Managing

Manufacturing
Performance
Code
1.0 PREPARATION DETAILS

Approvers Pier Luigi Sigismondi Javier Huerta

Chief Supply Chain Officer VP Supply Chain Strategies &
Industrial Performance

Renato Miatello
VP Manufacturing Excellence

Owner Unit Industrial Performance

Manufacturing Excellence
Supply Chain Finance

Owner Fernando Hernandez Gabriele Silvestrini

Industrial Performance Lead Manufacturing Excellence Director

Rodrigo Gonzalez Arvind Sunderrajan

Industrial Performance Director Manufacturing Excellence Director

Linked/Consulted Hafeez Mirza Daniel Jones

Technical Industrial Performance Supply Chain Finance Director
Director

Claudio Rimicci Javier Rodriguez

Supply Chain Finance Director Supply Chain Finance Manager

Authors Deepak Agarwal Fabio Martins

Industrial Performance Manager Group Manufacturing Excellence Specialist

Rodrigo Fernandez Girish Jambekar

Industrial Performance Manager Industrial Performance Manager

Christina Emseis
Industrial Performance Manager

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2.0 REVISION HISTORY
Version Version 1.0
Date May 2014

3.0 TIMELINE
The MMP Code upgrades the existing Manufacturing Scorecard KPIs and Definitions v4.0
published in April 2014 and becomes mandatory for all Unilever factories as of June 2014

- All factories are expected to read and apply the definitions (Sections 1.0 to 8.0 and
13.0 to 16.0)

- Industrial Performance initiated sites must apply the MMP Code in full (Sections 1.0
to 16.0)

4.0 TARGET AUDIENCE

The MMP Code is valid for all Businesses and different Product Categories across all clusters.
The MMP Code may be circulated to all Unilever Employees, however the document will be
most beneficial for the following roles:

• Industrial Performance Managers

• Manufacturing Excellence (ManEx) Manager / Officer

• Factory Directors / Managers

• Manufacturing Managers

• Factory Finance Managers

• Supply Chain Planning Managers

• Engineering Managers

• Quality Managers

• Supply Chain Finance Directors

• Category Directors

• Planning Directors

• ETS Directors / Managers

• R&D Directors / Managers

This document is for internal Unilever use only

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5.0 REFERENCE DOCUMENTS
Manufacturing Scorecard KPIs and Definitions v4.0 from April 2014

Global Product Costing Rulebook v2.11 from March 2014

HR for Factories Book v1.0 from September 2013

HR for Factories Handbook v1.0 from April 2014

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6.0 INTRODUCTION
Unilever has an ambition for growth which will be achieved through Compass. We operate in an environment of
volatility, uncertainty, complexity and ambiguity - a VUCA world. In driving sustainable, profitable growth, Supply Chain
is playing a fundamental role by reducing our environmental footprint and generating savings that will fuel our growth
ambition.

One Global Supply Chain Organisation has been built to develop the most efficient capital and cost network in the
industry, which means that we need to boost our Return on Assets (ROA). Significant progress has been made but, at
this stage, the financial-operational link is not transparent because of a lack of consistent rules and non-integrated
factory performance tools. We are still transferring the cost of non-performance (waste, losses and inefficiencies) to
our customers and consumers, who are understandably unwilling to pay for this.

Our aim is to become a role model, setting standards against which others measure themselves. To do so we need
consistent rules, integrated tools and right behaviours. We need a transparent, current and easily available global
performance picture that helps us to focus on where to improve and deliver value to the business. This means all of
us have to improve the way we capture and use information to realise our shared potential, unlock trapped value and
drive improvements that will enable factories to exceed performance targets.

To excel in End to End cost competitiveness we need to build a strong foundation. Factories control most of the Supply
Chain Costs (materials, conversion cost, stocks etc) and play a key role in driving Return on Assets (ROA).

Illustration:
Synchronised
operations in Routine
manufacturing
will allow the
ROA wheel to HR4F
boost business
operations in
Zero Loses &
optimised

performance
capacity

Reflect
SAP
WCM

ETS

IP

Improve

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The purpose of the Managing Manufacturing Performance (MMP) Code

To be truly global, we need a global set of standards and methodology by which to operate. This will help us to:

- Reduce the waste and remove inefficiency that our consumers will not pay for;

- Provide better information to our customers regarding sustainability and quality;

- Make smarter decisions based on better information.

The Managing Manufacturing Performance (MMP) Code standardises the way we operate our factories and evaluate
manufacturing performance. This MMP Code replaces the Manufacturing KPIs Scorecard and Definitions, PAMCO and
other guidelines and instructions. Whereas earlier documents addressed only manufacturing teams, this new code
targets factory teams, planning, finance, ETS and R&D. The purpose is to have one terminology and one methodology
for measuring and reporting manufacturing operations across the company.

The MMP Code has been created by Industrial Performance in cooperation with Manufacturing Excellence, with inputs
from Finance and R&D, as well as other functions and category experts. The MMP Code provides clear definitions
regarding manufacturing performance and processes. It includes all relevant Key Performance Indicators (KPIs), and
requires factories to define Process Performance Indicators (PPIs) and Key Activity Indicators (KAIs) needed to enable
their efficient and consistent management. The MMP Code also introduces new concepts such as Push and Pull
resources and Manufacturing Standards which require a paradigm shift. Manufacturing Standards will establish an
accurate link between operational and financial performance.

The Managing Manufacturing Performance Code is organised as follows:

- Definitions

- Manufacturing Standards

- Routine to Manage Standards

- Governance

By embracing the MMP Code as the new way we operate our factories, we will deliver greater value and reinforce our
performance culture. This will allow us to deliver unmatched business value.

Industrial Performance and Manufacturing Excellence

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 7.0 TABLE OF CONTENTS
1.0 PREPARATION DETAILS........................................................................................................................................ 1

2.0 REVISION HISTORY .............................................................................................................................................. 2

3.0 TIMELINE..............................................................................................................................................................2

4.0 TARGET AUDIENCE ...............................................................................................................................................2

5.0 REFERENCE DOCUMENTS.................................................................................................................................... 3

6.0 INTRODUCTION.....................................................................................................................................................4

7.0 TABLE OF CONTENTS............................................................................................................................................6

8.0 GENERAL DEFINITIONS.........................................................................................................................................8

8.1. SITE.....................................................................................................................................................8

8.2. FACTORY..............................................................................................................................................9

8.3. AREAS.................................................................................................................................................10

8.4. LINE....................................................................................................................................................11

8.5. RESOURCES....................................................................................................................................... 12

8.6. STOCK KEEPING UNIT (SKU).............................................................................................................. 14

8.7. BILL OF MATERIAL (BOM).................................................................................................................. 16

8.8. MASTER RECIPE................................................................................................................................ 16

8.9. PRODUCTION VERSION..................................................................................................................... 17

8.10. PRODUCTION ORDER....................................................................................................................... 18

8.11. SUB-FAMILIES.................................................................................................................................. 18

8.12. CATEGORIES AND UNITS OF MEASUREMENT.................................................................................. 19

8.13. LOT SIZE........................................................................................................................................... 20

8.14. NOMINAL SPEED.............................................................................................................................. 21

8.15. PRODUCTION VOLUME..................................................................................................................... 22

8.16. LINE TIME CLASSIFICATION............................................................................................................ 23

8.17. OVERALL EQUIPMENT EFFECTIVENESS (OEE)................................................................................ 27

8.18. LINE CAPACITY AND CAPACITY UTILISATION.................................................................................. 31

8.19. SALARIES AND WAGES.................................................................................................................... 32

8.20. LABOUR CAPACITY........................................................................................................................... 34

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9.0 MANUFACTURING STANDARDS............................................................................................................................ 35
9.1 LINE STANDARDS............................................................................................................................... 37

9.2 LABOUR STANDARDS.......................................................................................................................... 38

9.3 MATERIALS STANDARDS.................................................................................................................... 40

9.4. UTILITY STANDARDS......................................................................................................................... 43

10.0 ACTUAL VALUES OF RESOURCE CONSUMPTION................................................................................................ 48

10.1 ACTUAL............................................................................................................................................. 48

10.2 UNPLANNED NON PERFORMANCE.................................................................................................. 49

10.3 COST WATERFALL............................................................................................................................. 50

11.0 ROUTINE TO MANAGE STANDARDS.................................................................................................................... 51

12.0 GOVERNANCE / RECOMMENDED IMPLEMENTATION.......................................................................................... 53

13.0 FACTORY OPERATING SYSTEM (FOS).................................................................................................................. 54

14.0 MEASURES AND THEIR HIERARCHY................................................................................................................... 56

15.0 KEY PERFORMANCE INDICATORS (KPIS)............................................................................................................ 58

15.1 SITE CORE KPI SCORECARDS........................................................................................................... 58

15.2 SITE INFLUENCED KPI SCORECARDS............................................................................................... 75

16.0 APPENDIX.......................................................................................................................................................... 77
16.1 INTRODUCTION TO INDUSTRIAL PERFORMANCE (IP)...................................................................... 77

16.2 SUB-FAMILIES................................................................................................................................... 78

16.3 PRODUCTION LINE TECHNOLOGY (PLT) .......................................................................................... 82

16.4 SUMMARY OF FORMULAS................................................................................................................ 83

16.5 OEE LOSSES..................................................................................................................................... 85

16.6 NON VALUE ADDED ACTIVITIES........................................................................................................ 96

16.7 MATERIAL PLANNED NON PERFORMANCE (SCRAP %)................................................................... 97

16.8 UTILITY ALLOCATION LOGIC/ PUSH METHODOLOGY........................................................................ 98

16.9 ACRONYMS.......................................................................................................................................100

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8.0 GENERAL DEFINITIONS
Introduction Industrial Performance and Manufacturing Excellence are introducing some definitions which
will bring greater clarity and consistency to the way important concepts are referred to across
all Unilever Sites. This supports our ambition to have a single, common language within our
operations. Some of these definitions or concepts are already in use, others, however, have not
previously been used consistently across the organisation and some are new.

8.1 SITE
Definition A Site is a physical location with facilities, that is operated by Unilever. It is physically defined
by its tangible boundaries; e.g. “Can we put a fence around the Site?”

A single physical location is never considered as having more than one Manufacturing Site.
Sites have the following characteristics:

• Adjacent facilities are considered as one Site even if they have distinct mailing addresses

• A Unilever Manufacturing Site may:

o produce for several categories

o be defined independently from management structures: a management team can run

one or more sites and a site can have one or more management teams

o be part of a joint venture operation

o include a processing plant (e.g. Oil or Tea)

o be operated, but not owned, by Unilever

• Please note, that a physical location that is owned by Unilever but not operated by Unilever
(e.g. Unilever is not the ‘controlling mind’) is not considered to be a Site.

Examples of sites

Site 1
Corlu Ice Cream
Site 2
Corlu Foods

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8.2 FACTORY
Definition A Factory is a building with manufacturing facilities within a Site. All non-manufacturing
facilities, such as offices and utilities (areas), will be allocated to the Factories on a site.
A Factory is the unit for which production planning is executed. A Factory is identified in the
Enterprise Resource Planning (ERP) for all costing and planning purposes.

A Factory always has one or more of the following three manufacturing facilities:

• Processing facility; converting raw materials into semi-finished products;

• Production facility; converting raw and packaging materials into finished products;

• Packaging facility: converting semi-finished products into finished products.

A processing facility is usually a part of a production or packaging facility. However it is a

Factory in itself if:

1. the processing facility produces for more than one production or packaging
facility (internal or external of the manufacturing site); and

2. distinct planning and processes exist for the processing facility.

Illustration:
Port Sunlight
Unilever Factory 1
Manufacturing
Site with four
factories

Factory 2
1 2
Factory 3

Factory 4

Port Sunlight is a Unilever Manufacturing Site which has four Factories

• Two Liquid Factories
• One Solids Factory
• One Sulphonation Factory

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8.3 AREAS
Definition Areas are the physical zones in a factory where resources are consumed or stored, activities
are undertaken and inputs are transformed into outputs.

Buffers belong to the Area in which they were created (for example, ageing tanks in an Ice
Cream factory belong to the Mix Area, and not to the Filling and Packing Area.)
Illustration:
FACTORY
Exhaustive list
of all possible
Areas in a Site Services Bought
in Processing
Factory Utilities

Warehouse Building & Repairs & Repacking Filling &

Infrastructure Maintenance Packing

In-house Backward
generated Integration
Indirects Utilities

The illustration above shows all Area names in use in our business. The use of other names
or creation of other Areas is not permitted. This supports standardisation, leading to
global benchmarking.

Notes 1. A Factory Map can be created to show any entire factory as a set of Areas, without leaving
any of the factory’s activities unmapped.
2. The above Areas will be integrated with the Cost Centres Hierarchy proposed by Global
Product Costing Guidelines. The above illustration should be considered an exhaustive list
of Areas.
3. Rework may be a part of the Processing Area. Whether this rework would be classified as
a Line would depend on how it fits under the definition of a Line in section 8.4.

Illustration: Area 2 : Filling & Packing Area

Bottleneck
Example of a 1
Machine Palletising
Filling & 1
Buffer A
Machine 4
Quality
Buffer 1
Packing Area Area 1
Bottleneck
Area 3
2
Processing Warehouse
Area
Bottleneck Machine
3 2
Palletising Quality
Buffer B
Machine 5 Buffer 2
Bottleneck Machine
4 3

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8.4 LINE
Definition In physical terms, a Line consists of one or more machines, processes or tasks which together
amount to a step within the work of that Area. A Line always falls between two ‘relevant
and significant buffers’. Relevant and significant buffers can take many different forms,
but are always:

- big enough to measure and control; and

- make it possible for a Line to run independently of any other Line; and

- booked into the relevant Enterprise Resource Planning (ERP)

A Line is a production operation that may exist in any of the following Areas:

1. Processing

2. Backward integration

3. Filling & Packing

4. Repacking

A Line can include manual packing operations. It can be dedicated to the needs of a single
product or a group of products. It is defined as a Line for the purposes of production planning,
costing, manufacturing performance measurement and capacity management.

Illustration:
Lines Processing Backward Filling & Repacking
Area Integration Packing area Area

Notes 1. Buffers are not part of any Line, but of the Area that they and the Line fall within.

2. A bottleneck machine on a Line can produce only one product at a time. Therefore, only one
production order can run on the Line containing the bottleneck machine at any given time.

3. All involved transfer lines/pipes, including conveyors, are part of the Line.

4. The activities of quality inspection, and the buffer before quality inspection, are not part
of any Line. They are simply part of the Area in which the operation falls. So if, for example,
a product is palletised and then stocked for quality checks before sending it to the Finished
Product Warehouse Area, then the palletising, stocking and quality checking are not part of
the Line, but are part of the Filling and Packing Area.

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 Area 2 : Filing & Packing Area
Illustration A:
Area 1
Example of line Processing Bottleneck
Line 1
Area 3
boundaries within Area 1 Warehouse
Machine Machine Quality
an area Buffer 1
Bottleneck 1 2
2

Here’s how the Line’s boundaries are justified: Machine 1 is shared between Bottleneck 1 and
Bottleneck 2. As only one bottleneck can work at a time, only one SKU in total can be running
on the two bottlenecks at any given time. Hence, the two bottlenecks are defined within the
same Line. (Bottlenecks could be located anywhere on the Line and might not necessarily be
the first machine. Machines that are not technically bottlenecks could also create a similar
situation to that shown and would thus again be included within a single Line.)

Illustration B: Area 1 Area 2 : Filing & Packing Area

Example of line Processing
Area Line 2 Line 3 Area 3
boundaries within Warehouse
Bottleneck Machine Palletising Quality
an area Buffer A
Machine 1 Buffer 2
3 3

The line’s boundaries are justified by the following: Buffer A is relevant and significant; there-
fore the process will need to be split into two different lines.

Area 2 : Filing & Packing Area

Illustration C:
Area 1 Line 4
Example of Line Processing Area 3
boundaries in an Area Area
Palletising
Warehouse
Quality
Buffer B
Machine 2 Buffer 3

Line 5
Line 5

The Lines’ boundaries are justified by the following: Buffer B is not ‘relevant and significant,’
therefore it doesn’t divide the process into two different Lines. Palletising Machine 2 is shared
between Machine 5 and Machine 6, but both of these machines can be working simultaneous-
ly and independently on different SKUs. The single Palletising Machine 2 thus forms a com-
ponent of both Lines. Its use will be allocated to each Line on the basis of that Line’s nominal
speed, and it will be considered as two machines in ERP.

8.5 RESOURCES
Introduction Resources are materials and assets consumed within Areas to produce a certain amount of
output or to support that Area’s manufacturing activities.
Resources are classified as Pull or Push, because the drivers to manage the consumption of
these differ.

Examples People, machines, raw and packaging materials, bought-in and in-house generated utilities,
contract services, fuel, spare parts, supervision & management, etc.

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8.5.1 PULL RESOURCES
Definition Resources which are required on a Line for transformation purposes are called Pull resources.
These are the resources that are actually needed in order to deliver the manufacturing process
for which a Line exists. We can identify and measure the consumption of these resources
in relation to a unit of the output at Production Order level. Pull resources required (for
production) are defined using the following matrix:

Illustration: Pull Resources

Matrix of Areas vs. Line
Pull Resources Materials (Depreciation) Labour Utilities

Backward Line 1
Integration Line 2

Line 1
Mix Plant Line 2

Filling & Line 1

Packing Line Line 2

Since these resources are related to the output, they have to be compared against a reference
called a ‘Standard’. Standards provide the essential link between input and output. The
following ‘Manufacturing Standards’, which should be controlled in the Factory, are defined
for every Line:
1. Material Standards
2. Line Standards
3. Labour Standards
4. Utilities Standards

Notes 1. Every utility (e.g. electricity, water, air) will be calculated at a finished goods /
semi-finished goods level. This will help us to define a Master Recipe for both finished
goods and semi-finished goods. Using more educated allocation logic, deeper visibility and
understanding of utilities will be possible. As measurement capability is currently limited
we recommend beginning with the measurement of electricity and steam. Please refer to
Utility Standards (section 9.4) for further details.

2. The appropriate Pull resources should be mapped to each Area and Line on the
Factory Map.

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8.5.2 PUSH RESOURCES
Definition These are the remaining resources, which are not Pull resources but which are still required
within the physical boundaries of a Factory to produce according to Unilever standards of
safety, quality, sustainability and cost.

These resources need to be:

1. Controlled and reported;
2. Allocated to SKU’s for product costing;
3. Analysed and benchmarked through relevant and common measures.

Detailed rules on how to allocate Push resources are defined in the ‘Global Standard for
Product Costing’ document.

Examples Site security, repairs & maintenance, people and general utilities in warehouses and labs, etc.

Illustration: PULL RESOURCES PUSH RESOURCES

Perspectives for Concept Transformation Infrastructure, Services & Support
Push Vs. Pull
Resources Control Factory controlled Not always factory controlled

Where to Capture @ Production orders Consistent cost center structure

Focus Productivity/Efficiency Budget control

Reference Manufacturing standards Consistent allocation rules

Approach Bottom up Top - down (excl. R&M)

Measurement Accurate Consistent

Frequency Order- Shift- Day Monthly

Feedback Real Time (value @ standard) Closing books (value @ actual)

KPI’s Shop floor action (line/SKU/area) Corporate Benchmarking

8.6 STOCK KEEPING UNIT (SKU)

Definition A SKU is identified by the barcode Global Trade Item Number (GTIN) of the Trading Unit (TU),
irrespective of whether that trading unit is a case or a pallet.

The TU is the unit in which a particular customer places its orders. It includes repacking,
but does not include picking. This is because repacking results in a new TU for which the
customer places an order. However, picking is simply a part of preparing the order for the
customer, a general task within a distribution supply chain.

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Notes You should ensure alignment with International Standards Board (ISB), including alignment
with Global Master Data Management Team.

Illustration A: PIECES: CASES: PALLETS:

Example of a SKU

GREY

BLUE

As the customer orders this product by ‘number of cases’, there are 2 SKUs above; one for a
Grey and one for a Blue colourway of the product.

PIECES: CASES: PALLETS:

Illustration B:
Example of a SKU

GREY & BLUE

As the customer orders this product by ‘number of pallets’, and the Factory receives an order
for a standard make-up of pallet in which each contains a mix of cases of Grey and Blue
products, there are two SKUs and one Distribution Unit (DU), defined at pallet level.

