, so a score of 100% means represents perfect production with no downtime. However, most manufacturing lines are only 60% productive, meaning there is massive room for improvement. (Here’s a good explanation of OEE.)
OEE is a good metric for managers, but it can be a bit too abstract for employees. Here, “TAED” is a better metric for the operators, because it provides real-time, motivational goals:
- Target: real-time production target established by the planned rate of production
- Actual: actual production count
- Efficiency: ratio of target to actual, i.e. how far ahead/behind production is running as a percentage
- Downtime: accumulated downtime per shift in real-time
To see where to improve, you can’t rely on guesswork — you need to put the procedures and technology in place to clearly see, measure and drive efficiency. Coding and labelling equipment can easily keep product count since it sits towards the end of the line to measure actual production count, while inspection systems can keep count of the rejects.
Want to find out more on labelling, coding and inspection solutions that can help increase productivity, reduce TCO and improve your bottom line? Matthews can help you do all three. Speak to us today.
You could also take advantage of the boosted $20,000 instant asset claim-tax break announced in the 2015 Federal Budget.