There are two types of wastes: internal waste and external waste. The former is where the corrugated box industry deems as waste. It represents any defective sheet or box that is made and not shipped to the final customer. But, if you don’t get a hold of defective product and it does get in the hands of the customer, then it is referred to as external waste. This waste is not usually discussed until it is brought by customers. Many customers don’t return the defective products to the Belley’s boxes manufacturing which messes the feedback loop.
Misleading numbers
Studies have found that the costs involved in tracking external waste is larger than the internal waste numbers. Additionally, credits, customer complaints, and feedback are rare of the defective products that the customers are getting. In other words, customers are bearing the direct costs related to the external waste costs and the box makers are dealing with the internal waste costs. If the customer complaints indicate the external scrap rates, this comes in handy for making operational decisions. And when the customers don’t complain about the defective nature of the product, it breaks the feedback loop, the box makers have misleading numbers to work on.
Options
There are two options to handle waste. Firstly, you need to work harder on finding the defects before you ship and eliminate from the production stream. This increases the internal waste rate and enhances quality. You can also send the defects to customers to reduce the internal waste but it will increase the external waste rate and deplete the quality as well. You need to consider how this will impact your business.
Solution
The key to enhance both internal as well as external waste is to determine the defective products and eliminating them from the production stream, as well as determining the root cause of scrap production and addressing them too. Investing in QA systems for box inspections, operator training, PM discipline and keeping the equipment as updated as ever can help in determining the scrap and keep the root causes away. If the company is dedicated enough to address the issues that lead to waste, it will reduce the production of defective products and its shipment as well. Determining the issue quickly via QA devices and not making them occur from other improvement tactics will bring down the internal and external scrap rates and enhance the ROI performance of business.
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