When Bill Otis was president of the Patrick Cudahy unit of Smithfield Foods, other company units like Farmland and John Morrell might as well have been separate companies. They made the same types of products in completely different facilities, distributed through completely different supply chains and sold - often to the same retailers - by different sales staffs.
The theory prevailing at the time, under then-CEO Joseph Luter III, was that having 10 Smithfield units compete against each other kept everyone sharp. But it also meant keeping good ideas to yourself.
“It wasn’t common practice to share ideas. Are you kidding me? I wasn’t going to give Farmland an idea to make them more competitive with me in the marketplace,” Otis says. “That was a weakness. As big as we were, we shared very little information. We would steal business from each other for a penny. It was not good.”
Otis now is Smithfield’s executive vice president of operations for packaged meats. Under the “One Smithfield” initiative instituted by current CEO Ken Sullivan, sharing good ideas is now common. In fact, some of the best information that got shared was about … how to share information.
One of the things that helped Cudahy improve efficiency while Otis was running it was an actively managed efficiency and downtime tracking system throughout all production departments in the plant. It evaluated performance in terms of the percentage of the theoretical maximum output, or T-Max, that the equipment on a line – or in an entire plant – is capable of. The target range is 80-85 percent.
To attain this, the system tells employees in real time what the T-Max on their line is and provides daily breakdowns of production, hours worked, downtime and other metrics. When One Smithfield was instituted, Otis worked with his operations leadership team and a new continuous improvement team throughout the organization to develop a Real Time Performance Management System, RPM for short.
The new system has been implemented in all packaged meat plants.
“We basically took the Cudahy model, which was developed while I was there, enhanced it, and then implemented it plant by plant by plant,” Otis says. “And that’s One Smithfield.”
By Otis’ estimation, RPM was the most significant of many improvements that spread throughout the company as a result of One Smithfield.
“The first thing we started doing was sharing best practices across the organization,” Otis says. “I had 35 plants that made up the packaged meat network, and we literally took best practices from all of our plants and shared them with the other plants. It could have been equipment-related. It could have been some sort of efficiency tracking system and data system. It could have been how we processed meat.
"Some plants processed bacon in six hours, some in 12 hours. It was a variety of mix-match processes throughout the corporation, so what we did was, we took the best of the best and we applied it across the system.”
Companywide consistency in processes becomes especially important as Smithfield tries to stay ahead of trends affecting its major products.
Case in point: bacon, which makes up more than 20 percent of Smithfield’s packaged meat production (and makes Smithfield the world’s largest producer of American-style bacon). Demand for bacon shot up about 20 years ago, when quick service restaurants flooded their menus with bacon-garnished hamburgers and other sandwiches. That flood of demand has leveled off, but it has ripples that need attention.
Several major QSR chains decided a few years ago that frying raw bacon in-house would increase its appeal, but after a few years of dealing with stressed employees and lots of bacon grease, they switched back to precooked. Smithfield adjusted to the new demand for precooked by ramping up that capability. The production plant near corporate headquarters in Smithfield, Va., for example, installed higher-voltage microwave units (and the increased electrical capacity they required) to cook the bacon faster.
There still is significant demand among foodservice customers for fresh bacon. Many restaurants precook raw bacon in a microwave or convection oven, then grill it to order, which lessens the grease problem. Balancing the demand for raw and cooked product is an ongoing challenge—one of many that bacon presents.
One of these is packaging. Smithfield packages bacon several ways, including the classic retail shingled vacuum pack; completely flat, separated slices on a sheet, for foodservice customers who use it by the slice. The newer “stack pack” is an increasingly popular retail option that presents slices that can be peeled off from a brick inside a reclosable bag, instead of shingled and vacuum-packed.
This arrangement, along with the slightly increased slice thickness, makes the bacon look more “authentic,” as though someone had sliced through a solid chunk cut from the pork belly just for that package. Only that’s not quite the case: Slices emerge from the slicer en masse and are assembled by hand into package portions.
Because bacon slices, and the pork belly slabs they’re cut from, are not perfectly consistent, packaging them requires combining automation with manual work. When slices emerge from the cutter, they’re positioned with one package’s worth between dividers on the conveyor belt, which passes over a checkweigher. If the portion between a pair of dividers is right at target weight, it goes down the center to the packaging area. If not, it’s shunted to either side, where workers with scales add or remove slices as needed before sending it on.
On a roll
Bringing more consistency, and more automation, to products like bacon is a long-term goal at Smithfield. Sometimes this is done through equipment, like the roller press used on pork belly slabs destined for microwaving. It makes the slabs more uniform and increases the number of slices per slab. Cudahy plants installed these presses a half dozen years ago, but they were only recently introduced into other Smithfield units - another example of sharing good ideas under One Smithfield.
The drive for consistency extends to the product portfolio. Otis says Smithfield’s biggest production challenge is filling orders for small-volume SKUs – something the company wants to do less often.
“If we have a low-volume SKU in our system, we’re trying to get it out,” he says. “We’re trying to move [trade customers] to a different product under One Smithfield.” The company wants to get its trade customers to think of Smithfield bacon as the overarching brand, with a few sub-brands.
Some of these, like Cudahy or Farmer John, will probably survive for a long time, but “anything with a small volume related to it, we‘re trying to work [out of] our system, because it creates distribution and production issues.”
Working to get workers
As it is across the food industry, finding and retaining good workers is an ongoing challenge for Smithfield, especially in times and places that offer potential employees many other options.
“With the unemployment rate being low, which is a good thing for the economy, it becomes harder to find good employees,” says Todd Gerken, executive vice president of operations for fresh pork.
This is especially true in Smithfield, Va., which is near the shipyards of Norfolk and Newport News, whose well-paying jobs often are funded by government contracts. “You’ve got to start with a good, competitive wage and benefit program -- which we do,” Otis says. “We have to be competitive, and we have increased wages. Our benefits have always been strong, compared to our competitors.
“But then you have to make them feel welcome,” he continues. “How do you train them? How do you keep them? When an employee comes through the door here, an hourly employee, we’ve got to take the time to train them properly.”
The training process starts with a week of classroom sessions and is reinforced by weekly and/or daily meetings where teams review recent performances and discuss issues like safety factors and reasons for downtime.
This continuous process of review and improvement is fueled by the data that pours from the equipment’s PLCs and other controls. This information flows nearly in real time.
This allows “minute-by-minute [knowledge of] what’s going on, what’s an opportunity for improvement, then utilizing that to make improvements,” Otis says.
It’s working, at least if you look at the numbers. Otis says that last year, line efficiency has increased 3 percent across all packaged-meat plants — which, given the volumes involved, is highly significant.
Otis aspires to the consistency and high performance of a company that makes its product from sheet metal instead of pork.
“The intent with One Smithfield on the operations side is to be what I’d say is like Toyota-Lexus. I want to be the most consistent, low-cost producer across the platform,” he says. “Not one plant here, one plant there – I want to make Smithfield product in multiple different facilities, and I want it to be the same.”