Feed Operations: How expensive is shrink?

by Fred Fairchild
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grain
 
In a previous article, I discussed things that affect accurate inventory measurement. We looked at how the initial density taken at the time of receipt is determined by using a vessel of known capacity and filling it level to the top. Knowing the volume of the vessel and its weight, we can determine the net weight of the material in it and relate it to the volume. Most grains are measured in pounds per bushel while other materials, such as used in feed ingredients, use pounds per cubic foot for density measurement.

I believe there are three types of densities that might be found in materials depending on their condition. The initial density, or loose density, is when a sample is collected and measured. Changes in density occur when materials are consolidated due to vibration or overload pressure due to materials resting on materials as in a bin. So when measuring the amount of material, you have to account for consolidation or you will think you have lost some of the materials in a bin, but really haven’t. You will need to use a modified density to get the correct weight of materials in a given bin.

The most accurate way to determine if any change has occurred in a bin is to weigh the material delivered to the bin, and weigh it again as it leaves the bin. If grain is put in a bin and then aerated to keep it in condition, the weight leaving the bin will be less as moisture was removed with the air passing through the grain. Be careful when determining the amount of material in a bin that you are using an appropriate density for the material in the bin.

If grain is wetted while in a bin, moisture is absorbed and the kernels swell in size. A good example is if a bin of grain is inundated by flood waters. In 1993, during floods along the Mississippi River, several corrugated steel grain bins burst due to pressures created when the bins were inundated in flood water and the grain in them expanded.

Now let’s turn to the value of shrink or gain and where it may be found in a feed mill. Bert Emmerson, former manager for Tennessee Farmers Coop, once said: “You can’t manage what you can’t measure.” Measuring and minimizing shrink is important to a company’s bottom line.

Shrink is the loss of material from the time it enters a plant until it leaves the plant. This shrink affects the actual inventory of materials available for use in a facility. Inventory is not only a measure of quantities of a material on hand, but is converted into the monetary value for that material. Shrink in material available has a negative monetary value. The opposite of shrink is gain. This can occur when moisture is added in the process for making a product and is not removed.

Things that cause shrink include:

  • Receiving (dust loss during unloading and handling)
  • Grinding (dust losses)
  • Mixing (moisture loss)
  • Pelleting (moisture loss)
  • Packaging (overfilling)
  • Warehouse (broken or damaged bags)
  • Bulk Loadout (wind/dust).

We will look at each of these in further detail.

Shrink (gain) may be expressed in three different ways.

1. Weight = (beginning inventory + receipts) – (shipping and ending inventory) = shrink (gain).

2. Percent % = shrink (gain) by weight x 100/shipments by weight.

3. Monetary Value = shrink (gain) by weight x monetary value/weight unit = monetary value of shrink (gain).

Charles Stark, associate professor at Kansas State University, found in a feed mill industry survey that average shrink was 0.81%. The range of shrink or gain varied from 2.5% shrink to 1.09% gain. If feed is valued at $300 per ton and the shrink (loss) is 0.81%, the cost of the shrink would be $300 x .0081 = $2.43 per ton. If the feed mill produces 6,000 tons per week, the shrink loss value at $2.43 per ton would be $14,500. That is significant, and that is why shrink must be measured and managed to keep it at a minimum.

grain
Calculating shrink includes estimating loss in outside grain piles.
 
Let’s look at specific locations in a feed mill and how shrink or gain might occur in each:

Bulk receiving

Fugitive dust losses in the dumping procedure are due to wind passing through the pit area. Use choke filled shallow pits with high speed take-away systems in place of huge receiving pits and dust control systems. Always use destination weights, not origin weights, for what you are receiving. Leaks can occur in trucks and rail cars in transit.

Using the plant’s scale, you are paying for the weight you get. Spillage and foreign materials in the pit area must be cleaned up and saved if possible. The addition of moisture can occur if it is wet around the pit and rain is blowing into the receiving area. Shrink also may occur if the delivery truck or rail car is coated with ice or snow when it is unloaded.

Bag/tote receiving

Bags broken in transit or handling causes lost product. The weight of product in it will vary from bag to bag, but cumulative weights of the product in each bag should equal the weight of the amount of product ordered. Make sure all bags or totes are completely emptied so no product residue remains in a bag or tote. Make sure the count of bags in a shipment are adequate.

Grinding/sizing

Again, watch for fugitive dust losses before, during or after the grinding process. If air assist symptoms are used on hammermills, make sure a properly designed filtration system is used to separate product dust from the air and return it to the ground product stream.

Air assist systems also may absorb some of the moisture in the product being ground. There is a momentary change in the temperature of the product being ground that might contribute to shrink in a minor way.

Batch mixing

Gain may occur when: liquid ingredients or other products with higher moisture are mixed with another product; weighing errors are over/under actual batch weights required; and using a wrong ingredient or mixing a bad batch that must be disposed of or reworked into other batches, if possible.

Another factor affecting shrink or gain is if residues are left when a mixer is unloaded, but does not fully clean out. Inter-venting between the scale, mixer and surge bin below the mixer may send some product to a following batch. I suggest the inter-vent be sized large enough to maximize the air velocity in the vent so it does not exceed 500 feet per minute.

Pelling

Avoid any fugitive dusts that occur when filling the mash supply bin above the pelleting system. Confirm accuracy of the feeder from supply bin to conditioner. The amount and quality of steam or other moisture added in the conditioner and not removed in cooling can become gain in a finished product. Clean out any residue build-ups in the cooler or the ductwork from the cooler.

Bulk load-out

Watch for fugitive dust escaping into the air when loading a truck. Avoid spills and leaks during the loading cycle. Be aware of weather conditions, especially if using an outdoor loading area. Also make sure a truck has been fully cleaned out and no previous product residue remains before it is loaded as it may contaminate a load and give inaccurate weight readings for the load. Load-out areas and warehouse areas also should be secured so product theft is difficult.

General Practices

For all inbound materials check the supplier scale weights against the mill scale weights. Routinely check the ingredient and product moisture and densities. For shipping product, make sure the delivery trucks are always weighed empty and after loading as the net weight is a legal-for-trade, which may be used for billing. Make sure the truck scales weigh systems and their supports are kept clean from any build-up that could affect weight accuracies. Enclosed bulk receiving and load-out areas can greatly reduce fugitive dust escaping while unloading or loading.

Have a plant security plan and the ability to secure the plant to minimize theft of products. Regularly check the densities and accuracy of bin volumes holding products. Develop specific plans (SOPs) for conducting accurate bin inventories. Have an established pest control plan and use it.

Develop and use an actual shrink report and use it regularly to report actual shrink/gain occurring in the plant.

Summary

Good inventory procedures will help determine shrink or gain in the ingredients and finished products. All scales should be recertified on a regular basis. Even with good physical measurement of bin capacities and the depth of a material in a bin, the actual amount of product in a bin is dependent on accurate determination of the bulk density of product in the bin. Bulk ingredients of the same type may vary in density, even if from the same supplier.

Shrink is a cost of doing business that must be understood and managed. The greatest shrink or gain is caused by moisture changes, dust losses, spills and unrecoverable ingredients or product. Each plant should recognize where shrink or gain may occur and make the best efforts possible to control and minimize these losses.

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