The importance of being agile

21 November 2016

Representatives from across the food manufacturing supply chain, industry trade bodies and academics, recently got together at a Siemens-hosted roundtable event to debate the issues that agile manufacturing raises for the food and beverage industry.

Success, in a market sector that is becoming increasingly competitive, requires the ability to quickly respond to changing trends and consumer demands and this requires food and drink manufacturers to be more agile and keep pace as manufacturing technologies advance.
Packaging flexibility is a trend driven by retailers and the roundtable participants were in general agreement that their products are no more agile now than they were previously, but that they are required to package products in an ever-growing variety of ways. Supermarkets, for example, are demanding shelf-ready cases for in-store display. This poses a problem for the manufacturer as the dimensions of shelving varies between supermarkets, which means there is a requirement to produce different packaging for each retailer. Some retailers will place more importance on the appearance of the packaging, wanting it to look attractive in situ, whereas the others are more concerned with keeping costs down. One roundtable participant – biscuit manufacturer – said that most of the company’s recent manufacturing investment business has been in packaging flexibility. The product has stayed the same, but the variety of packet sizes is now greater than ever before.

One of the big challenges for supermarkets – especially with the rise of ‘discounters’ – is to get the costs of their core SKUs down. For many, the easiest way to do this is to value engineer packaging sizes. This does not compromise the quality of the product and enables production to continue unaffected. For food and beverage manufacturers though, this also becomes another driver of demand for greater packaging flexibility.

A consumer trend towards smaller packaging sizes was also noted. Consumers are shopping more frequently, moving away from the traditional weekly or even monthly ‘big shop’ and instead are more often buying on-the-day. Food manufacturers’ marketing departments were cited as the biggest influence when it comes to responding to consumer trends.

Rather than simply responding to demand, one participant cited an example of a sector that is actually creating demand and boosting business through packaging flexibility. Chewing gum has largely been the same product for decades. With demand plateauing, the industry created a whole new market when it developed in-car gum bottles – creating an additional gum-consuming touchpoint for consumers that has proved enduringly popular.

Where will investment come from?
In response to demand for flexibility, food and beverage manufacturers need to be able to achieve ever-quicker production line changeovers to cope with the multiple products and packaging variables produced on a line. Traditionally, changeovers have relied on manually changing over production requirements. However, increasing adoption of automation has seen changeovers which previously took 10 hours now taking just 20 minutes.

It is vital that companies continue to invest in technology to keep up with the intensified demand for flexibility. Continuing to speed up production line changeovers requires ever-growing amounts of automation technology. 

Participants went on to discuss where this investment should come from – essentially whether the retailer, consumer or manufacturer should be picking up the bill.

Investment in machinery that increases automation can be a significant capital expenditure (CAPEX) for smaller manufacturers, particularly if they cannot predict continued demand for a specific element of flexibility. To assuage this risk, some participants said that outsourcing production to third parties – particularly when trialing new products or packaging variables – was something they did on a regular basis. They then have the option to move production in-house if successful, but the agility to simply cancel a contract if it does not prove viable or demand quickly wanes.

Other participants suggested ownership of production machines was becoming irrelevant, and predicted that the manufacturing industry is moving towards a leasing model, or even something similar to personal contract purchase (PCP) in the automotive industry, which would allow them to always have an up-to-date machine by facilitating regular trade-ins for the latest model.

Responding to demand
With machine capabilities increasing, participants highlighted the training and skills gap. Many agreed that if there is a stop in production, it is very likely to be due to human intervention, via the cleaning process or changing the SKU type. Any stop in the flow due to a breakdown requiring maintenance work is made difficult with any black box technology and is then likely to need OEM intervention to be fixed, as knowledge on the technology and innumerable parameters means staff are unlikely to be able to fix something themselves. It was agreed that upskilling staff is vital.

Concluding the roundtable discussion, participants wondered whether food and beverage manufacture would soon reach ‘peak flexibility’. Some reasoned that we are getting to a stage where there is an overwhelming amount of choice for both retailers and consumers, and that streamlining product and packaging variables to a manageable level would help keep manufacturing efficient and cost-effective. However, marketing innovation and the consumer’s appetite for new and exciting products is at odds with this theory. New production facilities with real-time data and integrated operations have the possibility to deliver manufacturing agility and productivity. The challenge is to apply the same methodology in existing and often under-invested facilities. 

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