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 PIECES: CASES: PALLETS:
Illustration C:
Example of a SKU

Grey
& Blue

GREY & BLUE

As the customer orders this product by ‘number of cases’, where each case contains a mix of
Grey and Blue products, there is only one new SKU, defined at case level.

8.7 BILL OF MATERIAL (BoM)

Definition A Bill of Material is a summary of the materials consumed in making a product. A BoM is
drawn up for every SKU at its final level, as well as at various intermediate levels. For example,
separate BoMs may be drawn up for finished goods and for related semi-finished goods/
backward integration products, so that distinctions may be made between final and
intermediate levels. A BoM is always product specific.

Ideally, a BoM should also exist for Repacking, also termed ‘Rectification’ when it refers to
finished goods. This is when a finished good is repacked with supplementary or replacement
packing material to create another finished good.

Multi-packing processes - assortment packing or gift packing - will also result in a new
finished good which will hence also have its own BoM.

Notes Any change in the master data of a BoM must be agreed with the Global Specifications
Steering Team. The scale and type of changes required to reach the right BoM will be different
for each category and location, due to a lack of standardisation in current master data.

8.8 MASTER RECIPE

Definition The Master Recipe of a product describes the different steps required during the production
process. This is different from the ‘recipe’ term commonly used while preparing a batch or
defining a BoM. The Master Recipe can be described in terms of manufacturing standards
such as:
• Machine hours
• Labour hours

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8.9 PRODUCTION VERSION
Definition A Production Version consists of a Bill of Material and a Master Recipe. When a given SKU has
several Bills of Material or Master Recipes, it is necessary to develop multiple manufacturing
Production Versions for that SKU.

Ideally, different Labour and Utility Standards defined in Master Recipe should also result in
different Production Versions. However for the purpose of simplification, a Production Version
needs to be created in only the following three cases:
1. Change in BoM;

2. Change in Line standards e.g. a change in Line, nominal speed or OEE;

3. Change in season, resulting in different labour requirements

Examples In each of the following situations, for the same product, different Production Versions should
be created, so that there is a version which accurately details the way that the product is
produced in each case.

• A given product can be manufactured with liquid milk or solid milk. The composition is the
same but the form of the material is different.

• A given product can be manufactured on different Lines or on a given Line with various
operating set-ups. (e.g. When a Line is composed of machines occupying a position in
parallel with other machines, the Line might have several operating set-ups corresponding
to different machine combinations.)

• In case of ‘seasonality’, a given product might have different Line or Labour Standards. (e.g.
Different set up in an ice cream Line depending on the season; or the number of people
employed on a Line is different during on-season and off-season.)

Production Version 01 Production Version 02 Production Version 03

Illustration: - Line A: Set up 1 - - Line A: Set up 1 - - Line A: Set up 2 -
Illustration of
Production Version
of Product A

Production Version 04 KEY

- Line B - Let us consider Product ‘A’. This Product will have a
Machine change in a Production Version when:

i. The BoM changes e.g. From Production Version 01

BoM 1 to 02
(without rework) i. The Line set up or line speed changes e.g. From
Production Version 01 to 03
ii. The Line itself changes e.g. From Production Version 01
BoM 2 (with
to 04
rework)

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17 The Evolution of Excellence
Notes 1. Set up refers to the change in machine configuration in the above illustration.

2. A change in any of the three parameters above can result in either a new Production
Version replacing an existing Production Version or a new Production Version co-existing
with an earlier Production Version.

3. Every material on a BoM has a specification sheet. In the case that a material with a
different specification sheet is used during production for any reason at all, a Quality
Deviation has to be recorded. If and when a new specification sheet is adopted for regular
use, then a change to the BoM must be initiated.

4. As part of the Governance, R&D defines whether a change in Bill of Material results in an
alternative BoM (and therefore a different Production Version) or in the creation of a
different SKU code itself.

8.10 PRODUCTION ORDER

Definition A Production Order is a request from a planner for a given quantity of semi-finished or finished
product to be produced in a certain time, using a given Production Version. Production Orders
should be created for every Line producing either a semi-finished product or a finished
product, and define the amount of Resources which should be consumed.

A Production Order specifies the use of a particular Production Version, and so a Line cannot
fulfil two Production Orders at the same time. If a Line is found to have more than one
Production Order running on it, then the Line should be redefined so as to ensure that only
one Production Order runs on a given Line at any time. A Production Order is always planned
and launched on a Line, rather than at machine level. Closing and confirming Production
Orders within 24 hours is best practise to facilitate the receipt of goods, time confirmations,
daily performance review etc.
Notes A semi-finished product and finished product are referred to as HALB and FERT in
SAP respectively
Illustration: Line 2
Three Production Line 1 Machine Machine
Orders, to produce
Machine Machine Machine Buffer Production order #2: Product B
given volumes of Line 3
Production order #1: Product A
Products B and C, Machine Machine
each incorporating
Production order #3: Product C
Product A

8.11 SUB-FAMILIES
Definition For consolidation purposes at a Group level, we need to be able to group Lines into a
classification defined by the Categories. We use the name Sub-Families to describe
these groupings of Lines. For example, if we have three Lines that produce ice cream cone
components, then the three lines can be grouped together as the ‘Cones Sub-Family’.

Notes Details of the Sub-Families for all categories can be found in the Appendix 16.2.

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8.12 CATEGORIES AND UNITS OF MEASUREMENT
Definition For all reporting, aggregation and consolidation purpose at Unilever level, the ‘ton (liton)’ is the
obligatory unit of measurement, irrespective of the category. Adherence to this is critical, as
Unilever has to report its results to a number of external stakeholders.

In the ice-cream sub-category, ‘litons’ is reported as ‘tons’, ignoring the question of density.
Categories which use ‘pieces’ as their conventional unit convert ‘pieces’ to ‘tons’, using the
Declared Weight of the SKU. Hence, the resultant unit is still reported in ‘tons (litons)’.

Formula This formula enables the calculation of ‘tons’ from ‘pieces’ for the purposes of reporting and
aggregating Unilever results.

(Production Volume [ton] =Σ (Production Volume [pieces]

All SKU’s
SKU)(Declared Weight SKU)

Declared Weight refers to the Quantity declared on the pack. Refer to Material Standards for
the link between this and Zero Base in the Bill of Material.

For all reporting, aggregation and consolidation purpose at sub-category level, the following
table summarises the Units of Measurement. The following table is also used for making
Manufacturing Standards (see section 9.0).

Illustration:
Categories & Units
Unilever Reporting
Tons/Liton is the common unit of measurement for consolidation
of Measure
at Unilever level for all external purposes

Application Within Subcategories

Process Area Filling & Packaging

Area

For Capacity and

Volume Tons Refer below

For Line & Labour

Tons Cases/’000 units
Standards

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 Category Sub Category UOM
DRESSINGS TONS
SAVOURY TONS
FOODS
SPREADS TONS
OTHER FOODS TONS

ICE CREAM LITONS

REFRESHMENTS SOY BEVERAGES TONS

TEA ‘000 UNITS

LAUNDRY TONS
HOME CARE
HOUSEHOLD CARE TONS

DEODORANTS & FRAGRANCES ‘000 UNITS

HAIR CARE TONS

PERSONAL CARE ORAL CARE TONS
TONS
SKIN CARE (Including colours)
(‘000 UNITS)

SKIN CLEANSING TONS

WATER WATER ‘000 UNITS

Notes All the conversion factors for Pallets to Cases to Pieces to Tons/Litons form part of the master
data and are included in Excel templates supporting this document.

8.13 LOT SIZE

Definition A Lot Size refers to the quantity of product ordered from the shop floor as a standard unit of
production. This is also called an Order Quantity. The Lot Size is used in manufacturing, costing
and planning.

Ideally an optimum Lot Size should be calculated (commonly known as an Economic Order
Quantity). This is the optimum order quantity that a company should hold in its inventory given
a set cost of production, demand rate and other variables. This minimises variable
inventory costs.

A Production Order should be for a multiple of a Lot Size. In the absence of an Economic Order
Quantity, the most frequently used order quantity, or the minimum order quantity, should be
used. Generally, the planner and Manufacturing will agree, based on Lot Size, the production
batch configuration.

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Example Suppose there were five Production Orders for a particular SKU over the past year. The five
orders, in cases, were:
1. 2000
2. 2000
3. 4000
4. 2000

5. 6000

The most frequently ordered quantity and the minimum order quantity were 2000 cases, and so
the Lot Size is considered as 2000 cases. However, as you can see with orders 3 and 5, any
given Production Order can be a multiple of the Lot Size.

8.14 NOMINAL SPEED

Definition The Nominal Speed is a reference standard value which is used in several measures (OEE,
Capacity, etc.), standards (Line & Labour) and Costing & Planning.

The Nominal Speed is the highest sustainably achievable speed at which a given product can
be manufactured on a given line at perfect efficiency and with no losses, safeguarding all
Quality and Safety standards and attainable for the corresponding Lot Size.

To define the Nominal Speed, the supplier has to be consulted as the first point of reference.
The Nominal Speed must then be agreed with category experts and SC capabilities.

When commissioning a new Line, the Nominal Speed should be the speed defined in the
Capital Expenditure (Capex) proposal.

The Nominal Speed must be revised if changes or modifications occur to the equipment or the
product being produced e.g. Kaizens. (Refer to section 11.0, Routine To Manage Standards,
for details.)

8.14.1 BOTTLENECK & NOMINAL LINE SPEED

Definition A Bottleneck is the slowest machine/machines or process/processes that limits the production
of a Line, reducing its Nominal Speed.

The Nominal Speed of the Line is limited to the Nominal Speed of the Bottleneck
machine/process.

Comments Maximising the Bottleneck speed enables an increase in maximum capacity and a reduction
in or avoidance of additional investment. Operators should be aware which machine is the
Bottleneck and that the performance of this machine is critical to line productivity. A Bottleneck
must be identified for each Line, each product (or group of similar products) and each
Production Version. For any given Line there can be only one Bottleneck.

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Illustration:
Packing Line;
Nominal Speed and
Bottleneck

Notes If improvement activities increase the nominal speed of the bottleneck, the bottleneck may
switch to a different machine or process.

8.15 PRODUCTION VOLUME

Definition
The Production Volume is the quantity of a product produced in a given amount of time in a
specific Area in the factory.

• The quantity is the magnitude of the measurement unit as defined above in section 8.12
‘Categories and Units of Measurement’.

• The time is the frame of reference, e.g. shift, day, week, month, quarter or year, depending
on the reporting requirements.

• The nature of an Area is defined above in section 8.3 ‘Areas’. The Areas under consideration
when determining Production Volume are: Processing, Backward Integration, Filling &
Packing and Repacking.

• The product is anything resulting from partial or full transformation of materials (raw
materials/packing materials). The products under consideration when determining
Production Volume are the outputs of the Areas defined above e.g. finished products or
semi-finished products.

Once we have established a Production Volume for each Area defined above, these can be
aggregated to obtain a Production Volume for the Factory.

The Production Volume of the Factory is thus the quantity of product leaving the Factory in the
given amount of time. Volumes of different forms of product, such as semi-finished goods and
finished goods, cannot usually be added together, but in the example that follows, we will
simply add them, assuming they are all leaving the Factory boundary.

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 Studying the illustration will show how to ensure volumes are not double counted.

Illustration: SUBCONTRACTED OR SOLD / TRANSFERRED TO OTHER SITES

Production Volume
example
5 Tons 10 Tons
Factory

50 Tons
PROCESSING REPACKING
70 Tons 100 Tons 50 Tons
BACKWARD FILLING &
INTEGRATION PACKING

10 Tons 150 Tons

Production Volume = Production Volume = Production Volume = Production Volume =

70 + 10 + 5 = 85 Tons 10 + 100 = 110 Tons 50 + 150 = 200 Tons 50 Tons

Factory Production Volume =

5 + 10 + 150 + 50 = 215 Tons

STOCK TRANSFER VOLUME

Backward Integration (BWI) transfer 5 tons
Semi Finished Goods (SFG) transfer 10 tons
Finished Goods (FG) Transfer 150 tons
Repacked Product Transfer 50 tons

Notes
It’s important to ensure you do not double count quantities when calculating Production
Volume.

8.16 LINE TIME CLASSIFICATION

Definition In order to consider accurately the amount of time consumed by a Line, a suitable way to
classify time is needed. This classification has to allow sufficient visibility, consistency and
accountability to be usable for manufacturing performance management, planning, costing
and standard capacity calculation methods.

There are four types of time losses a Line can undergo:

1. Legal losses:

These occur when a machine or Line is unable to produce for legal/statutory/regulatory

reasons. Such losses are outside of Unilever’s control as they result from, and can usually only
be resolved under, the legal jurisdiction of the country in which the Site housing the machine
or Line is located.

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 2. Unutilised Capacity losses:

These are losses incurred when a Line is underutilised or idle; e.g. when it is available for
production. An exception to this definition is while an Equipment/Process Trial is being carried
out, as an Unutilised Capacity loss is then experienced though an activity is being performed
on the machine. The Factory Director and his external or internal business partners are
responsible for the management of this loss.

Any decision not to produce will be based on logical factors such as high costs, poor return on
investment, business planning or other pre-determined considerations.

Unutilised Capacity losses should be considered thoroughly in a Capacity Expenditure Proposal

before any new capacity investment is approved.

3. Process Driven losses:

These occur when a Line is intentionally stopped to complete certain activities on a machine
or Line. While these activities are being carried out, the Line is not able to produce. These
losses have a shared responsibility (e.g. manufacturing, planning and engineering are all
functions which may share the responsibility).

It is necessary to create standards for each of these losses, because the duration of the losses
will be dependent on the portfolio or the mix of products produced on the Line in question.
This means that even if a machine is running for long periods of time, the extent of these
losses should be largely consistent. For this reason, it’s best to estimate Process Driven losses
on machines / Lines on the basis of the mix of products, rather than on the basis of a
percentage derived from the machine or Line’s history. Please refer to section 8.17.2 Shared
Performance (SP) for further details.

4. Manufacturing Performance losses:

This is when a Line unexpectedly stops while it is intended to be in production under a

launched Production Order. These losses are mostly the responsibility of manufacturing, but
there can be exceptions.

The magnitude of these losses will mostly depend on the size of the Production Order and the
uptime of the machine e.g. the length of time for which the machine has to run. Hence, if the
machine has to run for long periods of time then there will be more hours of these losses.

It is thus best to estimate these losses as a percentage, taking historical data from existing
machines or Lines as a basis. Please refer to section 8.17.2 Manufacturing and Shared
Performance for futher details.

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Illustration:
Capacity Utilisation calculations
Time losses
TOTAL TIME
TOP DOWN

AVAILABLE TIME

AVAILABLE LOADING TIME

Unutilised Legal
LOADING TIME Capacity losses
losses
Idle
BOTTOM UP

(except
OPERATING TIME Process Time Idle Time)
Driven
Manufacturing
VALUE OPERATING TIME Performance losses
losses

OEE calculations

Notes This Time Classification is valid for calculations at annual, quarterly, monthly, weekly, daily and
shift level. Only the duration of total time and the losses will change as the time frame varies.

Formula Total Time (TT): The absolute number of hours available in a year of 365 days except for leap
years (366 days per year)
days hours
Total Time (TT) = 365 year x 24 day = 8,760 h

Formula Available Time (AT): The maximum time for which Unilever could utilise the Line for
production during the Total Time. This excludes only the time for which Unilever has no
control (Legal losses). This time is highly relevant for Capital Expenditure decisions. Since
Unutilised Capacity losses can be reduced over a few months, the Available Time represents
time considered as available over the long term. Refer to the Capacity definition, section
8.18, for further details.
Available Time (AT) = TT - Legal losses
Formula Available Loading Time (ALT): The maximum time for which Unilever could utilise the Line
for production over the short term. This time is used by the production planner for preparing
weekly production plans. Since Manufacturing Performance and Process Driven losses can
be reduced in a few weeks, Available Loading Time represents time considered as utilisable
for production in the short term. Refer to Capacity definition, section 8.18, for further details.
Available Loading Time (ALT)
= AT - Unutilised Capacity losses (except Idle Time)

Formula Value Operating Time (VOT): The minimum amount of time that will be consumed by the Line
for a given Production Plan under ideal conditions (operating at Nominal Speed and without
any loss of any kind). It is calculated as:
Good Volume
Value Operating Time (VOT) =
Nominal Speed

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Formula Operating Time (OT): The time for which the machine is operating including both uptime
(VOT) and failure time (Manufacturing Performance losses).
Operating Time (OT) = VOT + Manufacturing Performance losses

Formula Loading Time: The time for which the machine is loaded, including uptime (VOT), failure time
(Manufacturing Performance losses) and activity time (Process Driven losses).

Loading Time (LT) = OT + Process Driven losses

Formula Idle Time: The time for which the machine is not loaded because of lack of demand or capacity
being more than demand.
Idle Time = ALT - LT
Notes Good Volume refers to the quality-cleared volume produced at the end of a Line (refer to
definition of Line above). This volume might be different from the Factory Volume (defined
above) since certain quality analyses, like microbiological analysis, take a few days after the
Production Order has been closed on the Line. The output of such quality analyses will not be
included in the Good Volume or, hence, OEE.

Illustration:
Line Time 120 600
Classification 1100
example
8760 900
8640
8040 1400
6940
6040
4640

Total Legal Available Unutilised Available Idle Loading Process Operating Manuf. Value
Time Losses Time Capacity Loading Time Time Driven Time Perform. Operating
Losses Time Losses Losses Time
(excl. Idle
Time)

Top down calculation:

days hours
Total Time (TT) = 365 year
x 24 day
= 8,760 h
Legal losses = 5 days = 5 * 24 h = 120 h
Available Time (AT) = TT - Legal losses = 8, 760 h - 120 h = 8, 640 h
Unutilised Capacity losses (except Idle Time)= 25 days = 25 * 24 h = 600 h

Available Loading Time (ALT)

= AT - Unutilised Capacity losses (except Idle Time)
= 8, 640h - 600h = 8, 040h

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 Bottom Up calculation:

Good Volume 6,960 tons

Value Operating Time (VOT) = = = 4, 640h
Nominal Speed 1.5 tons/h

Manufacturing Performance losses = 1, 400h

Operating Time (OT) = VOT + Manufacturing Performance losses = 4, 640h + 1, 400h = 6, 040h

Process Driven losses = 900h

Loading Time (LT) = OT + Process Driven losses = 6, 040h + 900h = 6, 940h

Idle Time = ALT - LT = 8, 040h - 6, 940h = 1,100h

8.17 OVERALL EQUIPMENT EFFECTIVENESS (OEE)

8.17.1 DEFINITION
Definition Overall Equipment Effectiveness (OEE) measures the operational performance of the
production line taking into account Manufacturing Performance losses and Process Driven
losses. It reflects how effectively the Loading Time is being used to produce Good Volume.
(Please refer to the Time Classification section, 8.16, for more details on the Loading Time.)

As a minimum, the OEE measure should be calculated for every Production Order. It is also
recommended not to ignore the value of this measure in the management routine of the
factory (per shift/day/week etc).
Formula The standard method of calculating OEE considers the actual Good Volume at the end of Line,
as it was confirmed at the end of the Production Order, along with the required Loading Time:

Value Operating Time

Overall Equipment Effectiveness (OEE) =
Loading Time
Notes 1. In order to improve OEE, we need to measure Manufacturing Performance losses and
Process Driven losses during the Production Order. This is done using either a manual or
automatic loss measuring system, depending on the capability of a given Factory.

2. Ideally, the OEE obtained using the formula, and that calculated when the procedure
in Note 1 is applied, should be the same. If not, then this is because of unaccounted (or
inaccurate assessment of) losses in the loss-measuring system. Unaccounted losses
should amount to less than 2% of Loading Time (based on experience).

3. The recording of Manufacturing Performance losses and Process Driven losses by the
loss-measuring system should be made at the Bottleneck machine (e.g. if the Labeller
stopped for 7 min, while the Bottleneck stopped for only 5 min, a loss of 5 min would be
booked for the Line).

4. Material losses, manpower losses and energy losses resulting in OEE losses are captured
for the entire Line at the Bottleneck machine. They are recorded, respectively, in units
of kilograms, man hours and kilowatt hours, and then converted to time losses such as
Quality Defect time loss, Shortage of Operators and Process Failure time, respectively.

