RawMaterial Control Your Survival Guide

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When it comes to managing the P&L, Material Control is a key area that can make or break a company. We have put together a selection of Key Areas to focus on that will support you on your quest to control materials and reduce costs.

Raw Material Control -Your Survival Guide

NPD and Process DevelopmentIt’s important to get accurate information from trials to ensure your Bills of Materials (BOMs) for the product are accurate as well as ensuring any process issues are picked up and solutions put in place. Incorrect info can lead to major waste as well as over or under priced product.

Here are a few pointers to look out for:

• Ensure all losses (giveaway, process losses, transfer losses and other recorded waste) are validated during the trial period.

• Haveaproductionsignoffontheselosses.• Have a production champion attending trials.• Carry out life trials for “work in progress” materials.• Check Minimum Order Quantities (MOQs) and lead times against forecast volumes.• Get accurate forecasts. Ambitious forecasts can be costly!• Try and reduce complexity by ensuring materials can be worked in various products.• DoatrialrunonyourBOMstoensureallmaterialsarebeingflushedcorrectlythroughyourMaterial

Resource Planning (MRP) system.• Check if there is any “risk of redundant stocks” that can be used.• Consider putting in a costed loss for future redundant stock in the overall costing.

Goods In and Production AreasIt’ssoimportantthatyourteamsaretrainedeffectivelyfromaproceduresandskillsperspective and you have the correct manning in place.

Assumingthat’srunningeffectivelyherearesomeotherpointstoconsider:

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• Carry out spot checks on raw material weights and yields coming in against declared weights and yields.

• Haveaneffectiveissuingsysteminplace,whichistiedintotheproductionplan.• Have“extras”and“returns”systemsinplacethataresignedoffbyamanager.Extrasshouldonly

be authroised with a valid reason for the request e.g. yield, quality, rejection etc.• Have a regular warehouse walk round to review materials at risk i.e. out of code, redundant stock

etc. Having someone from Ops, Tech, Finance and Purchasing is key.• Ensure you have the correct equipment for the correct process. Below are a few examples:

» Carry out an audit of all the scales you have on site and what they are used to weigh. Using your +/- 50g tolerance scale for small spice mix batches could end up very costly as well as adverselyaffectingyourQUIDS.Alsoaudithopperweights.

» Areyourtrafficlightscalesbeingusedeffectivelyornotatall! » Useeffectivescraperstomaximizeyieldwhenemptyingcontainers. » Worktops too small can cause spillage as well as slowing down the process. » Knives not sharp can have a negative impact on yield as well as slowing down the process. » Ensure conveyors are set up correctly.

• Check your bins! When in the area have a look at the waste in the bins. Is it being reported on the waste sheets, is it waste or could it have been used?

• Raw Material to line – Issue the raw material to line in proportions to ensure its not over used. Have a trigger system where any extras need to be escalated for managers to authorise.

Accurate Stock TakingPoor stocktaking can lead to massive waste issues as well as customer service issues through lack of product.

Key Points:

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Have an Escalation System in PlaceHave an escalation system in place where waste is reported to the line manager over acertainvalueorweight.Considerdifferentvaluelevelsofsignoffbeforeitsrejectede.g. £50 + the Shift Manager is made aware, £250 + the Ops Manager is made aware, £1000 + the Site Manager is made aware. This will then drive accountability, understandingtheunderlyingissueandidentifyingafix.

• HaveaStandardOperatingProcedure(SOP)forstockcountingthatkeypeoplearesignedoffagainst.

• Areas to consider for your stock check:

» Timing-Ideallythestockcheckshouldhappenwhenthereisnoproductionflow.Ifthisisnotpossible,carryoutthecheckduringatimeofminimumproductionfloworhaveasysteminplace to account for stock movement.

» Store your stock wisely – Products with similar packaging next to each other can cause confusion.

Record Your WasteIf it can’t be measured it can’t be controlled. You also need to ensure that you are dealing with accurate info.

Key Points:

• Recorded Waste - Ensure all waste is recorded with reason codes. Target the top wastes. • Waste Accuracy - To ensure your factory waste recording is accurate compare it to the waste

measured in the skip e.g. Recorded waste today for day shift production is 900kg and waste weighed by yard person going in the skip was 1200kg. This gives you an accuracy of 75%. You can do this by shift or full day. Use the waste accuracy as a Key Performance Indicator (KPI). This is a great way of explaining your negative material variance and understanding where to look!

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Other Material MeasuresWhen it comes to material control the following KPIs will give a good level of control.

• Final Pack Waste – Due to quality issues with packaging or product, over produced, stock error etc.• Floor Waste – Natural spillage or waste due to processing.• Giveaway–Wherefinalproductweightisovertheagreedcustomerspec.• Yield - % Usable product.• Rejections - Quality, life, redundant.• Attainment to Plan – Causes overs and under waste.• Attainment to Sequence – Falling out of sequence will cause waste.

Using Your Measures to Review Material PerformanceThere are a number of ways you can use your measures to improve performance:

• Performance Reviews – Report key waste measures in your Daily, Weekly and Monthly Performance Meetings. Have a target and feedback only on below target values. Ensure you get a corrective action.

• MaterialVariance–Reviewthisfigureweekly.Targetyourtop3issues.It’simportantyourstocktaking is accurate here! Also look at longer-term trends and review price variance.

• Sales and Operations - Have a regular get together with the Sales, Planning and Ops teams to review forecast accuracy, upcoming promotions, capacity redundant stock, supplier claims etc.

• Objective reviews with direct team - Set objectives that can be cascaded down through the teams thatarematerialcontrolbasedandSMART(Specific,Measureable,Achievable,RealisticandTimely).

• Visual Management – Have the measures visible for the team to see. £ Loss, improvement, graphs, smiley/sad faces, red for below target, green above target. Make them engaging! Consider where to put them that will catch people’s eyes.

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We hope this guide has given you some food for thought. Implementing the information correctly will make a positive impact on your business. It’s also very importantthatyoucommunicateeffectivelytoyourteamwhatyouaredoingandwhy.

If you need any further support click here to book a telephone appointment to discuss how our Interim Managers can help. They have a wealth of experience in coaching your teams to release the opportunity in your business.

Best wishes

Denis & Zoe

Raw Material Control -Your Survival Guide

This guide is offered in goodwill and Corvin Fox Ltd shall not be liable under any circumstances for any loss, expense, damage, delay, costs or compensation (whether direct, indirect or consequential) which may be suffered or incurred by you.

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Contact Details

Denis O’Driscoll

denis@corvinfox.co.uk 01778 560319

Zoe O’Driscoll

zoe@corvinfox.co.uk 01778 560319

Denis and Zoe are Interim Recruitment experts who have been running Corvin Fox Interims since 2008. With Denis’ industry knowledge, having been an Interim Manager himself and Zoe’s Sales and Marketing background, Corvin Fox pride themselves in being the ‘Go To’ supplier of Top Performing Interim Managers to the Food Manufacturing Sector.