Saturday, January 31, 2009

"Pita" Management

Skippy – Hey Buzz – Happy New Year. Had someone inquire about "Pita" Management:

“Hi In the molding process when you allow raw material to flow fluently from the extruder at the beginning or end of work you get what we call here a "Pita" It is a big round and hard melted raw material. This raw material is out of the stock but not handled by the shop order and due to that after a while cause mismatch in stock. I would like to hear how do you handle that in your plants and if you have any suggestions for me. Thanks in advance.”

Buzz – Happy New Year as well. Hmm, this question could be looked at two ways – are we talking about the handling, use or disposal of the “pita” or the raw material allocation and subsequent quote effects side?

Skippy – why not both?

Buzz – Ok, from a material handling only point of view, it depends on the condition of the material as is extruded -

In custom shops running multiple materials, it is often that the barrel was given a light coating of a petroleum based product to seal the pores of the barrel. It is a given that your tooling was likely coated with something as well and that you have de-"greased" it etc as you hung and heated up -

A new run of material will pick this up and it is not in your best interest to have petroleum or silicone based products introduced back into your run mix from internally generated scrap - pitch it.

On the other hand, once you are up and running, with a good melt temp, the material can be handled at nearly the correct make up consistency, cool the material by mass quickly, remove water if present and run through granulator being careful to have the resultant regrind not too gummy/sticky - if you generate enough of this due to jamb ups, string ups, etc you may want to consider a "hot granulator" designed to take excess material at or near melt temp . . .

Skippy – okay, how about from a raw material variance standpoint?

Buzz – well, the amount of shop generated regrinds and virgin is a problem that is easy to overcome in your MRP or ERP process with a little examination of your particular system, some history analysis and a slight 'adjustment percentage' to your allocation table from the BOM..

It sounds like you have two major issues -

The first is COST for quoting, and the second is ACCURACY for material allocations.

Material allocations (probably the more important on a month to month basis):
Assuming that you have a costed bill of materials for each product, each would call for "X" pounds or kilos of plastic per some measure - thousand feet, 100 meters etc. Unless you have a VERY sophisticated MRP system, you probably have variances month to month in virgin to regrinds before any losses -

There are several losses that occur that belong in the BOM but generally are excluded until the problem becomes so large that it is hard to miss -

1) "Pita"s or start up scrap or jamb ups etc are all "losses" unless recaptured as I indicated in the original reply. If they are ground up and re-run, no loss exists and no variance is expected. For this exercise, we will assume that they are always losses
2) scrap that is lost in and around the granulator - it is rare that material isn't spilled on the floor and swept up, or vacuumed up when cleaning a granulator and going from one material to another or regular maintenance - what happens to it? Unless you re-wash, dry and reuse, again, loss
3) In extrusion, and vacuum or thermoforming versus injection molding, saw shavings, and tool cut offs end up on the floor as saw dust, trims etc. These can be or are losses as well unless recovered.

The closest MOSTLY correct answer is to do a scrupulous study by product - measure all inputs, all saved product, all by product wastes and losses as above, then calculate the % of loss as a measure of the total amount of material consumed and either

a) Increase the raw material per measure in each BOM by the same percentage or

the NEXT most correct answer is to do a scrupulous monthly study on the weights of all final products (net) by raw materials, and using the following formulas -

Beginning inventory + Purchases - minus ending inventory is Material Consumed. (Gross)
Material Consumed - net weight of all saved parts for shipment is Actual Material Used for Product and what ever is left is what was LOST.

LOST/Material consumed is the percentage that each Bill of Material should be increased by (average) to predict material allocations more closely.

This same exercise for a year would probably yield that your losses in aggregate are likely in the 1-3% range in a fairly clean well run shop. In this case, you would want to increase the raw material cost component in your quotes by the same or slightly more (slightly more is more likely to leave a little wiggle room until you find all the losses) than the aggregate loss. In this way, you know you aren't going to automatically get a "SURPRISE" loss in margin of 1-3% at year end.

Note that none of this discussion focuses on Regrind availability or max percentage usable. These discussions are beyond the scope of this simple answer.

I hope this simple explanation works. Good luck.

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