25-09-2012, 12:18 PM
Cost reduction and efficiency increasing methods in the Food Industry
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Introduction
On a global food market cost reduction is a basic requirement for food SMEs. The majority of the novel methods used in the industry are developed for mass production in the manufacturing (car manufacturing, machinery, electronic appliances, IT hardware) industries. The characteristics of these industries are high capacity, automatised production lines that produce large volumes, large batches of products, components, fixtures, made of materials of relatively uniform quality and a limited number of designs. The variation and choice of products is achieved through the assembly of the modular elements. In the food industry there are significantly lower volumes of batches, with a much higher variation of products, recipes, compositions and techniques and the quality of the raw materials shows much higher variation. Significant numbers of manual or less automatised operations are involved.
Therefore the techniques developed by the manufacturing industry need to be adjusted to the needs, facilities and activities of the food industry SMEs.
Examples for the approaches and techniques, that are aimed to be explored and adjusted to the needs of the food industry are supply chain management to reduce inventories, logistic costs, etc. lean manufacturing to reduce waste in terms of time, material, energy or labour.
Background of Lean Manufacturing
In other business sectors with bigger companies, management techniques are implemented to optimise processing along the whole production chain. The bigger companies need bigger quantities starting with buying high quality commodities and basic materials and using optimised production processes, which helped to save money. This optimisation process in the bigger companies nowadays is accompanied by a special management system for cost reduction including all contacts with suppliers and customers as well as the own processing steps.
Enterprise cost reduction is a wider approach towards controlling the company’s expenses and leading the organization towards improvement. It does not only imply focusing on specific operational processes. Enterprise cost reduction addresses a number of key cost- aspects that span the enterprise, such as the business configuration, organizational structure and design, business and process complexity, external expenses and the benefits.
Addressing any one of these cost aspects produces an impressive cost flow understanding. Cost reduction offers the opportunity to examine all the business areas and identify the savings, both within and between those areas. These aspects or ‘drivers’ determine how far the organization can stretch to reduce costs, without it having a negative impact on the organization’s culture, strategy and targets.
Objectives of IMSFood project
The objective of the project is to develop practically applicable, efficiency increasing and cost reduction techniques, which are adjusted to specific conditions, facilities and resources of the SMEs working in the food chain. The project is aimed to develop a toolbox made of a set of practical methods tested in factory environment of a wide range of food industry, which can be adopted by a large number of food SMEs all over Europe to establish their specific solutions for cost reduction and efficiency increasing within their own businesses.
For maintaining the long-term competitiveness of food industry it is important that the consumer benefits represented by the quality and reliability of the food products shall not be compromised, but lower prices shall be achieved by elimination or reduction of losses and wastes of time, material, human and other resources and through improvement of the efficiency of the whole food production and supply process.
Best practices in cost reduction and efficiency increasing methods
The methods, experiences and results on cost reduction and efficiency increasing techniques were collected from different manufacturing sectors, mainly from non-food, high-tech sectors like the car manufacturing, electronics and pharmaceutical industry, where these techniques are already implemented successfully. In this literature survey an emphasis was put on the practical experiences, hurdles and solutions for implementation. The Annex 4 contains some useful cases, which were identified during the project.