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7 April 2016
Management Control Systems

20 WAYS TO BE MORE PRODUCTIVE – Maximise Raw Material

Productivity means higher output using your current resources, or achieving the same level of sales with less resource.

This should be an easy win, but its amazing how many companies still don’t monitor and look at cost effective ways of optimising their raw materials.  When in it’s infancy, with relatively few people to train and organize, it’s easy for a business owner to watch over the stock and see how people use raw materials, but as it grows and materials pass through more pairs of hands, the yield from these may deteriorate, costing you money.

To maximise the usage, work procedures should clearly define quantities of ingredients, recipes or templates, diagrams on the wall to help workers know exactly how to use each raw material.  The stock usage should be compared to volume output as part of the control systems, to ensure the correct ratio of material to finished product is consistently achieved.

Industry standards of measurement can also be used to ensure the finished product is not giving away anything you don’t have to.  Weight per item for example normally has an industry norm range.  For example, if a one litre tub of ice-cream must be within a 5% tolerance – you could quite legally* pack 951g of product and sell it as a litre tub, improving your yield ratio.  Always check your relevant industry standards and legal requirements.

* check Weights and Measures regulations in your region to ensure you are compliant with local laws.

Raw Hide – Case Study

A small shoe manufacturing factory in Hungary used treated leather cow hide to cut shoe parts for the production line.  The shoes were manufactured for an Italian client and were of a good quality. The hides were the key cost of the shoes, even above the labour cost, but the factory was struggling to break even in its manufacturing process.  A few days spent observing the teams cutting the hides started to highlight the weaknesses.

Each worker had their own method for cutting the leather, laying the templates out in completely different patterns on the individual hides.  Some left wide gaps between the templates resulting in a lot of expensive wastage of the leather, whilst others would use different parts of the hide for the same pair of shoes resulting in rejects as a matching pair would have different textures of leather grain which was not acceptable to the client.

By working with the supervisor, a fixed pattern of cutting was established which took out the thinking required by the cutters, thereby changing their behaviour.  The template pattern was drawn up and fixed to the wall in the cutting room.  The supervisor started to train the cutters in exactly how to place the templates to ensure they were kept at minimum distance, the same pair would be cut as closely to each other on the hide as possible, and smaller areas of the hide would be used for the smaller sized shoes.  The yield of shoes from hides increased by 15%.

This all sounds really obvious and common sense. Yes, it is.  But when you’re a supervisor, far removed from the management systems, and not being consulted as to what is going wrong due to weak systems, poor communication and management, ideas rarely come forward. Improvements aren’t identified and the weak behaviour perpetuates.

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My book “20 Ways to Be More Productive” offers easy tips, case studies and ways you can improve productivity and save money in every aspect of your business.