Increase revenue by reducing waste throughout the manufacturing supply chain
We read with interest the articles surrounding the news on France’s move to ban supermarket’s unsold food waste at landfill. Such regulations prompt the discussion throughout the supply chain in the part each stakeholder must play in increasing recycling and reducing waste to landfill. According to the CIWM poll, 79% of UK respondents agree the UK should follow France’s lead.
There is not just an appetite but an achievable opportunity to reduce waste, starting with the manufacturing supply chain. Each year, millions of pounds of surplus inventory are progressed through the supply chain at the expense of retailers, distributors and manufacturers.
In the food industry alone in 2013 it is estimated annual waste within UK households, hospitality and food service, food manufacture, retail and wholesale was around 12 million tonnes, 75% of which could have been avoided, equating to over £19 billion a year. As well as the negative effect on business revenue, excess products and redundant stock also make a damaging contribution to the environment by needlessly consuming energy during the manufacturing, transportation and warehousing processes, as well as wasting a business’s time and valuable resources.
Waste can arise within manufacturing and when products flow between supply chain partners. For manufacturers, the first step is to recognise the contributors to waste and then to measure both the specific causes (breakdowns, quality defects, inaccurate forecasting) and inherent causes (poor line set up, ineffective packaging) in order to realise resource efficiency. So what are the approaches that manufacturers can adopt to achieve tighter efficiencies and reduce waste?
Reducing waste with demand driven and late stage strategies
In a demand driven supply chain model manufacturers align their supply chains with actual end-consumer demand. Products are manufactured in a recurrent fashion based upon recent sales volumes and current inventory positions. Adjustments to manufacturing, distribution, pricing and marketing activities are made weekly, daily or hourly based upon the latest consumer purchasing behaviours. Product categories such as non-perishable food items and consumer packaged goods lend themselves to such an approach. This has several benefits:
· Supplier and customer have a closer working relationship – Success with demand driven models require that buyers and suppliers are able to share large volumes of quantitative data electronically in real-time
· Processes can be automated to increase efficiency – Once demand signal data is received it is fed into supply chain planning applications
· Supply is more closely aligned with demand management – Manufacturers can calculate with a high degree of accuracy the replenishment quantities reducing excess inventory
Waste reduction is a bi-product of late stage configuration models
Late stage configuration (otherwise referred to as “postponement”) enables manufacturers to respond and anticipate changing demand patterns, increasing profitability and reducing waste within the supply chain.
Both of these models require the support of robust manufacturing technologies which produce the business intelligence, share the information and allow the production process to respond accordingly.
Improving product quality and design to reduce waste in the supply chain management
Quality control is incorporated in all manufacturing processes including, product design and resource management, with the goal of increasing the number of goods which pass quality inspection and therefore minimising the waste of raw materials. Reviewing each component can identify whether it can be manufactured differently in order to reduce waste. Offering an all-in-one solution, Prodware for Semi-Process industries is a fully integrated solution that offers comprehensive monitoring of all activities, from quality management and packaging management through to purchasing and sales management.
Products must be designed with the end of product life-cycle (EOL) in mind, not just considering how other replacement products might meet the needs of their audience but how that particular product may be recycled, reused, repaired or re-sold. Improvements in the technology of reclaiming waste material has meant that companies that previously discarded waste products now have the ability to reuse that material. For example, improvements in waste management sorting (using currents, magnets and sensors), allow for the separation of different elements found in waste streams. This is essential for enabling the recovery of useful materials, minimising the amount of material sent to landfill and allowing recyclable materials to find a new incarnation.
How technology can help manufacturers reduce waste and increase profit
Accurate reporting and forecasting underpins waste prevention, supporting approaches such as late-stage and demand driven supply chain management, which generate savings straight to the bottom line. Savings go much deeper than reducing disposal costs (which are increasing, with landfill tax set to rise to £84.40 per tonne in 2016), the implementation of waste minimisation programmes improves products quality as well as reducing overall costs.
Industry specific ERP applications such as Prodware’s SPI application based on Microsoft Dynamics facilitate the exchange of real-time data about orders, inventory management, sales and logistics as well as streamlining the supply chain processes and ensuring product quality. Manufacturers can see substantial return on investment achieved over a longer term by minimising waste and excess inventory.