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Past Project in Detail

Amcor Fibre Packaging - Build a Costing Model of Major Processes

01/12/2003

Build a Costing Model of Major Processes – Amcor Fibre Packaging (2 students – Mathematics and Master of Engineering Management)

Amcor Fibre Packaging, one of the world’s leading packaging manufacturers, is currently engaged in an improvement project that takes a closer look at their upstream supply chain, particularly paper. The improvement project is to find out how the company’s internal manufacturing processes and procedures are impacting the paper supply chain and the costs associated with the paper usage. Gerry Wind and Niels Reuvers of Amcor Fibre Packaging commissioned this CEED project to mainly focus on identifying the costs associated with the paper usage along the corrugator.

The 2 students who were selected by Amcor for this project were Angela Parry (QUT B.Science – Mathematics) and Aji Aloewie (QUT Master of Engineering Management).

Angela’s part of the project focused on examining the path and impacts of paper reels and their widths from arrival at the Rocklea plant to their final use on the corrugator, focusing on Cost Analysis. Angela also studied the impacts of storing particular board and paper grades at the Rocklea plant. During her project, Angela conducted analysis of data from the Amcor manufacturing systems, captured additional manufacturing data in the Rocklea plants and financial inputs. The aim of the financial inputs was to ultimately determine the optimum process of a paper deckle (deckle refers to the width of paper reel), by entering the cost inputs into the Amcor simulation system. The financial model would take into account the impact of having a particular paper grade and board grade stored at the Rocklea site. According to Gerry, Angela went to “great lengths, by developing some simple software, to extract meaningful data from our systems”.

Aji’s part of the project was similar to Angela’s, but focussed more on mapping and analysing the manufacturing processes associated with the corrugator, and the costs related to these activities. This involved observing the process in the warehouse and on the production floor (causing a bit of a stir, until the staff understood why Aji was there!) and conducting interviews with warehouse & corrugator staff and production planners about the machine and the process. At the conclusion of Aji’s project, he was able to document the cost structure of the processes and according to Gerry and Niels, he “certainly did a good job in advocating the benefits of Activity Based Costing”.

By the end of the project, the students built a costing model of the major processes in the Amcor operation, so that the company could get a better understanding of where they are incurring costs.

Gerry and Niels commented that “both Angela and Aji did well in building rapport with our factory staff” and “the ability of both students to grasp the complexities in our business meant that we didn’t have to take them by their hand all the time”. The results of these projects will now be incorporated into Amcor’s performance improvement program.

Ultimately, Amcor will benefit from these projects through their ability to minimise inventory and potentially reduce the amount of transportation between Amcor’s reel storage facility and manufacturing plant.

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