Process optimisation means looking for ways to improve the energy and/or materials efficiency and productivity of a business’s processes. The objective of process optimisation is to reduce process cycle times, reduce wastage, improve the quality of products or services, and reduce costs. Process optimisation could involve actions from plant re-layout based on improving material flow and productivity, to redesigning a process line to eliminate or reduce process wastage or energy used.
Process optimisation doesn’t only apply to manufacturing businesses, the majority of businesses have processes and operations that can be improved and made more efficient. For service industries this can involve improvements to customer focus, gaining control over process complexity, and improving performance and response times for targeted services or processes. It could mean changing the ways things are done; reducing the amount of handling involved; reducing delay times; or introducing smarter systems to manage operations.
Australian Bureau of Statistics (ABS) data suggest that material and water costs for businesses range from 10% to more than 50%, or an average of more than 30% of business revenue. Data obtained by Sustainability Victoria from its resource efficiency program which worked with businesses between 2012 and 2015, and other national and international research, backs this ABS data.
The high cost of materials is especially true for manufacturers, where it was found that for some businesses (e.g. plastics & chemicals and furniture manufacturers), the cost of materials can be as high as 80% of operating costs. For example, wastage from production lines can cost manufacturers tens of thousands of dollars per year, especially when the ‘real cost of waste’ is considered. The real cost of waste accounts for costs associated with the purchase of the materials, labour and handling costs, and the operating costs to handle or finish the wasted material (energy, water, transport, fuel).
Sustainability Victoria’s data has shown that the real cost of wasted resources is anything from twice to hundreds of times the cost of merely disposing of the waste. See case studies below.
For manufacturing businesses there are opportunities to save tens of thousands of dollars per year by reducing the amount of materials used, reducing the amount of wasted materials, or producing more with the same amount of materials.
It is recommended that businesses interested in reducing materials or energy costs conduct a mapping exercise to understand their operations, resource intensity and waste hot spots. Although not essential if good in-house expertise exists, an energy and/or materials assessment will help identify opportunities to improve efficiency and provide an estimate of potential savings and associated costs.
A global leader in process optimisation is Toyota. Its ‘Kaizen’ principle of improving or changing the business’s operations to always drive innovation means that Toyota is always looking for ways to reduce the amount of materials, energy and water it uses, reduce the amount of energy, materials and water wasted, and to produce better products.
A typical implementing process optimisation involves the following steps.
However, there are ways to identify processes to be optimised in-house:
Sustainability Victoria has a number of published case studies featuring businesses across many sectors, many of which have carried out actions to improve the efficiency of their operations.
The search for continuous improvement motivated jeans manufacturer, Nobody Denim, to undertake a resource assessment. This assessment made recommendations to improve materials efficiency and identified a number of energy efficiency savings.
Ryan & McNulty were aware of resource inefficiencies in their saw milling operations. A materials assessment allowed them to explore more efficient methods of production and management their materials.
The Plastic & Chemical Industries Association has produced a series of 5 Minute Guides to energy efficiency. The guide to process, operations & equipment provides simple and practical guidance to improve the energy efficiency of operations.
The Australian Grape and Wine Authority publication The Lean Guide for the Australian Wine Industry discusses process improvements to increase efficiency and productivity.
The USA EPA’s Business Guide for Reducing Solid Waste is a detailed guide providing step-by-step instructions designed to assist medium and large businesses to establish a waste reduction program. Key chapters include Getting Started, and How to conduct a Waste Assessment. Overall emphasis is on avoidance and understanding the true cost of waste.
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