South Africa | February – May 2024 | Case Study
The Opportunity
Setting a course for zero waste
Waste in manufacturing manifests in various forms, including the unnecessary use of resources such as materials, time, and labor. These inefficiencies significantly impact production costs and environmental sustainability, making waste and depletion reduction, such as systematic material handling, a crucial focus for improving operational efficiency and profitability.
In the aerospace industry, waste can be particularly substantial due to the high cost of raw materials like titanium and composites, coupled with the complexity of manufacturing operations and material criticality. Annual costs of material waste alone can reach up to $5 million, even for mid-sized aerospace manufacturers. However, the aftermath often leads to greater disruptions. Waste encompasses not only excess consumption but also scrap, non-availability, and material lost in progress. This results in increased material handling or production delays, adding up to 20-30% of total operational expenses, which can translate to $10 million annually, excluding additional costs from increased maintenance procedures.
A South African aerospace manufacturer sought support for systematic factory mapping to identify significant potential for savings across operations. The assessment involved analyzing two major production halls, focusing on processes, technologies, equipment, production logistics, waste separation, consumables, and hazardous materials.
The Solution
Breaking waste down into smaller compartments
While typically scattered all across operations, evaluations on waste reduction have proven to work best by breaking it down into smaller, more structured workstreams: In-depth exploration and AS-IS diagnosis, situational evaluation, Gemba walks (to track parts and movements), data collection, and employee interviews. Root-cause analysis involved extrapolating each level in operations of material lost in progress, scrap, consumption, and non-availability, resulting eventually in a detailed waste stream mapping to not only categorize waste types (e.g., metal scrap, composite offcuts, packaging waste), but also to identify their sources, ensuring a thorough understanding of waste generation points and targeting specific areas for reduction.
To everyone’s surprise, pareto didn’t showcase a classic 20% of causes create 80% of the costs, but instead the analysis showcased a rather balanced distribution, including workstation setup, lack of operator apprehension and capabilities, underperforming preparation and handling of material by the 3PL, such as overall chaotic factory layout. Having consolidated, evaluated, and classified the domains where savings can be achieved, initial recommendations and benchmarking against industry standards were made, to identify potential areas for cost reduction. This was followed by validating the savings opportunities, estimating their financial impact, and prioritizing them based on their feasibility and potential benefits. This involved outlining quick wins, short-term, mid-term, and long-term actions to implement the savings.
Solutions development addressed overconsumed material and scrap through sustainability and quality workshops with operators, redesigned workstations, Kanban-systems., dedicated material handling areas at station level, and redefining Service Level Agreements with 3PLs, that included amongst others the responsibility of production logistics. Regular audits and continuous improvement schedules were established to monitor waste management practices and material handling processes, sustaining the gains achieved and identifying new opportunities for waste reduction.
The Impact
Treating root-causes instead of symptoms
Identifying the root cause of any issue provides immediate benefits, especially through facilitating the development and implementation of solutions far more efficient. Treating symptoms alone is often ineffective, as the likelihood of issues reoccurring remains high. For our client, the clear segmentation of waste and material depletion figures—through the identification of material consumption behavior, scrap, non-availability, and material lost in progress—proved invaluable and resulted in astonishing results.
An impressive 26% reduction in waste was achieved through the organization and moderation of consumption and quality workshops, including training sessions for all shopfloor operators. Redesigned workstations and a newly established production logistics setup further reduced non-available material and material lost in progress by 24%. The proposed waste reduction measures led to annual reduction, re-use, and re-sell potentials of 67 tons of material and packaging waste.
