Category Archives: Manufacturing

That’s Not Trash … That’s Profit!

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A recent article in Industry Week explained how TerraCycle can turn your “garbage into gold” by taking non-recyclable pre- and post- consumer materials and up-cycling these traditional waste streams into reusable products which includes eco-binders, trash & recycling containers, pencil cases, backpacks, lunch boxes, and other consumer materials. They’ve even come up with a way to create fertilizer from, and package it in, bio-degradeable waste.

So where’s the profit? If you are a school, church, or a non-profit organization, TerraCycle will provide you with packaging materials and cover postage to ship it non-recylcable food packaging that it uses in the creation of its products — and pay you for each item you provide. For example, you can get $0.02 for each drink pouch, candy wrapper, or cooky wrapper your members collect and send it.

Your Manufacturing Supply Chain is Filled with Waste

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If your supply chain is misaligned, as per a recent AT Kearney white paper on “Aligning the Misaligned Supply Chain”, it’s probably filled with waste that might include, but not be limited to:

  • excess buffer capacity built into the system,
  • overtime and suboptimal changeovers,
  • too much safety stock,
  • excess inventory to keep the lines running, and
  • line shut down.

Of course, all of this costs you money and, if things are really bad, a lot of money. More specifically, if your supply chain is misaligned, once you fix it, you can realistically expect a 20% reduction in costs. Furthermore, you’ll require less capital up front, produce higher quality products (as suboptimal changeovers decrease quality and increase errors), improve service levels (as your service will be more predictable), understand true demand, and improve the overall visibility of total supply chain cost.

More specifically, better alignment will:

  • improve asset utilization (and reduce costs 6%),
  • reduce overtime (and reduce costs 5%),
  • increase utilization of transportation cubes (and reduce costs 5%),
  • decrease expedited shipments (and reduce costs 3%), and
  • reduce inventory levels (and reduce costs 3%).

And, like it has done for Toyota many times, it might even keep you in business. Why? How? Check out the white paper and find out.

The Lean Guru

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According to a recent article in Industry Week, the basic principles of lean — waste reduction, customer centricity and flow optimization — are fairly simple in theory but when it comes to putting lean principles into practice, even the most well-intentioned manufacturers can run up against some roadblocks. That’s why many manufacturing firms begin their lean journey by seeking the counsel of a consultant … a “lean guru”.

The article makes a great point. A consultant brings more to the table than simply helping organizations conduct kaizen events or create value-stream maps. Hiring a consultant is an excellent way for management and leadership to signal a change within the company and to use the consulting event to define and formulate a revised purpose or a reason for being. This helps you get lean on the fast track, and considering that lean is a great fix for a down economy that can help you sense demand, source successfully, streamline services, and reduce inventory, which reduces waste and lowers cost, how can you go wrong? Especially when Consultants are Cheap.

Manufacturing Supply Chain Challenges and Opportunities

The increased complexity of today’s supply chain brings with it a host of challenges for manufacturers. These include:

  • brand identify protection
    major brands are a bad press — and litigation — magnet if anything goes wrong
  • recall efficiency
    if a health-risk is found, it can be a challenge to recall the product in time
  • counterfeit prevention
    the EU seized six million counterfeit personal care products and one point two million food and beverage products at the border last year and the problems in pharmaceuticals are even worse
  • supply chain disruption bypass
    when a natural disaster, energy crisis, or a political situation arises, a company needs to quickly divert its supply chain around the situation to avoid disruption

However, as pointed out in a recent Industry Week article, “manufacturers are seizing opportunities across the supply chain” by tackling these challenges head-on. Companies that recognize the complexity of the modern supply chain and adopt serialization solutions that enable greater visibility, increased agility, and improved efficiency see the following opportunities:

  • improved responsiveness
    a company with an agile supply chain can quickly respond to changing demand patterns and maintain near-optimal inventory levels
  • consumer demand capitalization
    a company with downstream visibility can gain insights into consumer demand and produce the products customers want before its competition and gain a greater market share
  • SLA enforcement
    traditionally, outsourcing led to reduced visibility … but modern visibility and serialization solutions help manufacturers insure that the third party they outsource to lives up to their performance obligations

Machine-To-Machine Strategies Could Lower Your Production Costs

A recent article in Supply Chain Digest noted that it was Time for Manufacturers to Take Stock of Machine-to-Machine (M2M) Strategies. The logic is that M2M — which leverages connectivity to communicate directly with one another — carries the potential to serve as a “game changer” that can dramatically reshape a company and how it goes to market.

Done right, M2M could enable companies and their customers to make faster and better decisions as there would be real time visibility into the status of each machine and production line it is part of. It will allow the development of closed-loop applications and processes where decisions can be transmitted and the results retrieved to verify the implementation of those decisions. It could reduce service costs as real-time monitoring of systems will indicate when preventative maintenance is required and could also reduce fuel expenses associated with fleet management.

It’s certainly something worth looking into if your production costs are high.