The true cost of waste in manufacturing is often underestimated. Typically, the cost of waste is between 4-5% of company turnover, but in some instances, it can be as high as 10%. Savings for manufacturing facilities can easily reach hundreds of thousands of pounds, just by implementing simple sustainability strategies that focus on reducing waste.
For most manufacturing businesses, the process for minimising operational waste and reducing costs starts by understanding the types and volumes of waste that are being generated.
Understand the common sources of manufacturing waste
Holding an excessive inventory requires additional storage space and packaging, and the unsold product is a liability until it is sold; one that might be damaged at any time and have to be discarded.
The goal should be to manufacture to the precise demands of your customers, otherwise known as just-in-time (JIT) manufacture. However, most businesses overproduce and make products too early or in excess.
Production process waste
Inefficient use of machinery, or mistakes made early in the design process, result in excessive wastage. This costs the business time and money, and in many cases leads to excess production of poor-quality products. If these mistakes aren't picked up before delivery to customer, then they can impact the perceived quality of your brand and result in excessive returns, costing your business twice.
Suppliers generally provide materials in the format that is most convenient and cost-effective for them. Your business can then receive goods in large amounts of packaging, that may not all be recyclable. Your staff have to spend time de-packaging the goods and disposing of this material, costing your business time and money.
Defects cost your business twice, since the material and processes are wasted first in the defective product, and then in having to repair it or make a replacement. Then there are the costs of collecting the defective goods and re-delivering to the customer.
Wastes of time, labour, motion and energy
As well as the physical wastes of products and packaging, manufacturing businesses must also consider process wastage. Each movement beyond what is process-critical costs your business in time, money and energy, while also causing unnecessary stress to machines and employees. This includes, but is not limited to:
- Excessive movement of stock and product
- The unnecessary motion of machines
- Excessive travel between work areas
- The unnecessary motion of workers
Conduct an audit of production processes and waste generation
A thorough assessment of your production processes can serve as the starting point for your waste reduction efforts. This will show the opportunities to reduce the volume or toxicity of wastes or to increase the number or volume of materials that you recycle.
Conduct systematic waste-reduction audits on a regular schedule to identify the areas where waste can be reduced. Audits should be recorded so that baselines and improvements can easily be tracked.
The cost-saving potential (in labour, time, energy usage and materials) of each waste reduction opportunity should be quantified so that waste reduction goals can be allocated an appropriate budget that can be readily justified.
Engage the organisation
For waste minimisation practices to be followed diligently, and appropriate funding to be secured, it's vital to engage all members of the organisation, from workers on the manufacturing floor through to senior management.
- Allocate responsibilities and agree what success looks like. Include sustainability objectives in job descriptions, or add bonus targets
- Involve all personnel so that they know what's happening, and to ensure that the sustainability efforts are carried out collectively
- Establish regular, ongoing training and education in waste reduction to promote awareness and understanding
- Reward and publicise any sustainability efforts made by employees
- Quantify and share the results of successes with the entire company
Conduct staff training
To effectively minimise waste and improve operational efficiency, employees must receive adequate training at induction and on an ongoing basis. In these training materials, you should give your staff an overall perspective of production waste and the associated costs, and make sure that they are clear as to where waste arises.
Undertrained employees are often responsible for a significant proportion of wasted time, money, and even an accelerated depreciation of equipment, so training should also tackle workplace efficiency, with clear instructions of safe working practices.
As well as significantly reducing production wastage, training sessions can also help boost employee satisfaction and value.
Reduce packaging waste
Your organisation's environmental impact can be further reduced by redesigning your product packaging so that it uses the minimum number of materials possible, while still providing adequate protection for your product.
Once you have reduced the number of materials in your packaging, then the next step is to investigate how to incorporate recyclable or degradable content. For example, cushioning to protect your product can now be provided with inflatable air packs or corn-based packing peanuts, rather than utilizing non-recyclable polystyrene. While this may not affect your Scope 1 carbon emissions (those produced directly by your operations), it does affect your Scope 3 emissions, which companies are under increasing pressure to now report on.
Audit and Push Back on Suppliers
Audit your suppliers on a regular basis to ensure that you receive minimal defective goods and that their packaging material is kept to a minimum. Where supplier packaging cannot be reduced or reused, then explore with them if there is a recyclable alternative for any non-recyclable material currently used.
Many suppliers will agree to take back some or all of their packaging waste if sufficient pressure is applied, removing this cost from your business entirely.