Headquartered in London and St. Gallen, Switzerland, PIMS conducts benchmarking studies in a number of industries, including lubricants, where it gathers operational and financial information on more than 200 plants worldwide. Associate Director Omer Chowdhury broke out results for North and South America in December at the ICIS Pan American Base Oils & Lubricants Conference in Jersey City, New Jersey, United States.

PIMS defines top performers by four criteria: blending, filling packages and warehousing all on one site; achieving top quartile per-unit manufacturing costs in region; keeping manufacturing costs lower than par, or what PIMS would predict based on plant profile; and top quartile labor productivity. Chowdhury said those criteria were met by five of the 40 North American plants that participated in the latest study and five of the 20 in South America.

Economies of scale and automation were clear markers of success in North America. The average size of blending batches — or runs where in-line blending was used — for top performers was 74 metric tons compared to just 50 tons for other plants. When it came to package filling, top performers averaged 26 tons per run for packages of 10 or more liters and 93 tons for smaller packs, compared to 15 tons and 27 tons, respectively for other plants.

“Bigger batches means fewer changeovers and less time spent on setting up the blending equipment,” Chowdhury said.

In South America, though, top-performing plants had less economies of scale than their peers, averaging just 26 tons for blend batches and filling runs of 17 tons and 15 tons for large and small packs, versus 71 tons, 36 tons and 54 tons, respectively, for others in the region.

Data on automation showed similar contrasts. Top performers in North America used in-line blending for 89% of their output compared to 68% for others in the region. In South America, none of the top performers used in-line blending, while other plants used it for 55% of output. North American top performers had higher filling line automation indices (a PIMS measure) than peers, while indices of South American top performers were lower than their peers. Warehousing was significantly more automated than normal for North American top performers but less automated than normal for South American counterparts.

PIMS also rates plants on the complexity of their manufacturing operations — the variety of products, formulations and stock keeping units that they produce. “Less variety means less complexity,” Chowdhury explained. “There is a high correlation between complexity and cost.”

In North America, high achievement correlated to low complexity. Top-performing North American plants averaged 0.52 formulations per 1,000 tons of blending output, compared to 1.26 formulations/t for other plants. In South America, top performers averaged 1.67 formulations/t versus 1.45 for other plants.

Chowdhury said South American high-achieving plants did gain advantage in the speed at which they completed processes. They took an average of 4.54 hours to complete a blending run while other plants averaged 6.16 hours. Top performer fill runs took 3.3 hours for large packs and 4.5 hours for small packs, compared to 3.65 hours and 5.39 hours, respectively. Loading deliveries onto trucks took just 1.13 hours at top-performing plants compared to 2.88 at others.

“Their emphasis is on operational excellence,” Chowdhury said. “It is manufacturing efficiency that enables them to stand out from the crowd, rather than economies of scale or automation.”

Chowdhury noted that top performers in North America are following the same recipe as those from PIMS’ global study — achieving economies of scale, employing automation and minimizing complexity of operations.

“North American champions follow suit,” he said. “They are in line with the world champion plants. In South America champions have a different strategy altogether. They have smaller batches, smaller filling runs, less automation, higher complexity, but they stay ahead of the curve through operational excellence and efficiency in their production methods.”

He suggested that the findings from both regions are instructive.

“If you think about the South American champions, the way they are able to be a champion despite not having the automation and despite a high degree of complexity is by optimizing the amount of downtime they have. These are lessons that any plant in North America or globally can learn.”  

Tim Sullivan is Executive Editor of Lubes’n’Greases. Contact him at Tim@LubesnGreases.com