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PROCEDURE F O R E V A L U A T l N G P R O C E S S I N G EQUlPMErYT

WALTER M. U R B A I N

DEPARTMENT O F FOOD S C I E N C E M I C H I G A N S T A T E U N I V E R S I T Y . E A S T L A N S I N G _ _ _ _ _ _ _ _ _ - - _ - - _ - - - - - - - - - - - - -

The ordinary source of p lan t equipment i s the suppl ier whose busi- ness it is t o design, bui ld , and s e l l equipment. Problems can a r i s e f o r the u s e r i n procuring equipment when he has no experience with a piece o f equip- ment and he must secure information as t o i t s performance and s u i t a b i l i t y f o r h i s use. A common way o f obtaining such information i s t o ge t it from other users who have had experience. If t h i s can be done, it is an excel- l e n t way to proceed. When user experience cannot be obtained, help can be secured from the equipment suppl ier . ab le t o provide what i s needed, especial ly i f the item i s one t h a t he has manufactured previously. He may, however, n o t have had d i r e c t experience in the use r ' s appl icat ion, and under these circumstances, the most he may be able t o do is t o o f f e r an opinion a s t o performance.

A w e l l established suppl ier may be

If the item is a new one, o r one under development, the use r i s It may ap t t o f ind it most d i f f i c u l t t o secure information t o guide him.

be t h a t the suppl ie r has not been able t o evaluate h i s equipment adequately and desperately needs a f i e l d t e s t by a customer. somewhat r isky, need not de t e r the user . A s a first customer, he may obtain a preferred pos i t ion with the suppl ier . For example, a s compensation f o r a s s i s t i n g the suppl ie r i n evaluating the u n i t and proving it out, he might secure an option f o r addi t ional ones before h i s competition would be offered an opportunity t o purchase. If the i t e m should prove t o be good, t h i s lead time could be valuable.

This s i t ua t ion , while

In accepting a new unt r ied piece of equipment, even on an experi- mental bas i s , the user should be aware t h a t the t r i a l could be expensive f o r him. If the u n i t should require changes, the t e s t s t o es tab l i sh what i s needed and then t o prove t h a t an improvement has been made, involve p lan t t i m e , product, space, e t c . , a l l of which do not come f r e e . Unless an agree- ment covering payment o f such costs by the suppl ier is p a r t of the arrange- ment, the use r f inds t h a t these costs a r e h i s .

The evaluation of equipment, regardless o f what amount of p r i o r information the use r can secure on i t s performance, should be made by him by a method t h a t provides information t h a t appl ies t o h i s pa r t i cu la r s i t ua - t i on and needs. To use, o r more importantly, t o extend the use of equipment without making a proper evaluation of i ts s u i t a b i l i t y , can lead t o a mistaken understanding of i t s value. Best r e su l t s a r e obtained i n the evaluation when a defined procedure of evaluation is followed and when personnel who understand such a procedure follow it.

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The evaluation procedure usual ly involves two s teps :

(1) An appra isa l based on avai lable information and intended t o guide the se lec t ion of equipment before physical i n s t a l l a t i o n and tes t ing , and

(2) Evaluation of a t e s t i n s t a l l a t i o n under plant conditions.

The f i r s t s t ep involves the obtaining of any per t inent information t h a t the suppl ier o r others can provide. This might include performance claims, costs , and a v a i l a b i l i t y . What the use r w i l l require w i l l depend upon h i s judgment, i n t e r e s t , and experience. Some basic requirements a t t h i s s tage a r e :

(1) A de f in i t i on of the problem t o be solved o r the proposit ion t o be considered.

(2) An accurate descr ipt ion of the new process o r process s t e p and associated equipment.

(3) ~n estimate of a l l per t inent expenses over a period long enough t o encompass seasonal fac tors , usual ly one year.

(4) An analysis of the basic inter-play between investment and t o t a l annual expense.

( 5 ) Similar information f o r a l t e rna te methods and in a form t o permit comparisons.

The obtaining of these requirements can be a s s i s t ed by the use of several forms f o r the development and recording of the information. separate forms might su f f i ce and can be ident i f ied as:

Three

(1) Basis Form (Exhibit A)

(2) Cost Form (Exhibit B )

(3) Comparative Form (Exhibit C )

The - Basis Form -- The purpose of the Basis Form i s t o define the problem o r the

proposit ion. The sect ions of t h i s form a re completed as follows:

Process. A shor t descr ipt ive name of the process o r operation, e .g., S p l i t t i n g Cat t le , Formulating Frankf'urters .

