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Do you know your TDC from your TCO?

12 April 2021

Neil Giles explains who it is important to consider Total Delivered Cost (TDO) when considering new equipment. 

Managing packaged food production lines often demands the ability to be able to operate within tight financial margins and this has led to the Total Cost of Ownership (TCO) becoming a well-established metric. Put simply, TCO takes into consideration the purchase price 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 production lines, as it focusses 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’s the difference? 
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. 

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. 

Protecting production lines
Two main types of product inspection technology - x-ray inspection and metal detection – can help reduce TDC. This is achieved by initiatives such as reducing unnecessary product waste and enabling the re-working of product and packaging. Ways to reduce TDC can include:

Minimising False Reject Rates (FRR) with x-ray inspection: In food production, the cost implications of high 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. 

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: A critical factor of metal detection on production lines is sensitivity  – the measure of a metal detector’s ability to identify a specific type and size of contaminant, whether it be ferrous, non-ferrous or stainless steel. Food manufacturers need to carry out regular sensitivity checks for potential contaminant types, which can affect the availability of a production line and therefore, productivity. 

Typical snack manufacturers may need to test sensitivity levels on production lines every two hours, this means stopping the line and testing equipment thereby increasing overall TDC. However, by employing metal detection equipment that incorporates Reduced Test (RT) mode technology can help reduce the frequency of tests as much as above 80%. The technology also ensures that the system is continuously operating at a higher sensitivity than required to detect contaminants. In some cases, RT has helped reduce testing from two hours to every six hours, requiring only two tests per 12-hour shift, again reducing overall TDC. 

Other ways to reduce TDC: The latest checkweighing 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.

An e-guide  – Reducing Total Delivered Cost: A Guide for Packaged Food Manufacturers – can be downloaded from www.mt.com/pi-tdc

Neil Giles is marketing communications manager at Mettler-Toledo Product Inspection.


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