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 Start time: Finish time:
Illustration: 06:00 22:00

OEE calculation Loading Time = 16 hours

example
Manufacturing
Process Driven Process Driven
Performance
losses Value operating Time losses Value operating Time losses
20 mins 20 mins
80 mins

The Production Order above generated 50kg of waste and 1300kg of Good Volume at Nominal speed 100kg/h
Quality defect time loss = 50kg/100kg/h = 30mins

Process Driven losses = 20 + 20 = 40mins

manufacturing Performance losses = 80 + 30 = 110mins
Total OEE losses = 150mins

Below are two methods to calculate OEE given the data provided; only one method is correct

Loading Time = 16 hours Loading Time = 16 hours

Value
Operating =
Time
1300kg
100kg/hr
= 13 hrs
x Value
Operating = 16hrs – 150 mins
Time
= 13.5hrs

13hrs 13.5hrs
OEE = = 81.3% OEE = = 84.3%*
16hrs 16hrs

*3% unaccountable loss – improve loss capturing system

Notes Note 1: The second of the two ways of calculating OEE is wrong, because it subtracts OEE
losses from Loading Time to arrive at Value Operating Time. However, Value Operating Time
should be calculated directly from Good Volume and Nominal Speed. Doing the calculation this
way ensures that unaccountable loss does not affect OEE.

Note 2: The difference in OEE calculation between the two methods described above
is due to the Unaccountable Losses. These losses result as incomplete and inaccurate
loss capturing methodology. Improvements in the loss capturing system will reduce the
Unaccountable Losses.

8.17.2 MANUFACTURING AND SHARED PERFORMANCE

Introduction In order to keep track of the different losses and to manage them properly, two additional
measures have been introduced in addition to OEE. These will help to segregate responsibility
and add more granularity for OEE improvement.

Definition Manufacturing Performance (MP): This is a measure of Manufacturing Performance losses,

and is the sole responsibility of the Manufacturing department, since most of the losses are
under their control.

Value Operating Time

Formula Manufacturing Performance (MP) =
Operating Time

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Definition Shared Performance (SP): This is a measure of Process Driven losses, and is shared among
Manufacturing, Planning, Maintenance, Technology Innovation, etc.

Operating Time
Formula Shared Performance (SP) =
Loading Time

Notes 1. In theory, a calculation of OEE can be made by multiplying MP and SP together.

VOT OT VOT
Overall Equipment Effectiveness (OEE) = MP X SP = X =
OT LT LT
2. The MP of the previous year can be used to estimate the MP of following year, by ‘risk and
time weighing’ focused improvement estimates into the historical MP. This MP can then be
used to estimate OT for the following year.

3. The SP of the following year can be estimated by first estimating Process Driven losses
for the business plan volumes of the following year. Then add these losses to the
estimated OT from note 2 to estimate LT.

4. Aggregation method of OEE and all Line Performance Measures should be based on
Machine hours, not Volume.

Σ VOTlines
OEE Factory =
Σ LTlines

8.17.3 MANAGING MANUFACTURING PERFORMANCE & TIME LOSSES

Introduction Each of the WCM (World Class Manufacturing) defined losses is part of one (and only one) of
the Time Classification Cases below. Both WCM and Managing Manufacturing Performance
losses are shown here. The two illustrations describe precisely the same set of losses.

Illustration A: Past / Current MMP Code Loss

Managing Legal Restriction Legal losses 1. External/ Legal (Holidays & Maintenance)
Manufacturing 2. Bank Holidays
Performance 3. Shift Pattern
Time Losses Unutilised 4. Idle Time
Shutdown 5. Planned Stoppage Time
Capacity losses
6. Shortage of Utility (Force Majeure)
7. Equipment/ Process Trial & Scheduled Modification Time

8. Maintenance Time
9. Meal/ Tea Break
Process Driven 10. Cleaning & Sanitation time
losses 11. Changeover time
12. Preparatory & close out time losses (previously start up & ramp down)
Availability
13. Breakdown & equipment failure time
14. Process failure time
15. Shortage of operators (previously line organisation)
16. Material availability at line side loss (previously logistics loss)
17. Cutting blade change
Manufacturing
Performance 18. Minor stoppage & idling losses (abnormal operation of sensors,
Performance losses blockage of work on chutes, etc)
19. Speed loss

20. Quality defect time loss

Quality
21. Measurement & adjustment

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 # Loss Loss Reason # Loss Loss Reason
Illustration B: Weekends Cleaning & Sanitation
3 Shift Pattern 10 Routine cleaning
Reason to Time

Loss map 4 Idle Time No Production Orders 10

Cleaning & Sanitation
Unexpected sanitization
Time

Known Bottleneck in
4 Idle Time 11 Changeover Time Format changeover
processing area

4 Idle Time Failure to plan the line 11 Changeover Time Product changeover

Breakdown & Known lack of spare parts

5 Planned Stoppage Time Moving teams to other lines 13
equipment failure time (if occurs during breakdown)

Breakdown & Failure to provide spare parts

5 Planned Stoppage Time Planned trainings 13
equipment failure time (if occurs during breakdown)

5 Planned Stoppage Time Planned meetings 14 Process failure time Utility problem

Shortage of operators
Moving teams to activities out
5 Planned Stoppage Time 15 (previously line Accidents
of line
organisation)
Shortage of operators
5 Planned Stoppage Time Known shortage of operators 15 (previously line Unexpected lack of operators
organisation)
Material availability at
Shortage of Utility Lack of raw or packaging
6 Shortage of utilities 16 line side loss
(Force Majeure) materials in the site
(previously logistic loss)
Equipment / Process Material availability at
Lack of raw or packaging
7 Trial & Scheduled Planned modifications 16 line side loss
materials on the line
Modification Time (previously logistic loss)
Equipment / Process Material availability at
Failure to provide raw or
7 Trial & Scheduled Planned trials 16 line side loss
packaging materials
Modification Time (previously logistic loss)
Equipment / Process Material availability at
Lack of product from
7 Trial & Scheduled Scheduled modifications 16 line side loss
processing area
Modification Time (previously logistic loss)

8 Maintenance Time Planned maintenance 17 Cutting blade change Routine activities

Minor stoppage & idling

8 Maintenance Time Planned lubrication 18 Minor stoppages
losses

Failure to provide spare parts

8 Maintenance Time (if occurs during 20 Quality defect time loss Quality problem with product
maintenance)

Cleaning & Sanitation Planned sanitization Quality problem with

10 20 Quality defect time loss
Time packaging

Cleaning & Sanitation

10 Planned cleaning 20 Quality defect time loss Rework
Time

Cleaning & Sanitation Measurement &

10 Routine sanitization 21 Machine adjustment
Time adjustment

Notes Please refer to the Appendix 16.5 for all losses and their description.

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8.18 LINE CAPACITY AND CAPACITY UTILISATION
Introduction Factories play an essential role in supporting the Compass ambition in driving sustainable,
profitable growth by ensuring optimal use of capacity and the availability of appropriate
capacity. The first step should always be to maximise capacity utilisation before making
further investment.

To minimise Capex investment, we need to understand the unused capacity in our Factories
so we can increase Capacity Untilisation. Unused capacity is a hidden loss with a cost
associated to it. Highlighting this loss will increase visibility in the business and increase our
Return on Assets (ROA). Understanding the capacity of Factory resources will facilitate their
effective utilisation.

Capacity and its Utilisation is used in making strategic, tactical and operational decisions
regarding:

• Capital investments in new and upgraded manufacturing assets and processes;

• Rationalisation, consolidation and realignment of manufacturing operations;

• Production sourcing and allocation across Unilever factories and out-sourced

alternatives;

• Loading of resources to meet demand.

There are three measures by which Capacity and Capacity Utilisation are analysed. These are
defined below:

Definition Asset Utilisation: A measure used to understand the sweating of the assets e.g. the return on
assets. It summarizes all time losses captured on a Line.

Unconstrained Capacity: A long term measure which is relevant for strategic purposes and
capital expenditure process. It is a measure of Unutilised Capacity losses.

Constrained Capacity Utilisation: A short term measure which is relevant for scheduling Lines
on a week to month basis. It is a measure of Idle Time loss.

Please note: The formulas for calculating Unconstrained and Constrained Capacity are product
mix and volume dependent.
∑
SKU Value Operating Time
Formula Asset Utilisation =
Total Time
∑
SKU Loading Time
Formula Unconstrained Capacity Utilisation =
Available Time

∑
SKU Loading Time
Formula Constrained Capacity Utilisation =
Available Loading Time

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Formula Corresponding to the Unconstrained Capacity Utilisation measure, there is a measure of
Unconstrained Capacity:

Unconstrained Capacity = Available Time X Average Throughput*

Formula Corresponding to the Constrained Capacity Utilisation measure, there is a measure of

Constrained Capacity:

Constrained Capacity = Available Loading Time X Average Throughput*

∑
SKU Volume
*Average Throughput =
∑
SKU Loading Time

8.19 SALARIES AND WAGES

Introduction In many of our operations, Salaries & Wages make up a significant proportion of the product
cost. It is important that the Salaries & Wages are correctly budgeted in the factory, so that
accurate costs are assigned to products.

This section defines the various resources within Salaries & Wages with a focus on the ‘Pull
Labour’ required for labour Standards.

Illustration:
Salaries & wages Salaries & Wages

Labour
Supervision
and
Management
Pull
Push
Other Backward Filling &
Support Processing Repacking
Integration Area Packing Area
Functions Area Area

8.19.1 SUPERVISION AND MANAGEMENT/OTHER SUPPORT FUNCTIONS

Definition A resource whose hours are neither budgeted nor recorded at the level of individual tasks,
jobs, activities, Production Orders, Work Orders etc. This includes managers, supervisors &
administrative staff. These people form the management side, and support functions such as
buying and planning.

8.19.2 LABOUR
Introduction Labour is a resource which refers to all blue collar FTEs. They are not part of contracted
external third parties, nor Administrative Staff or Supervision & Management. However, where
external or contracted personnel are employed on the Line, they are considered part of the
Standard. Labour hours are classified as Push and Pull resources.

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Definition Push Labour
This term describes the labour used for activities required in Push Areas, such as warehouses,
maintenance, etc. Examples include:

• a blue collar FTE reporting into the warehouse;

• a blue collar technician reporting into Engineering;

• a blue collar quality operator reporting into a Quality Lab

Pull Labour
This describes those working hours of a person which are budgeted and recorded according
to a Labour Standard (see definition of Labour Standard, section 9.2 below) at the level of
individual tasks, jobs, activities, Production Orders, etc.

This budgeting and recording is required for costing and statistical purposes. The Pull Labour
corresponds to the labour required for production activities for each Line. It is necessary,
however, for this labour to be reported individually in Areas. Therefore, Pull Labour is reported
for each of:

• Processing;

• Backward Integration;

• Filling & Packing;

• Repacking.

There are two types of Pull Labour

• Crew is Pull Labour directly and fully dedicated to any Line at a given point in time.
Production cannot be undertaken without these positions being filled. The Crew has to be
established for each Production Version.

• Shared Crew is Pull Labour that supports the process but is not dedicated to a particular
Line at a given point in time. It may include line leaders, relief, changeover support, line
servicing (start up, cleaning, meal breaks) and monitoring, as long as they are shared
amongst several Lines. The Shared Crew has to be established for each Production Version
by distributing the FTEs between the Lines on which they are working.

Notes
1. Operators of machines defined as part of the Line are counted as Pull Labour, even
though they may not report into the Line. For example, if palletising is part of the Filling
and Packing Line, then the operator working the palletising machine will be counted as Pull
Labour even though he reports into warehousing and not manufacturing. (Palletising is the
only exception of this kind.)

2. Crew or Shared Crew working on process-driven losses and not assigned to a particular
Line will not be considered as part of the labour Standard if they are reporting into, for
example, engineering.

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8.20 LABOUR CAPACITY
Definition The total hours of permanent Pull Labour on a Line or Area is defined as the Labour Capacity
of that Line or Area. It is the maximum total hours Pull Labour in that Line or Area can work in
the short to medium term, e.g. the current year.

When calculating Labour Capacity, only the quantity of permanent personnel and the
contract of employment of those personnel are considered in the calculation. The permanent
personnel taken into consideration are the Crew and Shared Crew on each line of the Pull Area
who are fixed people on the payroll of the company.

Labour Capacity is useful for costing and planning, since it gives visibility of manhours
available.

Formula Labour Capacity

= Contracted number of man-hours of permanent people

Notes “Contracted” refers to Contract of Employment

Temporary personnel hired to support production as a result of seasonality is not part of the
labour capacity calculation.

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9.0 MANUFACTURING STANDARDS
Introduction Manufacturing Standards are reference values defined for all pull resources consumed in a
line. These are necessary for:

• Production Planning and Scheduling. Establishing the precise quantity that can be
delivered within a timeline, using the appropriate quantity of resources, to satisfy the
requirements of the business.

• Costing (budgeting, controlling and reporting). Providing an accurate baseline of our cost,
and ensuring financial decisions are based on accurate information.

• Understanding Plan (quantities and value) vs. Actual (quantities and value) and then driving
operational performance improvement.

Illustration:
WCM & Manufacturing
WCM Losses
Manufacturing Standards
Standards
Time / Equipment Line
losses standards

Manpower / Labour
labour losses standards

Material
Material losses
standards

Utility
Energy losses
standards

Definition In order to understand Manufacturing Standards, the following definitions are needed:

• Design: A base line measurement that does not include any type of losses. The Design
assumes resource consumption at 100% efficiency (“perfect world”)

• Standard: This is the expected level that will be achieved or delivered. This value (generally
in quantity) is used for costing, planning and scheduling purposes. It should be set as a
realistic, achievable value that can be maintained for a sustained period.

The Standard is a combination of the key operating data for a specific Line, product and
Production Version. It combines the Design with planned non-performance. This value will
contribute to budgeting and transfer price calculations, but will not establish the total cost
as Unused Capacity cost and Push cost will also need to be considered.

• Planned Non Performance: This refers to expected losses, wastages or inefficiencies, and
takes into consideration planned improvements or targets which are risk and time weighted.
This output is used for setting manufacturing targets, planning and finance, etc.

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Formula Design + Planned Non Performance = Standard

Illustration:
Loss 1
Design + Planned
Unit of Measure

Loss 2
Non Performance Loss …
e.g. hours

= Standard

Planned
Design Standard
Non Performance

Definition Capacity: Capacity is defined only for those pull resources which are capacity constrained
e.g. those whose management and expansion is Unilever’s responsibility. For example, Line
and labour are generally capacity constrained resources, unless they are outsourced to a co-
packer. Materials are not generally capacity constrained resources, however, since we buy
these from our vendors. Bought-in utilities, such as electricity purchased from the grid, are
not constrained, but in-house generated utilities like steam are capacity constrained. However
(and as discussed previously), since utilities are treated financially as push resources, we do
not define any Capacity for them.

Understanding the Capacity of factory resources ensures that these resources can be utilised
effectively. Capacity Utilisation is applied at strategic, tactical and operational levels in order to
make decisions regarding:

• Capital investments in new and upgraded manufacturing assets and processes;

• Rationalisation, consolidation and realignment of manufacturing operations;

• Production sourcing and allocation across Unilever factories and out-sourcing

alternatives;

• Loading of resources to meet demand;

• Optimisation of Capacity Utilisation through improvements to systems and operating

performance.

Planned Unused Capacity: Understanding Factory capabilities is a pre-requisite for being able
to make strategic and operational decisions regarding investment in, and utilisation of,
Capacity. As these decisions can impact business results and performance across the
supply chain, it is essential that we establish clear definitions and common approaches.
Planned Unused Capacity is calculated only for capacity constrained resources.

Formula Planned Unused Capacity = Capacity - Standard

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36 The Evolution of Excellence
Illustration:
Planned
Unit of Measure

unused
e.g. hours

Capacity

Planned Planned
Design Standard Capacity
Non Performance Unused Capacity

Notes Capacity should be calculated only for the restricted Pull resources for example, Capacity for
the Line is 365 days (8,760 hours).

9.1 LINE STANDARDS

Introduction Each Line requires information that describes its typical reliable operation. Line Standards are
a collection of key operating data (defined below) for a specific master recipe of a SKU. They
provide the basic inputs for production planning & scheduling, costing and performance
measurement. Key operating data for line standards are:

Definition Design. This is the minimum machine hours needed to complete a Production Order (or Lot
Size), assuming no manufacturing and process driven losses.

Formula Design Line Hours = Value Operating Time (VOT)

Definition Standard: This is the standard number of machine hours needed to complete a Production
Order. In other words this refers to Loading Time

Design Line Hours

Formula Standard Line Hours = + Process Driven Losses
Manufacturing Performance %
If details of Manufacturing Performance % and Process Driven losses are not available in the
first year, you should instead use:

Design Line Hours

Standard Line Hours = = Loading Time
OEE

Definition Planned Non Performance: This represents the OEE losses, including expected focus
improvement activities for the given year.

Formula Planned Non Performance Machine hours = Standard - Design = LT - VOT

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37 The Evolution of Excellence
Illustration: Loss 1
Line Loss 2
Standards Loss …

Design Line Planned Standard Line

hours Non Performance hours

The losses shown in the illustration above refer to the OEE losses.

Definition Planned Unused Capacity: This is the Resource availability that has not been consumed either
by the Design or by Planned Non Performance. Planned Unused Capacity is calculated at
a monthly and yearly level, and is the total available Resource Quantity of a Site minus the
resource used by the Standard.

Formula Planned Unused Capacity = Capacity - Standard = Total Time - Loading Time

Illustration:
Planned Unused
Line Capacity

Design Line Planned Standard Line Planned Line

hours Non Performance Hours Unused Line Capacity
Capacity

9.2 LABOUR STANDARDS

Introduction Labour Standards are defined as the labour hours required to produce a Lot Size of a product
using a given Production Version. They are established for Pull Labour and provide basic data
for production planning & scheduling and costing.
Key operating data for Labour Standards are:

Definition Design: This is the minimum labour hours required to complete a Production Order (or Lot
Size), assuming no losses. ‘Minimum labour hours’ does not refer to an ideal or hypothetical
manpower configuration, but to the current manpower, working for the minimum time, as
calculated using the Value Operating Time.

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38 The Evolution of Excellence
Formula Design Labour Hours = Design Line Hours X (pull labour per shift)

Definition Standard: This is the number of labour hours required to complete a Production Order,
including the OEE losses.

Design Labour Hours

Standard Labour Hours =
Formula
Manufacturing Performance %
+ Process Driven Losses (Labour Hours)
Where

Process Driven Losses (Labour hours) = Process driven Losses (Line hours) X Pull labour
required for these losses

If details of Manufacturing Performance % and Process Driven losses (labour hours) are not
available in the first year, you should use:
Design Labour Hours
Formula Standard Labour Hours =
OEE

Formula Planned Non performance labour hours = Standard labour hours - Design labour hours

Illustration: Loss 1
Labour Standards Loss 2
Loss …

Design Labour Planned Standard labour

hours Non Performance hours

The losses shown in the illustration above refer to the labour losses related to OEE losses.

Definition Planned Unused Capacity: These are the available labour hours that were not consumed
either by the Design or by Planned Non Performance.

Formula Planned Unused Capacity Labour Hours= Labour Capacity -Standard Labour Hours

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Illustration:
Planned Unused
Labour Capacity

Design Labour Planned Standard Planned Labour

hours Non Performance Labour Hours Unused labour Capacity
Capacity

Notes A Line may utilise either permanent or temporary personnel, and may also have different
Standards for the on-season and off-season. Hence, Planned Unused Capacity may be
negative, especially in on-season, mandating the need for hiring temporary personnel to
bridge the demand-supply gap.

9.3 MATERIALS STANDARDS

Introduction On most of our products, the cost of raw and packing materials accounts for about 60% of
the total product cost. This makes effective planning and control of sourcing, storage, handling
and usage of raw, packaging and intermediate (semi finished goods) materials into top
priorities. For this reason, variance in the usage of raw, pack and semi finished materials
(quantity and cost) needs to be continuously and accurately monitored.

The Materials Standards are equal to the combined Bill of Materials (BoM) for all products
(SKUs and semi finished materials) and their versions. The BoM provides basic data for
sourcing, production planning & scheduling and costing, and so can be used as the Materials
Standards.

Definition Design: The theoretical quantity of material required for a process to produce a given
Production Quantity. This theoretical quantity excludes any production related losses or
allowances. It is used as a base line measurement to provide a stable basis for comparison. In
SAP, this is more popularly known as the Zero Base Quantity.

