The ethos of over producing is nothing new. In print, the concept of finishing off the load has always been there but with lean production leading the way in profit-making, it’s time to look at your processes to see what the true bottom line costs are.
A familiar decision: The machine is running and you’ve reached the desired quantity for the customer’s order, but you’ve only got a quarter of a reel left or a part of a pallet so do you run it all out or do you stop?
Walking through a print or finishing warehouse, you will see the impact of these overs displayed through the number of pallets filling up the production bays. These pallets have, in most cases, spent their entire existence sitting in warehouse spaces, being counted at every stock take, moved around the warehouse at every opportunity and habitually overlooked when customer service executives take a new order for the same item.
When looking at overs, you need to judge your markets very well. If you can’t sell it on as part of the additional order or a percentage of it, is it worth doing? Let’s walk through what you are doing in the process of running on and producing overs…
Consider this example…
You may be running a high-speed printing press and that additional running on may only take 15 minutes, but what about the down-stream processes?
Your print run out takes an additional 15 minutes @ 30,000 metres per hour equating to 7,500 meters over-produced. Let’s presume this was sheeted, so with a material width at 1450 wide, we now have an over-production of 28,846 sheets of 520 x 720.
Let’s now die cut these sheets through a Platen @ 4000iph. That’s an additional 7.2 hours running to complete the overs alone.
The secondary processes may also call for additional raw material, making the cost exponentially higher with every process or intervention. If this additional cost is not recouped, it equates to a 100% loss on the bottom line of this job. While this is an extreme example, it does highlight the downstream issues in a single step.
Running Overs: Typical areas of impact
Missed sales opportunities
Customer Services aren’t always at fault. Often, they aren’t aware that they had overs to process in the first place, or they know the quantity is not enough to service the new order. Rather than reducing the new order’s quantity, the CSE may overlook them to avoid sending a customer a mix of dirty old boxes with newly packed items.
Overrun production plan
The planners have put together a plan for production based on the order quantity and production speeds set in their ERP/MIS solution. By running-on, you’re extending the production time, so bumping the plan and not just for your operation.
As is the case with most industries, space comes at a premium and print is no exception. Having these items in your warehouse is also driving a cost. The national average for pallet storage is £0.80 per day, meaning that a pallet stored for just 6 months in a warehouse is already costing you £148.50. That’s without laying a hand on it; this will add an additional £2.50 per pallet interaction.
What if you deliver it straight to the client? With a growing awareness of environmental waste management, some customers will even demand that suppliers pick up the overs delivered as they don’t want the responsibility for disposing them. Even if this is not the case, the possibility of including the quantity of overs on the invoice, will trigger some clients to demand a credit note, costing you in both time and reputation.
In conclusion: If your aim is to be lean, there is (definitely) a better way to get there.
In addition to ensuring you have the right policies in place to manage overproduction, a robust ERP/MIS system will ensure that all departments follow the right processes and always operate from the most complete information.
A full ERP solution such as Microsoft Dynamics NAV PrintVis can give you the data necessary to analyse your production versus sales, see where you can bring in rules to control production, provide better service to your customer with the greatest profit margin possible and cut the need for a warehouse full of stock you may never have the opportunity to sell!
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