The 21st Century Food Manufacturing Organization

Five years into the new millennium, a handful of manufacturing visionaries assesses the current state of American food processing and whether it’s prepared for the future.

By Mike Pehanich, Plant Operations Editor, and Dave Fusaro, Editor in Chief

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Editor's Note: Five years into the new millennium, the American food processing industry remains tumultuous. Plant rationalization and downsizing continue. Major players still play draw poker with their portfolios. Information systems promise solutions to unclear questions. Strategies are often afterthoughts. So where is the industry headed? Food Processing asked a handful of manufacturing visionaries to play futurists. Following is a distillation of their collective vision.



We are currently approaching another major point of transition in the development of the food industry. The downsizing, realignment and consolidations of the past 20 years are drawing to a close. Processors have taken a lot of manufacturing capacity out of the system. They can’t cut their way to prosperity much longer.

But cuts and consolidation also have put the food industry in a position to create and grow. As the large conglomerates of the 1970s and ’80s morphed into the highly focused enterprises of the past 20 years, we have seen business focusing on holding the line on price by reducing cost while still driving value to the customer.

“The food industry has certainly had its share of changes over the past few years,” says Jim Hardy, newly named senior vice president-enterprise manufacturing at ConAgra Foods (www.conagra.com), Omaha, Neb. “Consolidation has been a way of life. The eventual right-sizing of those organizations has led to reductions in force and a downsizing of the overall workforce. It’s clear these market forces are not finished with their impact on our organizations as we look to the future. Global market forces are relatively late to the game for the food industry, and we only have to look at other industries to comprehend the road in front of us.

“In order for our manufacturing organizations to be considered world class they will certainly have some traits which are common,” he continues. “These traits include but are not limited to the following: lean, empowered, process- and customer-focused, strategically aligned. Our ability to execute with excellence will separate us from our competitors.”

“If one phrase could define the last 20 years it’s the generation of sharpened focus. Now it is time to make that focus grow,” adds Burt Young, director of food and beverage for the engineering firm of Lockwood Greene (www.lg.com), Spartanburg, S.C. As former vice president of engineering for Kraft Foods and having held that same title for APV Crepaco, Young has viewed food manufacturing from the perspectives of food processor, equipment maker and engineering company through the period of the industry’s most dramatic change.

“In the new era of growth, we will continue to expand horizontally but with better and expanded focus,” Young continues. “To be better creators, we will reinvent engineering and R&D. Together they comprise the missing catalyst to food industry growth.”

How will this happen after we have so severely downsized these groups?

“The answer will be determined by who can best carry risk, who can enhance margin, who can control price,” answers Young. “The winners in the food manufacturing game will be those who can move the technology and make it serve the industry. Creative manufacturers will be able to move technology from one industrial sector into another. The food industry’s insularity – its isolation from other industries – will no longer hold up.

“In the ’90s, the food industry began to outsource its engineers. In my early days in the industry, internal engineering resources were used to maintain and improve the current asset base. We could be seen as guardians at the gate. Our role was maintaining and improving on things as they were. A company had huge capital investment in its plants. Engineers were charged with maintaining that investment in technology. We were defenders of the status quo, charged with driving productivity through the plants,” says Young.

“Today the supply chain drives our business,” he sums. “We use technology – principally information technology – to enhance opportunities.”


NOTE TO R&D

Cross-functional teams that include representatives of diverse disciplines may still seem new to some processors. But Steve Gundrum, president and CEO of Mattson and Co., an independent product development company located in Foster in California’s Silicon Valley, suggests food processors adopt more dynamic product development team models for faster and more effective product turnaround.

With its origins in software development, Extreme Programming, or “XP,” is a low-risk, small-team approach characterized by rapid feedback and short cycle times. Mattson embraces and encourages the concept. Each team member participates in every phase of the project.

In the software industry, two programmers work harmoniously to develop a product. One programs, the other debugs. Then they reverse roles, all the while receiving feedback from their customer. The food version of XP matches a culinary expert with a food scientist. They may utilize wireless tablet PCs and other collaboration technologies to generate their formulation.

Another approach employed by the software industry is the Open Source team, a technique made famous in the development of the Linux computer operating system and TiVo. In the food rendition of Open Source, a talented individual develops a prototype product then asks a variety of experts to improve upon it.

A food industry demonstration called Project Delta involved supplier firms, freelance chefs and representatives of Kraft, Kellogg and other major processing firms to develop a more healthy, premium-quality cookie. We’ll look at that development in case history style in our October issue.

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