Formula Design = Zero base Quantity

For SKUs, Zero Base Quantity is the declared weight on the pack. For semi-finished
goods, Zero Base Quantity is the quantity needed to form the declared weight on the
pack.
Definition Planned Non Performance: The expected total quantity of raw, pack and semi-finished
material losses. The value is expressed as a percentage of Design. In SAP, this is more
popularly known as the Scrap Factor or Scrap%. See Appendix 16.7 for details of how to
calculate Scrap%.

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40 The Evolution of Excellence
Formula Planned non performance = Design X Scrap%
The non performance expressed as Scrap% covers material losses. This is explained in
the illustration below.

Illustration:
WCM Material Finished Goods Waste:
Losses Yield Loss

Work in Progress Waste:

Overconsumption + Batch Rejection e.g. Wrong recipe for use
Quality Defect
Giveaway
Effluent e.g. Floor waste, cleaning loss etc
Raw Material Waste: Handling, transfer & storage loss
Overconsumption + Breakdowns, failures etc
Quality Defect Stock adjustments
Unused Rework material

Packaging Material Waste: Handling transfer & storage loss

Overconsumption + Breakdown, failures etc
Quality Defect Stock adjustments

Notes To accurately define the Scrap%, some categories may require exhaustive analysis of factors
such as volume, air, density, etc.

Definition Standard: This is the sum of the Design plus the Planned Non Performance material
consumption. The Expected Standard material usage loss is used for sourcing, planning and
costing purposes. In SAP, this is more popularly known as the BoM.

Formula Standard = Design + Planned Non Performance

Illustration: Loss 1
Material Loss 2
Loss …
losses

Design Planned Standard material

Material Usage Non Performance consumption

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41 The Evolution of Excellence
Notes
1. Material Yield Factor – Yield is the amount of acceptable material available after the
completion of a process that generates by-product(s). In manufacturing planning and
control systems, Yield is usually associated with a specific master recipe to determine how
many units should be scheduled in order to produce a specific number of finished goods.

Example: If protein extract is a result of processing of soya bean, then the Material Yield
Factor will be the amount of protein extract generated from a unit quantity of soya bean.
The BoM using the protein extract will reflect the quantity of soya bean along with its yield
factor, and not the quantity of protein extract.

2. For Finished Goods, Design, is equivalent to the declared or zero based material
consumption.

Illustration:
Yield Soya
Beans
example

Soya beans

Notes
3. There are material losses that are not included in the Expected Standard material usage,
but they should be considered separately as business / financial losses. These losses are:

• Re-use of trial material, pilot plant material or returns;

• Obsolescence and Stock write-offs;

• Chemicals and other processing materials not forming part of the finished product (e.g.
chemicals used in bleaching) which are treated as production costs;

• Loss due to bad handling whilst packing materials are in the warehouse (as long as it is not
under manufacturing responsibility);

• Loss during packing material transfer to production and finished goods transfer to
warehouse (as long as it is not under manufacturing responsibility);

• Other non-manufacturing related reasons.

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9.4 UTILITY STANDARDS
Introduction Sites require different types of utilities, depending on their production processes and their
geographic location. Prudent selection and efficient use of all energy resources required for
factory operations are necessary to ensure:
• Reliable supply;
• Favourable cost performance; and
• Minimum adverse environmental impact.
Utility usage should be measured and tracked by operation or task wherever this is feasible
and economically justified. For energy intensive processes (e.g. evaporating, drying and
freezing), the consumption of energy is a pivotal factor in taking decisions on investment and
operating plans. Even in operations that are less energy intensive, consumption may still be
one of the key factors in determining shift plans and operating cycles.

Definition Two broad types of utilities are used in any Factory:

• Bought-in utility - Utilities which are purchased from vendors operating outside of the
Factory premises, e.g. electricity, water, fuel etc.

• In-house generated utility (known as a Source Utility) - These are utilities that are produced
by ‘source equipment’ in the Factory consuming one or more bought-in utilities. For
example, steam is an in-house utility, produced by a boiler (source equipment), using
electricity, fuel and water (bought in utilities).

Both types of utilities will be found in different areas of a Factory. Some Areas may use only
bought-in or in-house generated utilities, while other Areas will use both.

Illustration:
In-house
Different types Bought In Utility Generated Utility Users
of utilities and
their usage in
a Factory Packing Lines

Processing Area

Other
Boiler

Refrigeration

Compressor

Other

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43 The Evolution of Excellence
Notes The above illustration shows the main bought-in and in-house generated utilities. The lists are
likely to vary by category and geography, and so by Site. The users list may also vary based on
site-specific conditions. Please refer to the section 8.3, Areas, for a full list of Areas that may
be ‘users’ in terms of the consumption of utilities.

Metering, Monitoring and Targeting (MM&T) is a programme led by Group Manufacturing

Sustainability. The MM&T programme monitors Utility ¬consumption (electricity, water, steam,
gas, waste effluent load etc.) The MM&T programme aims to ensure that required hardware
is installed and feeds the utility consumption into one Global Software programme. The
captured data will be used by factory team to calculate and monitor performance vs. Utility
Standards.

Illustration: GAS SYSTEM

Schematic
STEAM / HOT
of Gas and WATER SYSTEMS
Steam
Distribution M 500Mb
System SPRAY
Showing M TOWER
BURNER
Meters M

CLAYTON CLAYTON LOOS

No.1 No.2 BOILER

PRV

1 BAR
7 BAR BY-PASS 1 BAR

M
SHELL /
TUBE PHX PHX M
MARGARINE
STORAGE FACTORY

DHWS-60˚C M M PHX PHX

LPHW LPHW LPHW LPHW

M M
FOODS & FLOOR HPC HPC FOODS TANK FARM HPC HPC PRO-
CLEANING HWS HWS HEATING HEATING (HPC) STYRENE & CESS
PROCESS INJECTION
HEATING

9.4.1 TYPES OF UTILITY STANDARDS

Introduction There are two types of Utility Standards:

• Source Standards - These are Utility Standards defined at the in-house utility generator’s
end (e.g. boiler, air compressor).

• User Standards - These are Utility standards defined at the user end (e.g. Filling and
Packing Line, Processing Line etc).

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44 The Evolution of Excellence
Definition Source Standards: These refer to the level of consumption of each bought-in utility resource
by an in-house utility generator (source equipment) to produce one unit of a Source Utility.
Source Standards are useful in monitoring the performance of source equipment, and the cost
of in-house generated utilities, on an ongoing basis.

It is currently difficult, for two reasons, to treat in-house utilities as a Line and to calculate the
Source Standards (Design and Planned Non Performance) for each utility. This is because:

• In-house generated utilities get consumed simultaneously in multiple production Lines

and processing Areas, and the performance of the generators is mainly governed by
the demand from these users/Lines.

• There are frequently no appropriate metering devices at the in-house utility generator’s
end, making it difficult to monitor its performance.

As a consequence, Source Standards will not be defined, and both bought in and in-house
generated utilities will be treated as Push Resources. To enable this Push allocation, User
Standards will instead be developed.

Illustration:
In-house
Source Bought In Utility Generated Utility Users
Standards

Packing Lines

Processing Area

Other
Boiler

Refrigeration
User Standards

Compressor

Other

Source Standards

Definition User Standards: These refer to the level of each utility resource consumed, per production
line, per pack. User Standards are helpful in allocating utility costs to individual product SKUs.

User Standards are defined using historical data, and capture Line configuration and varying
utility demand for different Line and pack size1) combinations. If the same SKU, with similar
pack sizes, is being produced on two different Lines, then two different User Standards need
to be defined.

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Notes Note 1: During utility studies, it was observed that the product/SKU does not make any
significant difference to the utility consumption on a Line unless:

• A different product formulation is run on that particular Line. (e.g. when the same packing
line is used to produce shampoo, conditioner and lotions).

• Different pack sizes for the same product formulation are handled on that Line. (e.g. when
the same packing line produces 100 ml and 500 ml shampoo packaging).

Because of this, User Standards are defined for a Line and pack size combination for a given
product formulation.

Note 2: Details on the utilities allocation logic can be found in the Appendix 16.8.

Illustration:
In-house
User Standards Bought In Utility Generated Utility Users

Packing Lines

Processing Area

Other
Boiler

Refrigeration
User Standards

Compressor

Other

Source Standards

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46 The Evolution of Excellence
9.4.2 UNITS OF MEASUREMENT FOR UTILITIES (UOM)
Illustration: Bought in Utility UOM Source Utility UOM
UOM for
Utilities Electricity kWh Steam Tons

Water m3 Compressed Air m3/hr

Gas fuel MWh Refrigeration kW

Solid fuel MWh

Liquid fuel MWh

Notes The table above is provided for indicative purpose only. Please ensure Units of Measurement
are appropriate.

The Global Product Costing Rulebook (GPC) provides guidelines on how to set up Cost
Centre – Cost Element matrix.

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10.0 ACTUAL VALUES OF RESOURCE CONSUMPTION
10.1 ACTUAL
Definition ‘Actual’ refers to the ‘actual’ amount of each resource that has been consumed after a
Production Order has been completed. When a Production Order takes longer to complete than
a shift, the Actual values are captured at shift level, as well as at Production Order level.

Actual values are important in order to:

• Make comparisons against the Standard defined in the Manufacturing Standard;

• Take actions to eliminate unexpected events (Unplanned Non Performance) not allowed for
` by the Standard;

• Give the Factory Leadership team accurate information with which to manage the Factory;

• Take actions to improve and adjust the Standard.

Formula Actual=Standard+ Unplanned Non Performance

Illustration:
Line hours

Actuals Actuals
Standard

Time

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10.2 UNPLANNED NON PERFORMANCE
Definition This is the wastage, losses and inefficiencies which have occurred by the end of a Production
Order. These losses were not expected at the beginning, and so were not planned for in the
production and cost planning.

Formula Unplanned Non Performance = Actual - Standard

Notes In some cases the Production Order may perform better than the Standard (the expected
performance). This may occur where there has been an OEE improvement, for example. If this
is the case, the Unplanned Non Performance value will be a negative number.

Illustration A: Total Non-performance

Unplanned Non
Pulled
Performance
Unit of Measure

Actual
e.g. hours

Pulled
Plan

Planned Unplanned
Design Standard Total
Non Performance Non Performance

Actual performance is worse than the Standard

Illustration B: Total Non-performance

Unplanned Non
Unit of Measure

Performance
e.g. hours

Pulled Actual

Pulled
Plan

Planned Unplanned
Design Standard Total
Non Performance Non Performance

Actual performance is better than the Standard

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10.3 COST WATERFALL
Introduction A Cost Waterfall can be created by having accurate measurement of the consumption of
resources and linking the financial outcome through the allocation rules defined in the
Global Product Costing Rulebook. A Cost Waterfall provides information for decision
making and action at different levels e.g. SKU to Factory and is needed for clarity of cost flows
and responsibility.

Illustration:
Cost Waterfall Factory Pushed

Line/Hall Level Pulled

Allocated
Pulled
Actual

Pulled
Plan

Planned Unplanned Unused Push Total cost

Design Standard Rate
Non Performance Non Performance Capacity resources of SKU
(infrastructure ,
SKU Level/PO support & services)

Every shift Monthly

Rate is a financial adjustment which is calculated as actual cost minus actual quantity at
planned price. Actual quantity is Standards plus Unplanned Non Performance.

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11.0 ROUTINE TO MANAGE STANDARDS
Introduction It is important for there to be an agreed process to manage Standards, to ensure they are kept
up-to-date. A typical cycle to manage a Standard is:
Cycle to 1. Identify and establish a Standard: First, it’s necessary to identify what it is that needs to

manage be ‘standardised’ and then to define the values that the Standard needs to establish. For

standards example, a Standard may be needed which will define the speed of a Line and the crew
required to run a specific product on that Line. Once the Standard has been created, it
needs to be documented and controlled.

2. Train and apply the Standard: Once a Standard has been established, users need to be
trained to apply and follow it. It’s vital that all those whose work affects to the Standard are
properly trained in its importance and application, as its use is mandatory and it needs to
be applied with consistency.

3. Check and verify the Standard: The effectiveness of the Standard is checked by monitoring
that it delivers the expected output.

4. Act in case of deviation: The Standard is an evolving document that needs to be revised to
reflect changes. The following are examples of changes that may result in a need to modify
the Standard.
• The equipment is modified in some way;
• New equipment is added;
• The product is modified causing a change to its production data;
• New products are being produced;
• New not fully trained crew members;
• An improvement of some kind (eg. shorter cleaning times) is made to the resource,
resulting in OEE improvements;

• Low completion and compliance rate.

Even where no obvious changes have occurred, Standards should be reviewed at least once
per year.

Illustration: Develop and validate Train the users to execute

Cycle to information on paper the Standards and input
Manage combining IP these into relevant
Standards principles and systems
factory (e.g. SAP via
complexities master recipe)

STANDARDS

Verify completion
and compliance against
Update the the Standard (e.g. closing
Standards if necessary Production Orders in SAP)

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 Tracking & Changes to Standards need to be tracked and approved. Each Standard will contain the
Approving the following data, enabling it to be tracked:
Standard
• A Unique document/version number;
• The date on which the Standard was created;
• The dates to and from which the document is valid;
• The date at which the Standard was altered;

• The reason for changes (which will be mentioned in Comments).

Additionally, each Standard will have an Authorisation section, in which authorised personnel
will be required to approve its contents.

Roles & This section of the MMP Code defines ‘who does what’. It is important for responsibilities
Responsibilities to be defined clearly and concisely to create definite ownership of activities. Creating ‘owners’
ensures that input information is correct and activities are not duplicated, and results in less
debate and more action.

IP / ManEx * Factory
Category
Factory Mfg Finance
Local
leader Manager Manager

Create

Input
Standards
Validate
Routine to Manage

Notes Routine to Manage in the Roles and Responsibilities table refers to the Cycle to manage
Standards.

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12.0 GOVERNANCE/RECOMMENDED IMPLICATION
Introduction The implementation of the Managing Manufacturing Performance Code is one of the key
initiatives Unilever needs to achieve to meet its medium and long term objectives. As such, this
implementation must be given prime importance and all the resource it requires. Training
sessions will be planned by the Industrial Performance Team in order to transfer the
necessary knowledge to enable proper implementation, followed by the construction of a
careful action plan for implementation.

Lead responsibility for this task rests with the Local Industrial Performance Manager in
each Factory, supported functionally by the IP and ManEx organisations. However, individuals
in all affected and user functions share responsibility for the thoroughness and quality of
its implementation, and the whole Factory Management Team should support and be fully
involved in the initiative.

Implementation 1. Read the MMP Code thoroughly.

Steps

2. Any questions should be addressed to the Local Industrial Performance manager. In the
absence of the Local Industrial Performance manager, the ManEx manager is the next point
of contact.

3. All factories are expected to read and apply the definitions (Sections 1.0 to 8.0 and
13.0 to 16.0)

4. Industrial performance initiated sites must apply the MMP Code in full (Sections 1.0 to
16.0). The spreadsheets built to support the functions of the MMP Code must be completed.
Notes Full commitment to the implementation of the MMP Code is mandatory for all Sites

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13.0 FACTORY OPERATING SYSTEM (FOS)
Introduction In any organisation, ‘governance’ is the act of governing. Governance concerns those
decisions that define expectations, grant power, or verify performance. It is also concerned
with ensuring consistent management, cohesive policies, guidance, processes and decision-
rights for a given area of responsibility.

All Sites should have an effective governance process in place. (The tendency is to
overcomplicate matters by having far too many ineffective forums which add very little value.)

Our basic governance design must provide clarity, as well as creating an effective means of
communicating top-down and bottom-up.

Our key principles for good governance are:

• The Site has a long term Master Plan (of 3-5 years horizon), fully aligned with the category
and company business strategy. This plan must be updated regularly, as a matter of course.

• The Site should have a structured model, with the right forums in place to discuss its day-
to-day issues.

• These forums should be led by appropriate individuals, with participants who are
empowered to make decisions.

• It (good governance) is based on a few, highly relevant measures (typically 5 maximum) and
driven by a loss-reduction approach on a timely basis.

• It (good governance) has a clear link with the business/Site strategy, and a robust
deployment from the top to the shop floor level (Line).

• All Factory departments/Areas have aligned objectives and shared measures.

• There are clear escalation rules and problem solving procedures in place.

• There is a clear model to show how every team member contributes to the delivery
of results.

• All data utilised is accurate and relevant.

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Illustration: Frequency Meeting Who Subject
Meetings
. JTBD cascade and KPIs review
. High performance recognition
CIA
Biannual All factory employees and . GPS review
(Compass Into Action)
relevant interface areas . Inform key priorities

. GPS progress and Factory climate

Biannual Communication council All factory employees and . Community relationship
relevant interface areas . Overall communication

. Site masterplan review with focus on medium/long term

. Changing new factors, Key discussions and decisions
Quarterly Site master plan review Factory leader, Leadership . Man. Ex program integration (X-pillar)
Team and pillar leaders . Man. Ex assessment monitoring

. Individual meetings for Q, SHE and Innovation

Factory leader, Leadership . Focus on short term plan (1-6 months)
Q/SHE/Innovations . Based on standard set of KPIs
Monthly Team, pillar leaders and
committee . Innovation pipeline (for innovation only)
relevant coordinators and
/or as required . Quality panels with LT + shop floor people

. KPIs follow up (target vs actual)

. Man. Ex/TPM Masterplan follow up
Factory leader, Leadership
ManEx steering . Man. Ex assessment monitoring and action plan follow up
Monthly Team, pillar leaders and . Loss tree follow up (OEE and Cost}
committee
relevant coordinators and . Man. Ex/TPM pillars follow up
/or as required . Activity board review (per area)

Manufacturing leader,
Engineering leader, . OEE and Cost losses analysis
Monthly Losses review meeting operational team members, . Loss reduction activities follow up
pillar members and line . Establish “Kaizen” priorities and set up new groups
coordinators and
or

. Short term focus (week/month)

Weekly Leadership review Factory leader + . KPIs review, Site agenda review and JTBD
Leadership Team . Budget review (once per month)

Manufacturing leader + . Production plan attainment

relevant Leadership . OEE analysis per shift/time
Manufacturing
Daily members, coordinators and . Inventory analysis
performance meeting
/ , operators and technicians . Hot issues within the shift/day horizon
line level)

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14.0 MEASURES AND THEIR HIERARCHY
Introduction Key Performance Indicators (KPIs) are measures of performance that are extremely important
in determining whether the high level objectives of the Business are being (or will be) met.

However, KPIs are normally achieved by aggregating several factors, and so tracking them
directly, and making improvements to them, is difficult. In addition, because of the time
required for the process of consolidation, KPIs effectively becomes lag indicators. Thus, the
speed at which it is possible to react to KPIs is too slow to be of use in driving performance.

Because of this, it is necessary to cascade the KPIs into several other measures at different
levels in the Factory. This results in proactive behaviour which, in itself, increases the drive to
improve performance.

There is a hierarchy of measures, made up of a range of Performance Indicators, and depicted

in this pyramid structure:

Illustration:
KPI’s, PPI’s
KPIs
and KAI’s (Key Performance
Indicators)

KAIs
(Key Activity Indicators)

Definition Key Performance Indicator (KPI)

This is the consolidation into one Indicator of several PPIs. Examples of KPIs include: OEE;
Conformance; and Conversion Cost.

Process Performance Indicator (PPI)

Several Activities together can be combined into an intermediate result between a KAI and a
KPI. Examples of PPIs include: Quality defects; Unplanned Stoppages etc.

Key Activity Indicators (KAI)

At this level of Indicator the aim is to measure how well an activity in a Factory is being
performed. The more standardised a process is, the more stable it is and the easier to improve.
Examples of KAIs include: Attainment of changeover standard procedure; Compliance
with cleaning effectiveness; Lubrication etc.

