2013 Processor of the Year: For ConAgra Foods, Manufacturing Is a Core Competency

Dec. 4, 2013
Despite a dizzying variety of products, ConAgra Foods always has prided itself on manufacturing great food.
The size of ConAgra Foods' manufacturing network ranks among the largest globally in the food industry, but it is its breadth of production that really distinguishes the organization. Beverages is about the only product category not represented.

ConAgra Foods does dairy (Swiss Miss, Reddi-wip), shelf-stable/retorted products (Chef Boyardee), bakery (Ralcorp), grain-based foods (American Italian Pasta), aseptic products (Hunt's), protein foods (Odom's Tennessee Pride, Hebrew National), snacks (Slim Jim, Orville Redenbacher's), frozen (Healthy Choice, Banquet) and an array of pantry items such as peanut butter, margarine and cooking oil.

It's a shifting lineup, with numerous lines being added in recent years following 2006's divesting of the refrigerated meat, seafood and cheese businesses that generated $2.8 billion in annual sales.

Private label already was a $1 billion business before the January 2013 acquisition of Ralcorp, but that deal vaulted the company to the top rank. Ralcorp brought 32 additional production facilities under the ConAgra Foods umbrella. The production network now includes 131 facilities, including more than 100 packaged foods plants.

Some acquisitions since 2011 have returned the Omaha-based firm to categories it previously exited. Realignment has moved the organization further into value-added production and away from commodities. Given its roots in grain milling, that's a significant change for a company founded in 1919 as Nebraska Consolidated Mills.

Outsourcing and a focus on core competencies are long-term trends in food production, and ConAgra Foods reflects that movement. "We leverage co-manufacturers considerably," asserts Dean Poppe, vice president-operations, "and we evaluate all our core capabilities with a total cost of delivery model." In the end, internal processes are judged on capitalization and the scale needed to be competitive.

For example, the company believes it derives a competitive advantage by evaporating the milk used to make mixes for cocoa and puddings at the Swiss Miss plant in Menomonie, Wis. Similarly, some but not all of the seven facilities engaged in frozen food production extrude their own pasta. Volume dictates whether the capital investment is justified.

A few miles east of ConAgra Foods headquarters on the opposite bank of the Missouri River, the Council Bluffs, Iowa, facility extrudes 15 shapes and sizes for a growing lineup of pasta dishes. The just-in-time nature of that throughput eliminates the energy input needed for pasta drying.

Coincidentally, the Ralcorp acquisition made ConAgra Foods a leader in dry pasta production. Four American Italian Pasta plants were in the Ralcorp network, and management now must determine if and at what level dry pasta can provide a cost advantage over in-house production. "Pasta is a core competency," Poppe allows, "though generally we didn't bring on a lot of redundant capability with Ralcorp. We are looking forward to leveraging those facilities."

Hawkeye deep freeze

With nine lines under 580,000-sq.-ft. of roof, the Council Bluffs facility is second only in throughput to Russellville, Ark., in ConAgra Foods' frozen foods group. About 1,000 workers shepherd production of Marie Callender, Healthy Choice, Banquet and Bertolli branded goods (plus a smattering of private label) through three makeup rooms for 20 hours a day. Originally built in the 1950s by Blue Star Foods, the facility has undergone numerous expansions and upgrades.

Green-lighted projects typically augment existing automation or add flexibility. In the past decade, ConAgra Foods has invested $50 million in Council Bluffs to maintain the plant's competitive edge, one manager estimates.

Flexibility is critical for competitiveness, and Council Bluffs was enhancing flexibility long before the Ralcorp acquisition. Lug lines are replacing platen-and-carrier conveyors to move trays under the makeup rooms' depositors. Packaging material reductions and innovations like a flanged tray for greater strength could pose a changeover headache for the older lines. With the lugs, changeovers take 20-30 minutes instead of days.

A variable retention time freezer is another recent update. Stretching three stories high with a capacity of 37,000 cases, the freezer uses a combination of impingement and -22°F air to freeze full cases of finished goods in less than nine hours. By comparison, a blast freezer for full pallet-loads requires a dwell time of 12-72 hours.

Pot pie production requires some bakery competence. Mixers produce the dense, void-free dough needed for consistent crust in the Banquet and Marie Callender pie products. After the tops are stamped out and crimped, excess dough is rerouted to the front of the line for deposit into tins to form the pie's bottom crust.

Pie production is the least labor-intensive make-up activity, although the greatest amount of automation is downstream of filling. "When we finish a case here, it never gets touched again" on the way to warehousing, boasts production manager Neil Driscoll.

Continuous improvement in throughput, efficiency, worker safety and other corporate objectives is driven by line workers, making engagement and dialogue a prerequisite for improvement. That's easier said than done: Despite its location in America's heartland, Council Bluffs draws on a labor pool more reflective of the United Nations than a Grant Wood portrait. Eighteen languages are spoken, and translators are on hand at "town hall events" and other plant gatherings, according to plant manager Frank Castanhinha.

Management sets the agenda, whether it's the "zero-loss mindset" that drives production or the worker-safety initiative known as SWAG (safety with a goal), but the staff must take the lead if the desired results are to be achieved, he adds. "The people who really know how to run this place are out on the floor, and we have to listen to them," Castanhinha says, adding safety is "employee led; it can't be a policing action."

Near-miss documentation, peer observations and other employee-driven efforts have helped drive down recordable incidents and other injury metrics. Company-wide, the OSHA Incident Rate is down almost 28 percent, to 1.58 incidents per 100 full-time workers.

War on waste

"Personnel safety is employee led," Poppe re-emphasizes. "We are committed to being a good corporate citizen, and that starts with our employees' well-being.

"Safety is our entry point for best practices that engage our employees to help make us a better company," he continues. "We systematically identify skills our employees need to perform their roles, train them and then validate that the training has been effective."

That approach is reflected in ConAgra Foods' sustainability program. Corporate goals for reductions in solid-waste generation, energy consumption and water use were set in 2010, and green teams in the facilities identify the changes needed to attain them.

"Making sure we keep our lines stocked with what we need" is a big part of the effort in Council Bluffs, says Castanhinha, and it also advances the zero-loss objective. Identifying opportunities for re-use also contributes to landfill diversion.

For example, Council Bluffs generates 275,000 empty 5-gal. plastic buckets a year. The green team created a partnership with a firm that converts those buckets into water-filtration systems, portable toilets and shipping containers for medical supplies. "Separation of waste streams sounds simple but can be quite complex," offers Poppe, and detailed approaches developed at two facilities now serve as best practices for the entire organization.

Waste diversion has been so successful, ConAgra Foods was forced to move the goalposts. Twenty-seven facilities have achieved zero-landfill status, and a 93 percent diversion rate is the new corporate goal.

A 15 percent cut in water used per pound of finished goods compared to a 2008 baseline is proving more difficult to attain. A reduction of 4.8 percent has been achieved so far, though additional opportunities are being identified. Gail Tavill, vice president-sustainable development, cites the "drip spotters" team established in Russellville, Ark. Armed with blue tags, team members flag leaks and open spigots. In the first few months, 70 drips were fixed, saving millions of gallons, she says.

Those types of efforts are nominated annually for company Sustainable Development Awards that become network best practices. Since 2009, award-winning ideas have saved ConAgra Foods $122 million, estimates Tavill.

New lines of business and a growing roster of production sites will further complicate goal-achievement, but the more important objective is building a large, diverse manufacturing organization that does many things well.

"The store and the consumer and constantly changing," Poppe muses. "We have to react more quickly to those changes. That's where we're driving a lot of synergies."

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