Use a Better Formula for Total Backroom Optimization
The perfect meat backroom works like a small factory. It processes unfinished raw goods such as ground meat and freshly cut primals and transforms them into finished products. Supermarket managers who recognize their backroom for what it is – a small-scale yet fully fledged in-store production site – unlock a wealth of successful methods for evaluating the efficiency of their backroom and identifying potential improvements.
Can production-management methods and expertise from the world of food manufacturing really be applied to processes and investment decisions in the meat backroom? If we consider classic production environments, many manufacturers across the industry optimize their production lines based on lean principles. Lean production is aimed at customizing the technical set-up to the particular process, neither undersizing nor oversizing and eliminating unnecessary steps in the process. Additionally, many manufacturers adopt the 5S methodology. That method provides a step-by-step approach to making workplaces more orderly, more efficient, cleaner and safer.
“Manufacturers consider their processes first and foremost when purchasing new equipment, and select machinery based on the understanding that the equipment is part of a larger ecosystem. They often rely on the total cost of ownership (TCO) to calculate costs. The TCO method makes it possible to opt for equipment which, although more expensive initially, will reduce the total costs during the useful life of the equipment. Furthermore, operational uptime is an important success factor for any manufacturer. Any unplanned downtime causes disruption in the supply chain. In order to minimize downtime, manufacturers monitor and document their production lines and seize every opportunity to improve the operational uptime,” says Stephanie Rose, Global Backroom Product Manager at METTLER TOLEDO.
Process Analysis
Grocery retailers can think about the backroom in the same way as manufacturers approach their standard production processes. “First, a detailed analysis of the processes should determine the success factors and challenges in the backroom. As a consequence, sourcing decisions can be aligned with the actual needs and be in line with lean production principles. Second, a calculation model based on the total cost of ownership enables grocery retailers to estimate their long-term costs and make a comparison of the various alternatives. Third, retailers should consider the factors that can improve the operational uptime of their equipment,” says Rose.
Understanding the Backroom
The backroom as a ‘living, breathing operation’ is characterized by cyclical fluctuations in production volumes. In a typical backroom, the daily routine comprises two production phases. The first phase begins early in the morning. The second production phase, in the afternoon, produces sufficient extra stock for the early-evening sales peak. Typically, two or three employees work in the backroom during each production phase. The daily production plan is usually prepared in the evening beforehand and, if necessary, adjusted as the day progresses. The actual production process comprises cutting and wrapping, and these two tasks are usually divided between two people. “The packaging workflow is, as we see it, a cyclical process rather than a continual one. This is a result of the multitasking roles of backroom employees and is also due to the output of the cutter not running in sync with the throughput rate of the wrapping machine. The cutter tends to work too slowly to keep up with the demands of automatic wrapping machines. Hence, to ensure an interruption-free workflow, it is particularly important that the wrapping machine is always available and immediately ready for use, even after pauses in production.” says Rose.
The speed of product changeovers has a direct impact on the efficiency of the backroom production phases. The time that employees spend on adjusting the weighing, wrapping and labeling processes from T-bone to porterhouse steaks, for example, can be classed as waste in terms of lean production (kaizen). In comparison to hand wrappers, automated wrapping machines enable faster product changeovers, especially when it is possible to input pre-set parameters for each item. The takt time indicates how fast meat must be cut, weighed, wrapped and labeled in the backroom in order to meet demand levels. It can be calculated by dividing the customer demand level within the time frame by the available production time within the same period.
The takt time enables supermarket managers to establish whether a wrapping machine will be able to wrap a sufficient number of trays per hour/per minute. Research has demonstrated that many wrapping machines achieve a maximum throughput rate per minute that is significantly higher than what is actually needed in daily production.
Total Cost of Ownership
The total cost of ownership (TCO) calculation is aimed at including all aspects of subsequent use including costs for energy, repairs, and maintenance. It allows different systems to be compared objectively. In the backroom, wrapping machines are among those systems that have a long product lifecycle and have a tangible impact on the backroom workflows. Their performance can either increase or decrease the costs.
When viewed over a longer period of time, lower film usage represents a distinct savings potential. The label costs and tray costs also fall into this category. Additional factors are the maintenance and warranty costs. These include the annual costs of the maintenance agreement plus, if this does not cover unlimited maintenance expenditure, any additional spend on ad-hoc support. For comparison purposes, it is advisable to use the average maintenance costs for the existing equipment as a yearly average. The labor costs associated with a wrapping machine accounts for another significant cost factor. Easy, ergonomic operation and fast changeover help to reduce the annual labor costs for a specific number of packaged units. Regular activities such as changing the roll of film or staffing an internal helpdesk incur labor costs which should be included in the TCO of a wrapping machine.
Operational Uptime
As a mission-critical component, a backroom wrapping machine must have a very high operational uptime. Mechanical problems during a production phase can have a drastic impact on a whole day’s profitability. When making an investment decision for a new wrapping machine, the third consideration after process suitability and costs should be the matter of long-term operational performance. A comprehensive maintenance agreement ensures a high operational uptime right from the start, and prevents the condition of the wrapping machine from deteriorating faster and more dramatically than necessary as a result of negligence, operator errors or workarounds. Backroom employees must be able to operate the machinery correctly, safely and easily. Ideally, workers should not be allowed to operate the machine without first completing training. Some wrapping machine manufacturers already offer such training and certification programs, and often provide participants with a basic knowledge of problem-solving and troubleshooting. In addition, modern wrapping machines with large color displays offer the possibility to train operators directly on the equipment.
Conclusion
The close analysis of the backroom processes, the calculation of the total cost of ownership and the consideration of the operational uptime are the three essential pillars for a sound investment decision in the backroom. In the past, grocery retailers and backroom managers have primarily focused on the purchase price, the packaging quality and the maximum speed of the wrapping machine as criteria for their investment decision. However, process analysis has revealed that the maximum wrapping speed, which is generally expressed in terms of packages per minute and, until now, has often been used as a primary sales argument, is actually less relevant in practice. Speed has now been replaced as the decisive factor by operational uptime, which signifies process reliability and the equipment life cycle. With the three-step approach of process analysis, cost calculation and operational uptime, grocery retailers with backrooms gain the ideal tool for making sound purchasing decisions about process-critical equipment, such as wrapping machines.
