Next-Generation Manufacturing Models Taking Hold in Food Industry

The food industry may not be ready for lights-out automation, but some next-generation manufacturing models are taking hold.

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

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The 1990s proved to be an unusual decade for food manufacturing.

It was particularly frightening for food engineers, who were shoved out of their organizations in droves as processors sought to cut salaries -- some grown heavy with 25 or more years of tenure -- from their cost structures.

Companies such as Frito-Lay and Kraft, which once had huge in-house engineering staffs and equipment-making operations, yielded to trend and economic pressures. They sacrificed in-house assets and leaned on equipment suppliers and engineering firms for "proprietary" equipment, yielding strengths they once regarded as a major competitive advantage.

But the '90s also was a decade of exploration and innovative, out-of-the-box thinking that continues into the new century … even as downsizing continues to trim the manufacturing ranks.

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Engineers and manufacturing execs stepped out of the food mines and examined how the manufacturing arms in other industries with similar concerns were organizing and operating. They looked at high-performance work teams and cross-functional project teams and pushed decision-making down to well-trained operators close to the action. They explored outsourcing models that seemed radical departures for many companies and formed alliances with engineering firms.

Some of it worked, some of it didn't.

Lean or Six Sigma?

New Zealand Milk Products' Whareroa facility collects plant-floor data for better control of the process via Rockwell Software's RSSql industrial transaction system.
New Zealand Milk Products' Whareroa facility collects plant-floor data for better control of the process via Rockwell Software's RSSql industrial transaction system.

Lean manufacturing and Six Sigma may be buzzwords in other manufacturing industries, but they're not in the food industry's lexicon. Both methodologies -- if you embrace them, they become philosophies - come from the discrete manufacturing world and have a difficult time translating into the world of batch, where piece-by-piece measurements are difficult, if not impossible, and variability is a fact of life.

Simply put, lean is about removing waste from the process; Six Sigma is about reducing, maybe eliminating, variability though a disciplined, incremental improvement process.

Lean is "all about giving your customer exactly what he wants and only what he wants; maximizing the things that add value to your product and minimizing or eliminating the things that don't," says Vernon Spaulding, vice president of integration services at Data Specialists Inc. (www.dataspecialists.com), Elkhorn, Wis., which does consulting and custom software for food plant automation. He came out of the auto industry, which has embraced both philosophies, and now is on a mission to bring them to the food industry.

"Companies spend millions of dollars a year on activities that add no value to the product in the eyes of the customer," Spaulding laments. However, even he admits some of those overhead activities include food safety, traceability, regulatory compliance - things that are untenable to eliminate.

As for Six Sigma, "There really are unique variances in food production and any batch process, which make Six Sigma difficult," he says. "I see food manufacturers doing one or two of the components that may be part of a lean or Six Sigma program, but no one who's doing it all."

Why not? The answers are usually the same, he says. "The absolute No. 1 reason is 'we don't have the time, the money or the labor resources.' Second is education -- they just don't how these programs work and how they can save their companies money." Other food industry-specific reasons are the lack of baselines and poor measurement systems.

"In the food industry, nobody is really doing Lean or Six Sigma thoroughly," agrees James Maurer, national managing partner in the Consumer and Industrial Products Practice of Grant Thornton LLP (www.foodprocessing.com/gt/knowledge), the international accounting and business advisory firm. Indeed, in the 2007 Survey of U.S. Food & Beverage Companies, which Food Processing sponsors with Grant Thornton, 42 percent of respondents were employing some "lean thinking" methods, but less than 9 percent were using Six Sigma.

"In an industry already dealing with thin margins and high cost of raw materials, there is great potential for these incremental improvements. Companies making progress in these areas have significantly reduced their costs," says Maurer.

"For many food companies, maybe 70 percent of the cost is in raw materials and other direct costs. That leaves only 30 percent you can control," he continues. "But even this 30 percent is a huge opportunity for companies who take lean to the next level." Maurer pegs freight, information technology procurement, maintenance (especially contractual) and even benefits as costs capable -- and worthy -- of being better managed.

Outsource everything!

Alliances with engineering firms became commonplace at the end of the previous decade as processors tried to accommodate engineering loads their downsized departments could not handle.

In one of the better-known examples, Kellogg Co. (www.kelloggcompany.com), Battle Creek. Mich., outsourced virtually all its engineering in an alliance with Jacobs Engineering -- which, in turn, hired many of the same laid-off Kellogg engineers. That relationship has continued to evolve over the past 15 years.

"One advantage we had in the transition was a lot of the members of our engineering group went to work for Jacobs," says Marty Carroll, senior vice president of supply chain for Kellogg's Morning Foods division. "So we didn't have all of our engineering expertise walk out the door. Also, a succession plan was always in place. We took a realistic approach during this process, so ours went more smoothly than it did for a lot of companies. The transition was accelerated, but we managed it effectively."

