Let’s be honest, the single biggest objective of a business venture is to make profits. And when we talk about profit-making, organizations invariably put more focus on exploring new avenues of generating revenue. The emphasis is predominantly on gaining new sales or adding new products to the portfolio —which without a shred of doubt is a crucial element to the success of any company — so as to register more profit. However, interestingly, very few care to talk about the existing business processes. Especially in a process manufacturing business, there is little or no focus on the existing practices, which happen to be that overlooked source that has got profit locked inside.
Yes, the organizations can find profit in their existing business processes and practices. They can unlock more profit by streamlining the processes, reducing waste, building lean business processes, and keeping a strict check over the costs. Most of it could be achieved by efficiently managing and controlling the production process – batch production in case of process manufacturing businesses. Batch production helps process manufacturers deliver high quality products ‘just in time’, keep a check on waste, and ensure that each batch is produced as efficiently as possible.
First things first, what’s batch production?
In the method of batch production — also referred to as batch processing —the different constituents of a product are assembled through step-by-step processes. The raw materials move through the production line in batches, allowing enough room for a gap between steps throughout creation as a batch moves through. In batch production, a subsequent batch can be processed only after the current batch has finished, and in the overall process, there can be seven or more steps that are completed within the same number of equipment before a product is complete.
In batch production, the quality and capabilities of the product get enhanced by the use of more advanced machines/equipment. Also, it doesn’t require the manufacturers to make constant adjustments to the machinery, which happens to be an important benefit of batch production. The manufacturers can easily identify the batches with problems and create a new batch as a replacement. Moreover, it also helps improve production planning and scheduling.
How batch production helps reduce costs, increase profits?
Coming back to where we started from, the process manufacturing organizations can find profits in their existing business processes and practices by efficiently managing and controlling their batch production process, which delivers a whole lot of benefits such as consistent quality, reduced waste, and etcetera. It helps when the organizations deploy a batch production software such as in an ERP, which facilitates the reduction of costs and an increase in profits through its number of benefits. Let’s take a deeper look at how a batch production system helps reduce costs and increase profits:
By better management of inventory: A batch production software, through its inventory management module, helps with planning inventory usage, replenishment, surplus and turnover tracking, and achieving very high levels of inventory accuracy, among other things, besides reducing inventory shrinkage. Most of the time in process industries, the inventory has a limited shelf life and hence it becomes essential for the manufacturers to determine how fast a product or its ingredients are required to be used before its lot expire. A batch production software lends them that ability to determine shelf life/expiry date. It alerts the manufacturers about near-expiry lots and through its FIFO (first in first out) inventory protocol, prompts them to use that lot first and thus reduce inventory wastage as well as ensure cost savings.
By defining QC tests at all stages: Quality checks and inspections during batch production also plays a massive role in keeping the costs under check and ensuring profit. It allows the creation of QC tests at all stages- right from receiving the materials, production, to shipment of the final finished product, and storage of tests in its quality libraries. The manufacturers can define parameters for each QC test for a specified item or item group, apart from allowing them to manage the records of passed/failed tests, accept or reject products based on the result, and taking a swift counteractive action such as return or destruction against the items that fail inspection, thus ensuring quality at all stages of production process. Ultimately, reducing waste, making valuable savings on costs and time, and helping manufacturers focus on tasks that improve profitability.
By defining inspection plans: With a batch production ERP software, manufacturers can also define inspection plans. An inspection plan basically suggests how an item (a raw material, a finished good, or a piece of equipment used within the facility) is to be inspected, how the inspection is to take place (like temperature, humidity, PH Value, machine speed, etc.), the item characteristics to be inspected and all the required test equipment that are required for the inspection.
Post inspection, it can be determined whether the item is within tolerance or has to be rejected since the results did not meet the defined standards for a certain characteristic. This ensures that only those items are used for production that meets the set standards, thus eliminating the scope of reworks, and unnecessary wastage, and ensuring quality. With things moving as per the specified plan at the shop floor, manufacturers are bound to make savings on cost, and subsequently, profit.
By ensuring optimized use of machinery: A batch production system provides the process manufacturers with exactly the kind of data they need to plan and schedule their shop floor processes according to the availability and capacity of their machines. This way, it reduces the downtime and the set-up time, and ensures their output is not affected. With things moving in a streamlined manner at the shop floor, and with the optimized use of machines, process manufacturers can make savings on costs wherever possible at the shop floor, and improve the bottom line.
By going lean: A batch production ERP system also helps standardize the processes by the adoption of industry-best practices, facilitates continuous improvement of processes, and ensures uninterrupted flow of work- the mantras of going lean. This leads to better performance and more efficient as well as productive people. By putting an effective work flow in place, the system reduces the scope of errors and reworks, maintains consistent quality, limits slowdowns of production, and reduces waste. Also by going lean, manufacturers can produce only just enough output to satisfy demand, rather than over-producing. This reduces the costs associated with storage and shipping goods before sale. Also, the time saved on reworks can be used for other productive tasks, which eventually contribute to organization’s profitability.
By reducing formula loss: Any good batch production software’s formulation management module allows reviewing batch yield, and comparing the actual yield vs. theoretical yield. This way, manufacturers can know whether a formula is routinely requiring more material than expected or not, and fix the problem of raw material shortages, delayed shipments, expedited orders, etc. caused due to varying yield. Thus, by avoiding each of these scenarios that erode profits, a batch production system ensures cost savings and profitability.
By managing material costs: In today’s dynamic business environment, the economic conditions keep changing, which means that the material costs and the actual production costs keep fluctuating. It is therefore difficult for the manufacturers to anticipate future changes in these costs. But a good batch production system automates this process, enabling the manufacturers to know in advance how much and when the material is needed, to stock in advance and save holes in the pocket by making last minute purchases. This way, the profits increase without any significant changes to the production process.
In this blog, we read about batch production, and how a batch production software helps reduce costs and increase the profitability through its different features, in detail. If you are a process manufacturer who wants to explore one such solution that can help reduce the costs and improve the bottom line, your search ends at BatchMaster. For more information on how an ERP system reduces costs and increases profits, connect with our experts.