Market-Driven Manufacturing at Abbott Nutrition
From packaging to new plants, boomers, kids and fitness buffs are the real managers of the company's nutritional beverage operations.
By Bob Sperber, Plant Operations Editor | 08/08/2011
Most beverage processors do not obsess over the health and wellness of newborns in the neonatal ward or cater to aging adults looking to retain their muscle mass. But today's beverage industry has lucrative niches catering to the health and wellness demands of fitness buffs, baby boomers and children.
Not every beverage processor has the unique lineage and positioning of Abbott Laboratories, the diversified pharmaceuticals and health-care giant located outside Chicago. But make no mistake, Abbott Nutrition's business (http://abbottnutrition.com) is very much a food & beverage processor, marketing more than 50 global consumer brands spread over 4,000 SKUs sold in 130 countries. (The company also recently launched a new website: www.abbottnutrition.com/quality)
In managing 13 manufacturing facilities worldwide, Abbott Nutrition is a bottler, a canner and a blender of powder products. But a far cry from a mass-marketed soda pop, products such as Abbott's Similac brand of powdered infant formulas require plant personnel to maintain "extremely stringent quality expectations because of the pharma-influenced medical and infant nutritionals industry," says Susanne Roslon, divisional vice president of Abbott Nutrition.
The company makes significant changes in its products and, in turn, its production in ways that are directly related to what consumers say they want. In beverages and other categories, the company plans 20 new product launches by year's end. Last year, the company introduced several new products in markets around the world, including Ensure with Revigor and PediaSure SideKicks, designed for kids who are on track with growth but who can use extra nutrients to fill nutritional gaps.
To accommodate such innovation, the company spent $1 billion on capital expenditures in 2010 in areas including manufacturing upgrades and expansions, R&D, information technology and laboratory instruments. As new products come to the fore, plant processes must accommodate them.
In the adult health category, the first baby boomers are now past 65. After the age of 40, it is not uncommon for adults to lose 8 percent of their muscle mass every 10 years. To stay youthful and active, these consumers are turning to nutrition drinks such as Ensure high-protein drinks and Glucerna for diabetics and those who need to restrict glucose intake. Abbott over the past year has revamped packaging on Ensure and Glucerna with easier-to-read labels and a new, Abbott-patented easier-to-open closure that "makes it easier to open for aging customers," Roslon says.
ITW Hi-Cone supplies new packaging for Ensure; surveyed consumers called it modern and easier to carry than alternatives.
For this product, the company also changed its outer packaging for bulk six- and four-packs, from shrink film to a new packaging process from ITW Hi-Cone (www.itwhicone.com), Itasca, Ill. Through market research, Abbott found consumers preferred it over shrink film or full-wrap paperboard box options, calling it more "modern" and "easier to carry" than the alternatives.
Additionally, the Hi-Cone six-pack is a model of packaging material reduction, being made of clear, low-density polyethylene (LDPE, #4 plastic), which is photodegradable. Now, the colorful, primary bottle packaging shows through for a better billboard effect on grocery and drug-store shelves. The six-pack upgrade has also been added to Abbott's PediaSure product for kids.
Another change that affected products and therefore production lines came from the infant formula side of the business. Abbott recently replaced Similac's metal cans with a plastic one, called SimplePac. The change followed market research with more than 1,600 moms, which found that round cans were hard for moms to handle at feeding times. The rectangular design features a grip on one side, a hinged lid with a scoop holder and wide top opening.
Additionally, the scoop wasn't a good match for the package, which was changed to incorporate rounded bottom corners that now match the scoop design to allow easy removal of powder. "It truly was designed by moms, for moms," says Roslon.
To accommodate these market-driven changes, the company has taken significant steps. For example, the national rollout of the Similac SimplePac required the installation of a new powder packaging line in Sturgis, Mich. Likewise, to produce the new reclosable plastic bottle for Ensure and Glucerna drinks, the company installed new filling and packaging lines at three facilities: Altavista, Va., Casa Grande, Ariz., and Columbus, Ohio.
Integrating such capital improvements into the company's operations entails bringing them into Abbott's program of monitoring quality, productivity and additional key performance indicators.
"Our quality and operations teams use Lean Six Sigma and Class A programs to accomplish productivity improvements," says Roslon. Several additional examples of how plants accommodate requirements of the world outside the traditional four walls of manufacturing:
- Quality and safety testing include more than 200 quality checks on 2-oz. plastic lines each eight hour shift -- in addition to raw material, analytical and microbiological testing of every batch of product.
- Equipment suppliers must meet company standards "particularly in aspects related to food safety," including details in the design and operation of fillers, cappers, sterilizers, and aseptic equipment.
- In addition to FDA Regulations for Infant Formula and Low Acid Canned Foods, the company is implementing plant-by-plant adoption of the Safe Quality Food Initiative, starting with certification at plants producing infant formula and adult nutritionals.
- The Casa Grande, Ariz., plant recently received Level III certification from Arizona's Maternal and Child Health Services earlier this year. This is the highest certification possible for products used in neonatal intensive care and continuing care units.
Meeting operational challenges
Abbott Nutrition plants are managed with the expectation that if they're not already running 24/7, they should be able to do so. Therefore, operator training is a priority, as is a responsive maintenance organization.
Abbott Nutrition plant personnel, like this operator in Granada, Spain, monitor quality, efficiency and everything about the plant using various monitoring systems.
When asked for the toughest management challenge the division faces, Roslon cited a "changing work force and the changing technical requirements for employees." New employees entering the workforce "often have a different perspective on what they expect from their employers and what they are willing to give than the employees from a generation ago."
Conversely, she says long-term employees often face the challenge of "learning how to run equipment that is much more technical in nature" than the equipment they cut their teeth on 10 or more years ago. Roslon says the company's employee training and educational initiatives address both challenges.
To keep up with changing consumer preferences, Abbott's engineering organization maintains flexible manufacturing and packaging lines. This plays out in two areas: accommodating new packaging types and running plants efficiently.
For example, a given formulation may be offered in several package configurations and be produced on the same manufacturing line before being diverted to one of multiple packaging lines. The whole process requires lots of vigilance to schedules, bottleneck reduction and ever-faster equipment changeovers.
Additionally, in keeping with a trend driven by major retailers and even their warehouse stores, some customers require exclusive arrangements such as different numbers of bottles per carton. So equipment must be flexible enough to handle multiple pack sizes.
Because plant management and engineering rely on the expertise of the companies that supply them with technology, the company also relies on its suppliers to help meet marketplace needs. Before a new system is installed, engineers conduct "extensive front-end planning to minimize startup challenges," says Roslon.
"Equipment suppliers need to know that what they provide needs to be flexible, easy to operate, reliable and safe for our employees," she says. "Our fundamental expectation is that we procure, install and validate high-speed systems that reliably hold extremely high standards for all aspects of food safety."
Going forward, the company is accelerating growth globally and in existing U.S. product categories to increase market share. Nutritional products are driving the well-being of parent Abbott Laboratories, too. For the second quarter ended June 30, while corporate-wide sales are down 3.6 percent in the U.S. (compared to the second quarter of 2010), Nutrition division sales show double-digit revenue growth, a $1.5 billion increase.