DIRECT – Dynamic Industry Resource - Efficiency Calculation Tool

Nestlé Oceania

"Ratios given by DIRECT are good indicators of efficiencies in the food production system."

Nestle Oceania, 2014

Company background

NestlesLogoNestlé Oceania, a  global food giant,  is the biggest food and beverage company globally. Their Campbellfield site, situated 27km north of Melbourne CBD have a large and highly controlled confectionary factory running. Currently the group uses SAP to track mass and business resource losses through the food production cycle. This is done through the cost bases and mass flows tracked through the SAP platform, essentially capturing physical and monetary losses. As such the group would not have a need for DIRECT, however they kindly acted as a blind reviewer of the tool to help in developing the best possible outcome for Plenty Food Group members.

Business value of DIRECT – Positives and opportunities for improvement

In regards to the current DIRECT calculation interface, Nestlé Oceania sees the ratios as a good indicator of efficiencies in the food production system, and doesn’t see that there is anything obvious missing. They think that the loss results in the input table are important for hot spot identification in production efficiency, and see the value of including avoidable waste, as this is the first area to focus on in regards to reducing production waste. The inclusion of processed product waste to gross product would also be good (as aligned with the ideas of other manufacturers).

In terms of prioritising areas to focus on, the group generally has a method of using pareto principles for decision making in order to focus on the projects that give best “bang for buck”.  This may be in anything from labour, materials, to machine hours.  A useful addition for DIRECT would be a system that highlights the areas to focus on in a pareto or ‘hot spot’ type way (such as biggest cost or mass, link first to avoidable then unavoidable waste). With the current tool this would need to be done with a secondary analysis or interpretation of the results from DIRECT, and potentially a set of scenarios modelled in DIRECT to understand the changes to the system. This goes for benchmarking scenarios also. The easier this process can be made, the better it seems. Nestlé still struggle sometimes when they have a large amount of resource data in how to decide on what single actions to take or issues to tackle, even with various decision making methods in place.

The other function that would be nice is that of zooming in and out of the production process. Currently the tool is set up as a default for annual production. By changing the time, production size and product, the analyses could be tailored to micro or macro decisions (i.e. one line for a day through to total annual production). Nestlé Oceania view this flexibility as an advantage. Currently this could be done manually by the user of DIRECT, but an interface that facilitates this easily would be valuable. This leads to the idea that a Visual Basic skin, or ideally an online version of the tool would help facilitate initiative use of the tool by manufacturers in the future. Nestlé Oceania have indicated that they like the idea of an online tool.

The underlying principle of resource efficiency at Nestlé Oceania is the idea of a zero base loss of materials, where recipes and scrap factors are then applied to production from which losses are calculated from that base through the system. The problem here is that these are estimations, so when more detailed reporting or analysis are required, Nestlé Oceania run line data audits, to verify such scrap factors. Sometimes these factors are adjusted based upon these audits. The learning here is that accuracy is key, so the results from DIRECT is only as good as the data that is entered, and companies must decide how much they can rely upon results for decisions based on this data.

Nestlé Oceania still sees DIRECT as an interesting tool and positive in being helpful to many of Plenty Food Group members. The overarching aim of identifying issues with which to tackle seems a good one. Obviously some contexts will have higher waste than others naturally, so in the instance of Nestlé Oceania, chocolate may have a higher loss depending upon the type, operation than say ice cream production. As long as companies can collect the numbers related to business operations, and have an idea to what accuracy their data is measured, they could use DIRECT to identify opportunities to change for the better and become more efficient.  This could subsequently lead to more competitive products if manufacturers do not already have such a method, tools, or procedures in place.