Pulau Sambu Guntung

Operational Cost Reduction

Opportunity Analysis
June 5th 2012

Operational Cost Reduction

Opportunity Analysis
1.

Introduction

10 minutes

2.

Review of the OCR methodology

20 minutes

3.

Presentation Cost mapping and

Opportunity Analysis

90 minutes

4.

Next steps

20 minutes

5.

Discussion

40 minutes

Objectives and
Introduction
Operational Cost Reduction
Opportunity Analysis

Purpose of this meeting

To present the results of cost mapping exercise

and opportunity analysis
To agree the next steps in the Operating Cost
Reduction project

Operational Cost Reduction

Project phases Focused Improvement
Phase 1
Cost Mapping

Phase 2
Opportunity Analysis

Phase 3
Implementation

Map full operational

cost structure in filling
line operations

Identify savings
potential, prioritise
based on operational
cost impact

Customer implements
improvements (using
WCM methodology) in
chosen areas to gain
savings

Systematic approach to:

1) Establish operational cost baseline
2) Identify the improvement activities returning the highest cost
savings for your business
3) Proven methodology to drive and secure improvements

Summary What we have done so far

Used the information provided by you into our system performance and economics
model to generate a view of current operational cost structure

Focus is to understand the economic impact of system performance improvements

by line

The cost structure has been assessed for direct production costs only current
analysis do not include product and packaging (apart from waste), quality control
department, logistics and inventory, sales and marketing expenses, etc.

All analysis has been made on the operations in Pulau Samu Guntung plant

Snap-shot assessment - based on actual performance data for Line D A3CFlex, for
period of Feb to Apr 2012 Information provided by you and PLMS that we have
used:
Actual line operations for the investigated month e.g. production time, CIP time, machine downtime
and generated waste
Current costs for: raw material, packaging material and staff
We have also used general Tetra Pak assumptions for certain costs

We have analysed opportunities for improvement

The opportunities are based on the operational cost model and data gathered from
PLMS and site based records

They give indications of the type and size of savings available and will need to be
confirmed within the first phase of the WCM initiative

Review of the
Methodology
Project scope
Cost Analysis

OCR Focused Improvement

Scope Covered

Consumer

Total Conversion Cost

Producer
/Supplier

$ Reception

Processing Packaging
Customer
Operational
Cost Analysis

Scope with adequate

data

Logistics

Retailer

Review of the
Methodology
Project scope
Cost Analysis

Seeing everything in terms of cost

Understanding and allocating the data

Cost Items

Customer
Operational Cost

Cost Drivers
Cost/Unit

Cost base

Fixed costs

Output

Variable costs

Speed / Capacity

Overall Equipment
Effectiveness

Capital

Service cost

Machine Mechanical
Efficiency

Size/area

Spare part cost

Cleaning time

Operators

Utilities

Set-up time

Cost for waste

Service time
Waste

Costs are analysed by Item and Driver

Value adding

Non-Value adding

Total =
35.4

Cost/'000

Labor cost
Customer service work
Capital cost
Product waste cost

Utilities
Overhead
Labor cost
Packer cost

20

Operator cost

Product
waste

Package
waste

By Item

Filling
machine

Distribution
equipment

Production time
(normal functioning)

Service and maintenance (TP)

CIP stop
Spare Labor
Spare
parts cost
parts
Equipment stops

Production time (normal functioning)

Capital cost

(customer)

Product
waste

CIP

By Driver

Paper
Productchange
change

Unscheduled
time

40

Package
waste

Capital

Service and
maintenance
(Emig)

Packmat waste cost

Product
waste

1.5

Labor
TP
cost
service cost
Service
and maintenance
cost

Service and
maintenance (TP)

Area cost

60

Labor
cost

Labor cost

80

cost

3.3

Labor cost

Utilities
TP service work

Product waste

Capital cost

Capital
cost

1.1
2.5 2.6
Other
time
Labor

Capital cost

0.9 2.3 0.6

Labor cost

100%

4.7

Capital cost

16.0
Area cost
Spare part cost
Product waste

Other time
(incl. Customer
stops)

OEE Loss Analysis

(Overall Equipment Effectiveness)

Measures quality production against line capacity
Weekend
Shutdown
Holidays

Plant not scheduled

Scheduled downtime

x 100

OEE =
A

Breakdowns
Set-up & adjustment

Availability
loss

Tools change
Start-up

Others
Minor stoppages
Speed losses
Defect /
Rework

Performance
loss
Quality loss

Performance and
cost results
Cost

by item and by drivers

OEE

loss analysis

Key Data and Assumptions (1/5)

Line D Feb-Apr 2012

Product cost

Information given by the customer

Primary Packaging
material

Weighted average for all different
PM: 55.10 /000

Secondary pack. mat.

