Industry Expert Steve Buchanan talks about food processing and manufacturing supply chain and processing challenges and how Maine Pointe helps companies achieve their goals.
Q: From your perspective, what are the biggest challenges that food processors and manufacturers face at this time?
It’s well known that margins in grocery stores and supermarkets are lower than in almost any other industry, so increases or decreases in costs of production cannot be reflected in end-product price without the danger of losing shelf space, location, or even possibly losing an entire account. Efficiency in production then becomes more important than in nearly any other industry.
Even so, aggressively pushing productivity in order to lower costs is an extremely risky proposition because you cannot compromise food safety. That threat is always in the background—one misstep and any gains you made in productivity may be wiped out many times by fines, legal liability, and lowered demand. There’s a fine line you cannot under any circumstances cross. Manufacturers and processors know that it only takes one incident of to incur increased scrutiny of the USDA and the public. Companies must be sure they are ready to withstand that kind of scrutiny at a moment’s notice.
Q: Are most companies prepared to withstand that kind of scrutiny?
Most well managed food processors are well positioned to do so. The biggest management challenge related to safety is that sometimes you may have management preaching a strict philosophy of food safety, yet their simultaneous push on productivity creates confusion on the line. I have seen too often a tendency to inadvertently sacrifice food safety and employee in the name of productivity at the supervisory level.
Q: Let’s talk about productivity and efficiency at the plant level. How do companies promote efficiency while managing risk, whether due to food safety or otherwise?
Labor is a very minor element in food cost. The main driver of productivity within food processing or food manufacturing is typically OEE (overall equipment effectiveness). Other than mechanical downtime, the major factor that drives poor OEE is downtime attributable to sanitation and product changeover. Changeovers can be extremely costly, often involving disassembling the entire production line, sanitizing, maybe even cleaning in place with caustic—all of which takes a very long time. This reduces that OEE, or increases the cost of manufacturing the product. To reduce the number of changeovers, companies typically want lines dedicated to run just one product, or the long runs of one product, to reduce the number of changeovers.
Of course there are many managerial tools and techniques to improve the effectiveness of changeovers and to ensure you are running at the maximum rate for each product while you are running. That is where the expertise of Maine Pointe comes into play.
Q: Wouldn’t the logical step, then, be to invest capital into dedicated equipment?
It would, but capital is often difficult to come by and changes in consumer demand can very quickly make the assumptions made in the cost benefit analysis moot. The market is continually demanding more product variations in packaging size, flavorings, and content. Health trends play into this considerably as well.
Consider the edible oils industry. Years ago, there was a push to reduce products with saturated fat and the market responded, often with significant capital investment. In many cases, the saturated fat was reduced or eliminated with the introduction of trans fat. Now, the push is on to eliminate the trans fat. Some municipalities have even required restaurant chains to eliminate them. Ironically, one way to eliminate the trans fat is to saturate it. You may well remember the push a number of years ago to eliminate the use of tropical oils, namely palm oil, from popcorn made in movie theaters. Palm oil is now in great demand as a replacement for oils with trans fats. This market shift has rendered much of the capital investment made years ago obsolete.
SME background and experience - Stephen Buchanan
Steve has over twenty eight years of combined industry and consulting experience. Throughout his twenty years of consulting, Steve has focused on helping companies achieve bottom-line results through the implementation of productivity and quality improvements. His areas of expertise include maintenance, planning and scheduling, yield, throughput, organizational redesign and inventory control. Steve’s experience spans a broad range of industries including aerospace, chemical, automobile parts manufacturing, papermaking, fiber manufacturing, mining, steel and aluminum production, food processing, brewing and beverage manufacturing. Steve is a graduate of the Pennsylvania State University with a Bachelors degree in Business Administration.