Is your Packed Product Control just Average?
Optimised? Costing you money? Or leaving you open to the risk of fines, batch rejection and rework?
Average Quantity has been the law for pre-packaged consumer goods produced and sold in the UK since 1979. Prior to this, the UK law for such goods was Minimum Quantity. Therefore, whether packing liquids or solids to a pre-declared quantity, e.g. 1 litre or 1 kilogram, each pack had to contain, by law, at least the declared quantity. Any pack found to be less than the declared quantity was considered illegal and prosecution of the manufacturer generally followed. Given that every manufacturing process contains a degree of variation, the only way that manufacturers could guarantee never to supply underweights was to take account of this variation by overfilling.
When Average Quantity Law was introduced, (one of the few pieces of legislation which actually helps manufacturers to reduce manufacturing costs), some companies embraced the opportunity quickly, others took it more gradually, some did it well, others not so well and some never really got around to it. Some companies, even today, still package their products to Minimum Quantity even though the legal statute no longer exists.
Some companies decided that the variation in their products was too great to benefit from Average Quantity Law, failing to understand that those companies packing products with the greatest weight/volume variation, had the most to gain from a switch to Average Quantity Law. The upshot of all this is that the UK pre-packaged goods industry has needlessly given away millions of tonnes of product in overfill since 1979.
For those companies not entirely familiar, Average Quantity Law is simply based upon three rules (The Three Packers’ Rules).
- The batch average must not be less than the nominal/declared quantity e.g. 1kg.
- Some non-standard packages (T1s) may be included in the batch to a maximum of 2.5% of the batch. The T1 level for 1kg would be typically 985g.
- The packer must not knowingly include any inadequate packs (T2s) within the batch. The T2 level for 1kg would be typically 970g.
As you can see, these are wide tolerances which can provide huge benefits to packers. Obviously underfills will need to be compensated by overfills in order to ensure that the first packers’ rule (average quantity) is not breached, so the real benefit is that the natural process variation is shared between the packer and the consumer, where in some cases, the packer will overfill individual products and in some cases the consumer will receive an underfilled pack (all perfectly legally), provided that the limits already mentioned are respected.
Under Minimum Quantity Law, of course, all the natural process variation would need to remain above the nominal quantity as giveaway/overfill.
To appreciate this value still further, the metric often used as a measure of variation is standard deviation. Under process capability rules, a process capability ratio (Cp/Cpk) of 1.33 would provide a high degree of confidence in satisfying Average Quantity Law. This would mean that the nominal quantity could be achieved with virtually no overfill/giveaway. However, to ensure confidence under the old Minimum Quantity system with the same process capability, could mean a high level of giveaway.
Staying with our 1kg example from earlier, a standard deviation for such a pack size might easily be 3g. Under Minimum Quantity, this would need an overfill (Target Quantity) of 12 grams above the nominal (1kg) whereas under Average Quantity Law, no overfill would be required.
Manual process capability analyses are rarely carried out so control limits are often arrived at through guesswork which can result in control limits being wider than necessary (too much giveaway and increased risk of legal failure), or they may be set too tightly, leading to a greater number of production line adjustments; adding to the natural process variation; more giveaway and greater risk of legal non compliance.
This is why, at Harford, when we developed our own Average Quantity system nearly 40 years ago, we took a different approach. Obviously, the system calculated averages, T1 and T2, like all the rest, but we also used the actual standard deviation within process capability algorithms to more closely replicate what was often done manually under the old Minimum Weight system. This led to more accurate control for all products and fewer process adjustments.
Many of our liquid bottling clients have managed to reduce their overfills to 0.1% (1ml per litre), whilst meeting all the legal requirements.
It’s worth taking a moment to calculate the benefit in a reasonably sized production facility. Imagine a spirit bottler producing 12 million cases per annum, who overfills just 1ml per litre more than is necessary (a fifth of a teaspoonful). The spirit bottling industry standard case contains 9 litres. So the spirit bottler would, therefore, be producing 12 million x 9 litres, 108 million litres per annum. An unnecessary average giveaway of just 1ml per litre on this annual production volume would account for 108,000 litres of spirit given away per annum. If the spirit, before Excise Duty is added, has a production cost as little as 50 pence per litre, this would represent £54,000 per annum given away each year for each 1ml on average of giveaway.
However, most will know that Scottish whisky must be aged in oak barrels for at least 3 years before it can be called whisky. This aging process adds storage costs to the original manufacturing cost and also adds losses due to evaporation as high as 2% per annum.
Many blended or malt whiskies are aged for considerably longer, often 10 to 15 years. This aging process, especially of single malt whiskies, obviously increases the value considerably and whatever product is given away in overfill is no longer available to sell, as the aged quantity stored has been used up. This is known as the lost profit opportunity and, of course, would need to be added to the production and storage costs to calculate the true cost of unnecessary overfill.
With savings like these to be made, and the cost of raw materials constantly increasing across the whole packaged goods industry, we find it hard to understand why every company does not optimise fill control savings under Average Quantity Law.
Roy Green, Harford Control, October 2017.
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