A materials assessment for this Melbourne manufacturer highlighted the cost of materials (20% of the business’s operating costs) and the true cost of wasted materials along with the significant and surprising savings that could be made by minimising waste.
A range of initiatives were identified to save materials, improve energy efficiency, reduce packaging, minimise waste and upgrade machinery that have the combined potential to save Morgan Technical Ceramics more than $60,000 per annum.
Morgan Technical Ceramics Australia Pty Ltd, located in the Melbourne suburb of Notting Hill, is a subsidiary of the multi‑national Morgan Advanced Materials. The company designs and manufacturers made-to-order Zirconia ceramic components primarily used in the severe service valve and pump industries, oil and gas and metal forming industries. It exports approximately 80% of its products.
'Development of a sustainable business, including longevity, through the minimisation of business impacts on the environment is a corporate policy of Morgan Technical Ceramics,' said Quality, Environment, Health & Safety Manager, John Nicolussi.
Morgan Technical Ceramics initially focussed on its materials usage and in June 2014 successfully applied for a $15,000 grant through the Victorian government’s Smarter Resources Smarter Business (SRSB) program toward the cost of a detailed materials assessment of its operations at the Notting Hill site.
The materials assessment involved mapping the main material flows of its operations including packaging, quantifying intensity of use in mass or volume as well as dollars, and identifying opportunities for materials efficiency improvements and waste reduction.
The business received a $3,000 implementation bonus through the SRSB program toward the cost of implementing a number of recommendations from the assessment report to improve materials efficiency.
Morgan Technical Ceramics later successfully applied for a $13,000 (half the total cost) Capital Funding grant through the SRSB program to replace high bay lighting in all factory areas with more efficient LED lighting, instal lux and motion sensors, and to install switching controls to the cooling tower which currently runs continuously.
Nicolussi highlighted the key business benefits of the materials assessment, which included 'finding opportunities for reductions in operating costs, identifying priority areas for improvement opportunities, kick-starting the engagement of employees in searching for other resource saving ideas in their own area, and satisfaction in knowing that we are doing our bit for the environment'. He added that 'the consultant was very knowledgeable and provided useful insights for the business'.
The assessment found that material costs, mainly expensive, high grade zirconia, accounts for 20% of operating costs.
The assessment also highlighted the real costs associated with process waste and therefore the potential savings available from reducing waste. It found that the purchase price of wasted materials was more than 50 times the disposal costs, i.e. the purchase to disposal ratio.
Even more significantly, the true cost of rejected 'finished' product – which also accounts for energy, labour and other costs invested in a product – was found to be 213 times the disposal cost.
The assessment identified annual potential savings of more than $17,000 in material costs (mainly zirconia) by reducing the number of rejected products, $16,000 from reducing final machining and re‑tooling of some machines, $6,000 from reduced packaging and a subsequent reduction in waste collections from five per week to one per week savings $10,458.
The actions taken to date by Morgan Technical Ceramic arising from the assessment include:
- seven proforma tools (Bearing Mandrels) refurbished resulting in a reduction in firing defects by 4.5%
- changed processes so that excess material is removed from products prior to firing to reduce the amount of final machining of hardened material resulting in a reduction in cost of final machining by 5% and a reduction in tooling (diamond plating) by 10%
- improved packaging design with tighter, fully recyclable cardboard boxes replacing the need for protective sponge wrapping and reducing packaging costs by 20%.
Morgan Technical Ceramics used its capital funding grant to replace 22,400W metal halide high-bay lights with four 50W T5 LED high bay lights with lux controls. Smart scan lux controls and motion detectors were installed in several areas including the mill room, packing room, store room, canteen, maintenance office and toilets. The estimated total annual savings from lighting upgrade is $6,280.
The new switching control installed in the cooling tower and the new pump in the laboratory are expected to save a combined $5,580 annually.
According to Nicolussi, Morgan Technical Ceramics will continue to make resource efficiency a key goal of the business and is investigating the feasibility of further improvements to lighting efficiency by replacing all existing fluoro lights with more energy efficient alternatives.
Resource assessment conducted by Manufacturing Best Practice Program.