Cardboard: 14.14 /000

Opening: 1.93 /000

Product cost

0.30 / Litre

57.03 / 000 packs

14.14 / 000 packs

Key Data and Assumptions (2/5)

Line D Feb-Apr 2012
Labor

Filling Machine operators :1
xxxxx /month
Distribution Equipment/FL
Operators: 10
xxxxxx /month
Production leader:0.2
per shift
xxxx /month
QC personnel:0.33
per shift
xxxx /month

Total labor cost for the

line per month:
xxxx / month

Waste

Maintenance contract

Service employee cost: 1.16

/hour with 1924 hours service
work per year on the line

Product waste

CIP : 1000 l/event

Product change: 1000 l/event

Paper change :0.75 l/event

QC : 100% of QC waste

Overfilling: 0.514 ml/pack

Service &
maintenance

Package waste

QC:28/h (destructive)

CIP : 183/event

Product change: 3/event

Paper + strip change 3

packs/event

Line stops: 25.290 packs

Package waste:

2.083 / month
Product waste:

8.120 / month

Maintenance contract:

Customer Service

4.573 / month

186 / month

Total Customer system Cost

Line D

Feb-Apr 2012

Op. Cost

Two ways of looking your cost

Line D - Cost items, Cost drivers

Line D A3 CFlex Cost/000

Period of analysis Feb- Apr 2012

Detailed operational cost structure

Line D

Period of analysis: Feb-Apr 12

Operational Cost Reduction Focussed Improvement

Project Overview
= On target (Within 0.5% of target)

Customer Project Manager:

Tetra Pak Project Manager:

= Within 1.5% of target

= More than 1.5% below target

Objective:

Quantification

Operational Cost Reduction of 31.01 %

Cost/1000 saved on focus lines 5.70

OCR Target
%

Focus Improvement areas

OCR
Result %

CIP time reduction

13.79

55.304

Filling Machine stop reduction

14.07

56.427

3.15

12.627

Other stop time reduction

Total

31.01 %

124.358
Highly Confidential
HPBR/2012-05-18

Performance and
cost results
Cost

by item and by drivers

OEE

loss analysis

OEE Loss Analysis (Overall Equipment Effectiveness)

Line D
Feb-Apr 2012
B

x 100 = 42.3 %

OEE =
A

Improvement
Opportunities
Opportunities
Total

and sensitivity analysis

potentials and impact on cost

Set

Up Time
analysis

How Tetra Pak Lines are working?

Set Up (CIP) time definition
Production Stop,
Set Up start

Production starts at
maximum speed

Production

Production

Machine
cooling
down

Machine
preparation

Cleaning
Water
circulation

Machine
preparation

Machine
sterilization

Set up is the sum of activities that has to be done in the machine in

order to prepare it to produce

Set Up AIC time

Line D Actual Average 2:52 hrs
Specification: 2 hours
Actual average: 2:9
Target: Average = 2.1 hrs
4.50

4.00

3.50

Actual Average

3.00

2.50

Target Average
Specification

2.00

1.50

1.00

Target
-30%

Set Up time reduction: what happens

Line D, AIC reduction
Time saved

Transfer at 50 % OEE
to additional
production time

Additional production

Hours per month and line

300h

202

209

200

100

Production
time

Additional New total

production production
time from CIP
time
time reduction

Line D Target -30% for AIC

Set Up reduction: 0:51 hours (Monthly frequency 8)
Total potential saving monthly: 6.36 hours
Yearly Extra Capacity (@ 50% OEE) = 0,36 Mio Packs

Set Up Final CIP time

Line D Actual Average 6:10 hrs
Specification: 4 hours
Actual average: 6:10
Target: Average = 4:15 hrs
9.00

8.00

7.00

Actual Average

6.00

5.00

Target Average
Specification

4.00

3.00

2.00

1.00

Target
-30%

Set Up time reduction: what happens

Line D, Final CIP reduction
Time saved

Transfer at 50 % OEE
to additional
production time

Additional production

Hours per month and line

300h

26

228

202
200

100

Production
time

Additional New total

production production
time from CIP
time
time reduction

Line D Target -30% for final CIP

Set Up reduction: 1.2 hours (Monthly frequency 15)
Total potential saving monthly: 26.06 hours
Yearly Extra Capacity (@ 50% OEE) = 1.4 Mio Packs

Set Up time reduction: potential saving

Line D Final CIP + AIC

Line D Target - 30% for CIP

Total OCR = 13.23% (2.44 /000)
Yearly potential saving* = 55.300
*Assuming 21.8 Mio packages produced yearly

Line

Equipment Downtime
analysis

Stop Reduction: what happens

Line D excluding Set Up
Actual Lost Time

Target Situation
Hours per month

- 50%
330h

320.9

300

-30%
-40.1
253.0
-27.8

200

100

Actual

Target = Stop Reduction by 50%

Monthly savings : 51 hours
Yearly Extra Capacity (@ 50% OEE) = 2.754.000 Packs

FM

OE

New total
production
time

Stop Reduction: what happens

Filling machine line D
Transfer at 50 % OEE
to additional
production time

Time saved

Additional production

Hours per month and line

250h

39.0

241.0

- 50%
202.0
200

100

Production Additional
New total
time
production production
time from CIP
time
time reduction

