Do you know your TDC from your TCO?
Neil Giles, Marketing Communications Manager, Mettler-Toledo Product Inspection, explains how packaged food manufacturers can measure the efficiency of their production lines by knowing the difference between Total Cost of Ownership and Total Delivered Cost.
Managing successful packaged food production lines often requires manufacturers to be able to operate within tight financial margins. For this purpose, a well-established metric in the industry is Total Cost of Ownership (TCO).
In simple terms, TCO takes into consideration the purchase price of a piece of equipment, as well as the operational costs it incurs over time. TCO is often used in procurement analysis when preparing business cases to secure additional capital expenditure to update food production lines, as TCO focuses on all costs directly related to the piece of equipment itself.
However, packaged food manufacturers are increasingly considering another metric to measure the overall productivity and effectiveness of their production lines: Total Delivered Cost (TDC).
What is the difference between TDC and TCO?
TDC looks into the total cost of manufacturing and delivering a product. This includes the sum of TCO (all costs directly related to the piece of equipment) and all operational costs, such as the physical product, packaging, labour for production and quality checks, waste product, waste packaging and transport.
A critical factor of successful and accurate metal detection on production lines is sensitivity
However it should be noted that as TDC takes into account operational costs, the metric can easily be affected by common issues on production lines, such as product rejects, having to change product set-ups manually, contaminants and downtime for maintenance purposes. While TDC is a more comprehensive metric for manufacturers to measure their overall productivity, it also means that their production lines need to be running at capacity and smoothly, with minimum hiccups and issues to keep their TDCs in check.
How can manufacturers protect their production lines?
Two main types of product inspection technology – x-ray inspection and metal detection – can help manufacturers reduce TDC. This is achieved by initiatives such as reducing unnecessary product waste and enabling the re-working of product and packaging. Some ways to reduce TDC include:
Minimising False Reject Rates (FRR) with x-ray inspection
In food production, the cost implications of high False Reject Rates (FRR) can be daunting and increase overall TDC. Every good product which is rejected leads to avoidable re-testing and production line re-working costs.
Two main types of product inspection technology – x-ray inspection and metal detection – can help manufacturers reduce TDC
For example, a snack manufacturer using an old x-ray machine, which executed a small set of inspection algorithms, reported that their system was generating at least four false rejects per hour, equating to approximately seven per 10,000 packs. In addition, a quality assurance employee spent valuable time investigating and documenting the results of each false reject event – adding more unnecessary costs to production over time.
Fortunately, current advanced x-ray inspection software uses a larger number of algorithms than older systems, which individually check for product anomalies over a smaller range. Thereby increasing inspection accuracy and allowing for natural package variations without increasing FRR and ultimately TDC.
Reducing frequent testing with metal detection technology
Typical snack manufacturers often need to test the sensitivity levels on their production lines every two hours, this means stopping the line and testing equipment thereby increasing overall TDC. However, the latest metal detection equipment incorporating Reduced Test (RT) Mode technology can help reduce the frequency of tests as much as above 80 percent.
The technology also ensures that the system is continuously operating at a higher sensitivity than required to detect contaminants. In some cases, RT helped manufacturers reduce testing from two hours to every six hours, requiring only two tests per 12-hour shift, again reducing overall TDC.
Further ways to reduce TDC
The latest check weighing and vision inspection devices using technical innovations such as feedback loops and enhanced automated vision technology can also help reduce TDC. This is achieved by providing a precise level of weighing accuracy at high production speeds and removing the need for manual visual checks of product labelling ensuring that labour costs are reduced plus improving overall quality and consistency.
Would you like to learn more about TDC and other ways to further reduce it across your production lines? You can now download the full e-guide on “Reducing Total Delivered Cost: A Guide for Packaged Food Manufacturers” with actual examples of manufacturers, equipment and the TDC results they achieved here.
About the author
Neil Giles is the Marketing Communications Manager for the Product Inspection Division of Mettler- Toledo. He is based in the UK and has over 30 years’ experience of working in the food and pharmaceutical industries. For the last 20 years he has been focused on a wide range of Product Inspection technologies including Metal Detection, Checkweighing, X-ray and Vision Inspection.