Tuesday, January 27, 2015

Improving Operational Efficiency: Part 3

Tracking Batch Yields 

Measuring yield loss (input vs. output) is critical to improving operational efficiency for formula-based manufacturers.

When process manufacturers calculate and review yield by batch or formula the result is identification of below-normal yields.  Once corrective action is taken the pattern is broken and profits increase.

Increasing batch yields by 1-2% can result in a significant reduction in raw material cost and plant overhead. The results in overall production efficiency and saves money.
As manufacturers we spend a great deal of time analyzing our raw material costs but little time on batch yields.  An increase of 1% yield can be equivalent to 5-10% or more reduction in raw material costs.  So why would a company not monitor this powerful profit lever?

How do I get started?

The process is quite simple.
  • Target a formula that has a significant volume.
  • Look at the yields by batch for this formula over the pasts 6 months. Do you see a trend? Do you see variation? If either is true you have found a potential target.
  • Spend a little time with production and R&D to see if you can identify the source of the variation or change for that formula.
  • Watch the batch carefully the next time it is produced. What is causing the change or variation? The answer is probably staring you right in the face.
  • Are there other products that share the same characteristics and are of high volume?  You have now found your next candidate.
  • Repeat this process for the top 10 selling products. 
Before long your yields will increase and drive higher profits.  All with very little marginal effort.

By utilizing and ERP solution such as Vicinity software with Microsoft Dynamics a manufacturer can easy track and manage yield loss. Vicinity has a standard query that allows a user to view yields by formula/batch for any period of time. This data can be viewed in Vicinity or easily exported to Excel or statistical packages. Additionally,Vicinity has the ability to notify key personnel when a batch is out of a tolerable yield range. Corrective action can be taken immediately.

Using Vicinity, batch yields  can be reviewed by batch or formula through time. This lets process manufacturers identify those formulas requiring more raw material than anticipated to produce finish goods. The savings in raw material costs alone is significant, and the risk of missed shipments is reduced.

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