Input Materials. Listed here are the item6 a t the s t a r t of the operation. For example, i f a new method of packaging f rankfur te rs is being evaluated, the input materials could be : chi l led peeled f rankf'urters, packaging f i l m , and shipping containers.

216.

Output Items. Listed here a re the items as they a re a t the end of the operation being evaluated. would be f rankfur te rs i n 1-pound packages i n the shipping carton.

In the above example the output items

Output o r Input Volume. Which volume bas i s is used should be -- designated. Volume can be s t a t ed i n any convenient u n i t s pe r u n i t time. Because volume has an €Inportant e f f ec t on manufacturing expense, it i s necessary to s e l e c t a proper volume. only i f the same volume i s used f o r a l l methods being compared.

A value cost comparison can be made

S t a r t i n g Point. This is the point i n the t o t a l process a t which we begin t o accumulate cos ts . It must be the same f o r a l l methods being compared.

End Point. This is the point of the t o t a l process a t which we -- stop accumulating costs . a l l methods being compared.

Like the S tar t ing Point, it must be the same f o r

Other. Here i s entered addi t ional information needed t o describe For example, the volume l i s t e d may be an average the problem o r operation.

volume over the period covered by the cos ts , and it could be noted here t h a t seasonal var ia t ions require i n s t a l l a t i o n of equipment capable o f handling twice the average volume on an instantaneous r a t e bas i s .

The Cost Form --- The purpose of t h i s form i s t o accumulate a l l per t inent invest-

ment costs and operating expense. methods, the relat ionships among the various items of cost such as invest- ment, operating expense, labor and supplies, e t c . a r e c l ea r ly s e t f o r t h i n order t o a s s i s t i n se lec t ing the bes t method. The sect ions of the C o s t Form a r e completed as follows:

The form i s such t h a t i n comparing

Process. Same as Basis Form.

essent ia l

Method. Means t o accomplish process s tep .

Description. s teps between s t a r t i n g and end points .

A b r i e f descr ipt ion of the method covering the

Footnotes. Here a r e entered any explanatory notes pa r t i cu la r ly the source, computation o r content of f igures entered on the right-hand column .

Equipment. This normally i s the delivered cost of the equipment used i n carrying out the described method between s t a r t i n g and end points .

In s t a l l a t ion . A s the name indicates , the cost involved i n put t ing the equipment i n place, connecting u t i l i t i e s , e t c . a r e entered here.

Other. Miscellaneous cost items a r e entered here. For example, i f building changes a r e needed, they should be l i s t e d here.

Total . This f i r s t t o t a l i s the sum of the costs f o r equipment, - i n s t a l l a t ion , and o ther items of an investment nature.

217.

Labor. This i s the estimate of the t o t a l annual labor expense t o carry out the method between the s t a t ed s t a r t i n g and end points and a t the s t a t ed volume.

U t i l i t i e s . This i s an estimate of the t o t a l annual u t i l i t i e s ex- pense, including steam, e l e c t r i c power, water, gas, e t c .

Maintenance. This is the estimated t o t a l annual maintenance ex- pense. This estimate can be made spec i f ic f o r the equipment i n question o r i f not, it can be approximated by use of standard costs based on a per- centage of the f ixed cap i t a l investment, such as follows:

Type of equipment $ of f ixed cap i t a l investment (considered a s annual maintenance cost)

Simple - l i g h t use 2 t o 4

Average 6 t o 7

Complicated - severe use 8 t o 10

Equipment expense. This i t e m covers costs associated with owning the equipment and which a r e independent o f i t s use. It may be calculated a s a percentage of the t o t a l investment a s follows:

Taxes 2%

Insurance 1

4 - Value of money

To t a l 7$

To t h i s i s added 5.5% of the equipment investment t o permit write-off of money invested, making a t o t a l o f 12.5%.

Total . This is the sum of a l l the annual expenses.

Miscellaneous. Here may be entered items of pa r t i cu la r i n t e r e s t . For example, it may be useful t o show the cos t on the basis of cost per u n i t o r p e r cwt, o r as expense per day, pe r week, o r per month.