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Comments The following illustration shows a summary of KPIs, while further details are included in the
section 15.0. Factories are expected to determine appropriate PPIs and KAIs in association
with the Global Capabilities team and Regional Category teams.
Q1 Q2 2012 Jun Jul
KPI Measure Frequency 2010 2011 YTD
Illustration: 2012 2012 Plan 2012 2012
Examples of Total Recordable (LTA + RWC Formula + MTC) x
QTR 1.4 0.8 0.0 0.0 0.0
Frequency Rate (TRFR) 1,000,000/ Hours worked
Site Core KPI’s
CO2 from Energy Kg/ Ton QTR - Deferred 134.07 91.05 90.00 84.47 98.08 90.14

Energy GJ/ Ton QTR - Deferred 1.56 1.17 1.23 1.09 1.26 1.16

Hazardous Waste Kg/ Ton QTR - Deferred 0.19 0.91 1.42 4.01 0.97 2.74

Non Hazardous Waste Kg/ Ton QTR - Deferred 0.66 0.84 1.63 1.55 0.36 1.06

Total Water m3/ Ton QTR - Deferred 0.54 0.51 0.48 0.43 0.24 0.36

COD Kg/ Ton QTR - Deferred 0.13 0.03 0.08 0.01 0.01 0.01

OEE % Monthly 88.6 84.5 85.0 83.4 85.6 86.0 84.3

Raw Material Waste

% Monthly 0.4 0.3 0.3 0.3 0.3 0.3 0.3
(RMW)
Packaging Material
% Monthly 1.0 0.8 0.7 0.7 0.7 0.7 0.7
Waste (PMW)

Conversion Cost (CC) €/Ton/’000s/Litons Monthly 47 89 62 98 78

Days inventory
Absolute (#) Monthly 14 14 0 0 7
(RM+PM+WIP+Stock)

MEx Savings (MES) € QTR 0 0 83 0 0

Notes 1. Factories are requested to create PPIs and KAIs for each KPI.

2. Details of these KPIs are included in the section 15.0.

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15.0 KEY PERFORMANCE INDICATORS (KPI’s)
Introduction At the request of the GSCLT, the Group Manufacturing Excellence Team has developed
Manufacturing KPI Definitions which will be used to report performance for all Unilever
Manufacturing Factories.
A key performance indicator (KPI) is a measure of performance. Such measures are commonly
used to help an organisation define and evaluate how successful it is, typically in terms of
making progress towards its long-term organisational goals.
The MMP Code contains an overview of the KPIs that will be collected and reported, each of
which has been defined, agreed and endorsed by a large number of stakeholders.
Further definitions, such as Line, Labour, Material and Utilities Standards, can be found in
Industrial Performance – Manufacturing Standards for Costing and Planning.

15.1 SITE CORE KPI SCORECARDS

Introduction Core Scorecards have been mandated, and will be used by Sites to focus on measuring the
agreed KPI’s and target improvements in the short, medium and long term.
Site Influenced KPI Scorecards: These tend to be measured outside of the Site, but include
important information as they are impacted by the Sites e.g. CCFOT.

Illustration: KPI Measure Frequency 2010 2011

Q1
2012
Q2
2012
2012
Plan
Jun
2012
Jul
2012
YTD

Site Core KPI Total Recordable

Frequency Rate (TRFR)
(LTA + RWC Formula + MTC)
x 1,000,000/ Hours worked
QTR 1.4 0.8 0.0 0.0 0.0

Scorecard CO2 from Energy Kg/ Ton

QTR -
Deferred
134.07 91.05 90.00 84.47 98.08 90.14

QTR -
Energy GJ/ Ton 1.56 1.17 1.23 1.09 1.26 1.16
Deferred
QTR -
Hazardous Waste Kg/ Ton 0.19 0.91 1.42 4.01 0.97 2.74
Deferred
QTR -
Non Hazardous Waste Kg/ Ton 0.66 0.84 1.63 1.55 0.36 1.06
Deferred
QTR -
Total Water m3/ Ton 0.54 0.51 0.48 0.43 0.24 0.36
Deferred
QTR -
COD Kg/ Ton 0.13 0.03 0.08 0.01 0.01 0.01
Deferred

OEE % Monthly 88.6 84.5 85.0 83.4 85.6 86.0 84.3

Raw Material Waste

% Monthly 0.4 0.3 0.3 0.3 0.3 0.3 0.3
(RMW)
Packaging Material
% Monthly 1.0 0.8 0.7 0.7 0.7 0.7 0.7
Waste (PMW)

Conversion Cost (CC) €/Ton/’000s/Litons Monthly 47 89 62 98 78

Days inventory
Absolute (#) Monthly 14 14 0 0 7
(RM+PM+WIP+Stock)

MEx Savings (MES) € QTR 0 0 83 0 0

Supplier inbound
material Non- # Monthly 2.5 2.2 0.0 0.0 1.1
conformance
Manufacturing D
% Monthly 0.0 0.0 0.6 0.9 0.0 0.0 0.5
Incidents
Manufacturing D
Absolute (#) Monthly 11 40 0 0 40
Incidents
Manufacturing D
1000s Consumer Units # Monthly 4 1 0 0.0 1
Incidents
CRQS Factory
% Red Monthly 0.5 0.2 0.0 0.0 0.2
Performance
CRQS Factory
% Amber Monthly 2.0 2.0 0.0 0.0 1.8
Performance
CRQS Factory
% Green Monthly 97.5 98.0 0.0 0.0 98.0
Performance
FG Pallet
% Monthly 0.5 0.2 0.0 0.0 0.1
Non-conformance

PPW % Monthly 85.0 86.4 87.0 87.0 86.6

PPW70 % Monthly 85.0 86.4 87.0 87.0 86.6

Output Reliability % Monthly 86.1 84.8 90.8 83.4 90.8 93.0 86.4

Absenteeism % Monthly 5.0 4.5 4.5

Training Hours per FTE Annual 2400 40

Employee Relations (ER)

% QTR 0.0 0.0 0.0 0.0
Index

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 Reporting
Illustration: . KPI Frequency
Timing
Core KPI Safety
Total Recordable
Frequency Rate (TRFR)
QTR Deferred Month

Scorecards CO2 from Energy QTR Deferred Month

Definition QTR
Energy Deferred Month

Hazardous Waste QTR Deferred Month

Environment
Non Hazardous Waste QTR Deferred Month

Total Water QTR Deferred Month

Total Chemical Oxygen

QTR Deferred Month
Demand (CCD)
Overall Equipment Standard
Monthly
Effectiveness (OEE) Reporting Month

Productivity Raw Material Waste Standard

Monthly
(RMW) Reporting Month
Packaging Material Standard
Monthly
Waste (PMW) Reporting Month
Standard
Conversion Cost (CC) Monthly
Reporting Month
Days inventory Standard
Cost Monthly
(RM+PM+WIP+Stock) Reporting Month
Standard
MEx Savings (MES) QTR
Reporting Month
Supplier inbound
Standard
material Non- Monthly
Reporting Month
conformance
Manufacturing D Standard
Monthly
Incidents Reporting Month
Manufacturing D Standard
Monthly
Incidents Reporting Month
Manufacturing D Standard
Monthly
Incidents Reporting Month
Quality
CRQS Factory Standard
Monthly
Performance Reporting Month
CRQS Factory Standard
Monthly
Performance Reporting Month
CRQS Factory Standard
Monthly
Performance Reporting Month
FG Pallet Deferred Month
Monthly
Non-conformance (Europe only currently)

Standard
PPW Monthly
Reporting Month
Standard
Delivery PPW70 Monthly
Reporting Month
Standard
Output Reliability Monthly
Reporting Month
Standard
Absenteeism Monthly
Reporting Month
Standard
Morale Training Annual
Reporting Month
Employee Relations (ER) Employee Relations (ER) Standard
QTR
Index Index Reporting Month

15.1.1 SAFETY: TOTAL RECORDABLE FREQUENCY RATE (TRFR)

Definition Total Recordable Frequency Rate (TRFR) monitors employee safety improvement for all
Unilever organisations. This will assist in determining whether Unilever safety targets are
being met. TRFR is expressed as a rate of Loss Time Accident (LTA), Restricted Work Case
(RWC) and Medical Treatment Case (MTC) per million hours worked, e.g. all workplace
accidents, excluding those that require simple first aid treatment.

(LTA + RWC + MTC) x 1, 000,000

Formula
TRFR = hours worked

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59 The Evolution of Excellence
Measure Rate
Source & TRFR data is provided monthly by each manufacturing factory in the OS system (Occupational
Frequency Safety System).

15.1.2 ENVIRONMENT: CO2 FROM ENERGY

Definition Unilever reports externally its CO2 emissions from energy. The data is calculated based on the
amount and types of fuel and electricity used and on standard conversion factors.

Formula CO2 from Energy =

Σ (energy Consumption x CO2 emission factor)
Σ Production Volume
Measure Kg/ton production

Source & CO2 from Energy data is provided monthly by each manufacturing Factory in the EPR system
Frequency (Environmental Performance Reporting System).

Comments The reference for the emission factors is the Greenhouse Gas Protocol webfactory. For
electricity, country-specific electricity CO2 emissions data is used. It is sourced from the IEA
(International Energy Agency) based on how the electricity is generated in the national grid.

In all cases, CO2 emissions are automatically calculated using the Environmental Performance
Reporting (EPR) System.

15.1.3 ENVIRONMENT: ENERGY

Definition Unilever manufacturing factories use different sources of energy depending on their
production processes and their geographic location. The term ‘Energy’ takes into account all
consumed energy.

Formula Energy (GJ) =

Σ (energy Consumption (GJ) from each fuel source)
Σ Production Volume
Measure GJ/ton production

Source & Energy data is provided by each manufacturing factory in the EPR system (Environmental
Frequency Performance Reporting System). Frequency: Monthly.

Comments Default values for the energy content of all fuels are provided in the Environmental
Performance Reporting (EPR) System (ref IEA (International Energy Agency)
Total energy consumption is automatically calculated using the EPR System.

15.1.4 ENVIRONMENT: HAZARDOUS WASTE

Definition This is the quantity of waste (in tons) that is sent off-factory for disposal, e.g. to landfill or
incineration, and which is classified as hazardous based on the local legislation for
each country.

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 Σ Quality of waste (kg) for each Hazardous Waste stream
Formula Hazardous Waste=
Σ Production Volume
Measure Kg/ton production

Source & Hazardous Waste data is provided by each manufacturing factory in the EPR system.
Frequency Frequency: Monthly.

Comments Since there is no common international waste classification, the Unilever data is based on the
national legal definitions applicable for each factory.

15.1.5 ENVIRONMENT: NON HAZARDOUS WASTE

Definition This is the quantity of waste (in tons) that is sent off-site for disposal e.g. to landfill or
incineration, and is classified as non-hazardous based on the local legislation for each country.

Σ Quality of waste (kg) for each Non Hazardous Waste stream

Formula Non Hazardous Waste =
Σ Production Volume
Measure Kg/ton production

Source & Non-Hazardous Waste data is provided by each manufacturing factory in the EPR system.
Frequency Frequency: Monthly.

Comments Since there is no common international waste classification, the Unilever data is based on the
national legal definitions applicable for each factory.

15.1.6 ENVIRONMENT: TOTAL WATER

Definition Water consumption is measured in all Unilever’s factories. The data represents all water
consumed – both the potable (drinking quality) and non-potable (lower quality) water that we
use. It may thus include:

• water used as an ingredient in products,

• uncontaminated non-contact cooling water

• waste water

Σ Potable Water (m3) + Non Potable Water (m3)

Formula Total Water =
Σ Production Volume
Measure m2/ton production
Source
& Total Water data is provided by each manufacturing factory in the EPR system. Frequency:
Monthly.
Frequency

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15.1.7 ENVIRONMENT: TOTAL CHEMICAL OXYGEN DEMAND (COD)
Definition COD (Chemical Oxygen Demand) represents the ingredients and product lost from the
manufacturing processes. It arises mainly during cleaning operations. COD is widely used
by regulatory bodies to control industrial wastewaters, and to calculate the correct level of
charges for downstream municipal wastewater treatment, which is designed to remove most
of the COD before the wastewater is discharged to the environment.

Σ COD load (kg) (watercourse and water treatment)

Formula COD =
Σ Production Volume
Measure Kg/ton production

Source & COD data is provided by each manufacturing factory in the EPR system. Frequency:
Monthly.
Frequency

15.1.8 PRODUCTIVITY: OVERALL EQUIPTMENT EFFECTIVENESS (OEE)

Definition Overall Equipment Effectiveness (OEE) measures the operational performance of the
production line, taking into account Manufacturing Performance losses and Process Driven
losses. It reflects how effectively the Loading Time is being used to produce Good Volume.

The OEE measure should be calculated at least for every Production Order. It is also advisable
to consider this important measure in the management routine of the factory (per shift/day/
week).

Formula Refer to section 8.17

15.1.9 PRODUCTIVITY: CAPACITY UTILISATION (CU)

Definition Understanding the unused capacity in our Factories enables us to increase capacity
Utilisation and so minimise Capex investment. Unused capacity is viewed as a hidden loss that
has cost associated with it. Highlighting this loss will increase visibility for the Business and
increase our Return on Assets (ROA).

Formula Refer to section 8.18

15.1.10 PRODUCTIVITY: LABOUR PRODUCTIVITY

Definition Labour Productivity (LP) measures the average volume produced per FTE employed in any
specific sub-family (technology).
Production Volume
Formula Labour Productivity =
Total Number of FTE
Where:
Total Number of FTE = Total Number of FTE Direct+ Total number of FTE Indirect
Aggregation from Month to YTD:

Σ Production Volumemonthly
Labour Productivity =
AVG (Total Number of FTEmonthl )
y

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Measure Tons/FTE
‘000 Units/FTE

Source
& Labour Productivity is reported as raw data (number of FTE) in the Alignment of Metrics
Frequency Information System (AMIS) at sub-family level, on a monthly basis.

Comments
1. Production Volume must be measured in both Tons (Litons for ice cream) or ’000 units.
Labour Productivity is expressed in both FTE/Tons and FTE/’000 units.

2. Direct and Indirect Labour associated with manufacturing includes the managers,
supervisors and part or full time administrative personnel involved.

3. FTE is Full Time Equivalent. An employee working 80% of the standard working hours is a
0.8 FTE.

4. FTEs Direct should include temporary/casual workers and third party contract workers
directly supervised by Unilever in any given sub-family.

5. The ‘Hours Production Direct’ is divided by the ‘Standard Working Hours’ to generate the
‘Total Number of FTEs Direct’.

6. The calculation of Hours Production Directs for this KPI excludes training, public holidays,
paid absences, vacation, other non-productive time (paid breaks, meetings, lunch, wash-up,
etc).

7. Important clarifications:

• Absence includes any cause of non-attendance at work for any reason such as
sickness, weddings, funerals etc.

• Unpaid leave includes extra time taken by employees (e.g. extra unpaid vacation/
holidays).

• If a ‘total committed hours’ labour agreement is in operation at the Factory, the

negotiated number should be used in the Standard Working Hours/FTE Direct
calculation. Please adjust the other elements accordingly. Otherwise, use the
Standard Working Hours applicable in the country.

8. Aggregation across months in AMIS to produce YTD is calculated based on summing up the
raw data for production, averaging the FTE data individually, and re-calculating the KPI.

15.1.11 PRODUCTIVITY: PRODUCTION VOLUME

Definition Refer to section 8.15
Formula Refer to section 8.15

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15.1.12 PRODUCTIVITY: RAW MATERIAL WASTE
Definition Raw Material Waste (RMW) is waste related to raw materials and ingredients incorporated in
the product sold during a given period. It must relate to the product in the form it leaves
production. Zero-based RM cost is taken directly from the Bill of Material (BoM); no material
wastage allowance is included.

Actual RM cost includes:

• Raw material lost during Rework
• Batches lost due to wrong recipe use, over/under dosages, contamination etc.
• Washouts
• Residues
• Raw material lost during transfer to production (only when the transfer is a manufacturing
responsibility)

• Raw material lost during handling in production and machine adjustments

RMW excludes:
• Re-use of trial material, pilot plant material or returns
• Obsolescence and Stock write-offs
• Chemicals and other processing materials not forming part of the finished product
(e.g. chemicals used in bleaching) which are treated as production costs
• Loss due to bad handling whilst raw materials are in the warehouse
• Loss during raw material transfer to production and finished goods transfer to warehouse
(as long as it is not under manufacturing responsibility)

• Other non-manufacturing related reasons

Actual RM cost is always bigger than Zero-based RM cost.

Measuring RMW gives a better understanding of the amount and source of raw material
losses, so that a proper plan can be made to eradicate these.

Actual RM cost - Zero Based RM Cost

Formula
RMW =
Zero based Raw Material Cost x 100

Measure Percentage (%)

Source & RMW will be collected from the Alignment of Metrics Information System (AMIS) at sub-family
Frequency level. Frequency: Monthly.

15.1.13 PRODUCTIVITY: PACKAGING MATERIAL WASTE

Definition Packing material waste (PMW) is the waste related to packaging incorporated in the product
sold during a given period. It must relate to the product in the form it leaves production.
Zero-based RM cost is taken directly from the Bill of Material (BoM); no material wastage
allowance is included.

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 Actual PM cost includes:

• Packing material lost during Rework

• Batches lost due to wrong recipe use, over/under dosages, contamination etc.

• Washouts

• Residues

• Packing material lost during transfer to production (only when the transfer is a
manufacturing responsibility)

• Packing material lost during handling in production and machine adjustments

PMW excludes:

• Re-use of trial material, pilot plant material or returns

• Obsolescence and Stock write-offs

• Chemicals and other processing materials not forming part of the finished product (e.g.
chemicals used in bleaching) which are treated as production costs

• Loss due to bad handling whilst packing materials are in the warehouse

• Loss during packing material transfer to production and finished goods transfer to
warehouse (as long as it is not under manufacturing responsibility)

• Other non-manufacturing related reason

Actual PM cost is always bigger than Zero-based PM cost.

Measuring PMW gives a better understanding of the amount and source of packing material
losses, so that a proper plan can be made to eradicate these.

Actual PM cost - Zero Based PM Cost

Formula
PMW =
Zero based Packaging Material Cost x 100

Measure Percentage (%)

Source & PMW will be collected from the Alignment of Metrics Information System (AMIS) at sub-family
Frequency level. Frequency: Monthly.

15.1.14 COST: PRODUCTION COST

Definition Production Cost (PC) allows the monitoring of production cost development. It is used to
generate improvement plans, set targets and deliver manufacturing savings. It is measured
per unit of volume (either Tons, Litons or ‘000 units).

(Labour + Utilities + Depreciation + Other + Repair & Maintenance)

Formula Production Cost = Production Volume

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 Production Cost Breakdown covers the following elements:
• Labour
• Utilities
• Repairs and Maintenance
• Depreciation
• Other Production Costs

Measure Currency/Tons
Currency/’000 units

Source & Production Cost is uploaded as raw data at sub-family level. Frequency: Monthly.
Frequency

Comments
1. Production Cost will follow SCOA definitions.

2. Production Costs include all costs involved in the making of an agreed category unit,
e.g. one ton of “packed powder”.

3. Production Costs should be measured and collected in local currency. Cost ‘raw
data’ will then be converted to Euro by our system. (This also applies to all Production
Cost Breakdown elements.)

4. Production Cost is not the same as Conversion Cost. Conversion Cost includes other
elements which are not solely related to Manufacturing Cost.

5. The principles for the allocation of fixed costs across categories should come either
from SCOA or from your local/regional Finance contact. In general terms, the use of
volume weight is suggested for this purpose.

Note: R2 Cost is booked under Supply Support Cost, and is thus not recorded under either
Production Cost or Capital Expenditure.

15.1.15 COST: CONVERSION COST

Definition
Conversion Cost measures the cost of transforming Raw and Packaging Materials into finished
products.

Production Costs include factory operations from receipt of materials up to and including
palletisation or bagging of finished products, and including the costs of factory services
management and other production-related costs.

Buying & Planning Costs include raw and packaging material buying, bought-in products and
other services buying, technical buying, production and supply planning, sales demand
forecasting and NPI buying.

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 Supply Support Costs include:

• The cost of supply chain management;

• The cost of quality assurance and control for raw materials, packaging materials
and suppliers, for work in progress and finished products, excluding the costs of analysing
competitors’ products, costs of personnel engaged in quality inspection, and control at the
point of processing;

• Elements of the following functions for which supply chain management is responsible:
Facilities, Finance, Human Resources, Information Technology;

• Other supply chain costs (such as supply chain insurance) not included elsewhere;

• European packaging recovery environmental charges (‘green charges’).

Production Cost + Buying & Planning + Supply Support
Formula Conversion Cost = Production Volume

Measure Currency/Ton or Currency/’000s or Currency/Liton

Source & The measure will be collected from the Alignment of Metrics Information System (AMIS) as
Frequency raw data (value in local currency) at sub-family level. Frequency: Monthly.

Production Volume will be collected in AMIS at sub-family level. Frequency: Monthly.

