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Pulau Sambu Guntung
Operational Cost ReductionOpportunity Analysis
June 5th 2012June 5th 2012
Operational Cost ReductionOpportunity Analysis
1. Introduction 10 minutes
2. Review of the OCR methodology 20 minutes
Presentation Cost mapping and 3. Presentation Cost mapping and Opportunity Analysis 90 minutes
4. Next steps 20 minutes
5. Discussion 40 minutes
Objectives and Introduction
Operational Cost ReductionOpportunity AnalysisOpportunity Analysis
Purpose of this meeting
To present the results of cost mapping exercise and opportunity analysis
To agree the next steps in the Operating Cost Reduction project
Operational Cost ReductionProject phases Focused Improvement
Map full operational cost structure in filling
line operations
Phase 1Cost Mapping
Identify savings potential, prioritise
based on operational cost impact
Phase 2Opportunity Analysis
Customer implements improvements (using
WCM methodology) in chosen areas to gain
savings
Phase 3Implementation
Systematic approach to:
1) Establish operational cost baseline
2) Identify the improvement activities returning the highest cost savings for your business
3) Proven methodology to drive and secure improvements
cost impact savings
Summary What we have done so farUsed the information provided by you into our system performance and economics model to generate a view of current operational cost structure
Focus is to understand the economic impact of system performance improvements by line
The cost structure has been assessed for direct production costs only current analysis do not include product and packaging (apart from waste), quality control department, logistics and inventory, sales and marketing expenses, etc.
All analysis has been made on the operations in Pulau Samu Guntung plant
Snap-shot assessment - based on actual performance data for Line D A3CFlex, for Snap-shot assessment - based on actual performance data for Line D A3CFlex, for period of Feb to Apr 2012 Information provided by you and PLMS that we have used: Actual line operations for the investigated month e.g. production time, CIP time, machine downtime
and generated waste
Current costs for: raw material, packaging material and staff
We have also used general Tetra Pak assumptions for certain costs
We have analysed opportunities for improvement
The opportunities are based on the operational cost model and data gathered from PLMS and site based records
They give indications of the type and size of savings available and will need to be confirmed within the first phase of the WCM initiative
Review of the Methodology
Project scope
Cost AnalysisCost Analysis
OCR Focused ImprovementScope Covered
Total Conversion Cost
Consumer
Reception Processing Packaging Logistics$ $Customer
Operational Cost Analysis
Scope with adequate data
Producer/Supplier
Retailer
Review of the Methodology
Project scope
Cost AnalysisCost Analysis
OutputCost base
Customer Operational Cost
Fixed costs Variable costs Speed / CapacityOverall Equipment
Cost/Unit
Seeing everything in terms of costUnderstanding and allocating the data
Cost Items Cost Drivers
Fixed costs Variable costs Speed / CapacityEffectiveness
Size/area
Capital
Operators
Spare part cost
Service cost
Utilities
Cost for waste
Cleaning time
Machine Mechanical Efficiency
Set-up time
Service time
Waste
Spare part cost
TP service work
Customer service work
Product waste cost
Area cost
Costs are analysed by Item and Driver
60
80
100%
Cost/'000
Other time
Service and maintenance (customer)
Service and maintenance (TP)
Area costProduct waste
Utilities
Capital cost
Capital cost
Labor cost
Capital cost
Capitalcost
Laborcost
Capit
al cost
Pro
duct w
ast
e
Labor
cost
TPservice
cost
Labor
cost
Capitalcost
Packagewaste
Product
waste
16.0 4.7 0.9 2.30.61.1
2.5 2.6 3.3 1.5
Total =
35.4
Value adding Non-Value adding
Packmat waste cost
Area cost
Utilities
Overhead
Packer cost
Operator cost
Capital cost
By Item By Driver
0
20
40
60Service and maintenance (TP)
CIP stop
Equipment stops
Production time (normal functioning)
Labor cost
Product
waste
Packagewaste
Labor cost
Productwaste
Pro
duct w
ast
eLabor
cost
Spare
parts
Spare
partsLabor
cost
Labor
cost
Production time
(normal functioning)
Filling
machineD
istr
ibution
equip
ment
Product
change
Paper
change
CIP
Serv
ice a
nd
main
tenance (TP)
Serv
ice a
nd
main
tenance
(Em
ig)
Unschedule
dtim
e Other time(incl. Customer
stops)
OEE Loss Analysis (Overall Equipment Effectiveness)Measures quality production against line capacity
OEE = x 100A
B
WeekendShutdownHolidays
Plant not scheduledScheduled downtime
Breakdowns
Set-up & adjustment
Tools change
Availability loss
A
Tools changeStart-up
Others
loss
B
Defect / ReworkQuality loss
Minor stoppages
Speed lossesPerformance
loss
Performance and cost results
Cost by item and by drivers
OEE loss analysisOEE loss analysis
Key Data and Assumptions (1/5)Line D Feb-Apr 2012
Product cost Primary Packaging material
Secondary pack. mat.