Comparative Form - The purpose of t h i s form i s t o br ing together on one sheet the

pr inc ipa l information r e l a t ing t o several methods o r equipment associated with them. This information i s derived from individual Cost Forms. The several headings of t h i s form a r e completed using information s imi la r ly iden t i f i ed on the Cos t Forms f o r each of the methods o r equipment. assembling the information on a l l under consideration a se lec t ion of the bes t can be made.

By so

218.

An example of the use o f these forms is given in the comparison of two methods f o r packaging frankfurters , one method involving manual band- ing and the o ther automatic banding.

No strong b r i e f is made f o r the par t icu lars of these three forms. It is believed, however, t h a t they do l i s t the key information and some- thing similar t o them is needed. Details d i f f e ren t f r o m those shown may be appropriate t o some circumstances. These forms i l l u s t r a t e the kind of order ly analysis o f appropriate information t o enable an accurate compari- son of a l t e rna te s o r t o determine the value of a pa r t i cu la r piece of equip- ment.

The analysis j u s t indicated is a f i rs t s t ep . Basically it i s the assembly of avai lable information and is a guide t o choosing the equipment needed from two o r m r e a l t e rna te s . The next s t ep i s t o obtain the equip- ment of choice and t o evaluate it.

In proceeding t o the ac tua l s t ep of obtaining and evaluating the equipment on a performance basis, it should be recognized that t h i s s t e p may be car r ied out i n an atmosphere t h a t is not always conducive t o the obtaining of meaningful r e su l t s . Recognition o f t h i s s i t ua t ion and a l e r t - ness t o the problems involved w i l l help to avoid mistakes.

F i r s t , there usual ly ex i s t s incomplete understanding between the designer, manufacturer o f the equipment, and the user . This lack of under- standing can be several sided. !The designer may understand very well what i s needed and he may have provided a l l that is needed. The user, on the o ther hand, may not understand how t h i s has been done and what he mst do t o g e t the most out of the equipment. The designer-manufacturer may not have provided what i n f a c t i s needed, because e i t h e r he could not o r because he did not know what was needed. a bas i s of common understanding between the designer-manufacturer and the user .

A strong e f f o r t must be made t o a r r ive a t

Second, the use r should recognize t h a t the designer-manufacturer tends t o be opt imist ic a s t o the performance of h i s equipment. Realism i n t h i s area is needed and the use r cannot bl indly accept what i s claimed. P r io r to h i s own performance evaluation, the use r needs t o employ what means a re avai lable t o him t o assist i n judging the extent of the v a l i d i t y of the claims f o r performance. d i f f i c u l t t o obtain. Common sense and general technical knowhow, however, can be of good value i n avoiding the acceptance of unreasonable claims.

It i s probable t h a t spec i f ic information w i l l be

Somewhat unique t o meat operations and an area which many equip- ment designer-manufacturers do not f u l l y appreciate i s the nature o f the environment i n which t h e i r equipment w i l l operate. Packing house require- ments tend t o center on ruggedness and resis tance t o corrosion from moisture, sa l t , smoke, e t c . Water i s a major cause of equipment f a i l u r e . Not only i s it widely used i n processing and cleaning, but humidities a r e generally high. Water i s a pr inc ipa l cause of the f a i l u r e t o e l e c t r i c a l components. Sealing such u n i t s may not be su f f i c i en t . Heat on a continuous bas is , even when the equipment i s not i n use, may be needed t o keep them dry and oper- a t iona l .

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Special a t t en t ion must be paid t o those pa r t s of equipment which a r e i n contact with products o r ingredients. Improper equipment components can be corroded o r deter iorated by product. Alternat ively product can be contaminated. Certain metals cannot be used. Some such as lead o r cadmium a r e toxic . Others such as copper can a f f e c t product qua l i ty o r s t a b i l i t y . Similarly san i ta ry needs a r e not always s a t i s f i e d . These s i tua t ions a r e much b e t t e r now than they have been and ord inar i ly experienced bui lders of food processing equipment prac t ice sound design. Problems may a r i s e with bui lders who do not have a proper understanding and who lack experience.

