The State of Food Manufacturing
Man & Machine Reach for Operational Excellence
September 10, 2012
Production improvement is always a driver in manufacturing, but there are other areas of concern in food and beverage, as survey participants make clear.
Standing still is an optimist’s take on falling behind, but no one in a hypercompetitive business like food and beverage manufacturing can be satisfied with the status quo. And this is certainly true of Food Engineering readers, who report their organizations’ ongoing investments in both process improvements and personnel.
Continuous improvement programs such as lean manufacturing and Six Sigma, along with automation’s role in faster/better/cheaper production, are frequently flagged as key manufacturing trends by production professionals in Food Engineering’s 2012 State of Food Manufacturing Survey (see chart on page 52). The analytical abilities of employees up and down the organizational chart are needed if manufacturers are to optimize their investments in technology and state-of-the-art equipment. Capital spending took a hit in 2009 but has since rebounded to historical levels. Survey respondents report an average increase of 6.2 percent in 2012 budgets for production, packaging and processing equipment, the biggest boost in five years.
As a proportion of facility budgets, allocations for purchases of production, packaging and process-control equipment and professional services represent 22 percent on average this year (see chart on page 52). To maximize return on that spending, manufacturing professionals believe a higher priority needs to be placed on human assets. Asked to rate 18 ways to improve productivity at their facilities, 27 percent indicate a great need for better skills training of line supervisors; 24 percent put a high priority on improved training of line operators. Equipment upgrades and improved maintenance systems also are areas of great need.
“More automation in processing demands a workforce which is more skilled and more technically savvy,” one reader succinctly notes. Adds another, “continuous improvement driven by the capabilities of our workforce to be a learning and lean organization” is critical in today’s manufacturing environment.
Respondents rate 18 factors as areas of great, some or no need at their plants. When a weighted score was generated for each factor, the need for improvement sometimes appears less than compelling. For example, two-thirds indicate their plant only has some need for process control upgrades, making that action only the fifth most important factor in productivity improvement. But when asked what types of automation hardware and software they intend to install this year, half say plant control systems or upgrades are planned. Two out of five plan to purchase digital sensors and programmable logic controllers. A third includes HMIs, lab equipment and CIP/sanitation systems on their shopping lists. Last year, only one in five intended to purchase HMIs. Wired network equipment is growing in purchase intent, doubling to one in five, the same proportion as wireless networks. The payoff from automation investments and enhanced personnel skills is higher production of saleable product, with less downtime and scrap. Metrics such as overall equipment effectiveness (OEE) are useful for tracking how well those investments pay off. One in six readers says OEE on their lines is below 60 percent. Most report line throughput minus downtime and scrap is in the 71 to 90 percent range; one in 10 puts OEE for their lines above 90 percent. On average, OEE is 74 percent, up seven points from 2011. (Cautionary note: Last year’s sample skewed toward smaller companies.) As with any benchmark, the objective is to do better, and respondents are targeting an OEE of 81 percent.
Data collection is necessary to calculate OEE, but human action is needed to move the needle up. That implies an organized effort, and companies lacking a formal continuous improvement program are becoming a rarity. Only one in 14 survey participants works for an organization without a continuous improvement program, half the ratio in 2009.
Lean manufacturing initiatives are the most popular programs and now are in place at three out of five plants. Two out of five organizations are utilizing total quality management, Six Sigma and total productive maintenance. Self-directed work teams are gaining adherents, with a third of readers saying they have been organized in their facilities. Recommendations from third-party auditors are incorporated into continuous improvement efforts at three out of 10 plants.
One in four participants states their organization implemented game-changing technology in the last year. In many cases, the changes reflect trends readers tag as having the biggest impact on manufacturing operations over the next five years.
Containers with consumer appeal and the materials and machines that make them are among the major trends, and some respondents point to the enabling technology their firms recently acquired. “High-speed plastic packaging line with integrated blow molding of packages” is one reader’s example of a game changer. Filler improvements and new tray-forming equipment are cited by others. Innovative new products and the machinery that produces them are often mentioned.
“HMIs at each line to update our operational KPIs and allow us to do root cause analysis to drive improvement” touches on both technology procurement lists and firms’ continuous improvement focus. “We have actually implemented several [game changers], with more in the wings,” a food professional writes, adding his company is committed to outpacing its competition on the technical innovation front. X-ray inspection equipment, data tracking software and warehouse management systems also are mentioned as one-step-ahead actions.
