Best ofclass manufacturers track their performance by measuring a set of key metricsfor a variety of needs such as continuous improvement and costing. Given theimportance of these metrics, it is important to ask: Are the correct metricsbeing used, and which potential savings are overlooked when measuring the wrongones?
 

The topics of “material utilization” or “material savings”were the center of intense discussions and process evaluations conducted withdozens of manufacturers worldwide, specifically as it pertains to optimal rollselection, cut-planning and nesting. Effectively all manufacturers place agreat emphasis on tracking their material yield. However, the vast majority ofthem measure the yield through the eyes of the product -level nesting process.Such manufacturers measure their ‘Product-level Nesting Yield’ which is thetotal area of the parts in a product divided by the area of the material usedfor the nest. In many cases, the nests are prepared once per product, on agiven material size, and then stored for future use and reference.

By associating nesting with the product-level entity, this metriccompletely ignores the broader realities of manufacturing and the actual levelof material utilization as driven by operational decisions such as schedulingof similar products to cut, selection of raw material to use (including remnantutilization) and more. In fact, most manufacturers we meet are intuitively (andpractically) aware that there is “additional waste in the process”, but theyaccept it as an unavoidable cost given the [lack of] systems and processes theycurrently have in place.

To realize the true utilization of material in production,it is important to look at the overall Manufacturing Yield, that is, the totalmaterial that becomes finished product, as a percentage of the total rawmaterial purchased by the plant. This paper will focus on measuring materialutilization during the nesting/cutting processes.

On site process studies have shown that the gap between thesetwo metrics typically ranges between 5 and 10 percent, exposing a set ofsignificant inefficiencies. Conversely, overlooking these inefficiencies allowsthem to cement themselves and become a given ‘cost of doing business’, untilthe time they bubble up to management as some amortized – fixed – factor thatis added in all decisions related to material consumption or costs. Then, thewaste in production adversely impacts other processes and leads to excesspurchase of raw material, over-priced products, over-costing of futurecontracts and more.

In a simplified world, let’s assume this is the only productin production, and that the manufacturer needs to produce six such units per day.By looking strictly at the single-unit yield, the overall yield would remainthe same year-long at 89 percent.

However, by looking at the overall production sequence, onerealizes the Manufacturing Yield is much lower.

For the sake of this example, let’s assume a new roll ofmaterial is 50 yards long, and that the plant always cuts the same product withthe same nest. Therefore, they could fit 5 sofas in a single roll (total of45.5 yards), but cutting the sixth sofa would require starting a new roll, whileleaving 4.5 unused yards in stock. Let’s also assume that this remnant isdiscarded (we’ll get back to this assumption later). In such a scenario, theManufacturing Yield drops to 82 percent and the difference compared with the 89percent Nesting Yield represents the waste ignored when using the wrong metric.

Utilizing remnants

In the previous example it was assumed that the unutilizedremnant is discarded. This is a critical assumption which has a clear bearingon the Manufacturing Yield, but no impact on the Nesting Yield.

There are various ways that each manufacturer deals withremnants, both formally and informally. These are highly dependent on a varietyof factors, and get further complicated by the questions of variable materialwidth, yet they could be consolidated into two main practices, as shown inthe table below.

Mainpractices of dealing with remnants

I  Return them to the shelf for futureuse, typically for re-cuts, and then discard them if no use was found.     Requires additional labor and attention onthe shop floor, but at least attempts to use the material.

II Discard them immediately (for example,“if the remnant is shorter than 3 yards*, discard it”)            Loses the material, but saves the labor of managing it.

* Thedefinition of a “remnant” also varies widely in the industry (typically between3-5 yards).

In practice,given the amount of labor and ‘hassle’ required to utilize remnants, those thatare shorter than 3-5 yards are seldom used, certainly not consistently or inentirety. However, if one can boast a high level of remnant utilization, itwould typically come at the expense of additional labor & WIP costs.

In anyevent, to the extent remnants are used, the gap between the Nesting Yield andManufacturing Yield will be narrowed accordingly.

Increasing your Manufacturing Yield

Once the Manufacturing Yield is established as a moreaccurate metric, the obvious question becomes how can one improve it, or inthis example, how to methodically utilize remnants in the routine manufacturingprocesses?

First, why are remnants not typically utilized? In mostcases we see, the Nesting process is tied to the Engineering room, or moreprecisely to the CAD system. The nest is pre-prepared for any given style (ormix of styles), and is then retrieved and cut each time the product(s) areneeded. Thus, nesting is typically disconnected from the production realitiesand variability such as order mix, material dye-lots/shades, material width andmore.

Therefore, if a given product requires 9 yards of material(as in this example), three distinct capabilities are required to routinely userolls shorter than 9 yards for it, let alone 3-5 yard remnants:

1. An Integrated or Holistic Approach: the knowledge thatsuch remnants exist at the time the nesting decision is made.

2. A Dynamic Approach: given the knowledge about theremnants, the ability to utilize them by creating a suitable nest on-demand,i.e. not reusing a pre-prepared nest suitable for some arbitrary standard.

3. The practical ability (software algorithm or human-based)to nest a single product to multiple rolls of various sizes

To be more precise, using software to support the thirdcapability saves tremendous amounts of labor and ensures optimal decisions aremade every time.

Given these three capabilities, one can routinely utilizethe remnants in stock, with each day presenting a different demand for productsand a different set of rolls as resources.

Summaryof remnants

I. Whenremnants are both discarded and ignored in measurement, the Nesting Yield showsan illusion of a higher yield in production (89%). This deviation thenadversely impacts other decisions such as purchase of raw material, costingetc.

II. Whenremnants are considered in measurement, but not used in practice, theManufacturing Yield is exposed at 82%

III. When remnantsare methodically used in production, the Manufacturing Yield climbs up to 87.3%and represents a true figure.

Summary

Effectively all manufacturers place a great emphasis ontracking their material yield, yet a vast majority of them measures it throughthe eyes of the product-level nesting process. By associating nesting with theproduct-level entity, this metric completely ignores the broader realities ofmanufacturing and the actual level of material utilization as driven byoperational decisions such as scheduling of orders to cut, selection of rawmaterial to use (including remnant utilization, rolls width optimization) andmore.

In fact, most manufacturers are aware that there is“additional waste in the process” beyond what they measure, but they accept itas an unavoidable “cost of doing business”. After a while, this waste becomes agiven: manufacturers do not attempt to reduce it, and factor it uniformly intoa wide range of decisions made in the plant such as material purchasing,project costing and more.
The Manufacturing Yield therefore represents a more accuratemetric, and measuring it is a big first step towards improving it. Thechallenge of utilizing short rolls is just one of many difficulties dealt withdaily in an attempt to increase the Manufacturing Yield. Other dilemmas includethose of Scheduling, WIP Optimization, and managing material width variations. Ourfuture white papers will discuss these topics.
Addressing these challenges methodically and efficientlyrequires a dynamic and integrated optimization approach, based on closecollaboration between the various teams involved (Engineering, Manufacturingetc.), and bridging that gaps between the systems they use (ERP, CAD, PLMetc.). Solving this truly complex problem requires suitable optimizationsoftware tools and processes. Without them, improving the Manufacturing Yieldbecomes a labor-intensive task that is often set aside.