Despite reporting a R76-million loss for its glass business in 2015, packaging company Nampak has recorded seven consecutive profitable months since July, owing to improved sales and operational planning processes, and key operational excellence interventions, thereby leading to greater operational efficiencies.

Nampak CEO André de Ruyter told media at the company’s glass manufacturing facilities, in Germiston, last month that the glass division had been losing money, following the commissioning of the third furnace in 2014, prompting Nampak to overhaul significant elements of the operation, including the divisional leadership team.

Nampak Glass MD Pieter van den Berg notes that, through several initiatives aimed at improving operational efficiencies, the division has reduced its monthly glass manufacturing breakeven point materially, depending on the product mix and campaign build parameters.

Increased Capacity
To help improve its glass manufacturing capacity, the company invested R1.2-billion in a 400 t furnace, Furnace 3, which has increased Nampak Glass’s manufacturing capacity by 56%.

The new furnace was commissioned in late 2014, which Van den Berg highlights was a trying time for the division, owing to manufacturing disruptions.

“Furnace testing and corrective interventions were ongoing and the forming equipment installed on the new furnace showed severe capability constraints, further compromising manufacturing and output capability. These had to be replaced with proven alternatives,” Van den Berg explains.

Nampak currently operates three furnaces, each with three forming lines and double- and triple-gob capabilities, with the latter capability enabling the division to increase output of more than 500 000 units a day on a forming line. ‘Gob’ refers to the molten glass before it is formed into a glass product.

Nampak Glass’s current manufacturing capacity is 285 000 t/y.

De Ruyter explained that having all Nampak’s furnace operations at one site offered significant economies of scale and also “diluted” overhead costs, particularly utility, infrastructure and warehousing costs.

“There is a narrative that corporate South Africa is not investing, but Nampak has demonstrated that it is investing significantly in South Africa . . . it is also investing in the latest technology, which provides us with a very competitive position on the cost curve,” he asserted.

Nampak has added a covered warehouse on site, enhancing storage space by 20 000 m2. Following the installation of the new furnace and to ensure business continuity, Nampak invested in a fully operational 20 MW rotary uninterrupted power supply to ensure it is not affected by power cuts.

Van den Berg says the company had to align its manufacturing footprint, which resulted in a combination of short-run and long-run volume manufacturing strategies being implemented to improve competitiveness.

He explains that the short-run volume strategy is entrepreneurial and enables manufacturers to react quickly to market demand; however, this strategy requires a significant number of job changes in equipment configurations to produce the various products.

Owing to the time it takes to make a job change and the difficulty of reacting quickly enough to market demands, Van den Berg says, this strategy makes it difficult for the company to maintain profitability.

In comparison, long-run volume strategies require fewer job changes, as they focus on mass producing and prestocking fewer products. This has enabled Nampak, in conjunction with clients, to reduce the number of product variables by about a third and has also resulted in significantly improved output because of reduced complexity.

While job changes are still necessary, even when employing, long-run volume strategies, Van den Berg asserts “when a job change is done, the company ensures that it meets all customer requirements”

The company has also dedicated its furnace operations to the production of specific glass colours, such as flint, amber, dark green, deadleaf and emerald green.

Van den Berg explains that, while each furnace might produce differently coloured products, the required changes are now properly planned. This, in turn, significantly improves Nampak’s manufacturing efficiency and uptime, dedicating furnaces, and flexing between colours when required throughout the year.