Premio Foods, a privately-held, family-owned business since 1943, is one of the largest processors of sausage in the United States. Its products are carried in leading supermarket chains located throughout the United States. In addition, Premio is recognized as a leading supporter of organizations working to eliminate hunger.
Premio Foods is the recipient of the Safe Quality Food (SQF) Level 3 certification, with a rating of E (Excellent), recognized under Global Food Safety Initiative (GSFI) standards. Premio is the only dinner sausage producer on the Eastern Seaboard to achieve this prestigious certification, and is one of only nine companies to have received certification covering the processing of manufactured meat and poultry, a category covering over 40 different meat and poultry products.
Premio’s decision to introduce lean manufacturing techniques to the organization was not driven by any particular or critical issue that needed to be addressed, but rather by the knowledge that lean manufacturing techniques, such as Value Stream Mapping, Five S, Kanban and Poka-Yoke, inherently produce significant benefits in terms of operating efficiency, cost and productivity, and help uncover continuous improvement opportunities that would otherwise remain hidden.
Similarly, Premio’s decision to work with NJMEP and conduct Accelerated Process Improvement training for its employees was not in response to any particular need, but rather resulted from:
- a desire on senior management’s part to more fully engage its manufacturing personnel in the process of identifying and pursuing process improvement opportunities, and thereby enjoy the satisfaction that results from achieving a positive outcome;
- a recognition that its manufacturing employees represented an untapped resource of knowledge and expertise that if harnessed would have the potential to yield significant results; and,
- Premio’s commitment to employee development to ensure that all who join Premio have an opportunity to grow both professionally and as individuals. Premio saw the Accelerated Process Improvement exercise as an investment in its employees.
In a constantly changing economic environment, it is critical for any manufacturing company to effectively manage one of the highest cost asset values – inventory. This requires balancing sufficient inventory to meet customer demands, with closely monitoring and controlling inventory so as not to maintain more than is absolutely required – thereby tying-up valuable financial resources. At Premio, this is especially relevant with respect to raw materials used in the manufacture and packaging of its products.
In attending NJMEP’s program on Inventory Management, Premio management was looking for insight into various management techniques used by similar organizations to control and minimize the cost associated with inventory. For example: Materials Requirements Planning (MRP) and Sales Forecasting.
The Accelerated Process Improvement workshop resulted in the identification of three projects. Each project was addressed by a cross-functional group of participants, with each group being comprised of representatives from Production, Logistics, Engineering, Maintenance, Purchasing and Quality Assurance.
1) Raw Material Impact Project
Objective: To establish increased control over raw material and packaging inventory by employing Five S, Kanban and JIT lean manufacturing techniques.
Results: Through 1) analyzing Spice and Tray storage capabilities and staging; 2) coordinating with vendors regarding order lead times, minimum order quantities, product availability and shipping; 3) negotiating storage of the most critical raw materials by vendors at no charge to Premio; and, 4) reorganizing inventory storage using Five S and Kanban, Premio achieved an overall reduction in raw material and packaging inventory sufficient to free-up $250,000 in working capital.
2) Chopper Room Operation Project
Objective: To further improve operating efficiencies in the Chopper Room.
Results: Through a reconfiguration of Chopper Room equipment and controls, Premio achieved a projected annual savings of $10,000 in maintenance costs and improved operating efficiencies.
3) Process Improvement Project
Objective: To enhance manufacturing equipment efficiency through a reduction in equipment downtime.
Results: By 1) beginning the development of formalized SOPs for each piece of equipment; 2) improving Maintenance Mechanic response time to equipment failures through the acquisition of superior communication equipment; 3) reducing finished product rejects by improving raw material inspection, more aggressively addressing raw material issues with vendors, and in some cases purchasing higher quality materials; 4) resolving issues related to the temperature effects on some equipment; 5) intensifying Machine Operator training; and, 5) implementing more frequent preventive maintenance, machine downtime has been reduced resulting in an overall improvement in operating efficiencies.
Overall, Accelerated Process Improvement had a very positive impact on the organization in terms of operational improvements realized and, most especially, with respect to providing employees with the opportunity to become engaged in identifying and addressing areas of interest to then and in which they felt they could add value – and they did. It proved to be a rewarding experience for everyone involved.
With respect to Inventory Management, in addition to the improvements realized through the Accelerated Process Improvement exercise, Premio management concluded that more emphasis should be placed on integrating Sales Forecasting into all facets of the organization as a means to:
- Further enhance the procurement process and control raw material inventory;
- Assist in more accurately planning production requirements and shipment of finished products to the customer;
- Increase annual cash flow; and,
- Increase Company efficiency and productivity.
While not yet fully implemented, it is projected that a more focused, systemized sales forecasting process will yield significant results for the organization.
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