While only a very rare occurrence, it does happen t h a t what amounts t o a fraud i s attempted by an occasional suppl ier . An a l e r t user who takes a common sense viewpoint and who employs competent and qua l i f ied I

personnel t o assist him and who deals with suppl iers of known i n t e g r i t y is not l i k e l y t o be "taken in."

Within h i s own organization there may e x i s t a s e t of circum- stances t h a t the use r needs t o recognize. It i s l i k e l y t h a t the i n t e r e s t i n a p a r t i c u l a r piece of equipment may or ig ina te with an operating o r engi- neering group--not top management. It i s a l so qui te possible t h a t i n i t i a l l y top management may not be sympathetic. The convincing of the people who can authorize the purchase o r even the t e s t ing of the equipment may be a problem. A somewhat reverse s i t ua t ion can a l so e x i s t . Top management might have been "sold" by an outs ider . Despite res is tance from t h e i r own organ- i za t iona l u n i t s concerned with equipment innovations and use, they might require ac t ion . In both circumstances, once top management is convinced, they may not understand o r accept w h a t i s involved i n an adequate evalua- t ion , especial ly if t h i s takes appreciable time. They may push f o r u t i l i - zation o f the equipment without a r e a l evaluation. Resolution o f t h i s s i t ua t ion can be d i f f i c u l t .

Another i n t e rna l problem area involves p lan t operators. They can be suspicious of new equipment. It could reduce the s k i l l required f o r an operation and thereby devalue t h e i r services . It might increase eff ic iency and may even replace them. It i s too much t o expect human nature t o be happy with such p o s s i b i l i t i e s . If the operators a re aware t h a t an evalua- t i on t o determine the fu ture of a piece of equipment i s being made, a l l s o r t s of problems may a r i s e . Some d i f f i c u l t i e s might be mysterious i n t h e i r o r ig in and may be even d i f f i c u l t t o i den t i fy as aberrations from the normal. The extreme can be out-and-out sabotage. Alertness and a determination t o proceed regardless a re needed t o overcome such d i f f i c u l t i e s .

Sometimes i n a multi p lan t organization, the l o c a l management may be unsympathetic. Tests i n t e r f e re with regular production. If the new equipment functions poorly, a s it may u n t i l problems causing d i f f i c u l t y a re solved, e f f ic iency i s reduced. Defensively Plant A would be happy t o see Plant B do the evaluation of new equipment. In such an environment those who need t o do the evaluating may f ind problems t h a t can be solved only by strong backing from headquarters.

A s one proceeds t o evaluate the equipment, a plan of ac t ion i s needed. If a t a l l possible, the equipment should be in s t a l l ed on a t e s t and not a production bas i s . of proper data than requirements t o f i l l orders f o r product.

Nothing w i l l i n t e r f e re more with the obtaining Further the

220.

re l iance on unt r ied equipment f o r meeting production needs i s extremely hazardous. Equipment f a i l u r e , the p o s s i b i l i t y of which is undoubtedly grea te r than w i t h a proven f a c i l i t y , simply puts one out of operation. The bes t , bu t not always the simplest approach, is t o parallel ex is t ing equipment. Under t h i s condition, a t e s t run can be made on the new equip- ment w i t h the knowledge t h a t the regular equipment is always avai lable should it be needed. The t e s t u n i t can be taken out of operation any time adjustment o r modification is indicated. If the new equipment can not be i n s t a l l e d p a r a l l e l w i t h ex is t ing equipment, it should not be committed t o production f o r f i l l i n g orders u n t i l i t s performance is proved t o be satis- factory. Alternatively, arrangements f o r quick r e ins t a l l a t ion of the regu- l a r equipment, when needed, w i l l be helpFul.

The exact nature of the evaluation procedure w i l l depend upon what the equipment is and what i t s purpose is. Evaluations which lead t o a "f igure of merit," a quant i ta t ive evaluation, a r e c leanest and simplest . Those involving a subject ively characterized r e s u l t a r e l e a s t s a t i s f ac to ry and more d i f f i c u l t t o judge. It is important not t o accept o r r e j e c t equipment w i t h no more bas i s than a statement (usually made by an operating group) t h a t "It works fine," o r "It's no good." measurement of performance should be an object ive basis. Data need t o be gathered and there should be a plan f o r which and how many data t o be taken. This plan should be worked out according t o good s t a t i s t i c a l pro- cedures. Conclusions based on these data should be developed through ap- propriate s t a t i s t i c a l analyses. through use of recording instruments ra ther than depending upon human e f f o r t f o r t h i s .

