Effective Production Design Can Help In Better Profits

Vijay Sardana

We have discussed, in earlier articles, many important technical parameters relating to production system. While establishing a processing facility, many factories have many defects that could be avoided with proper planning. This article discusses few basic issues, which can help in establishing a good food factory.

While establishing a food factory, review of at least following items of the project’s production design should be taken.

  •    Implication plans
  •    Engineering
  •    Production scheduling

Implementation Plans

The focus of this series has been on the analysis and design phase of the food projects. It is important for the management to ensure that the investment, if approved, can be successfully implemented. While working on investment plan, a preliminary implementation plan should also exist that explains the steps to be taken after the investment decision and before production begins.

To assist and guide during this phase, the project managers can make use of such management techniques as Gantt charts that divide the implementation process into distinct activities with time periods attached to each.

For more complex projects, other network diagramming techniques such as the Critical Path Method (CPM) or Project Evaluation and Review Technique (PERT) might be used. The managers should keep in mind the seasonal nature of the agro industry’s raw material in formulating or reviewing the implementation schedule,. The timing of this availability sets basic temporal parameters for the start of production and also will set important milestones.

Project Engineering

The project’s investment, production design, and organization should be based on detailed engineering. The degree and sophistication of it will depend on the size and nature of the undertaking.

The following charts and layouts as useful important tools:

  • General functional layouts: These show the relations and interconnectivity among equipment, buildings, and civil works.
  • Mass Balance Sheets and Materials Flow Diagrams: Such diagrams help to show the direction of movement and quantities of all inputs (for example, materials, supplies, and utilities) and outputs such as intermediate and final products, by–products, and emissions) throughout the plant. For agro industries it useful to extend these diagrams backward through raw material procurement, especially if the product is highly perishable and may require special pre-processing treatment.
  • Production-line diagrams: These show the location, equipment specifications, space requirements, utilities requirements and mounting device sizes for each processing stage.
  • Transport layouts: These diagrams show the distance and modes of transport inputs and outputs to, within, and from the production line.
  • Utility consumption layouts: These show the location and quantity of utility requirements for the purpose of guiding installation and calculating costs.
  • Communications layouts: These diagrams show the location and kind of communications device needed throughout the facility.
  • Manpower layouts: These indicate the number and skill level of personnel needed at each stage of the production process and are useful in identifying areas in which intensity can be increased.
  • Physical layouts: These charts fit the functional layouts to the actual conditions at the site and are thus based on geodetic, geological, hydrological, soil, mechanical, and other surveys.

Production Scheduling

Production scheduling needs to be examined because in agribusinesses, it is complicated by the raw materials’ seasonality. The processor should design a master schedule that programmes dates and quantities of raw material procurement, processing volume and duration, and inventory levels.

Managers can, in this way explore the possibilities of reducing investment in equipment capacity by operating multiple shifts, extending the processing period by multiple crop inputs or semi processing of raw materials, minimizing fluctuations in product flow, and attaining adequate quantities of labour and supplies.

The production schedule of a juice processing plant, for example,  might show a strong seasonal variation in capacity use because of the drop in a particular fruit production from the lack of raw material in off season. This variation might stimulate the processor to use alternate fruit in the off-season and to produce alternate juice as another of its products to maintain output. In effect, the production schedule becomes the working document for analyzing many of the issues examined in the earlier paras of the article.

Quality control

Many companies frequently lack systematic quality-control procedures. As a result, their product quality is erratic can cause consumer dissatisfaction, and, sometimes, can be hazardous for consumption. Food safety needs careful understanding.

The important aspect to note is that product quality is influenced by many factors, beginning with the genetic material (seed or breed) used on the farm and with the farmer’s agricultural practices. As discussed in earlier articles, quality assurance must begin at the stage of raw material production. At the processing stage, quality control should be applied to the raw material inventory, work in process, and finished goods. The quality of the raw material stock can be preserved by adequate storage facilities. Periodic sampling of the inventory to test for pest or insect damage or microbial growth is also advisable. These measures can identify problems in time for the plant’s management to take corrective measures. Spoilage can begin inconspicuously and accelerate rapidly, causing massive inventory losses and production stoppage. By contrast, monitoring is relatively expensive and, usually, cost effective.

Most of the food and fibre processing is relatively quick, but in-process monitoring is feasible for such aspects as contamination levels, packaging integrity, temperature, and chemical composition. Finished goods can be inspected by variable (that is, a particular characteristic) or by attribute (to sort good from bad).

Quality-control mechanisms must be effective to include visual inspection, mechanical measuring devices, and laboratory analyses. Sampling techniques are relatively reliable and efficient, but the processor must first set an acceptable level of quality. After acceptable quality is defined, sampling can take place within limits of probability of committing either a “Type I” error (accepting a lot that should be rejected) or a “Type II” error (rejecting a lot that should be accepted). Nutritional quality of finished goods should be monitored by biochemical analysis to measure nutrient retention and any microbial contamination.

By-products

One final aspect of processing is the role of by-products. Unlike other manufacturing operations, agro-industrial processing generally disaggregates one raw material, rather than aggregating various materials. The biological nature of the raw material allows it to have many useful parts, and the product often has multiple derivatives. In the economics of agro-industries, by-products are important and warrant close inspection.

Economic value

The managers should identify all the outputs of the processing flow because almost all have a realizable economic value. Pure wastage should be minimized, but economic opportunities from possible by-products should not be overlooked, especially in an early stage of development. The manager should look for recoverable but economically unexploited by-products.

It is essential for a processor to project the prices of the by-products it can produce to forecast accurately total project revenues. Even though it is difficult, as it requires an analysis of supply and demand conditions in another industry, these projections should take into account price levels and variability. If the realizable revenue and profit margin are small relative to the main product, extensive price projections are not warranted. Nevertheless, estimates of a by-product’s market are important because in some cases the economic importance of the by-product can become paramount.

For example, several years ago a sugar sector in India developed a process for converting bagasse, sugarcane residue after extraction, into pulp for the production of paper. This process gave economic value to a previously unused by-product. It had a negative value before as it used to cost the processor to dispose of the bagasse as waste.

In South Africa, changes in the international sugar prices, while at the same time prices for paper products in the domestic market continued to increase. The shifts in the paper industry were so dramatic that the sugar refinery’s profits from its bagasse sales exceeded its profits from processed sugar: in effect, bagasse become its primary product and sugar its by-product. It is the case in Brazil, where alcohol is gaining more importance than the sugar.

Managers must realize that because of inter-sectoral nature, the agro-processing company can have many businesses simultaneously and that a project’s operating strategies must be adjusted according to the overall price dynamics.

Another aspect worth considering is the extent to which the variability in by-product price provides countercyclical or seasonal balancing to the variations in the primary product’s prices.

Another consideration is the possibility of the processor’s using the by-products as energy sources. Because energy costs are rising, this use for by-products is of increasing economic importance. For example, a vegetable-oil processor can use the cottonseed husks as boiler fuel and in sugar refining, bagasse can be similarly used. Some feedlots in the United States are recycled and converted their animal wastes into fuel, thereby simultaneously solving problems of waste disposal and environmental pollution. Similarly, small-scale biogas plants are operating in some village level in India.

 

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