1995 KVY AREA PAPER: UTILISATION OF PRODUCTION
RESOURCES
1. Cavacitv Plan
Manufacturing capacity should be planned to meet
Marketing forecasts including seasonal
and other fluctuations. Additional capacity should
only be planned in nominated key
operating companies or when markets are
particularly volatile and spare capacity
elsewhere in BAT cannot be used due to sourcing or
import restrictions.
Where possible, contract manufacture which absorbs
surplus capacity in other BAT
companies, must be considered as an alternative to
investment in new capacity or where
there are overall cost benefits.
For hygiene reasons, Primary manufiLcture should
not be planned for full three-shift
operation.
Contingency plans should be made to respond to a
disaster at a production site or
warehouse or at a key supplier. Plans should be
consistent with the format being
developed at Southampton plant and should include
procedures to:-
Assess then minimise risk.
Manage the disaster and minimise its effect on
personnel and properry.
Establish alternative production sources in the
event the disaster could produce
interruptions to market supply.
Restore production capability-
2. Machinem
Investment in new machinery must always maintain
or improve product quality.
New technology will be adopted where product and
commercial benefit can be shown.
Machinery purchases should be consistent with
BATCo and regional machinery
standardisation.
Machinery utilisation should be maxirrased,
including the use of multi-shift woricing where
this is cost effective.
3. Production Costs
Companies should aim to be the lowest-cost
producer where competitive markets e)dst to
achieve cost reductions of at least 5% per year in
real per mille costs (t-cluding
depreciation) on average over the plan period.
Competitor production performance and capability
should be specifically reviewed on a
regular basis with particular reference to their
production strategy and production cost
structure. L7
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Production departments should provide Marketing
with information on each product r1j
manufactured which reflects the true costs ofthe
different cigarette and pack cr\
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BATCo document for Province of BritiSh Columbia 23
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specifications, production volumes etc. A costing
model which allows allocation of fixed
and variable productions costs to brands is being
developed at Southampton.
Production plans to reduce costs should identify:-
3.1 Targets for improving productivity in the
direct and indirect areas. Strate~ries
should include:-
Flexible Working practices.
Team Working and *Mini Factories".
Reduced Product handling-
Contracting out services, iffinancially viable,
and with a view to
improving the quality of service.
Use of effective information systems.
Machinery investment where justified.
Reduced layers ofmanagement.
Nfeans to ensure a healthy IR environment.
3--' Targets for process and material cost
reductions. Strategies should include--
The principles ofvWH.
Reductions in stock levels, including Finished
Goods, W.MS and R&RS.
Rationalisation of specifications.
Reductions in energy usa_ge ratios and energy
costs.
Regional Cooperation on stock items.
Use ofProcurement Dept- to ensure competitive
purchasing.
3.3 Targets for improved use of existing
resources. Strategies should include -
'-fachine Efficiency improvement prograrruncs.
Improvements to material and cut tobacco quality.
Comprehensive maintenance and machine clearing
programmes
On-floor management and supervision.
Improvements in skills, through local or regional
training.
Reduced machine change-over times.
Disposal ofsurplus assets.
4. Product Ounlirv
Companies should plan that product quality meets
the expectations ofthe consumer, is
superior to that of competition where this M'sts
and that, as a minimum, produc-i meet
standards set under relevant legislations.
Production plans to improve product quality should
show targets for improvements in
Product Quality Ratings, performance against
competition (where appropriate) and
reductions in consumer complaints. Strategies
include:-
Moving responsibility for quality to machine
operator level.
Quality training at all levels.
Quality Performance Audits and Reviews at
shop-floor level.
Compliance with QC Protocols and Q Methods.
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BATCo document for Province of BritiSh Columbia 23
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Investment in on-line quality measurement.
Off-line quality measurement at the point of
manufacture.
Quality data and complaints analysis.
Quality system and procedures which are consistent
with the principles of ISO
9000.
Machinery investment where specifically justified.
Effective Machine maintenance programmes.
Working with material suppliers to enhance the
quality of their products and
services.
Reducing the cost of quality by emphasising
prevention of defects rather than their
detection.
5. Health and Safetv
Companies should aim to eliminate all accidents
and risks to health to personnel on 13AT
premises.
Production plans to improve Health and Safety
should show strategies for reducing the
number of accidents and the time lost through
accidents and for improvements in hygiene.
Strategies should include:-
Compliance with BAT safety requirements as
expressed in BAT SaferyNfanuals
and Guidelines.
Ensuring that contractors are carefully selected
and supervised and are obliged to
adhere to BAT standards of safety.
Compliance by visitors with BAT safety standards.
General and job specific safety training for all
employees.
An effective safety organisation and regular
safety meetings and audits at Company
and Department level.
Promotion of the safety message through specific
campaigns and programmes such
as "Saf~ry Week".
Provision of saf: systems of work.
Deta~ed investization of all accidents and
incidents which could hive led to an
accident.
Machinery which is fuUy guarded and interlocked.
Safe storage and use of hazardous substances.
Effective systems for fire prevention and fire
fighting at all locations, including
remote warehouses and depots.
Elimination of electrical hazards.
Meeting all relevant legislation.
Maintaining the highest standards of hygiene in
the factory, lavatories. kitchens
etc-, including regular Hy ene Audits.
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BATCo document for Province of BritiSh Columbia 23
April 1999