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Ensuring Resource Efficiency: Reducing Loss of Materials by Rearranging the Storage Area

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PHU QUY Wood Processing Factory, Vietnam

In brief

The Phu Quy Wood Processing Factory is located at Bac Ly Industrial Zone in Dong Hoi, Quang Binh. The factory specializes in processing indoor furniture for the local market and export. It has 180 employees, 160 workers and 20 contract staff.

The factory’s main products are indoor furniture for household, office and industrial use. Products are sold on the local market and supplied to export companies.

Challenge

Every year, the factory buys timber with varying specifications for producing indoor furniture for household and office use. During the in-out process, the loss rate and rejected wood were relatively high due to inappropriate timber classification, improper FIFO (First In - First Out) procedure, and workers’ carelessness about using the right timber specification required for production. In order to produce 1 m3 of finishing products, 1.8 m3 of timber was needed.

Usually, the factory buys timber from a member company. Quality control of this timber was only informal and not following any strict procedure.

Similarly due to the lack of workers’ education, the materials sent out to production were selected without following any strict quality control either.

Actions taken within the enterprise (after applying the PREMA GHK guide)

Rearrangement of the storage area, which included an improved timber classification system and thus better control over the timber being sent out to production

Economic benefits

Results obtained when these measures were applied: timber loss reduced by 10%.

Yearly loss of timber

(800 m3 x ₱114.28 / m3) - (800 m3 x ₱ 1.15 /m3  )

Due to rejected wood

Gross savings per year

₱ 9,051.42

(₱ 90,514.28 x 10% )

Reduction of timber loss by 10% each year

Operational Costs

₱ 2,880

1,800 m3 x 0.5 man-day / m3 x ₱3.2 /man-day

Due to workers for arranging storage area

Net savings per year

₱ 6,171.42

(₱ 9,051.42 – ₱ 2,880)

 

Investment Cost

None

 

Pay Back Period

Immediate

 

 

Environmental benefits

The saving of 10% timber per year helps reduce solid waste (unused timber discharged into the environment), thus contributing to environmental protection.

Organizational benefits

  • Increase in workers’ awareness of the possibility for savings; all members in the company now realize their role in cost savings.
  • Increase in workers’ awareness of good housekeeping in the production process.
  • Faster production, cleaner production area, happier and more efficient workers.

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