Waste Not, Want Not – Optimizing Usage Variance and Waste Management Can Deliver Big Gains

Cutting Bulk Waste in Personal Care Manufacturing Case Study

Cutting Bulk Waste in Personal Care Manufacturing Case Study

The company is a one-stop partner for its customers, supporting products from early concept and formulation through manufacturing and filling, with a strong emphasis on innovation, speed to market, and flexible capacity to meet shifting demand. Headquartered in the Midwestern U.S. with operations across North America and Europe and a market capitalization exceeding $1 billion, the company faced growing margin pressure across its multi-site network. They contacted TBM to drive a focused effort to unlock cost savings and better understand its true productivity potential by targeting bulk waste and material usage variance, where materials account for up to 70% of total product cost.

Challenge

The company needed to streamline its cost structure and achieve 5% savings at each of its 10 sites while tackling significant bulk waste and material usage variance (MUV) in a complex, distributed operation.

A key challenge from the start was getting an accurate read on the overall capability of the firm’s entire process. What is its true productivity ceiling? Where are we now and where do we need to go? One key focus area was “Bulk Waste,” where reducing material costs—representing 60–70% of the total product cost structure—drove the greatest impact.

A Mass Balance Study pointed to several core steps in the process that could yield the most savings in the quickest fashion:

  1. The company’s bulk mixing and purging process
  2. Its product fill capability and associated giveaway approach, and
  3. Identifying and eliminating excess scrap and waste, particularly around material usage variance (MUV).

Solution

Integrate Lean and Continuous Improvement (CI) principles, including value-stream mapping at all sites and a focused Mass Balance Study.

The company’s willingness to integrate lean and continuous improvement (CI) principles throughout the process not only helped provide a laser focus on top priority areas but also uncovered other parts of the process that benefited from improvement, for example around time savings and more efficient labor allotment. The first wave of work involved value-stream mapping at all 10 of the company’s sites to identify and analyze the best opportunities. Some of the bigger buckets of opportunity revolved around OEE, where we focused on downtime, speed, and quality by addressing labor alignment, inventory reductions, and warehouse optimization. Another major area of opportunity, and the focus of this case study, surfaced around material usage variance (MUV), which was a particularly acute challenge at one of the company’s sites.

Results

The initiative reduced bulk waste and material usage variance, improved OEE through better labor alignment, inventory reductions, and warehouse optimization, and moved the company closer to its cost savings goals across the network.
  • Generated up to $3 million in savings per site from value stream mapping work
  • Optimized MUV at one site led to $500,000 in savings
  • Eliminated $75,000 in costs from just three lines, well above expectations
  • Developed Standard Work for critical operational procedures
  • Helped provide an extension/force multiplier to the company’s CI team

Frequently Asked Questions

What is Material Usage Variance (MUV) in manufacturing?
Material Usage Variance (MUV) measures the cost impact of using more or less raw material than the standard quantity required to produce a product. It reveals how efficiently materials are consumed and is critical because materials typically account for 50–70% of total product cost, meaning even small variances can significantly affect profitability.
How does bulk waste impact cost structure in personal care and cosmetics manufacturing?
Bulk waste directly drives material usage variance and can represent 60–70% of total product cost. In high-volume personal care and cosmetics production, excess waste during mixing, purging, filling, and scrap processes can quickly translate into hundreds of thousands of dollars in lost margin if not controlled through standard work and process discipline.
How can manufacturers reduce waste during line changeovers and purging?
Manufacturers can reduce purge waste by implementing standard work that defines optimal purge time, volume, and operating parameters. In this case, excessive purging was reduced from 100–150 pounds of material per changeover to as little as 10–15 pounds by tightening procedures and operator practices.
What role does overfilling and “giveaway” play in material loss?
Overfilling above target weight—often done to ensure compliance—creates hidden waste known as giveaway. By validating process capability and filling closer to the target and lower specification limit, manufacturers can eliminate unnecessary grams per unit that accumulate into large annual material losses across high-volume production lines.
What financial results can companies achieve by improving MUV and waste management?
By addressing mixing and purging losses, filler giveaway, scrap, and inspection waste, the manufacturer achieved up to $500,000 in annual savings at a single site, eliminated $75,000 in costs across three lines, and identified opportunities worth up to $3 million per site through value stream mapping and standard work deployment.

Topics in this Case Study

Performance ImprovementContinuous Improvement

At a Glance

Client

Leading contract manufacturer developing and producing personal care, health care, and fragrance products for brand owners.

Results

  • Generated up to $3 million in savings
  • Optimized MUV led to $500,000 in savings
  • Eliminated $75,000 in costs from just three lines
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