Shrinkage and Waste- A Food Manufacturer’s Loss-

Free money!

My first boss is a truly intelligent man who focused on waste in a manufacturing facility with laser eyes.  He demanded quality, but he also despised waste at all levels.  We use to joke that he could find and identify ants carrying grains of sugar out of the facility.  That is the level of focus a food manufacturer should give shinkage and waste.  Here is a list of items I have compiled over the years that may be of some interest to you as a food manufacturer.  It does not contain everything you can find in your facility, but it does give you time to think.

1.        Are you depositing your product at the correct weight? One ounce of product at 50 cents a lb is only around 3 cents.  What plant can’t afford 3 cents over.  Multiply that 3 cents by 1 million units and you just gave away $30,000!

2.       Empty those bags of ingredients.  With sugar costing 56 cents a pound, a 1-2 ounce loss in a bag on 50,000 bags used is $1750-$3,000.

3.       Learn to use clean rinses from liquid products by adjusting water in a recipe- recovering the 1-2 ounces of residual product in a bucket or liquid bag can pay back. 

4.       Don’t put your cardboard with your wet trash- sell it to a mill.  Contracts with trash haulers can save the $95-$175 per ton trash haul and actually pay you back for your recyclable cardboard.

5.       Cleaning secondary containers and primary containers properly and avoiding things going down the drain.  The loss of the product down the drain and the BOD and TSS charges from waste water treatment can be reduced.  Don’t know what BOD and TSS are in the food industry?  Keep growing and you will!

6.       Control disposables like gloves, earplugs, hairnets, and aprons.  Teach employees how to use them properly to avoid early retirement of these supplies into trash cans.  The company I once worked for could save $15,000 a year simply by making sure employees only used one set of earplugs throughout the day and only replace them if they became damaged.

7.       Control soap usage levels.  Soap usage levels should be properly defined by your supplier.  More is not better, it is wasteful.

8.       Install VFD’s  and soft starts on electric motors that do not need to run full throttle.  Simply by changing a sprocket size and adding a Variable Frequency Drive to a conveyor can pay for the VFD in less than a year and put less stress on the motor. 

FREEBIE NOTE:  Has your facility undergone an electrical audit?  There are companies that will do free audits with the hopes of getting more business.  There are also college and university programs that would like you to allow them to audit your facility as part of a class assignment.  There is no excuse for not having an audit.

9.        Are your lighting fixtures efficient?  Lighting has come a long way and you need to check your fixtures.  Adding  motion control for on and off are also great value adds or just teaching employees how to turn off lights.

 10.   Are your recycling everything you can- Buckets, plastic jugs, metals, and even scrap food can be sold or at least given away to avoid hauling and trash handling. 

11.   Are you buying the right package?  A #10 can of pineapple is much more difficult to handle in terms of space, and container cost than a comparble bag in box.  The employee cuts and metal contamination will also be reduced.

12.   Have you found a way to use your out of spec product?  Bread companies have found that croutons, bread pudding, and bread crumbs are excellent ways to recover baked bread.  Ice Cream companies have used “rerun” for years to make richer tasting chocolate ice creams.  What product are you now throwing away that is still edible and recoverable according to FDA standards?

FREEBIE NOTE:  Money is available in most areas from your electrical service providers to help cover the cost of lighting retrofits or even VFD additions.  Some will pay only a portion, but many will pay almost 100% of the cost.  Ask your provider!

13.   Ammonia refrigeration is a great saver versus freon and liquid nitrogen-  Ammonia refrigeration is an excellent long term money saver compared to freon and liquid nitrogen.  We were able to help a company drop the 9 cent per lb of product cost of nitrogen to 3 cents per lb product cost on 3 million plus lbs of product.  Initial investment in equipment is higher, but the long term return is excellent. 

14.   Ammonia and Freon type refrigeration systems must run efficiently and you can regain some energy efficiency through heat recovery.  Too many times refrigeration systems are overlooked and years of basic PM’s are not completed properly despite Process Safety Management rules.  Poor insulation, too much oil in your system, and incorrect pressure adjustments will result in loss.  You could also find ways to use “hot gas” to preheat your facilities hot water.

15.   As a small manufacturer are you in a purchasing cooperative-  Imagine you and small manufacturers like you pulling your buying power together to get better prices.  It works and there are companies that can help you do just that.  This will save money by allowing you to get out of the grips of small distributors with high margins.

16.   Water costs money so do not waste it!  Add flow controls to hoses and teach employees how to use them.  C.I.P. systems can be set to use the right amount of water with the right amount of soap.

17.   Ask your packaging suppliers if there are ways they can help you reduce waste.- Some suppliers may offer packaging in larger bulk packs you can use such as gaylord style boxes or pallet stacking corrugated units.  This could decrease the waste handling in your facility.

18.   Don’t replace parts when you can rebuild them.- There are times when a mechanic may find it easier to buy a brand new air cylinder rather than put a rebuild kit in an used unit.  You have to be careful with this one because you need a competent maintenance leader to make the determination of whether rebuilding  is better but it can many times save on maintenance expenses.

19.   Are you using more packaging than you need  and the right package?  If your primary pack is over sized or packing boxes are too big that wasted space could be costing you in real dollars or in unnecessary damage during shipping.

20.   Have you identified labor saving tools?  Can you find a way to turn a two person job into a one person job at the same production speed or maybe add a small piece of equipment that will give you a fast ROI?

21.   Are you losing product due to poor production planning?  Are you producing more than you need or providing customers with product that is not selling in the alloted time?  You don’t want to miss a sale, but throwing food away is wasteful and costly.

This is list 1 and I will soon post a list 2.  Hopefully this will get you thinking about waste and shrinkage in your facility.

Do you have some other areas of waste and shrinkage reduction you would like to share? 

Please comment.

Do you want more information or an on site evaluation of a waste problem, email me at jsearles63@gmail.com .