If a t a l l possible, the

It may be helpf'ul t o log the operation

Jus t w h a t needs t o be done cannot be given as a generalization. Information answering the following kinds of questions probably w i l l be needed :

(1) What is the capacity? (Average? Instantaneous ?)

( 2 ) What is the product y ie ld?

(3) Does the product meet qua l i ty control specif icat ions?

(4) What percentage of r e j e c t product i s produced?

( 5 ) What a re the labor requirements and costs f o r operation?

( 6 ) What i s the supply u t i l i z a t i o n and cost?

(7) What i s the u t i l i t y u t i l i z a t i o n and cost?

( 8 ) A r e there c r i t i c a l adjustments which a re l i k e l y t o cons t i tu te an operation problem?

(9) For automatic equipment, i s manual operation possible, should a breakdown of the automatic fea ture occur?

(10) What amount of unscheduled down time i s typ ica l?

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What a r e maintenance cos ts?

What inventory of spare p a r t s i s needed? Is there a source f o r spare p a r t s ?

Is the equipment s an i t a ry?

What amount of l abor is needed f o r clean-up?

How long a continuous run is poss ib le?

Is the equipment s a fe?

Is the equipment s ing le purpose o r is it e a s i l y adapted to o the r uses? To o the r products? To o the r u n i t s i z e s ?

Is the equipment s u f f i c i e n t l y durable ?

Is corrosion l i k e l y t o be a problem?

Are the e l e c t r i c a l and o the r f r a g i l e components protected aga ins t water and moisture?

Is the equipment adequately instrumented t o ind ica te o r control i t s operation?

Is there adequate provision f o r lubr ica t ion?

Are there unusual i n s t a l l a t i o n requirements?

Is serv ice ava i lab le from the manufacturer?

Are manuals f o r operation and f o r maintenance avai lable? Is each sa t i s f ac to ry?

Are there p a r t i c u l a r advantages o r disadvantages associated with the equipment?

Upon completion of the planned evaluation procedure the da ta are t o be assembled and a report s t a t i n g the conclusions of the f indings t o be wr i t t en . A suggested ou t l ine f o r t h i s report i s as follows:

I. A . Description of new equipment.

B. Description of use of new equipment.

C . Description of present operation, i f any.

D. Believed advantages of new equipment.

11. I n s t a l l a t i o n of new equipment.

111. Data on operation of new and a l t e r c a t e equipment.

2 2 2 .

I V . Expense comparison of new equipment w i t h a l t e rna te equipment.

V . Projections, i f any. (This sect ion is concerned w i t h in- s t a l l a t i o n s of addi t ional u n i t s . Since there are differences among p lan ts , spec i f ic f igures and not averages a re needed i n making these projections.)

V I . Conclusions and recommendations.

I n some respects the report i s an amplification of the forms used i n the analysis p r i o r t o t e s t ing . t r ia l s and covers important aspects of equipment design, manufacture, and use which a re not emphasized i n the f i r s t analysis . bines cost elements and performance charac te r i s t ics and these together a re the most l og ica l and l i k e l y basis f o r se lec t ion .

It adds information secured through

In essence, i t com-

Following the evaluation procedure, and if the conclusion indi- cates t h a t the equipment involved is worthwhile using, i n s t a l l a t i o n on a permanent basis should be made. ing assessment through adequate recording of performance and cos ts . Long term experience can bring out advantages o r disadvantages not always d is - cerned i n a shor t term tes t . f a c i l i t i e s on a continuing basis i s a never-ending responsibi l i ty f o r con- t inuing success.

Good management w i l l provide f o r continu-

C r i t i c a l evaluation o f a l l manufacturing

MSIS FORM EXAMPLE

Process. Package 1 pound f rankfur te rs .

Basis.

Input mater ia ls . Chilled peeled f rankfur te rs Film No. XYZ Shipping containers

Output items.

Output volume.

1 2 one-pound packages i n shipping container

1,000 l b . /hour 16,000 l b . /day 80,000 lb./week

4,000,000 l b ./year

S tar t ing poin t . Loose f rankfur te rs i n bins adjacent t o operators and a l l supplies within reach.

