Feng Shui for a serene blending operation

“Declutter Regularly. Decluttering is a key principle in Feng Shui interior design…”

Feng shui the ancient Chinese practice aims to use natural energy forces to harmonize individuals with their surrounding environment.

Hmmmm…

Talking of ancient traditions, many companies in the HI&I sector claim a proud heritage, with the business being started decades ago and maybe even passed down the generations. That sort of longevity is something to be celebrated.

However, in my experience that sort of heritage comes with a series of unhelpful legacies (clutter). I’ve worked in and with many such companies and invariably found;

1. Sprawling product ranges with a long tail of products that really don’t pay their way with small batches and slow moving stock.
2. A large (and growing) stock of slow-moving raw materials tying up inventory, cluttering the warehouse and gathering dust.
3. Often over complex and costly formulations with scope for significant simplification.
4. A heap of redundant raw materials no longer used in any live products, carrying the double-whammy costs of write-off and specialist disposal.

This is nobody’s fault, it just happens and the pressure of daily routines makes housekeeping a bit of a luxury.

However, there’s huge benefits to be gained from conducting a bit of industrial feng shui.

Some benefits are obvious:

• Reduction in material costs
• Reductions in inventory and slow-moving stock.

Others are less obvious:

• Increased efficiency
• Liberation of much needed space
• Simpler manufacturing operations

Approached systematically, these benefits are easily realised. So, why not try a bit of feng shui in your factory?

Here’s a road map you could follow.

Starting point: data. Unless you’re operating an entirely paper system, basic data should be fairly easily gathered:

Raw Materials:

• How many?
• Stock value?
• Monthly usage?
• How many are effectively redundant?
• How many are equivalent (for example, it’s not unusual to find the same raw material being bought with different trade names with separate raw material codes in different formulations.)

Formulations:

• How many formulations
• Annual volumes of each
• Value of finished goods associated with each formula

Armed with this data it’s usually possible to …

• Rationalise slow moving materials substituting them with similar materials already being bought in volume. In this respect it’s important to work-off any remaining raw material to avoid adding to the stockpile of redundant material. But as that can take some time, it’s wise to flag materials to be discontinued with **DO NOT RE-ORDER** with a reminder of what will replace it when stock finally runs out (… because by then people will have forgotten the plan!).
• Consolidate volumes through fewer materials. This will increase the average order size and volume through fewer materials, giving more leverage on prices. On some occasions it can justify switching to bulk supply on key materials with the attendant savings and efficiencies.
• Review formulations looking for any fat that can be trimmed out. In my experience savings of 5-10% of annual raw material spend are often realisable. It’s not unusual to find  formulations that are overbuilt, i.e. contain more materials than is required. There is scope for both reducing costs and simplifying blending operations.

Sometimes these formulation changes can be implemented as a desktop exercise, however, it’s wise to have the revised formulations made up and put through a period of stability testing to check for any changes to the spec or formula stability.

Then it’s important to check out the CLP classification of the revised formulation to check for any impacts on labelling or transport classification – and then manage label stocks down to avoid any undesirable stock write-offs.

Sounds like a lot of work, but the effects of a bit of feng shui can be very rewarding:

• Improved margin and profitability (remember, every £1.00 saved in material cost adds the same to the bottom line as £3.00 –£4.00 sales) 
  • Reduced inventory
  • Tidier warehouse
  • Smoother operations

Push reset and allow for fresh beginnings.