Comments
Full definitions of the components of the measure are held in the Approved Information
Standard, the Standard Chart of Accounts by Type, Cost Reporting Group & Allocation Rules
(SCOA), in the Cost Reporting Group section.

15.1.16 COST: PRODUCT COST

Definition Product cost (PC) includes cost of raw and packing material, cost of factory operations from
receipt of materials up to and including palletisation or bagging of finished products, including
the costs of factory services management and other production-related costs. Namely
Production costs include:

• Processing and Packing Labour

• Depreciation (Machinery Processing, Machinery Packing, Utilities, Buildings)

• Utilities (Electricity, Steam, Air, Water, Refrigeration)

• Repairs & Maintenance (R&M - Processing, R&M – Packing, Buildings, Other)

• Warehousing/ Palletisation (Material storage RM/PM, Material handling RM/PM,

Palletisation)

• Other production costs (Factory and Security costs, Cleaning & Consumables, Canteen,
Laundry, Supervision / Management, Engineering Stores, Waste removal including Effluent)

Raw materials + Packaging Materials + Production Costs

Formula Production Cost = Production Volume

Measure Currency/Ton or Currency/’000s or Currency/Litons

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 Source & Product Cost will be collected from the Alignment of Metrics Information System (AMIS) as raw
Frequency data (value in Local Currency) on Monthly basis at sub-family level. Production Volume will be
collected in AMIS on a Monthly basis at sub-family level.

Comments
Full definitions of the components of the measure are held in the Approved Information
Standard Chart of Accounts by Type, Cost Reporting Group & Allocation Rules (SCOA) in the
Cost Reporting Group section.

15.1.17 COST: STOCK (RM/PM) DAYS INVENTORY

Definition Stock (RM/PM) Days Inventory is used to understand the Inbound Stock stored on factory in
terms of days. This covers Raw Material (RM) stored on factory, Packing Material (PM) stored
on factory and Work In Progress (WIP).

Measure Days Inventory

Source & Total RM, PM and WIP will be collected in the Alignment of Metrics Information System (AMIS)
Frequency as Category raw data at sub-family level. Frequency: Monthly.

Comments
Stocks held at third party locations should be included.

15.1.18 COST: MANUFACTURING EXCELLENCE SAVINGS

Definition Manufacturing Excellence Savings (MES or ManEx Savings) are savings originating from
projects developed and executed by the Factory within the factory boundary. All savings must
reflect a structural cost reduction, therefore the benefit must be incremental versus a baseline
spend of a prior 12-month period (rather than against a budget).

MES must be representative of manufacturing performance (e.g. asset reduction due to

performance improvement, wastage reduction, labour productivity increase, etc). No benefits/
penalties should result from factors not controlled by the factory. In this way MES do
not include savings which come from cost-avoidance projects (e.g. change from original
equipment supplier to a lower cost supplier) or commercial innovations (e.g. a new tax rate).

Formula ManEx Savings = Total Savings from ManEx Project

Measure Euro €

Source & Actual MES will be collected/reported in the Integrated Supply Management Information
Frequency System (ISIS). Frequency: Monthly. Target MES will be collected from the Alignment of Metrics
Information System (AMIS). Frequency: Annually.

15.1.19 QUALITY: MANUFACTURING D INCIDENTS (% NON CONFORMANCE)

Definition
This KPI measures the % of consumer units that do not meet InterSpec specification or CRQS
specification resulting in product being put on hold. All non-conforming consumer units must
be within Unilever control (e.g. blocked in SAP and not available for delivery to customer),
whether in the factory warehouse or a Unilever distribution centre (Unilever-operated or third
party-operated).

Inter-country sourced product, where a manufacturing non-conformance is identified by the

receiving country, is reported as a non-conformance against the manufacturing location.

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68 The Evolution of Excellence
 KPI is expressed as the % of consumer units produced that are non-conforming.

Included are:

• Any products that do not meet the specifications on routine or extraordinary testing in
factory

• Any products that have damage and therefore cannot be released

• Non-conforming product that will be reworked, disposed, or sold to personnel (e.g.

independent of disposition decision/action taken)

• Products that are made and packed in-specification, but found to be out of specification
during repacking.

• Products that are held as a precaution but found to be conforming after further testing

• Products that are held but which, after consultation with category teams, are confirmed for
release for shipment without any adjustment

Excluded are:

• Normally applied product quarantine processes

• Manufacturing trials (e.g. new equipment installation, innovation activities)

• Holds caused by secondary operations e.g. repacking primary product for promotional
purposes, damage during warehousing or transportation. These will be tracked as part of
Go to Market KPIs.
Total non - conforming consumer units
Formula Manufacturing D - incidents (%) = x 100
Total consumer units produced

Source & The Factory will record this KPI within AMIS at Manufacturing sub-family level. Frequency:
Monthly.
Frequency
Example
In March, 100,000 consumer units of category ‘A’ were produced, of which 7,000 consumer
units were non-conforming as measured against CRQS evaluations. The same sourcing unit
produced 80,000 consumer units of category ‘B’, of which 3,000 units were out of specification
for pH, evaluated by a lab test.
Manufacturing D Incident % Category ‘A’ = [7,000/100,000] x 100 = 7.0%
Manufacturing D Incident % Category ‘B’ = [3,000/80,000] x 100 = 3.75%.

15.1.20 QUALITY: MANUFACTURING D INCIDENTS (ABSOLUTE)

Definition This is the same definition as that for ‘Manufacturing D Incidents (% Non Conformance)’, but
expressed as an absolute number of incidents.

Formula Manufacturing D Incidents (Absolute #) = Total number of incidents due to non-conformance

Measure Absolute (#)

Source & The Factory will record this KPI within AMIS at manufacturing sub-family level. Frequency:
Monthly.
Frequency

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 Example In March, 100,000 consumer units of category ‘A’ were produced of which 7,000 consumer units
were non-conforming as measured against CRQS evaluations. The same sourcing unit
produced 80,000 consumer units of category ‘B’, of which 3,000 units were out of specification
for pH, evaluated by a lab test.
Manufacturing D Incidents Category ‘A’ = 1
Manufacturing D Incidents Category ‘B’ = 1

15.1.21 QUALITY: MANUFACTURING D INCIDENTS CONSUMER UNITS (ABSOLUTE) #

Definition This is the same definition as ‘Manufacturing D Incidents (% Non Conformance)’, but
expressed as a total number of consumer units involved in D incidents.

Formula Manufacturing D Incidents (Consumer Units) = Total number of Consumer Units rejected

Measure Consumer Units

Source & The Factory will record this KPI within AMIS at manufacturing sub-family level. Frequency:
Monthly.
Frequency

Example In March, 100,000 consumer units of category ‘A’ were produced of which 7,000 consumer units
were non-conforming as measured against CRQS evaluations. The same sourcing unit
produced 80,000 consumer units of category ‘B’, of which 3,000 units were out of specification
for pH, evaluated by a lab test.
Manufacturing D Incident Consumer Units Category ‘A’ = 7,000
Manufacturing D Incident Consumer Units Category ‘B’ = 3,000

15.1.22 DELIVERY: PORTFOLIO PRODUCED WEEKLY (PPW)

Definition Portfolio Produced Weekly (PPW) measures the degree of flexibility and linkage of the Make
Process within the overall Supply Chain. The purpose of this measure is to track how close
Operating Units’ production scheduling is to market needs. The more frequently products are
produced, the greater the flexibility to provide a rapid response with minimum stocks.

A unique SKU includes all standard and promotional items that are traded in the following
quarter to the period of evaluation. The number of Unique SKU’s Produced must be counted
based on the actual production every week (rather than from the plan).

Number of unique SKUs produced per week

Formula PPW = x 100
Number of unique SKUs in the portfolio

Measure Percentage (%)

Source & PPW will be collected from the Alignment of Metrics Information System (AMIS) as a KPI
Frequency at sub-family level. Frequency: Monthly. Consolidation by month should be done as a volume
weighted average (tons or ‘000 units) across weeks.

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 Example APRIL Week 1 Week 2 Week 3 Week 4
Number of SKU Produced 23 37 34 0
Following Quarter Portfolio 62 62 62 62
Volume ('000 Units) 2,500 3300 2870 0
PPW % 37% 60% 55% 0%
PPW April = 52%

MAY Week 5 Week 6 Week 7 Week 8 Week 9

Number of SKU Produced 38 45 12 27 50
Following Quarter Portfolio 62 62 62 62 62
Volume ('000 Units) 2650 1250 4000 2700 1050
PPW % 61% 73% 19% 44% 81%
PPW May = 46%

Week Week Week Week

JUNE 10 11 12 13
Number of SKU Produced 26 15 48 31
Following Quarter Portfolio 62 62 62 62
Volume ('000 Units) 2500 3500 2500 2000
PPW % 42% 24% 77% 50%
PPW June = 46%

15.1.23 DELIVERY: PORTFOLIO PRODUCED WEEKLY (PPW70)

Definition Portfolio Produced Weekly (PPW70) measures the degree of flexibility and linkage of the Make
Process within the overall Supply Chain. The purpose of this measure is to track how close
Operating Units’ production scheduling is to market needs. The more frequently products are
produced, the greater the flexibility to provide a rapid response with minimum stocks.

A unique SKU includes all standard and promotional items that are traded in the following
quarter to the period of evaluation. The Number of Unique SKU’s Produced must be counted
based on the actual production every week (rather than from the plan). Only measures SKUs
that account for the top 70% (volume) of a Site’s production.

Number of unique SKUs produced per week

Formula PPW70 = x 100
Number of unique SKUs in the portfolio

Measures SKUs that account for the top 70% (volume) of a site’s production only.

Measure Percentage (%)

Source & PPW70 will be collected from the Alignment of Metrics Information System (AMIS) as a KPI
Frequency at sub-family level. Frequency: Monthly. Consolidation by month should be done as a volume
weighted average (tons or ‘000 units) across weeks.

Comments Only measures SKUs that account for the top 70% (volume) of a site’s production.

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15.1.24 DELIVERY: OUTPUT RELIABILITY (OR)
Definition Output Reliability (OR) measures the reliability of a Factory to deliver an agreed Production
Plan, which has to be frozen from the first production confirmation of a pallet or unit to a
production or process order. This allows for the Factory to be matched to a responsive,
demand-driven supply chain where there is a requirement to be flexible to customer demand.
Where a production or process order is greater than 24 hours, then adjustments of the order
header quantities will be accepted. In no circumstances should the production or process
order quantity be adjusted after the order to match the production run quantity. The customer
order quantity must remain to identify the OR.

The measure is produced on a daily basis and consolidated to monthly OR as volume weighted
average across days.

Σ
SKU (plan - ABS (actual - Plan))
Formula OR = x 100
Σ SKU Supply Plan
Measure Percentage (%)

Source & OR will be uploaded in the Alignment of Metrics Information System (AMIS) as KPI at sub-
Frequency family level. Frequency: Monthly.

Comments Any product rejected for quality or hygiene incidents should not be recorded as production
output in this measure.

Any production in ‘excess’ or ‘missing’ against the original plan should penalise the KPI
equally. Hence the data is computed in absolute figures.

Crossing days orders must be taken on the finish date. Crossing month orders will be
accounted on the next month (date finished).

Example SKU Plan Actual ABS (Plan- Actual) SKU Plan Actual ABS (Plan- Actual)
A 250 260 10 A 400 300 100
B 300 290 10 B 200 300 100
DAY 1

DAY 2

C 450 600 150 C 150 150 0

D 500 450 50 D 650 800 150
E 0 100 100 E 250 100 150

SUM 1500 1700 320 SUM 1650 1650 500

SKU Plan Actual ABS (Plan- Actual) SKU Plan Actual ABS (Plan- Actual)

A 600 600 0 A 0 0 0
B 350 300 50 B 0 0 0
DAY 3

DAY 4

C 500 550 50 C 500 0 500

D 800 500 300 D 500 0 500
E 250 150 100 E 0 0 0

SUM 2500 2100 500 SUM 1000 0 1000

SKU Plan Actual ABS (Plan- Actual) SKU Plan Actual ABS (Plan- Actual)

A 0 0 0 A 0 0 0
B 0 500 500 B 0 350 350
DAY N
DAY 5

C 600 0 600 C 0 350 350

D 600 0 600 D 0 0 0
E 0 500 500 E 0 0 0

SUM 1200 1000 2200 SUM 0 700 700

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 OR (Day 1) = 79%
Comment: Volume was delivered above plan, but plan was not
delivered as required.

OR (Day 2) = 70%
Comment: Volume was delivered as required, but plan was not
delivered as required.

OR (Day 3) = 80%
Comment: Volume was delivered below plan, plan was not
delivered as required.

OR (Day 4) = 0%
Comment: No volume delivered, plan was not delivered.

OR (Day 5) = 0% (calculations –83%)

Comment: Some volume was delivered, but plan was not totally
delivered.

OR (Day 6) = 0% (calculation #DIV/0!)

Comment: Some volume was delivered, but there was no
production order.
Day 1 Day 2 Day 3 Day 4 Day 5 Day n TOTAL
Daily OR 79% 70% 80% 0% 0% 0% 58%
Volume
1700 1650 2100 0 1000 700 7150
(Actual)
Weight 24% 23% 29% 0% 14% 10%

Volume Weighted Average OR (monthly) = 58%

15.1.25 MORALE: ABSENTEEISM

Definition This indicator is used to monitor employee absenteeism in a Manufacturing Factory. It
measures the absenteeism as a ratio of absent hours over the total hours worked in the factory
(actual + absent).

Absent includes:
• Illness
• Lost time accidents
• Absence without reason
• Long-term illness
• Illness whilst pregnant

Absent excludes:
• Vacations
• Absence with company interest or permission (e.g.: blood donation, vaccination)
• Maternity leave
• Training

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 Number of Absent Hours x 100

Formula Absenteeism =
Total hours worked Factory

Measure Percentage (%)

Source & Absenteeism will be collected in the Alignment of Metrics Information System (AMIS) as raw
Frequency data at factory level. Frequency: Monthly.

15.1.26 MORALE: TRAINING

Definition This measures the level of training invested in personnel in a Manufacturing Factory. Training
Hours (Total Factory) is the total number of hours spent by ALL employees of the factory
(including temporary workers), on seminars, quality training, TPM training, workshops, etc.
Training is planned, and has objectives and documented results.
Number of training hours (Total Factory)

Formula Training =
Total FTE (Total Factory)

Measure Hours per FTE

Source
& Training will be collected in the Alignment of Metrics Information System (AMIS) as raw data at
Frequency Site level. Frequency: Annually.

15.1.27 MORALE: EMPLOYEE RELATIONS INDEX (ER)

Definition The Employee Relations (ER) Index measures the frequency with which employee relations
issues occur in a Factory. Formal disciplinary, grievance and capability actions are all included
in the calculation of the ER index, including both individual and collective cases. (Industrial
action, OECD complaints and external arbitration cases are all excluded from this measure
and should not be included in the calculation of this index.)

(# formal Disciplinary Cases + # formal Grievance Cases + # formal Capability cases)

Formula ER index =
# of Employees on Factory at the start of every year

[Note: both individual and collective grievance issues should be included in the calculation.]

Disciplinary cases = all formal disciplinary actions, as recorded (excludes informal warnings
but includes formal verbal warnings if recorded, and any written warnings and dismissals).

Individual grievance cases = any formal written grievance received and investigated, including
Code of Business Principle complaints.

Collective grievance cases = any failures to agree or procedural issues raised by employee
representatives or groups of employees under the applicable procedural agreement.

Measure Rate

Source
& Available to be calculated through the ER reporting tool, and data is collected Quarterly on a
Frequency cumulative annual basis e.g. Q4 figure = annual total, Q3 figure = 3rd quarter total etc.

Example 3 disciplinary cases + 2 grievance cases + 1 capability case / 200 employees x 100 = 3%

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15.2 SITE INFLUENCED KPI SCORECARDS
Introduction These tend to be measured outside of the Site, but include important information as they are
impacted by the Sites e.g. CCFOT.

15.2.1 MORALE: EMPLOYEE ENGAGEMENT (GPS)

Definition Employee Engagement is simply about people holding positive attitudes towards Unilever as
a place to work, and acting in a positive way. It indicates how people feel about their working
life at Unilever in general terms. Engagement is measured through four questions which
assess: overall satisfaction; pride in working for Unilever; loyalty; and a willingness to
recommend Unilever as a place to work.

The purpose of the Global People Survey (GPS) is to collect valuable information on working
life at Unilever. The GPS gives the opportunity for employees to share their views on what it’s
like to work at Unilever, what can be done better, what’s working well and what isn’t. It is a
vital opportunity for the Unilever Executive (UEx), as well as all leaders throughout the
business, to hear views and take them into account, identify areas for improvement and
develop effective links between our people, performance and business growth

Formula Employee Engagement is a mixture of:

Pride - Being able to draw esteem from working at Unilever.

Satisfaction - An overall positive feeling generated by working at Unilever.
Commitment - Rarely thinking about leaving Unilever to work elsewhere.
Advocacy - Recommending Unilever as a place to work.

Measure Percentage (%)

Source & The measure will be sourced from the Global People Survey (GPS) held in KODR (Kenexa
Frequency Online Dynamic Reporting) by the Global HR Team. Frequency: Collected Bi-Annually.

Comments There is a global set of core questions in the Unilever survey, covering topics such as
leadership, environment, and opportunities for personal development. Business Groups and
Operating Companies can add additional questions to reflect their critical business needs.

15.2.2 CUSTOMER SERVICE: CUSTOMER CASEFILL ON TIME (CCFOT)

Definition
Good Customer Service is key to collaborative partnerships with our customers and an
important step towards ensuring our products are on the shelf, in store, for consumers to
purchase.
CCFOT and the associated Loss Tree approach have been established to satisfy the following
objectives:
• Enable a consistent method for measuring our Order to Delivery (OTD) performance
across Unilever
• Provide a mechanism for root cause analysis; create ownership for losses, generate
actions to remedy those losses and instigate continuous improvement.
• Provide a common mechanism for sharing performance and major losses/root causes, to
facilitate sharing of best practice.

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 Total Cases Accepted by Customer On-Time
Formula CCFOT =
Final Costumer expected Order Quantity

Measure Percentage (%)

Source & CCFOT will be collected from the CSE data warehouse, at the site’s country level. Frequency:
Frequency Monthly. The measure is currently available for the top 20 countries.

Comments Total Cases Accepted by Customer On-Time:

Cases shipped and delivered on time, minus refusals and damages:

• If specific delivery dates are not agreed with the customer, then standard delivery
lead times should be used.

• Orders collected by the customer (e.g. backhaul) should be measured against on time
pick-up. Late pick-ups by the customer will therefore impact CCFOT.

• Changes to agreed delivery dates will be considered a loss. For further details, please
refer to the CCFOT manual.

Final Customer expected Order Quantity:

• Last quantity requested by the customer before any dispatch takes place.

Example
Please refer to Unilever Information Standard Customer Casefill On Time – CCFOT, for more
information.

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16.0 APPENDIX
16.1 INTRODUCTION TO INDUSTRIAL PERFORMANCE (IP)
Industrial Performance is a new function within Manufacturing in Unilever. It will help Factories to embed the MMP
Code and, as a result, fix the broken link between operational and financial performance.

This will be achieved by standardising the rules, improving the use of the ERP systems and reinforcing right
behaviours. The Industrial Performance function will fundamentally change the way we operate, building capability
within our factories to meet our challenging savings targets, which require improvements in productivity and
optimisation of capacity utilisation.

The Industrial Performance function will operate at a global, cluster and local level. It will embed the discipline of cost
control and cost estimation and will own Manufacturing Standards in ERP in our factories. It will link management
theory, business planning and profitability analysis by developing project management skills, and will place proper
value on engineering knowledge.

By building the Industrial Performance function in Unilever, factories will be able to:
- Translate strategic targets into operational targets;
- Measure manufacturing performance more accurately by highlighting clear and transparent
improvement opportunities;
- Have one version of the truth in money terms to understand trade-offs and take immediate
actions to deliver tangible benefits;
- Enable benchmarking, best practice sharing and leveraging of global scale;
- Deliver superior Return on Assets (ROA) to create long-term, sustainable competitive
advantage;
- Provide Manufacturing Standards to enable the Cost Deployment pillar of ‘World Class
Manufacturing’.

The implementation of Industrial Performance will also deliver benefits to Unilever which will enable us to assess the
financial impact of non-performance and excess capacity by region, category, technology, line, factory and SKU.