Target = Stop Reduction by 50%

Total potential saving monthly: 39 hours
Yearly Extra Capacity (@ 50% OEE) = 2.100.000 Packs

Stop reduction: potential saving

Filling machine line D

Line D
Activity Target = Short Stop Reduction by 50%
OCR =14.7% (2.59 )
Yearly potential saving* = 56.427

*Assuming 21.8 mio packages produced yearly

Stop Reduction: what happens

Other Equipment stops reduction
Time saved

Transfer at 50 % OEE
to additional
production time

Additional production

- 30%

Activity Target = Stop Reduction by 30%

Total potential saving monthly: 12 hours
Yearly Extra Capacity (@ 50% OEE) = 648.000 Packs

Stop reduction: potential saving

Other equipment stop reduction

Line D
Activity Target = Short Stop Reduction by 30%
OCR = 3.15% (0.58 )
Yearly potential saving* = 12.627

*Assuming 21.8 mio packages produced yearly

Overfilling Analysis

Overfilling Reduction
Line X
TPA3Flex 2000ml Line 7 packs > 200 packs
0.1

Achieve 3 Gr mean
with 0.7 STD

0.09

0.08

0.07

Cream Mean

0.06

Skim Mean
Cust Min

0.05

Cust Max
Skim
Cream

0.04

0.03

0.02

0.01

27.0

26.0

25.0

24.0

23.0

22.0

21.0

20.0

19.0

18.0

17.0

16.0

15.0

14.0

13.0

12.0

11.0

10.0

9.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

-1.0

Overfilling reduction
Line X sensitivity analysis

Activity target:
Reduce from 13.8 Gr. (weighted average between cream and skim) to 3 Gr.
(78 % reduction) reducing the standard deviation from 6 (average between
cream and Skim) to 0.7.

5.4% OCR representing 7.7

Yearly potential saving* = 77 000
Over capacity = 51 500 packs

*Assuming 10 Mio packages produced yearly

Improvement
Opportunities
Opportunities
Total

and sensitivity analysis

potentials and impact on cost

Scenarios showing impact of implementing

realizable initiatives on Line D
Potential 31.01% reduction in operational
Operational cost base

31.01 %
124.358 /year

Potential saving

Product Loss Analysis

Operational Cost Reduction Focussed Improvement

Additional Potential Benefits (not included on calculated savings)

Target
Total Monthly
Total Monthly

Overfilling (*)

CIP Product
Waste

4 ml / pack

300 lts

7.271 lts

6.900 lts

14171 lts

Total savings / month

4251

Total savings / Year

55.266

(*) Assuming an underfilling aprox 4 ml of the 261 ml of the nominal full pack is
achievable without forming problems
Highly Confidential
HPBR/2012-05-18

Project Deliverables

OCR FI
Hard Deliverables
Operational Cost reduction
Pilot line savings
OEE Improvement from 42.3 %
An additional capacity of packs/year
An additional potential saving of product loss

31.01 %
124.358
51.41 %
4.559.000
55. 266

OCR FI
Soft Deliverables

An additional capacity of packs/year 4.559.000

A group of people trained in WCM methodologies
Potential to expand methodology to the rest of the
Tetra Pak lines
Potential to expand methodology to the rest of
the plant

Questions?

Thank you

Next Steps

Operational Cost Reduction road map

Driving Focused Improvements
Focused
improvement
team training
and kick off
Execute projects

Prioritisation &
Master Plan

Operational Cost Analysis

Regular
follow-up

Opportunity Analysis

OEE Loss Analysis

Close individual
projects

Propose and define Team table/matrix

Steering Committee
Customer:
Technical Service:
KAM:

Operational Team

Project coordinator
name
(Customer)

OCR manager

OCR Central Team

(Tetra Pak Indonesia)

(Technical service)

Team 1

CIP time reduction

1 leader + 4 members

Team 2

FM short stop reduction

1 leader + 4 members

Team 3

Other equipment stop Reduction

1 leader + 4 members

Next Steps


Identify Team Leaders and members

- 1 Team Leader/Team
- 4 members/Team

Running the Teams: From Middle of October 2007 till End of February
2008

it visit week

Steering group meeting from week to review results from the teams

Monthly regular meeting to update Prod. manager.

Training and Kick off of the teams

The

End

Training proposed

World Class Manufacturing Concept

- WCM big picture, infinite loop
- From Pillar to teams (definitions)
- Team work

Method and tools applied at customer

- analyse Data and decide the route to take

Standards for visualisation to be used (team boards)