Shifts in the public’s purchase behavior are a double-edged sword, with both winners and losers citing changing product preferences as a reason for their plants’ production-volume trends. “All bakery items are down,” writes a manufacturer who is among the one in 10 expecting a drop in plant throughput this year. Half of survey participants expect their production volume to increase, with new manufacturing contracts and consumption trends the most frequently mentioned reasons. “Consumer demand and greater efficiencies realized through implementing lean manufacturing principles” is cause for one reader’s optimism. While aggregate gains in throughput are a modest 4.66 percent, the average among those anticipating higher volumes is 14 percent.
Safety ducks in order?
High-profile product recalls and public health events roiled the industry and made food safety a top priority in the last decade. Those events have occurred much less frequently in recent years, which may explain why food safety seldom is mentioned in the survey as a leading area of manufacturing concern. However, the fallout from those recalls is expected to impact manufacturing in the coming years.
The Food Safety Modernization Act (FSMA), as well as the industry’s self-policing Global Food Safety Initiative (GFSI), is mentioned by several respondents as a trend shaper, particularly in terms of the more demanding audits and higher food safety standards involved. While uncertainty still shrouds the specifics of FSMA, most organizations are aware of what they must do and are confident they will comply.
Half of respondents agree with the statement, “We already practice what FSMA preaches,” up from a third in 2011. Fewer than one in 10 thinks FSMA will create an undue burden, a 50 percent reduction from a year ago. On the other hand, fewer firms are in denial of FSMA’s impact: Only one in seven believes FSMA will have no effect on their business, half the ratio of last year. Almost a third of respondents indicate the law will push them closer to an electronic recordkeeping system.
The need to respond quickly to documentation requests also is reflected by the 44 percent of readers indicating their firms have instituted electronic HACCP records, up from 31 percent in 2011. One in five says they use electronic signatures to document processing steps.
Underlying both FSMA and GFSI is a requirement to move food safety from a departmental function to a management-led system. Almost four out of five say their companies have instituted a food safety management system, up from three out of five. Lot-level traceability also is widely embraced (76 percent). Sharp increases in microbiological and chemical testing of raw material (63 percent), paper-based HACCP programs (58 percent) and item-level traceability (50 percent) are reported.
If FSMA generated blank stares a year ago, the same could be said of the certified standards under GFSI. That no longer is true, and manufacturers are deciding which standard to adopt. SQF, which is the only US-based standards group, is the standard of choice for half the surveyed professionals, up from a third in 2011. Europe-based standards such as BRC and SQF 2000 also are gaining traction.
A year ago, companies certified under one of the GFSI programs could be characterized as early adopters, and they spent an average of 11 months and $324,429 to secure certification. As the programs move into the mainstream, completing the process is taking longer. The average duration now is 14 months, with almost two in five companies investing 19 months or more in the process. Documentation requirements are far and away the biggest challenge and most significant procedural change brought on by the process.
Doing well by doing right
Sustainable manufacturing practices and corporate social responsibility (CSR) programs have become mainstream, with three-quarters of companies reporting initiatives in these areas. Workplace safety and diversity programs are the most commonly cited CSR examples, followed by social responsibility/community outreach and tracking of water and electricity. Half of respondents’ companies can calculate their carbon footprint, up from a third.
Energy use is a particular concern, though some put conservation efforts in the broader context of a war on waste. “Energy is our highest cost-of-production item,” writes one food professional, “and energy conservation projects provide a relatively quick payback.” Putting energy efficiency in the context of sustainability, another writes, “there will be added cost in the short term, but long term it should reduce the carbon footprints and … should add to the revenue stream.”
Employee welfare is an element of CSR, and employee safety and ergonomics are growing concerns. About half of the survey participants say their organizations implemented new worker safety programs in the last year. Safety awareness campaigns and daily meetings, “industrial athlete” stretching programs and physical demand assessments for new hires are examples, along with revisions of programs already instituted.
Who answered the survey?
Information in this report is drawn from an April 2012 survey of Food Engineering readers. Consistent with previous surveys, engineers constituted a plurality, with 36 percent indicating engineering best describes their job function. Quality control professionals compose 20 percent of the base, followed by operations management (15 percent), general administrative management (9 percent), production management (7 percent) and purchasing (6 percent). Other job functions include R&D, packaging, continuous improvement and logistics and supply chain.
Meat, poultry and seafood is the most frequently cited product category of respondents (15 percent), followed by flavors, ingredients and supplement suppliers (14 percent); baking and snack manufacturers (13 percent); and beverage producers (12 percent). Other categories include dairy and frozen novelties, shelf-stable foods, frozen and prepared meals, cereal and grain-based products and candy and confections.
More than two out of five (43 percent) work at plants with 101-250 employees; one-quarter are based at facilities with 251-500 staffers. One in 10 works at a plant with 100 and fewer, and one in 10 is employed at a facility with more than 1,000 workers.