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.

One of the most acute concerns in manufacturing circles is the engineering function. “The role for engineering will expand beyond traditional project work,” predicts Dave Kramer, vice president of engineering in the Cincinnati office of Sara Lee Foods (
www.saralee.com). “The entry-level engineer will need to add personnel safety, environmental compliance, food safety, HACCP, finance, sanitary design, sanitation technology, new product development, logistics, information technology and customer interface skills to his resume in order to climb the management ladder and work effectively across the enterprise.

“I don’t foresee expanding engineering departments in the food industry,” Kramer continues, “so this will require us to develop strong partnerships with outside engineering firms because the shorter timelines we have for projects and the increased complexity of projects will prohibit us from shopping for engineering. We will need firms that know our standards, know our people and facilities and can turn on a dime to service our needs.”

“Engineers in the coming age will change from guardians of the gate to champions of change,” adds Young. “Engineers want to create. They want something exciting to do. If we don’t let them, they’ll go somewhere else to invent. Whether they will ultimately settle in food companies, engineering firms, equipment companies or somewhere else has yet to be determined. If the food companies don’t give them the opportunity, someone else will.”

But if we let engineering and R&D loose, will they show us how to use technology to get incremental value?

“We will see engineers in our industry displaying a technological leadership our industry hasn’t seen,” predicts Young. “Outside engineering firms have brought fresh solutions to food operations. Our [Lockwood Greene’s] engineers get the chance to work in a large variety of industries, such as pharmaceutical and chemical and power. They are cross-fertilizing industries, bringing to food plants ideas from other industries. No matter where food companies get their engineering, they will need to draw from this bigger pool of resources.”

Changing the minds of leaders

It’s all well and good to have these energetic young engineering minds changing the very core of our business. Who’s going to give them that power? What will spark this drive for technological leadership?

“Circumstances will change the minds of the stakeholders,” says Young. “As conditions change, management has to change as well. Companies will be required by circumstances to change their functional leadership to continue to gain economic advantage.

“One of the biggest problems we face today is that circumstances are changing as quickly as everything else. Management sees its long-range strategies moving so fast they become short-range strategies before they can communicate them. Organizations will have to remain flexible. Managers will have to anticipate these changes. They will have to be more aware of how technology changes our business and our lives.

“Corporate leadership is on the verge of functional realignment,” Young continues. “No one person can be the leader of a company forever anymore. Leadership is about having a vision. All functional areas create a vision from their own unique perspective. Over time all industries undergo change in perspective. Circumstances can change your perspective, which in turn can change your vision on how to compete.”

“Staying creative, innovative and competitive requires the knowledge of what in your process actually needs to change and what should remain constant,” Larry Wu, R&D director at Starbucks Coffee Co. (www.starbucks.com), Seattle, said at the 2004 IFT Meeting and Expo. “Managers need to identify and understand the key ‘truths’ about their company makeup. These truths are found in their company DNA, their master blueprint for how they operate. Unlocking that understanding of their core competencies, their comfort zone, their structure, their organization and their investment strategy all help to determine what changes need to be made in their new product development strategy or, more drastically, to the company’s DNA in order to stay competitive.”

Sara Lee’s Kramer adds one more very current factor: “Obviously, in the Sarbanes-Oxley era, this will require new management skills, new documentation efforts and a rigorous adherence to the highest moral and ethical standards to succeed.”

Managing data…and risk

Nothing has changed our industry as have information technology and process control. Productivity improvement today resides in information control, not just in high-speed manufacturing equipment. Much of the success today relates to how well we can manage data and drive down decision-making. These systems are key to eliminating the huge overhead systems that once characterized the industry.

“By their very nature, businesses maintain a strong resistance to rapid change,” says Young. “To get a payback on the investment in new technology we need time to recover from change. In the future, however, engineering and R&D will be driving the changes in how things get done. So we will cover risk and payback by going after products that deliver higher margins. To get the higher margins we will have to add more value to the foods we sell to consumers. Today, technology is allowing the primary processor to do just that and this in turn is increasing their value proposition.”

How will we balance the risk?

“With size!” Young shoots back. “All the industry consolidation of recent years begins to make sense. When a company gets large enough, it can spread its total investment across many businesses, brands and lines. A company will be able to afford risk in a given product area because each product comprises a smaller percentage of the company’s overall investment. The company will be willing to take a risk with a given product line because the impact of making a mistake will be reduced. In an environment of more risk taking, technology will flourish.”

People issues

While the food industry could raise its collective level of automation, lights-out, unmanned factories are nowhere on the horizon. People remain the key component in making our food factories run. From the higher-level, engineering-oriented college grads orchestrating the processes to machinery operators with their hands on those processes, people must be attracted, trained and maintained to run our industry.

Labor concerns have been the No. 2 worry in all four of our annual Manufacturing Trends Surveys, annually behind food safety. “Competent technician availability – it gets tougher every year,” an executive at a North Carolina meat and poultry plant wrote last year. “We as an industry need to improve our recruiting in technical colleges for technicians.”

“Our ability to understand the needs of our workforce and engage them at all levels will create competitive advantage,” says ConAgra’s Hardy. “Our understanding and complete embracing of diversity as a means to drive business performance is paramount to long-term business growth.”