Information given by the customer Weighted average for all different PM: 55.10 /000
Opening: 1.93 /000
Cardboard: 14.14 /000
Product cost
0.30 / Litre
57.03 / 000 packs 14.14 / 000 packs
Key Data and Assumptions (2/5)Line D Feb-Apr 2012
Labor Waste Maintenance contract
Filling Machine operators :1 xxxxx /month
Distribution Equipment/FL Operators: 10xxxxxx /month
Production leader:0.2per shiftxxxx /month
QC personnel:0.33
Product waste
CIP : 1000 l/event
Product change: 1000 l/event
Paper change :0.75 l/event
QC : 100% of QC waste
Overfilling: 0.514 ml/pack
Package waste
QC:28/h (destructive)
Service & maintenance
Service employee cost: 1.16 /hour with 1924 hours service work per year on the line
Total labor cost for the line per month: xxxx / month
Package waste:
2.083 / month
Product waste:
8.120 / month
Maintenance contract:
4.573 / month
Customer Service
186 / month
QC personnel:0.33per shiftxxxx /month
QC:28/h (destructive)
CIP : 183/event
Product change: 3/event
Paper + strip change 3packs/event
Line stops: 25.290 packs
Total Customer system CostLine D
Op. CostFeb-Apr 2012
Line D A3 CFlex Cost/000
Two ways of looking your cost Line D - Cost items, Cost drivers
Period of analysis Feb- Apr 2012
Detailed operational cost structureLine D
Period of analysis: Feb-Apr 12
Operational Cost Reduction Focussed Improvement Project Overview
= On target (Within 0.5% of target)
= Within 1.5% of target
= More than 1.5% below target
Objective:
Operational Cost Reduction of 31.01 %
Quantification
Cost/1000 saved on focus lines 5.70
Customer Project Manager: Tetra Pak Project Manager:
Focus Improvement areas OCR Target %OCR
Result %
CIP time reductionCIP time reduction 13.79 55.304
Filling Machine stop reduction 14.07 56.427
Other stop time reduction 3.15 12.627
Total 31.01 % 124.358
HPBR/2012-05-18
Highly Confidential
Performance and cost results
Cost by item and by drivers
OEE loss analysisOEE loss analysis
OEE Loss Analysis (Overall Equipment Effectiveness)Line D
OEE = x 100 = 42.3 %A
B
Feb-Apr 2012
Improvement Opportunities
Opportunities and sensitivity analysis
Total potentials and impact on costTotal potentials and impact on cost
Set Up Time analysis
How Tetra Pak Lines are working?Set Up (CIP) time definition
Production Stop,Set Up start
Production starts at maximum speed
ProductionProduction
Set up is the sum of activities that has to be done in the machine in order to prepare it to produce
Machine cooling down
CleaningWater
circulation
Machine preparation
Machine preparation
Machine sterilization
3.50
4.00
4.50
Set Up AIC timeLine D Actual Average 2:52 hrs
Specification: 2 hoursActual average: 2:9
Target: Average = 2.1 hrsTarget-30%
1.00
1.50
2.00
2.50
3.00
3.50
Actual Average
Target Average
Specification
200
300h
Hours per month and line
2027 209
Set Up time reduction: what happensLine D, AIC reduction
Time saved Additional productionTransfer at 50 % OEE
to additional production time
0
100
Production
time
Additional
production
time from CIP
time reduction
New total
production
time
Line D Target -30% for AICSet Up reduction: 0:51 hours (Monthly frequency 8)Total potential saving monthly: 6.36 hoursYearly Extra Capacity (@ 50% OEE) = 0,36 Mio Packs
6.00
7.00
8.00
9.00
Set Up Final CIP timeLine D Actual Average 6:10 hrs
Specification: 4 hoursActual average: 6:10
Target: Average = 4:15 hrs
Target-30%
Actual Average
1.00
2.00
3.00
4.00
5.00
6.00
Target Average
Specification
200
300h
Hours per month and line
202
26 228
Set Up time reduction: what happensLine D, Final CIP reduction
Time saved Additional productionTransfer at 50 % OEE
to additional production time
0
100
Production
time
Additional
production
time from CIP
time reduction
New total
production
time
Line D Target -30% for final CIPSet Up reduction: 1.2 hours (Monthly frequency 15)Total potential saving monthly: 26.06 hoursYearly Extra Capacity (@ 50% OEE) = 1.4 Mio Packs
Set Up time reduction: potential savingLine D Final CIP + AIC
Line Line D D Target - 30% for CIPTotal OCR = Total OCR = 13.23% (2.44 13.23% (2.44 /000)/000)Yearly potential saving* = Yearly potential saving* = 55.300 55.300
*Assuming 21.8 Mio packages produced yearly
Line Equipment Downtime analysis
Stop Reduction: what happens Line D excluding Set Up
Actual Lost Time Target Situation
300
330h
Hours per month
320.9
-40.1
-27.8
253.0
-30%
- 50%
Target = Stop Reduction by 50% Monthly savings : 51 hours Yearly Extra Capacity (@ 50% OEE) = 2.754.000 Packs
100
200
Actual FM OE
-27.8
New total
production
time
200
250h
Hours per month and line
202.0
39.0 241.0
Stop Reduction: what happens Filling machine line D