End point . -- 1-pound packages i n shipping container adjacent t o operator.

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COST FORM EXAMPLE A

Process. Package 1 pound f rankfur te rs . Investment

Method. ABC machine, manual banding. Equipment $ 12,300 Ins t a l l a t i o n 9,800

Description. Operators place 5 Other -- f rankfur te rs i n sect ions o f infeed conveyor t o ABC machine. Packages hand banded using DEF machine. Banded packages placed manually i n shipping container .

Footnotes.

Total $ 22,100

Total annual expense

Labor (l) $ 86,500 Supply (2) 116,000 U t i l i t i e s (3) 980 Maintenance (3) 6,700 Equipment

expense (4) 2,800 Lease 5,400

(1) Estimate by AHP. To t a l $218,380 (2)

(3) Estimate by PHA.

Includes cos t of f i l m , bands, and shipping container . Miscellaneous

(4) 12.5% of i n s t a l l e d equipment cos t . C w t .

COST FORM EXAMPLE B

Process. Package 1 pound f rankfur te rs . Investment

Method. ABC machine, automatic banding.

Description. Operators place 5 frankf'urters i n sect ions of infeed conveyor t o AEC machine. Packages automatically banded. Eanded packages placed manually i n shipping container .

Footnotes.

(1) Estimate by AHP. (2 )

(3) Estimate by PHA. (4)

Includes cos t of f i l m , bands, and shipping containers .

12.5% of i n s t a l l e d equipment expense.

Equipment I n s t a l l a t i o n Other

Total

Total annual

Labor(l) Supply (2) U t i l i t i e s (3) Maintenance (3) Equipment

Lease expense (4)

Total

C w t .

$5.45

$ 23,500 12,200 --

$ 35,700

expense

$ 67,000 114,000

1 ,120 7,500

4,460 5,400

$1 99,480

Miscellaneous

$4.99

224.

COMPARATIVE FORM EXAMPLE

Process. Package 1 pound franlrfurters.

Total To t a l annual

Method investment expense

ABC Zanual $22 , 100 $218 , 380

ABC Automatic 35,700 199,480

R. B. SLEETH: Thanks very much Walt f o r t a t i o n . I bel ieve the many problems t h a t Walt has a r e probably,at l e a s t some of the problems t h a t he

Miscellaneous

$5.45 per cwt.

4.99 per cwt.

t h a t very timely presen- brought up i n h i s t a lk has raised and has not

answered,is probably analogous t o the new su l tan who had j u s t been in t ro- duced t o h i s f i rs t harem. He knew what t o do, but he d i d n ' t know where t o start. I think t h i s is real t rue from the standpoint of the packer ge t t ing new equipment in ; what t o do with it, who t o br ing i n from the standpoint of the various departments within each of t he groups within the company t o evaluate it with the engineering, operations research, economic department, e t c . the equipment that i s j u s t i f i e d . Are there questions t h a t you would l i k e t o d i r e c t t o D r . Urbain concerning h i s presentation? Walt, I guess you answered a l l the questions and problems the fo lks might have had. So i n the i n t e r e s t o f t i m e , Bob, I w i l l turn it back t o you.

It takes a l o t of organization i n order t o make proper analysis of

ROBERT SAFFLE: Thank you, R. B. The Board of Directors real ized

However, i n the area of semi- t h a t i n the pas t f i v e o r s i x years we have begun t o see some research infor- mation on ce r t a in types of sausage products. dr ied and dried sausage products, there is v i r t u a l l y no information ava i l - ab le i n research l i t e r a t u r e on the processing of these items. It was the hope and idea of the Board of Directors t o have someone t o t a l k on the sub- j e c t of semi-dried and dr ied sausages pr imsri ly from a sausage-makers standpoint t o give us some bench marks o r rules of thumb i n the production of semi-dried and dr ied sausages; perhaps t o encourage us t o take t h i s a rea away being completely a r t back t o where we would have some good research information. I think we a re very for tunate t o have B i l l Shannon t o t a l k t o us on the production, processing of dry and semi-dry sausages. Del Doty was not able t o be here as l i s t e d i n your program; however, Neil Webb with Eckhert Packing Company a t Defiance, w i l l handle the discussion period immediately a f t e r B i l l ' s presentation. B i l l .

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