I rather fancy being Chairman of a major food manufacturer.
If this happens, where would I start and what would I do?
I have three principles; this is the first one
#1 – If it is routine, do it excellently.
Many years ago, my Royal Marine Sergeant Major said:
“Sir, you will be a success in everything you do because you always find the easiest way to do it.”
Here is an example of what I mean. This is an example that is in plain sight for most manufacturing companies.
We all ship, store and distribute products. These costs are increasing and are hitting all our margins.
Westaways was recently asked to tender for 50 pallets of own brand sausages into 10 sites across the UK. We obtained the current sample. How could we make our sausage standout in a competitive market? We make good sausages, but so do plenty of other companies.
The sample case of sausages looked well designed, sturdy and had clear branding and identification. However, on opening the box, I saw a sealed inner liner and the potential to make a saving. The air trapped in the sealed bag was using too much space.
I ran a pallet utilisation tool to see how this case size performed, it used 93.4% of the pallet surface but only 88.4% of the volume usage. This is not bad. But I had noted there was a potential to add extra width and reduce case height. By tweaking this we reduced cardboard usage and improved pallet surface usage and volume usage to 97.7%. This meant we could ship 204 cases per pallet compared to the existing 169 cases.
The maths is clear; we could ship 8,450 cases on 50 pallets of 169 cases, or ship on 42 pallets of 204 cases. But it does not stop there, our customer could store these better in their cold store and fit more on his distribution vehicles. The end user could order more per drop because he could store more in his ready use storage.
The savings might even fund a multibuy offer to promote this own label sausage and in turn add incremental sales to the category.
Search for the routine, then look for changes that add value or reduce cost.