Perception of ˝cost optimization˝ usually is negative, because process stakeholders look at this activity simply as a cost reduction. At the beginning of cost optimization most of manufacturers will do straightforward actions for cutting their costs in different areas of business. For some manufacturers that approach may still be standard operating procedure, but the fact is, this is not sustainable approach. Cutting the costs in a wrong way can have disastrous effects on long-term results. An overview of common cost saving areas in biscuit manufacturing is given in the table below.
Figure 1. A partial list of areas with cost saving potential in biscuit manufacturing
Rather than simply reducing costs, optimization is more about creating continuous improvement process that delivers healthy cost savings and business growing. Continuous improvement is a long-term approach to work, where processes are constantly evaluated and improved in the light of their efficiency, effectiveness, quality and flexibility. Some tools (e.g. 5S, visual management, SMED, TPM, VSM) can be effectively used to improve equipment availability, reduce wastage of material and improve quality.
Continuous improvement begins with identifying a current process, procedure, workflow or project. Once is agreed which process or workflow would most benefit from improvement, the team may come together to brainstorm. At this point it is important to evaluate feasibility of proposed actions and to analyze associated risks, in order to avoid wrong decisions and negative effects on results. During continuous improvement process teams follow a series of steps that go something like this:
Figure 2. Continuous improvement cycle
It is recommended to look at your entire process. Focusing on the process rather than on the product or product-related cost will create more sustainable outcome. Start with small improvements, rather than large scale changes allow you and your employees to see results more quickly, which can be a positive reinforcement. While large improvements are of course the goal, not seeing results sometimes for years can foster a sense of disappointment. Small improvements can also serve as a model for large scale changes.
If you can't measure it, you can't improve it - Peter Drucker
To support continuous improvement cycle in the organization, it is important to establish set of appropriate metrics such as: OEE (Availability x Performance x Quality), labor productivity, waste, utilization, MTBF, MTBR, energy consumption, etc. They will help teams to have better visibility and control of the process and to recognize areas for improvement on daily, monthly or annul basis.
In God we trust, all others must bring data – W. Edward Deming
For continual improvement of manufacturing performances, and consequently cost optimization, an effective manufacturing information system remains the ultimate goal for many companies. How fast we are able to collect reliable data from the factory shop-floor, to transform them into usable reports and dashboards, as fast we can react to improve, optimize our processes, services or products. It puts IT support in the center of the game. Foundation of future optimization in factories is IT driven process, including manufacturing information system, automatic data collection and cloud based technologies. This approach often is called smart manufacturing, with different local initiatives and concepts (Industry 4.0 – Germany, Advanced Manufacturing – US, e-Factory – Japan, Intelligent Manufacturing- China). By linking machines, production lines, operators, and support services, smart manufacturing can help companies to optimize their business processes to a level that could previously only be imagined.
Figure 3. Smart factory pipeline
Source: DFKI | GTAI
Smart manufacturing is beginning to have a major impact on the food and beverage industry. When we look at the biscuit manufacturing process, we can see that changes and innovations in last few decades were mostly related to the equipment (e.g. automation, connectivity, data collection, energy efficiency) and this influence will continue to grow.
Well established continuous improvement program, reinforced by new technologies, highly-automated and IT-driven processes, together with people who should lead all of these changes, creates the strong basis for future cost optimization in biscuit manufacturing in a smart way.
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References and useful links:
Lean manufacturing effects in a Serbian confectionery company – Case Study, Ilija Djekic, Dragan Zivanovic, Sladjana Dragojlovic, Radoslava Dragovic