World Grain - September 2022 - 44

MILLING OPERATIONS
Hidden cost of failure
green path results in increased cost to the
milling organization.
The annual failure cost due to a given
malfunction depends on frequency of occurrence,
the number of cycles and actions
taken to resolve the issue, delay time, labor
and energy costs.
At each stage of analysis, a cost is incurred
to run the test, notify operators,
supervisory and management staff in quality
assurance, production, warehouse, and
perhaps even the plant manager and sales
department. If internal flour transfers or
blending is required, time and energy resources
are consumed in addition to material
shrink, including moisture loss incurred
reducing dirty wheat yield and increasing
the cost of goods.
As a result, both fixed and variable costs
increase for the flour order, reducing profit
margin or in the worst-case result in a profit
loss. Should the flour be recovered in transit
or from the customer location, the cost
of failure is significantly higher as it may
impact customer
satisfaction, prompting
consideration of alternative flour sources.
Depending on the failure scenario, team
involvement, flour quantity and shipment
method the cost of failure may be as little as
downtime caused by equipment failure carries with it a variety
of incurred and measurable costs, including production labor,
energy, material loss and management costs affecting both the
fixed and variable cost of goods sold.
Monetizing unplanned downtime losses can reveal the cost
of equipment failure, which in turn establishes a maintenance
performance baseline allowing for measurable goal setting
with respect to unplanned downtime minimization.
Generally, the overall cost of unplanned downtime can be
identified by looking at fixed and variable components of
manufacturing costs identified in mill reporting accounting
systems.
Further analysis may be required to make the assessment
on a departmental basis such as the elevator intake, mill, and
warehouse, including flour and feed loadout.
Cost of hidden failure
There is a cost associated with the failure of not meeting a
specification due to equipment or operational failure, which
occurs and often goes unnoticed as it is not reflected in the
accounting system. An example of the hidden cost of a failure
is provided in the figure at the top of the page, showing the potential
steps involved in failures to meet a simple flour specification
due to an unidentified equipment or operational failure.
Successfully following the green outline path minimizes
cost and therefore maximizes profit. Divergence from the
44
$50 to thousands of dollars.
Time spent on analysis, re-analysis, reporting, holding
product, blending, testing, and documenting, communicating
and decision-making takes time away from the system being
managed, team development, planning and strategizing efforts
to improve efficiency, quality, safety and profit margin. The
cost of failure both internally and externally often supports
and justifies the need for improved maintenance.
Maintenance call-back, call-in
Reduction in maintenance call-back or emergency call-in time
should also be considered the baseline and justification. Callback
or call-in time occurs when maintenance personnel with
a specific skill craft is off duty and must return to the work site
to provide an emergency repair to keep or return the department
to planned operating status.
Unplanned maintenance requiring maintenance staff and
maintenance managers to be called back in during unscheduled
hours can be quite costly. In some cases, a minimum
call-back wage of perhaps four hours of overtime pay may be
required even if the repair takes less time. The opportunity to
be a hero getting the plant back up and running in the middle
of the night along with the additional pay, provides less incentive
as the frequency of call backs for unplanned downtime
increases.
Excessive call backs may lead to fatigue that can result in
September 2022 / World Grain / World-Grain.com
Source: Jag Services Inc.
http://www.World-Grain.com
World Grain - September 2022

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