Time saved Additional productionTransfer at 50 % OEE
to additional production time
- 50%
100Production
time
Additional
production
time from CIP
time reduction
New total
production
time
Target = Stop Reduction by 50% Total potential saving monthly: 39 hours Yearly Extra Capacity (@ 50% OEE) = 2.100.000 Packs
Stop reduction: potential savingFilling machine line D
Line DActivity Target = Short Stop Reduction by 50%OCR =14.7% (2.59 )Yearly potential saving* = 56.427
*Assuming 21.8 mio packages produced yearly
Stop Reduction: what happens Other Equipment stops reduction
Time saved Additional productionTransfer at 50 % OEE
to additional production time
- 30%
Activity Target = Stop Reduction by 30% Total potential saving monthly: 12 hours Yearly Extra Capacity (@ 50% OEE) = 648.000 Packs
Stop reduction: potential savingOther equipment stop reduction
*Assuming 21.8 mio packages produced yearly
Line DActivity Target = Short Stop Reduction by 30%OCR = 3.15% (0.58 )Yearly potential saving* = 12.627
Overfilling Analysis
TPA3Flex 2000ml Line 7 packs > 200 packs
0.06
0.07
0.08
0.09
0.1
Cream Mean
Skim Mean
Overfilling ReductionLine X
Achieve 3 Gr mean with 0.7 STD
0
0.01
0.02
0.03
0.04
0.05
-1.0 0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
15.0
16.0
17.0
18.0
19.0
20.0
21.0
22.0
23.0
24.0
25.0
26.0
27.0
Skim Mean
Cust Min
Cust Max
Skim
Cream
Overfilling reductionLine X sensitivity analysis
Activity target: Activity target: Reduce from 13.8 Gr. (weighted average between cream and skim) to 3 Gr. Reduce from 13.8 Gr. (weighted average between cream and skim) to 3 Gr. (78 % reduction) reducing the standard deviation from 6 (average between (78 % reduction) reducing the standard deviation from 6 (average between cream and Skim) to 0.7.cream and Skim) to 0.7.
5.4% OCR representing 7.7 5.4% OCR representing 7.7 Yearly potential saving* = 77 000 Yearly potential saving* = 77 000
Over capacity = 51 500 packs
*Assuming 10 Mio packages produced yearly
Improvement Opportunities
Opportunities and sensitivity analysis
Total potentials and impact on costTotal potentials and impact on cost
Scenarios showing impact of implementingrealizable initiatives on Line DPotential 31.01% reduction in operational
Operational cost base Potential saving
31.01 %
124.358 /year
Product Loss Analysis
Operational Cost Reduction Focussed ImprovementAdditional Potential Benefits ( not included on calculated savings)
Overfilling (*) CIP ProductWaste
Target 4 ml / pack 300 lts
Total Monthly 7.271 lts 6.900 lts
Total Monthly 14171 lts
Total savings / month 4251
Total savings / Year 55.266
HPBR/2012-05-18
Highly Confidential
(*) Assuming an underfilling aprox 4 ml of the 261 ml of the nominal full pack isachievable without forming problems
Project Deliverables
OCR FI Hard Deliverables
Operational Cost reduction 31.01 %
Pilot line savings 124.358
OEE Improvement from 42.3 % 51.41 %OEE Improvement from 42.3 % 51.41 %
An additional capacity of packs/year 4.559.000
An additional potential saving of product loss 55. 266
OCR FI Soft Deliverables
A group of people trained in WCM methodologies
An additional capacity of packs/year 4.559.000
Potential to expand methodology to the rest of theTetra Pak lines
Potential to expand methodology to the rest of the plant
Questions ?Questions ?
Thank you Thank you
Next Steps
Focused improvement team training and kick off
Execute projectsPrioritisation & Master Plan
Operational Cost Reduction road mapDriving Focused Improvements
Close individualprojects
Regular follow-up
Opportunity Analysis
Operational Cost Analysis
OEE Loss Analysis
Propose and define Team table/matrix
OCR manager OCR Central Team
Steering CommitteeCustomer:
Technical Service:KAM:
Operational Team
Project coordinatorname OCR manager
(Tetra Pak Indonesia)
OCR Central Team(Technical service)name
(Customer)
Team 1 CIP time reduction 1 leader + 4 members
Team 2 FM short stop reduction 1 leader + 4 members
Team 3 Other equipment stop Reduction 1 leader + 4 members
Identify Team Leaders and members - 1 Team Leader/Team - 4 members/Team
Running the Teams: From Middle of October 2007 till End of February 2008
it visit week
Next Steps
Steering group meeting from week to review results from the teams
Monthly regular meeting to update Prod. manager.
Training and Kick off of the teams
The End
Training proposed
World Class Manufacturing Concept - WCM big picture, infinite loop - From Pillar to teams (definitions) - Team work
Method and tools applied at customer - analyse Data and decide the route to take - analyse Data and decide the route to take
Standards for visualisation to be used (team boards)