Industrial Performance principles and design will be mandated for all factories. In new factories, ETS and UEnS will
deliver an integrated Manufacturing System Design securing the flow of information from the shopfloor.

Illustration: Embed SMART choices to minimise non performance and optimise unused capacity
Industrial WHY to become the best manufacturer in the industry to support doubling the size of the
business in a profitable and sustainable way
Performance
Scope Chart
WORKSTREAMS Standard Integrated Right
Rules Tools Behaviours

Mfg. KPI’s Direct the Motivate Shape

Mfg. Product Factory ERP New the
WHAT Standards Costing and Master Rider Elephant the Path
Usage Tools
Definitions Data “What” “How”
“Why”

Global & Local Get Basics Cost Control Change

Industrial Rights to Systems to link SAP User
HOW Performance increase ERP financials & Interface and Management
Function usage operations OEE tool replicable model

Deliver at least 1% of Raw and Pack Materials savings and

RESULT 3% of Production cost avoidance while increasing core business model
compliance and ERP usage in manufacturing

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16.2 SUB-FAMILIES
Category Manufacturing Sub Manufacturing Family Manufacturing Sub Family
Category
Aerosol Aerosol Aerosol
Deodorant Other Deodorant Other Deodorant Other

Deodorants & Deodorant Lotions Deodorant Lotions Deodorant Lotions

Fragrances Roll-on Roll-on Roll-on
Soft Solids Soft Solids
Stick
Stick Stick

Ketchup & tomato based products Ketchup & tomato based products

Mayo - Doy packs/pouches

Mayo & Mayo Based Dress- Mayo - Glass Jars/rigid plastic

ings, Sauces & Spreads Mayo - Others
(spoonable)
Mayo - Portion Packs
Dressings Dressings Mayo - Squeezable
Mustard Mustard
SD & V - Doy packs/pouches
SD & V - Glass Jars/rigid plastic
Salad dressings &
Vinaigrettes (pourable) SD & V - Others
SD & V - Portion Packs
SD & V - Squeezable

Vinegar, Pickles, chutney & other Vinegar, Pickles, chutney & other

Hair Liquids (Includes: Bottles &

Tottles, Tubes, Jars, Pouches)
Hair Liquids
Hair Care Hair Care
Hair liquids - Sachets
Styling Styling

HHC - LAC’s HHC - LAC’s

HHC Liquids - Bottles

Household Care HHC HHC Liquids
HHC Liquids - Flexibles

HHC Rimblocks HHC - Rimblocks

Cones Cones Cones

Cup Products Cup Products Cup Products
Extruded Extruded Extruded stickless
Extruded Extruded Extruded sticks
Ice Cream
Ice Cream Other Ice Cream Other Ice Cream Others

Log/Cake Products Log/Cake Products Log/Cake Products

Moulded Moulded Moulded sticks
Tubs Tubs Tub Products

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 Fabric cleaning - Bars
Fabric cleaning - Bars/Soaps
Fabric cleaning - Soaps
Fabric cleaning - Flexibles Fabric cleaning - Flexibles
Fabric cleaning - Liquids - Bottles
Fabric cleaning - Liquids
Fabric cleaning -Liquids -unit dose

NTR - Box
Fabric cleaning - Powders NTR - Flexibles
Fabric Cleaning
NTR
NTR - Sachets
TR - Box
Fabric cleaning - Powders
Laundry TR - Flexibles
TR
TR - Sachets
Fabric cleaning -Tablets/unit dose Fabric cleaning -Tablets/unit dose

Fabric conditioner-Liquids -Bottles

Fabric conditioner - Liquids
Fabric conditioner-Liquids -flexibles

Fabric Conditioner Fabric conditioner - Sachets Fabric conditioner - Sachets

Fabric conditioner - Sheets Fabric conditioner - Sheets
Fabric conditioner - Unit dose Fabric conditioner - Unit dose

Oral Other Oral Other Oral Other

Oral Care Oral Toothpaste Sachet Oral Toothpaste Sachet
Oral Toothpaste
Oral Toothpaste Tube Oral Toothpaste Tube

NVP Others NVP Others NVP Others

Olive Oil Bottling Olive Oil Bottling
Olive Oil Olive Oil Filtering Olive Oil Filtering
Olive Oil Processing Olive Oil Processing
Other foods Other foods Other foods
Other foods
Powders Powders
Bakery Fats, Margarine and Bakery Fats, Margarine and
Others (Foods Solution) Others (Foods Solution)
Other ODF &
Cooking White Fats and Other ODF Cooking White Fats and Other ODF
Bakery
Oil Bottling Oil Bottling (seed, Tropical)

Oil Processing Oil Processing (seed, Tropical)

Staple Foods Corn Starch Corn Starch

Jelly - Cans/Jars
Jelly
Jelly - FFS

Savoury Dry Savoury Noodles - Blocks

Noodles
Noodles - Pots
Other Dry Savoury ODS - Others

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 P&P - Bottles

P&P - Buckets

Pasty & Pressed P&P - Cans/Jars

P&P - Hard Cube Wrap
P&P - Pasty Cube Wrap
SP - Bottles
SP - Buckets
Savoury Powders SP - Cans/Jars
SP – HFFS (Horizontal Form Fill Seal)

SP – VFFS (Vertical Form Fill Seal)

S&D – Bottles
S&D – Buckets
Sachets & Desserts S&D – Cans/Jars
S&D – HFFS
S&D – VFFS
HFP - Cans
Hot Fill / Pasturised HFP - Flexibles (doypacks/pouches)

HFP - Rigids (glass/plastic)

Liquid Fonds & Bouillons Liquid Fonds & Bouillons
Sterilised – Cans
Wet Savoury Sterilised-Flexibles (doypacks/pouches)
Sterilised
Sterilised - Rigids (glass/plastics)
Sterilised - Tetra/Combi
Tomato Processing Tomato Processing
Wet Dessert Wet Dessert
Skin Liquids (Includes: Bottles &
Skin Liquids Skin Liquids (Includes Tottles, Tubes, Jars, Pouches)
Skin Care
Lotions, Creams, PWL)
Skin Liquids - Sachets

Beauty & Hygiene Soap Bars Beauty & Hygiene Soap Bars
Skin Cleansing Skin Solids Dove Soap Bars Dove Soap Bars
Skin Bars - Pears Skin Bars - Pears

Dairy Cream Alternative (DCA) Dairy Cream Alternative (DCA)

Dairy Spread Alternative (DSA) Dairy Spread Alternative (DSA)
Fresh Cream Cheese and Fresh Cream Cheese and
Spreads Spreads & cooking Other Cheese Other Cheese
Products Peanut Butter Peanut Butter
SCC other (incl. Milk and Yogurt SCC other (incl. Milk and Yogurt
& Alternatives) & Alternatives)
Spreads Spreads - Bottles

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 Spreads - Others

Spreads - Tubs

Spreads - Wrappers

Ready To Drink Ready To Drink Ready To Drink

Soy Based Soy Based - Drinks Soy Based -Drinks Aseptic Bottle (DAB)

Big Bags (BIB)

Packet Tea Packet Tea Carton (PAT)

Packet Tea Pouch (POU)
Tins (TIN)
Double Chamber Env. Cold Seal (DCECS)

Tea, Soy & Double Chamber Env.(DCE)

Fruit Beverages Tea Double Chamber Sealed Env (DCH)

Double Chamber Serv.(DCS)

Heatseal Single Chamber Round (SCR)
Tea Bags
Mousselines (MOU)
Pyramid String & Tag (PST)
Pyramid Tagless (PTL)
Single Chamber String & Tag Env. (SCE)
Single Chamber String & Tag Serv. (SCS)

Single Chamber Tagless (STL)

Squeezable (SQZ)

Water Purification Water Purification Water Purification

Water Purification
Category

Granulated Granulated

Nutrition Nutrition - Drinks Nutrition- drinks Aseptic Bottle

Weight Management Nutrition - Extruded Snacks Nutrition - Extruded Snacks

Drinks Can
Weight Management Weight Management - Drinks Weight Management - Drinks
Aseptic Bottle
Weight Management-Extruded Snacks Weight Management-Extruded Snacks

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16.3 PRODUCTION LINE TECHNOLOGY (PLT)
ICE CREAM SUBCATEGORY

Sub-Family PLT PLT Name Description Comments Sales Description

Code

PLT 01 Moulded Sticks Volume ≤ 50 ml Impulse / multipack

Small

Moulded Sticks PLT 02 Moulded Sticks Volume ≥ 70 ml Impulse / multipack

Large
Moulded Sticks 50ml < Volume < 70ml Previously in Europe
PLT 03 Impulse / multipack
Medium PLT26

PLT 04 Cones Volume > 60ml Impulse / multipack

Cones PLT 05 Mini Cones Volume ≤ 60 ml Impulse / multipack

Ball Top Cones Any Volume with

PLT 06 Impulse / multipack
Ball Top
Extruded Sticks Volume > 65ml
PLT 07 Impulse / multipack
Extruded Large
Sticks Extruded Sticks
PLT 08 Volume ≤ 65 ml Impulse / multipack
Small

PLT 09 Rotary Extruded Any Volumes Impulse / multipack

Sticks
PLT 10 Extruded Bars Impulse / multipack
Extruded
Stickless Extruded Volume ≤ 30 ml + Including Viennetta
PLT 11 Impulse / multipack
Monoportions speciality small products stick & Viennetta cup
Extruded
PLT 12 Impulse / multipack
Sandwiches
Including Push-ups
PLT 13 Cartridge Cups Impulse / multipack

Cup Products PLT 14 Cup Products Volume ≤ 250 ml B&J < 150 ml Impulse / multipack

Calippo and Solero

PLT 15 Tube Products tubes Impulse / multipack

PLT 17 Small Tub 250ml < Volume < 700 ml B&J 470 < 500 ml Take Home
Products
Medium Tub
PLT 23 Products 700ml< Volume < 2000 ml Take Home
Tub Products
PLT 18 Large Tub Volume > 2 Litres Take Home/Catering
Products

PLT 19 Bricks Any Volume but packed Take Home

PLT 16 Log Products Including Viennetta Take Home

Log / Cakes
PLT 20 Cakes Take Home

PLT 21 Cold Roller/Disk Any cold roller products Impulse / multipack

PLT 22 MAD Take Home

Other
PLT 24 Shots Impulse / multipack

PLT 25 Other Impulse/Take Home

Catering

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16.4 SUMMARY OF FORMULAS
GENERAL DEFINITIONS: CATEGORIES & UNITS OF MEASUREMENT – CALCULATE TONS FROM PIECES

Production Volume [ton] = Σ

All SKUs
(Production Volume [pieces]SKU )(Declared WeightSKU )

GENERAL DEFINITIONS LINE TIME CLASSIFICATION

days hours
Total Time (TT) = 365 year
x24 day
= 8,760h

Available Time (AT) = TT - Legal Losses

Available Loading Time (ALT) = AT - Unutilised Capacity Losses (except Idle Time)

Good Volume
Value Operating Time (VOT) =
Nominal Speed

Operating Time (OT) = VOT + Manufacturing Performance Losses

Loading Time (LT) = OT + Process Driven Losses

Idle Time = ALT - LT

GENERAL DEFINITIONS: OVERALL EQUIPMENT EFFECTIVENESS (OEE)

Value Operating Time
Overall Equipment Effectiveness (OEE) =
Loading Time

GENERAL DEFINITIONS: OEE - MANUFACTURING & SHARED PERFORMANCE

Value Operating Time

Manufacturing Performance (MP) =
Operating Time

Operating Time
Shared Performance (SP) =
Loading Time

GENERAL DEFINITIONS: LINE CAPACITY AND CAPACITY UTILISATION

ΣSKU Value Operating Time

Asset Utilisation =
Total Time

ΣSKU Loading Time

Unconstrained Capacity Utilisation =
Available Time

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 ΣSKU Loading Time
Constrained Capacity Utilisation =
Available Loading Time

Unconstrained Capacity = Available Time X Average Throughput

Constrained Capacity = Available Loading Time X Average Throughput

∑
SKU Volume
*Average Throughput =
∑
SKU Loading Time

GENERAL DEFINITIONS: LABOUR CAPACITY

Labour Capacity = Contracted number of manhours of permanent people

MANUFACTURING STANDARDS
Planned Non Performance = Standard - Design
Planned Unused Capacity = Capacity - Standard

MANUFACTURING STANDARDS: LINE STANDARDS

(Design Line Hours
Standard Line Hours = + Process driven losses
Manufacturing Performance %)
If details of Manufacturing Performance % and Process Driven losses (Labour hours)
are not available in the first year, you should instead use:

Design Line Hours

Standard Line Hours = = Loading Time (LT)
OEE
Planned Non Performance Machine Hours = Standard - Design = LT - VOT

Planned Unused Capacity=

Capacity - Standard
= Total Time - Loading Time

MANUFACTURING STANDARDS: LABOUR STANDARDS

Design Labour Hours = Design Line Hours X (Pull Labour per shift)
(Design Labour Hours
Standard Labour Hours = + Process Driven Losses (Labour hours)
Manufacturing Performance %)

Process Driven Losses (Labour hours) = Process driven Losses (Line hours) X Pull labour required
for these losses

If details of Manufacturing Performance % and Process Driven losses (Labour hours) are
not available in first year use:

Design Labour Hours

Standard Labour Hours =
OEE
Planned Non Performance Labour Hours=Standard Labour Hours-Design Labour Hours

Planned Unused Capacity Labour Hours =Labour Capacity –Standard Labour Hours

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MANUFACTURING STANDARDS: MATERIAL STANDARDS

Design = Zero Base Quantity

Planned Non Performance = Design × Scrap%
Standard = Design + Planned Non Performance

ACTUAL VALUES OF RESOURCE CONSUMPTION: UNPLANNED NON PERFORMANCE

Unplanned Non Performance = Actual - Standard

16.5 OEE LOSSES

16.5.1 BREAKDOWN & EQUIPMENT FAILURE
Definition An unexpected equipment stoppage of greater than 10 minutes due to loss of functionality,
irrespective of whether this is caused by the replacement of line/machine parts. The
Breakdown starts from the moment the machine stops producing and ends on the start-up of
the machine.

Formula Breakdown Time = Measured Time

Time Manufacturing Performance Losses
Classification
Example:
• An oil pump breaks and the machine stops, due to overheating;
Breakdown
• Gearbox breaks and conveyors stops;
Time Graph
• Choking at filler. It might take more than 10 mins to open the filler, clean it and then re-
assemble it. This entire time is booked under this loss;
• Electrical circuit overheats, leading machine to power down for more than 10 minutes.

200
Nominal Speed
180
160
Machine Breakdown
140 Breaks time
120
SPEED

100
80
60 Production Production

40
20
0
0:00:00 1:00:00 2:00:00 3:00:00 4:00:00 5:00:00 6:00:00 7:00:00 8:00:00
TIME

Comments The start-up after a Breakdown time is booked as part of the speed loss. Any loss due to a
Breakdown (cleaning, adjustments, etc) should be booked as part of the Breakdown.

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16.5.2 PROCESS FAILURE TIME
Definition An unexpected process stoppage of greater than 10 mins, due to process/line shutdown
caused by factors external to the equipment. Occurrences such as packaging material
breakage, operating errors or changes to chemical and physical properties of the substances
being processed should be booked here. Process Failure Time also includes failures in
providing utilities to the line. The Process Failure starts from the moment the machine stops
producing and ends on the start-up of the machine.

Formula Process Failure Time = Measured time

Time Manufacturing Performance Losses
Classification

Example: • An operator wrongly activated emergency blockage, causing the system to stop.
Process
Failure • Material is on the line, but an operator forgets to feed the line, causing it to stop.
Time Graph
200
Nominal Speed
180
160 Process
140 Failure Failure Time
120
100
SPEED

80
60 Production Production
40
20
0
0:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00
TIME
Comments The start-up after a Process Failure time is booked as part of the speed loss. Any loss due to a
Process Failure (cleaning, adjustments, etc) should be booked as part of the Process Failure.

16.5.3 SHORTAGE OF OPERATORS

Definition A loss in machine time due to a shortage of operators, due to factors such as absenteeism,
illness, etc. Shortage of Operators loss time starts from the moment a line is not working e.g.
even if the machine is available but there are not enough operators to start it. The Loss ends at
the moment of the start-up of the machine.

Formula Shortage of Operators = Measured time

Time
Manufacturing Performance Losses
Classification
• A line is planned to produce, material is in place and the machine is operational, but no
Example:
operator shows up due to, for example, illness or being delayed by heavy traffic
Comments Delays from Meal/Tea breaks and communications should not be booked here.

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16.5.4 MATERIAL AVAILABILITY AT LINE-SIDE LOSS
Definition Loss in time (i.e. a line stop) due to non availability of good raw, packaging or semi finished
material to feed the line, or due to lack of warehouse space, pallets etc to transport and store
finished goods. The Material Availability Loss starts from the moment the
machine stops producing and ends on the start-up of the machine.

Formula Mat. Availability Time = Measured time

Time Manufacturing Performance Losses
Classification
Example: • Production stops because the logistics operator has not transported required material from

Material the warehouse to the line.
Availability
• Line stops because material waiting at the line differs from that specified (different colour
Graph
of packaging, different product, wrong label etc) and so cannot be fed onto the line.
200
180 Nominal Speed
160 Material
140 Availability Time
Lack of
120 Material
SPEED

100
Feeding Machine

80
60 Production Production
Gathering
Material

40
20
0
0:00 1:00 2:00 3:00 4:00 5:00 6:00 7:00 8:00
TIME

Comments Delays in the start of production due to lack of material are booked here. Lack of material
during a changeover (delaying the start of production) should be booked as part of changeover
time. Running the line at lower speed to compensate for a lack of materials or space is booked
under speed loss.

16.5.5 CUTTING BLADE CHANGE

Definition This is a line/process equipment stoppage due to having to change items (such as a cutting
blade) which have worn out. The Cutting Blade Change Loss starts from the moment the
machine stops producing and ends on the start-up of the machine.

Formula Cut Blade Change Time = Measured time

Time
Manufacturing Performance Losses
Classification
Example: • Changing packing bobbins
Cutting Blade
• Refilling ink on coding spray
Change
Graph • Changing cut blades

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 200
180 Nominal Speed
160 Cut Blade
Change Time
140 Blade
worn out
120
100
SPEED

80

Spare part retrieval

60

Replacement
40
20 Diagnosis

0
0:00 0:01 0:02 0:03 0:04 0:05 0:06 0:07 0:08
TIME
Comments This loss includes changes of label/film rolls, cutting blades, claws, stretches, teflons, ink and
codifier belts.

16.5.6 MINOR STOPPAGE & IDLING LOSSES

Definition
Time (of less than 10 minutes) lost when a machine is running and stop/starting frequently,
losing speed and preventing a smooth flow. The idling and stoppages are caused by small
problems such as product/s that block sensors or get caught in chutes. Small (i.e. under 10
minute) replacements/repairs (except for those booked under Cutting Blade) are booked here.
The minor stoppage time starts with the stopping of the machine and ends on
the start-up of the machine.
Formula Minor Stoppage = Measured time
Time
Manufacturing Performance Losses
Classification
Example:
• Product falls and get caught in chute
Minor
Stoppage • A dirty safety sensor misreads and stops the line
Graph
• A rejection piston gets stuck in its extended position

200
180
160 Bottle Caught
on Chute Minor Stoppage Time Nominal Speed
140
120
100
SPEED

80
Production
60 Production
40
20
0
0:00 0:01 0:02 0:03 0:04 0:05 0:06 0:07 0:08
TIME

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Comments Recovering time to achieve nominal speed is booked as speed loss.
Minor Stoppages is theoretically a speed loss and is usually defined as a stoppage of between
30 sec and 10 min. In fact, the measurement of minor stoppages is an assumption made on the
basis of the machine’s counter.