Though Kellogg has tweaked and shuffled the arrangement, the Jacobs alliance has proven effective. Kellogg maintains its corporate engineering group, which tends fundamental packaging, processing, electrical and mechanical capability. It also has strengthened engineering capability at each of its plants. Each facility has an engineering director responsible for projects and maintenance.

Other companies, too, may be swinging back to greater staff control of engineering. "In the '80s and '90s, many cut their engineering staffs but kept processing and packaging engineers," says Greg Cherok, Cincinnati-based business development manager for Lockwood Greene/CH2M Hill (www.ch2m.com). "Now many companies are building their engineering ranks back up and expanding their core.

"It's being done quietly," he continues, "and not everyone is doing it, of course. It's a subtle shift."

Automation and information

Ambitious labor reduction coupled with precise process control and maximum yield are core manufacturing goals across the industry, and have been for some time. The difference is that today some plants are realizing those goals.

Automation and information technology is filling the gap, which accounts, in part, for the diminished emphasis on line teams and growing emphasis on alliance teams. In some highly automated plants, there aren't -- or soon won't be -- enough operators devoted to a line to even call a team. But even these automation and information investments need strong proof of payback, particularly in light of high-profile systems failures, such as the one Hershey suffered a few years back during its critical Halloween production season.

Batch software standardization is a slowly growing component of food plant automation, but its early adopters say the payback is readily apparent. ANSI/ISA S88 is a 10-year-old international standard that contains models and terminology for controlling batch processes. The models provide a hierarchical and modular categorization for the machines and devices that carry out the process and for the recipes that describe how to manufacture the product. They form the basis for managing the production process and thus ensure standardization within batch process automation.

S88 allows manufacturers to write software that structures the equipment and the procedures of batch processing operations. Equipment logic that has been developed according to the S88 standard can be changed or adapted with minimal, perhaps no, adjustments being necessary in other implementation modules or in master recipes. Procedures can be developed and changed without taking any implementation aspects into consideration. But change control is automatic.

ANSI/ISA S95 is taking this automation effort one step further. The standard was developed to integrate enterprise and batch control systems. S95 allows the exchange of batch recipe information between enterprise resource planning (ERP) systems and manufacturing execution systems (MES). Changes in a recipe can be automated as they are sent to the floor. Perhaps more importantly, master recipes -- and changes that corporate engineering makes in a master recipe -- will work in all plants anywhere in the world that conform to the standard. But once again, change control is automatic.

Cerveceria Polar, a large Venezuelan brewer, used the standards to better control the brewing process. The automation they brought to the process enabled a 50 percent reduction in lauter time, the elimination of a process engineer (now the brewmaster can control and reprogram the process) and the manufacture of six batches of beer in a 24-hour period instead of five.

Because beer increasingly is being made in more varieties but smaller batches, the company can quickly respond to market preferences and changing consumer tastes.

"The brewmasters were worried at first," Francisco Ferrero, automation manager for the brewer, told a Rockwell Automation Fair audience last fall. "But after using it, they're not just satisfied, they are delighted."

Energy pervades

Energy is not exactly a manufacturing model, but it's becoming such a critical piece of the manufacturing picture it deserves a well-thought-out and multifaceted plan, and it becomes a serious consideration in any manufacturing philosophy.

Processing plants are, more often than not, energy-intensive operations. And, as a rule, adding more value to a product increases the overall energy invested in the making of that product. The staggering jumps in energy costs in recent years have had a profound effect on the industry.

The good news is some of the total "energy" package of a product is recoverable. As high-fructose corn syrup manufacturers found before their ethanol businesses began to boom, lots of energy has been going to rot among raw material waste.

"Energy costs just keep going up," says Cherok. "Lots of companies are looking at ways to fuel boilers with materials waste from their plants. They are using waste -- primarily biological waste -- as an alternative energy source."

Converting food waste into methane gas for boiler fuel is a practice with promise. Not so surprising, companies that have long handled enormous volumes of commodities, such as Cargill, ConAgra and Tyson Foods, have been leading these efforts.

ConAgra Trade Group, the commodity trading arm of ConAgra Foods, signed an agreement with Agribiofuels LLC of Dayton, Texas, to provide feedstock oils for the latter's biodiesel plant in Dayton. The agreement included ConAgra providing biodiesel and glycerin marketing services.

Biodiesel fuel from vegetable and animal fats holds particular promise because it does not require engine modification to be used. The process involves mixing sodium hydroxide and methanol with the oils. The fuel can be mixed with petroleum diesel.

Tyson has capitalized on the availability of bio-fuels from the abundant organic materials of its beef, poultry and other food operations as well as tax credit opportunities offered by the federal government's energy bill for companies using organic waste as an alternative energy source. Among its many and growing efforts, the company has employed beef tallow to power its boilers and bio-diesel fuels in its truck fleet.

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