That sounds great, but diversity comes with a price. “From the workforce side of the business, I don’t see how this is going to be possible if we are managing facilities where as many as eight or nine different languages are spoken,” says Kramer. “Imagine the cost to create enterprise-wide solutions where each operator interface panel has to have multiple language capability. Imagine the training cost. Ultimately, our ability to implement state-of-the-art manufacturing systems may teeter on our ability to overcome communication barriers.”

At the higher end, Young expresses concern over the industry’s ability to attract good engineering talent. “In recent decades, we have broken the old paradigm of the best people going to the older, mature companies,” he says. “The best and brightest and most creative people can’t spread their wings in a tight structure geared to maintaining what is. Today, many of these people are bypassing both the universities and the Fortune 500 companies because what they envision -- what they want to do -- cannot be developed there.

“Why? For one reason, in recent years, we have broken the social contract. Food companies, like many other American industries, moved away from the higher educated employee, the engineers, research folks and the long-time workers that comprised their brain trust. Young people wonder what happened to the security their fathers and grandfathers had in their jobs. This is the first generation since World War II that thinks it may not be moving economically forward. But many are learning to embrace this environment we are in. The risk is greater today. But the good news is that the upside is bigger.”

How will our industry attract dynamic, creative people?

“You offer them a stake in the future, shares in the company. Innovative tech companies have done just that,” continues Young. “We are not seeing this in the food and beverage industry yet because our industry has not been on the leading, bleeding edge of technology. In industry in general, the best and brightest are moving into infrastructure development, process control and information management.

“The industry will have to change. Improving productivity alone will not drive our industry. New ways of doing business will,” he says. “A change in culture is coming, and it will be the most exciting thing we’ve ever seen in the industry. As a business executive, you must marshal your resources; get yourself into position to act, to absorb risk, to prosper.

“A lot of companies have been amassing cash, waiting to invest,” Young continues. “The problem is they are not sure what choices to make because these are big choices. Not just changing the flavor of a product, but changing how we do business. Imagine the changes in the industry over the next 100 years!”

A little help from my competitors

It took a long time for food processors to realize they have more in common than target customers. Today, more and more companies are sharing success stories with their competition, even if only in non-proprietary areas.

American Meat Institute (AMI) members declared food safety a non-competitive issue in 2001. Since then, they have shared data, systems, technologies and strategies to reduce threats of microbiological contamination and other threats to the safety and integrity of the food supply. They have invested millions of dollars in research as well.

Member companies of the Northwest Food Processors Assn. have developed “core competency” standards for industry jobs and are now sharing energy management tips. Such association efforts are multiplying, and the typical response to “common cause” issues is becoming more open.

Similar, though limited, cooperative efforts have taken place through food industry associations for years. What is different today is the openness and degree of sharing between competitors. More significantly, the openness goes beyond industry health and welfare.

Processors are well aware they cannot stockpile all the expertise in every niche and dimension of their operations. Sharing information – and even resources –in non-competitive areas will become more frequent. And while associations will continue to be facilitators of such efforts, expect more to take place in invitational peer group gatherings, frequently constructed around Best Practices.



Jet propulsion for foods

What started out as a novel marine propulsion system has been developed into an even more novel processing system for liquid foods and drink, one that can mix, cook, pump, emulsify and homogenize simultaneously.

Pursuit Dynamics Inc. (www.pursuitdynamics.com), Darien, Conn., a subsidiary of the UK’s of Pursuit Dynamics Plc, is just establishing a beachhead in the U.S. (in partnership with A&B Process Systems) for its PDX Sonic system. By accelerating steam to three times the speed of sound, the heat and moving energy of the steam instantaneously is transferred to soups, sauces, jellies, drinks and other liquids.

The PDX technology introduces steam into the process fluid at supersonic speeds. The high velocity steam shears the fluid into minute droplets, creating a high velocity vapor flow leading to a condensation shockwave across the entire bore of the unit. This mechanism simultaneously provides a pumping action and an intimate mixing and heating of the product. The intensity of this process is fully controllable. There are no moving parts to block or constrict and no contact heat surfaces or hotspots to contaminate. The manufacturer claims it improves the quality of food and reduces cleaning times by up to 80 percent.

In a beta installation for an unnamed U.K. sauce and soup manufacturer, a sweet and sour sauce, which contains at least 10 ingredients, took 3 minutes 50 seconds to process. With traditional processing, it took 55 minutes.

Ingredients are fed in through a process flow. Steam first passes through an annular expansion chamber, which wraps around the core of the PDX unit, then the steam is injected into the process flow. At supersonic velocities they combine in a vapor phase, which lasts 2 milliseconds. Then, as temperature and especially pressure decrease rapidly, the food product condenses back into its original state.

“By increasing the steam flow to a high-shear mode, we can increase mixing action to create stable emulsions with ingredients,” says Leo Cochrane, vice president of North American business development. “Or the system can be turned down to a low-shear mode, allowing for the gentle processing of soft fruits and vegetables without damage.”

UK customers Coca-Cola Enterprises, Campbell Soup and brewer Greene King Plc have licensed the technology.

While the core technology is the PDX Unit, Pursuit Dynamics is creating skid-mounted processing systems that include a one-ton vessel, infeed entrainment hoppers and computerized controls.

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