Example: Machine speed = 60 bottles/min. That means that every second one bottle must be counted.
Standard
counting signal
for nominal
speed

Figure 1: Standard counting signal for nominal speed

Example: When we have a speed reduction the time between each signal starts to increase.
Counting signal
for speed loss

Figure 2: Counting signal for speed loss

Example: When this ∆ hits 30 sec, the speed loss is characterized as a minor stoppage.
Counting signal
for minor
stoppage

Figure 3: Counting signal for minor stoppage

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16.5.7 SPEED LOSS
Definition This is the equivalent machine running time, where the maximum speed/throughput is not
achieved. Measuring the time effect of speed loss is complicated. It can be treated as
unaccounted time, or as the difference between the captured losses and the time in which the
machine is not producing, calculated based on the machine’s nominal speed.
Volume produced
Formula Speed Loss = Loading Time - Losses Captured - Nominal Speed
Where

Loss captured = All the time losses captured (classified or not(unaccounted Time))

Time Manufacturing Performance Losses

Classification
Example:
• Viscosity of the product resulting in a longer time taken to fill the package
• Wrong alignment of guiding bars causing products to jam (for less than 30 sec)

Comments ‘Losses Captured’ as defined in the formula does not include quality defect time loss.
Events captured and not classified are unaccounted losses and should not be booked as Speed
Loss. It is important that the Nominal Speed is correctly defined to measure this loss. The
Nominal Speed is defined as ‘the highest demonstrated speed achieved at which a product is
manufactured at best conditions, with the best crew, without any losses (stoppages, material,
etc), safeguarding all Quality and Safety standards’.

16.5.8 QUALITY DEFECT TIME LOSS

Definition Quality Defect losses include time loss in producing rejects, physical loss in scrap and financial
losses due to downgrading. It is calculated based on the quantity of products showing a defect
and the nominal speed of the machine, and includes the loss of material (raw, packing or
semi-finished products) due to quality defects generated in the line.

(Volume producedNC)
Formula Quality Defect Time =
Nominal Speed
Where NC = Non Conformance
Time Manufacturing Performance Losses
Classification

Example:
• Product caught out of specification on the end of the line
• D-Incidents
• WIP loss due to out of specification product

Comments Total raw/packing/semi-finished goods loss attributable to quality defects must be booked
here, assuming give-away is not part of Quality Defect time losses.

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16.5.9 MEASUREMENT & ADJUSTMENT
Definition All unplanned measurements and adjustments to process and equipment made to correct or
prevent a quality defect occurrence. The Measurement and Adjustment Loss starts from the
moment the machine stops producing and ends on the start-up of the machine.
The start-up after a Measurement and Adjustment Loss time is booked as part of the
speed loss.

Formula Measurement & Adjustment Time = Measured Time

Time Manufacturing Performance Losses
Classification
Example: • Adjusting the print nozzle of the code printer
Measurement
& • Adjustment of the position of the labeller
Adjustment Time
Graph 200
180
Nominal Speed
160 Quality Issue Measurement &
140 Detected Adjustment Time

120
100
SPEED

80 Production
Production
60
40
20
0
0:00 0:01 0:02 0:03 0:04 0:05 0:06 0:07 0:08
TIME
Comments Products out of specification which have already been produced are booked under Quality
Defect Time.

16.5.10 CLEANING & SANITATION

Definition This covers all cleaning procedures dictated by mandatory guidelines, for each product
category. It includes additional time incurred due to inefficiencies in the cleaning process,
excluding ramp-down and ramp-up before and after the cleaning. Cleanings caused by
machine inefficiency (spillages, material handling, etc) and not resulting from other time
losses are booked here.

Formula Cleaning & Sanitation time = Measured Time to perform the activities

Time
Process Driven Losses
Classification

Example:
Waiting for CIP: 15 mins
Cleaning procedure: 45 mins

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 Total cleaning time to be recorded
=Waiting for CIP + Cleaning Procedure
=15 + 45 = 60 mins

Comments All cleaning incurred as a result of a breakdown/minor stoppage, malfunction, etc. should not
be booked here, but booked as a Causal Loss. The ramp-up and ramp-down before and after
cleaning is not included here, but under Speed Loss.

16.5.11 CHANGEOVER/ PRODUCT CHANGE

Definition The time taken for changing over from one SKU (product) to another SKU at nominal speed/
output and quality. This includes additional time incurred due to inefficiencies in the
changeover process, excluding ramp-down and ramp-up before and after the changeover.

Formula Changeover time = Measured Time to perform the activities

Time
Process Driven Losses
Classification
Example:
Waiting for parts: 5 mins
Changeover procedure: 65 mins
Cleaning Time: 30 mins

Total changeover time to be recorded

=Waiting for parts + Changeover Procedure + Cleaning time
=5 + 65 + 30 = 100 mins

200
180 Nominal Speed
160 Changeover Time
140
120
SPEED

100
80
Production
60 SKU A Production
40 SKU B
20
0
0:00 0:01 0:02 0:03 0:04 0:05 0:06 0:07 0:08
TIME
Comments This loss includes all product and format changeovers. The ramp-up and ramp-down before
and after changeover/product change is not included here, but under Speed Loss.

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16.5.12 PREPARATORY AND CLOSE OUT TIME (PREVIOUSLY START UP AND RAMP DOWN)
Definition The time required for preparatory activities at the beginning of the week and the close-out time
at the end of the week.

Formula Preparatory and close out Time = Measured Time to perform the activities
Time
Process Driven Losses
Classification
Example:
Starting the plant with shift pattern 6x1 on a Monday
Comments The ramp-up and ramp-down before and after preparatory and close-out time is not included
here, but under Speed Loss.

16.5.13 MAINTENANCE TIME

Definition All time taken to maintain assets so as to deliver their optimum operation. Daily, weekly and
planned periodic maintenance (annual shutdown) are included. Any unplanned maintenance
not due to failures is booked here.
Formula Planned Maintenance Time = Measured Time to perform the activities

Time Process Driven Losses

Classification
Example:
Weekly maintenance (per year)=1h* 52 w = 52h
Monthly maintenance (per year)= 2h* 12 m = 24h
Periodic shutdown (per year)= 168h* 2 = 336h
Unscheduled Maintenance (non Breakdown)= 200h

Total Maintenance Time

= Weekly maintenance + Montly Maintenance + Periodic Shutdown
+Unscheduled Maintenance = 52h + 24h + 336h + 200h = 612h

Comments Maintenance time should be recorded, even if this is undertaken during days out of the shift
pattern. The ramp-up and ramp-down before and after maintenance should not be included
here, but under Speed Loss.

16.5.14 MEAL & TEA BREAK

Definition Time incurred when the line has to stop for operators to take their meals/breaks. This does not
apply in factories running lines continuously using relief manning.

Formula Meal & Tea Break Time Loss = Measured Time Lost
Time
Process Driven Losses
Classification
Example:
Stoppage of the line for lunch/dinner

Comments This includes the delays caused by late arrival of operators (loss should not be split).
The ramp-up and ramp-down before and after meal and tea breaks is not included here, but
under Speed Loss.

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16.5.15 BANK HOLIDAYS
Definition This represents time loss due to holidays which are negotiable. By working on these holidays
Unilever is not violating any rules and regulations of government or external statutory bodies.
‘Negotiable’ means that we can work on these holidays by agreement with the union, by paying
more, by compensating with a holiday at another time or by obtaining permission from external
statutory bodies. These days are thus available to be used should the business need volume.
Formula Bank Holidays Time Loss = Measured Time Lost
Time Unutilised Capacity Losses
Classification
Comments This loss excludes the start up and shutdown time arising due to these bank holidays. The
ramp-up and ramp-down before and after bank holidays are not included here, but under
Speed Loss. Certain factories will have praying time. If praying time is mandated by the country
law then this loss should be recorded as External / Legal holidays. Otherwise record this loss
as Bank Holidays

16.5.16 SHIFT PATTERN

Definition This is the time loss due to shift pattern (not working certain days of the week, no shift on a
particular day etc). A shift pattern is generally agreed with the union. As it is not legally
mandated by government, it is negotiable for long term capacity needs.

Formula Shift Pattern Time Loss = Measured Time Lost

Time Unutilised Capacity Losses
Classification
Example • A factory does not run production on Sundays or in the night shift on any day.

Comments This loss does not include the start up and shutdown time arising due to the shift pattern since
this is booked under Speed Loss.

16.5.17 IDLE TIME

Definition Time when there is no Production Order (zero plan)

Formula Idle time = Available Loading Time - Loading Time

Time Unutilised Capacity Losses

Classification
Comments This loss is only an indicator of lack of demand, resulting in idle time. If a weekly plan is
completed ahead of schedule, the excess time should be booked here. The ramp-up and ramp-
down before and after is not included here, but under Speed Loss.

16.5.18 PLANNED STOPPAGE TIME

Definition
This is time loss due to agreed stoppages for weekly/monthly/periodic shopfloor and ad hoc
communication.
Formula Planned Stoppage Time = Measured Time to perform the activities
Time
Unutilised Capacity Losses
Classification

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Example • Safety briefing/quality incident sharing/quarterly communication etc.

Comments The stoppage plan should be agreed in advance of the event. It is anticipated that this loss will
be small. This loss excludes the start up and shutdown time arising due to bank holidays. The
ramp-up and ramp-down before and after Planned Stoppage Time is not included here, but
under Speed Loss.

16.5.19 SHORTAGE OF UTILITY (FORCE MAJEURE)

Definition A time loss due to the known non-availability of a utility (e.g. power, water, steam) due to Force
Majeure reasons (e.g. nationwide blackout).

Formula Shortage of Utility Time Loss = Measured Time Lost

Time Unutilised Capacity Losses

Classification
Example • There is no power supply from the grid and no generator available for alternative supply.

Comments To be included as Shortage of Utility, the stoppage must be known of in advance, so that no
schedule is put on plan. This loss excludes the start up and shutdown time arising due to this
loss. The ramp up and ramp down before and after this loss are not included here, but under
Speed Loss. Periodic Load Shedding or Power Outage should not be booked here.

16.5.20 EQUIPMENT PROCESS TRIAL & SCHEDULED MODIFICATION TIME

Definition Time due to trials for innovation, new product introduction, saving (VIP), Kaizen activity.

Formula Equipment process trials and modifications Time = Measured Time to perform the activities

Time Unutilised Capacity Losses

Classification
Example New product introduction

Comments This loss excludes the start up and shutdown time arising due to this loss. The ramp-up and
ramp-down before and after trials is not included here, but under Speed Loss.

16.5.21 EXTERNAL / LEGAL HOLIDAYS

Definition This is time loss due to holidays which are not negotiable. By working on these holidays,
Unilever would be violating rules and regulations of government or external statutory bodies.
These holidays cannot be used even if the business needs volume. It is out of Unilever’s hands
to decide whether we want to work these days or not. This also includes maintenance
regulated by the government.

Formula External|Legal Holidays|Maintenance Time Loss = Measured Time Lost

Time Legal Losses
Classification
Example • Independence day in India
Comments This loss excludes the start up and shutdown time arising due to this loss. The ramp-up and
ramp-down before and after this loss is not included here, but under Speed Loss.

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16.6 NON VALUE ADDED ACTIVITIES
Definition Non Value Added activities are those tasks within the design of Pull labour which do not
contribute to completing the Production Order, but which are still booked into it. NVA% is a
metric used to understand the contribution of Non Value Added activities in the labour of the
line. Determining Non Value Added activities requires a lot of effort and time. The detailed
activities of every employee have to be mapped in order to determine the non value adding
jobs. As a result, at the start of implementation of this document, it is not expected that Non
Value Added Activities be calculated. However, those factories which are at an advanced level
of performance measurement and analysis should begin to introduce this concept.

Non Value Added manhours

Formula NVA% = x 100
(VOT)(crew + Shared crew)

Planned Non Performance (Labour Standards)

Once the NVA% measure is being calculated, an additional measure to determine the planned
Non Performance of Labour Standards will be introduced. This measure will be used to
capture the non value adding work of the crew and shared crew. As a result, the total Planned
Non Performance (Labour Hours) will be a sum of both the measures as follows:

Formula Planned Non Performance (1) Labour Hours = Plan Non Per mc hrs X (Crew+Shared Crew)
(from labour standards chapter above)
Planned Non Performance (2) Labour Hours = Planned Non Performance (1) X NVA %

Illustration: Before After

Before &
After

(1) Planned Standard material (2) Planned (1) Planned Standard material
Design Design
Non-performance consumption Non-performance Non-performance consumption

The new metric – Planned Non Performance (2) consists of all labour losses defined in WCM
as follows:

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Illustration: Loss / Waste Category Group Loss What (precise loss definition)
WCM Labour
Losses Rework Loss
Man hours spend on handling rework (# of hours * #
of people handling rework)

Man hours spent on unplanned cleaning (Unplanned

Cleaning
cleaning * # of people cleaning)

Lubrication, Inspection Total Lubrication, Inspection & Re-fastening Time (#

& Re-fastening people doing activity * time spend on each activity)

Production
Non Value Added Non value added activities performed by the operator.
man-hour Activity (To be measured by activity)
Loss
Loss Labour
Absenteeism Man hours required to cover unplanned absenteeism

Man hours to adjust and set up equipment / machines

Adjustment while good product is produced at design./ nominal
speed)
Loss due to the extra amount of people. It is
Unbalancing calculated as the difference from the standard work
hours requested for a certain SKU and the hours paid.

Management Losses that arise from poor management systems or

Management Loss
System Loss poor operations of those systems

16.7 MATERIAL PLANNED NON PERFORMANCE (SCRAP %)

Definition For most categories and countries, the Scrap Factor is defined in the Bill of Material (BoM).
This Scrap Factor serves the purpose of the Planned Non Performance metric needed to
calculate Material Standards. Ideally, the Scrap Factor should include all expected material
losses such as waste and give-away. Even if the Scrap Factor does not include all of these
losses, it should be assumed that the factor is correct for the time being. At a later date, the
factor will be fully specified and verified.

For those categories or countries where the Scrap Factor is not defined in the BoM,
the process below may be used to arrive at an approximate Scrap Factor which will serve as
the Planned Non Performance metric needed to calculate Material Standards.

Formula Semi Finished Good (SFG): In most cases, a SFG will comprise of raw materials. Irrespective of
this, the following steps should be followed:
a) Calculate the actual SFG produced in the last complete year;
b) Calculate the actual raw materials consumed to make the same SFG;
c) Using the BoM of SFG, calculate the raw materials that should have been consumed;
d) The Scrap Factor for each material is then as follows:
(b - c)
Planned Non Performance (Scrap%)= x 100
c
Formula Finished Good (FG) or SKU: A FG comprises of SFG, raw and packing materials. Follow the
steps below to arrive at the Scrap Factor for all three components of FG:
a) Calculate the actual FG produced (assuming declared weight) in the last complete year;
b) Calculate the actual SFG, raw and packing materials consumed to make the same FG;
c) Using the BoM of FG, calculate the SFG, raw and packing materials that should have been
consumed;

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 d) The Scrap Factor for each material is then as follows:

(1)Planned Non Performance (Scrap%)= (b - c) X 100

c

e) Calculate the average actual weight of FG produced from the samples taken by quality team
as part of weight control;

(e) - declared weight
f) Giveaway% = x100
declared weight

h) Discuss with R&D the contribution of SFG and raw materials to the give-away of FG. Based
on the R&D recommendation, analyse give-away contributions of SFG & raw material to
their Planned Non Performance calculated in (d).

16.8 UTILITY ALLOCATION LOGIC / PUSH METHODOLOGY

Introduction The Utility cost for each type of utility is captured either in the Auxiliary Cost Centre, or in the
Summarization Cost Centre.

• Auxiliary Cost Centre: Captures all the associated costs involved in generating
or bringing in one particular utility. This cost centre provides visibility of the cost of
utilities produced in-house or bought externally. This cost centre captures consumption of
materials, man hours utilised on the source equipment, depreciation and repair
& maintenance.

Example: Factory ‘A’ uses electricity from two sources: the external power grid and an in-
house power generator. The cost associated with both of these sources of electricity will be
captured into two different Auxiliary Cost Centres.

• Summarization Cost Centre: When a factory has more than one source for any particular
utility, the costs associated with these sources will be captured in Auxiliary Cost Centres.
All these Auxiliary Cost Centres for any individual type of utility will form a single energy
cost centre called a Summarization Cost Centre. Thus the cost of energy obtained from
more than one source gets averaged out at a Summarization Cost Centres.

Example: Two Auxiliary Cost Centres, one for electricity purchased from the grid and the
other for in-house generated electricity, are summarized to show the total electricity
consumption of the factory in a Summarization Cost Centre.

Notes A factory’s total consumption of a certain type of utility is captured in one of the cost
centres listed below. This list is likely to vary from site to site depending on their current
metering and monitoring infrastructure and ERP usage.
1. Electricity summarization cost centre
2. Steam summarization cost centre
3. Water summarization cost centre
4. Miscellaneous summarization cost centre

Depending on factory readiness, some factories will start using all these cost centres with
immediate effect, while others will need to take one or two steps before reaching this stage.

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 The total utility from the Summarization Cost Centre is allocated using pushed methodology
to the different users/areas, called Consumption Cost Centres. These are Auxiliary Cost
Centres, from where utility resources are pulled using user standards to the respective SKU/
line combination.

Utilities consumed for general usage in a factory, for purposes such as lighting, heating and
air-conditioning for offices, are directly pushed to the cost of the products towards month end,
on the basis of machine hours. In fact, the consumption of utilities for general usage is broadly
fixed, and does not vary according to production volumes.

The following illustration summarizes utility push cost methodology, taking electricity as
an example.

Illustration: Producers Cost centres Consumption Cost

Electrical User standards
centres (areas)
Energy
Allocation ACC=Auxiliary cost
centre Processing Line 1
SFG 1
Processing
area
Bought-in Processing Line 2
Electricity SFG 2

ACC1

Summarization Packing Line 1

cost centre In-House SKU 1
Generated
(Electricity) Utilities
Filling Packing Line 1
and SKU 2
Packing
area
Packing Line 2
In-house SKU 3
generated
electricity

ACC2

General Pushed at the end of the

Usage month

EXAMPLE OF HOW TO CALCULATE USER STANDARDS THEORETICALLY

To measure compressed air consumption in a production line, we need to measure the number
of instruments installed on that production line and understand the air consumption of those
instruments per cycle. To do this, we must measure the cycle of operations for all of these
instruments in an hour, and calculate the total air demand on that line. Air used in a production
process can be estimated using a mass balance exercise. Alternatively, machine operating
manuals can guide on the demand of compressed air by the Line. Refrigeration demand can
be calculated by considering the total heat load in a production line and applying heat load
calculations.

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16.9 ACRONYMS

ABBREVIATION DESCRIPTION

ALT Available Loading Time

AMIS Alignment of Metrics Information System
AT Available Time
BoM Bill of Material
Capex Capital Expenditure
CC Conversion Cost
CCFOT Customer CaseFill On Time
CIP Cleaning In Process
COD Total Chemical Oxygen Demand
CRQS Consumer Relevant Quality Standards
CU Capacity utilisation
EPR Environmental Performance Reporting
ER Employee Relations
ERP Enterprise Resource Planning
FERT Finished Product
FG Finished Good
FOS Factory Operating System
FTE Full-Time Equivalent
GPS Global People Survey
GSCLT Global Supply Chain Leadership Team
GTBR Get The Basics Right
GTIN Global Trade Item Number
HALB Semi-Finished Product
HANA High-performance analytic appliance
IEA International Energy Agency
IP Industrial Performance
ISIS Integrated Supply management Information System
JTBD Jobs To Be Done
KODR Kenexa Online Dynamic Reporting
KAI Key Activity Indicator
KPI Key Performance Indicator
LP Labour Productivity
LT Loading Time
LTA Loss Time Accident

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ABBREVIATION DESCRIPTION

ManEx Manufacturing Excellence

MES Manufacturing Excellence Savings
MM&T Metering, Monitoring & Targeting
MP Manufacturing Performance
MTC Medical Treatment Case
NC Non Conformance
NVAA Non Value Added Activities
OEE Overall Equipment Efficiency
OR Output Reliability
OS System Occupational Safety System
OT Operating Time
PC Production Cost
PLT Production Line technology
PM Packing Material
PMW Packing Material Waste
PNP Planned Non Performance
PPI Process Performance Indicator
PPW Portfolio Produced Weekly
QTR Quarterly
R&M Repairs and Maintenance
RM Raw Materials
RMW Raw Material Waste
ROA Return On Assets
RWC Restricted Work Case
SAP Systems, Applications, Products in data processing
SCOA Standard Chart Of Accounts
SFG Semi-Finished Good
SHE Safety, Health and Environment
SKU Stock Keeping Unit
SP Shared Performance
TPM Total Productive Maintenance
TRFR Total Recordable Frequency Rate
TT Total Time
TU Trading Unit
UOM Unit Of Measurement
VOT Value Operating Time
WCM World Class Manufacturing
WIP Work In Progress
YTD Year To Date

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