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2011 Processor of the Year H.J. Heinz Co.: A Global Standard for Local Performance

Nov. 30, 2011
Heinz Global Performance System defines quality, teamwork and management best practices for 81 plants worldwide.

Growing up in Iowa, Troy Shannan often would pass the H.J. Heinz Co. plant in Muscatine, about 45 minutes down the road from his hometown, Burlington. "I knew the plant was there; I used to drive past it as a kid. But I'd never been inside of it until a few years ago," says Shannan. Now he oversees its operation and 22 other factories in the U.S. and Canada as vice president of manufacturing for Heinz North America.

Shannan came to Heinz in 2004 and was promoted to his current position in 2010 with a background well-suited to continuous improvement. Since earning a mechanical engineering degree from Iowa State University in 1994, he spent nine years at General Electric, where his work with quality management and statistical methods helped him become not only a plant manager but a certified Six Sigma Black Belt.

Much of his perspective went into the development and implementation of the Heinz Global Performance System (HGPS), a process modeled on quality, teamwork and management best practices. HGPS was designed in 2008 by Heinz in partnership with Competitive Capabilities International (www.ccint.net), Irvine, Calif.

"HGPS resulted from the Heinz North America continuous improvement organization asking for a system to standardize and consolidate continuous improvement, Six Sigma, Lean and TPM and other best practices," said Dan Poland, chief supply chain officer for Heinz North America.

"HGPS provides the means to standardize measurement, reporting and continuous improvement practices across the North American plants as well as 21 facilities in Europe, 27 in Asia/Pacific and nine more. That's 81 plants worldwide that employ 35,000," Poland says.

Judging by Heinz's financial numbers (the company reported record sales and net income in fiscal 2011), HGPS has been a success. Another indication is seen in the November news that Heinz ranked first in overall customer satisfaction among all 225 companies in 47 industries in the 2011 American Customer Satisfaction Index. Heinz led all companies with an overall score of 89, which measures its performance in categories including quality, value, consumer loyalty and consumer expectations. Heinz also topped all 12 food manufacturers in the ACSI for the 12th consecutive year.

Commenting on the ranking, Heinz Chairman, President and CEO William Johnson said: "Our No. 1 ranking in the U.S. reflects our commitment to manufacturing consistently great-tasting premium foods that enhance consumers' meals at home and at restaurants."

For those involved in operations, those attributes of success begin and end in the plant. While each facility must follow a structured approach to track and report performance using the same standards, "each plant has wide latitude on how to design its own way to 'get there,' " says Shannan.

"Each plant's implementation has to be suited to its specific business, processes and production lines. So if you're in Muscatine, the way you implement the system is unique to your plant. Each time you roll it out, it can be different, from the [whiteboard] visuals to the way you implement projects."

The Muscatine plant's ownership of the program -- and customization of it -- is exemplified by that plant's renaming of the system as the Muscatine Performance System, which even has its own logo modeled after the corporate insignia for HGPS. This balance between standardization and home-team spirit has evidently resulted in top-flight operational effectiveness.

As with all companies, there is an organizational chart, but HGPS and related programs are in place to help transcend departmental borders, aka "silos" or "walls." The way Shannan sees it, his group is "essentially a customer of the Continuous Improvement group; we work hand in hand." Whereas HGPS is focused on the Factory Group, continuous improvement is maintained as a broader program under which manufacturing represents one link in the Heinz' global supply chain structure.

Sustainable profits
Cooperation across borders is evident in multiple programs across Heinz North America. Cross-functional resources from R&D, engineering, marketing, manufacturing and "pretty much all departments" collaborate on capital projects and many product developments.

Such was the case in launching the new dual-function Heinz Ketchup Dip & Squeeze package last year, which Heinz touts as its biggest innovation in ketchup in decades. This single-serve packet in the shape of a ketchup bottle holds three times the ketchup of traditional 9 gram packets. It lets consumers peel away the lid for dipping French fries or chicken nuggets or tear off the tip to squeeze ketchup onto their food.

"Dip & Squeeze required collaboration from packaging, R&D, quality, engineering, marketing -- the entire team was involved," says Shannan. The new product is produced in Fremont, Ohio, on a new thermoform/fill/seal installation created by Multivac. The package is a response to consumer desire for a mess-proof ketchup packet. A single package replaces three traditional flexible film pouches.

Of all the recent collaborative efforts that show HGPS in action, a new retort installation in Muscatine stands as a model for how to manage a plant improvement project. "The key challenge for this project was to make sure that the change in process didn't adversely affect flavor and other product attributes," says Shannan. "It took a lot of collaboration among manufacturing, R&D and quality to make sure it all came together and was approved by the FDA in time. It was a very complex project." (See the article 118 years of Modern Technology at Muscatine)

On environmental sustainability, the company continues to improve its results based on 2005 benchmarks. Global results, released in mid-November, showed the company is on track to achieve or surpass corporate goals of reducing greenhouse gas emissions, solid landfill waste, energy consumption and water consumption by at least 20 percent each by fiscal year 2015.

Compared to that baseline, plants across the global manufacturing organization have achieved:

  • 45.6% reduction in solid waste per 100 metric tons of production
  • 21.8% reduction in water consumption per metric ton of production
  • 13.2% decrease in greenhouse gas emissions per metric ton of production
  • 15.1% decrease in energy consumption per metric ton of production.

"Other sustainability efforts at Heinz, globally and in the U.S., focus on reducing packaging, cutting carbon emissions from agriculture, lowering fuel consumption related to transportation and increasing the use of renewable energy," says Poland.

Information systems in the pipeline
Heinz's continued success depends on its ability to execute on plans for product innovation, cost-cutting, supply chain efficiency, process and system upgrades and information technology systems. The last is both an area of ongoing improvement and an over-arching factor that can enhance all of the above.

"We are in the process of converting our ERP [enterprise resource planning] systems over to SAP," Shannan says. The move to upgrade and standardize globally on SAP business software has been in the works about a year, he says. North American factory implementations are scheduled to begin in mid-2012 and will continue for the better part of three years.

This change, like so many, won't come easy, and "probably represents the biggest change-management project we have ever undertaken," he says. The initiative, dubbed Project Keystone, already has begun with implementations, most recently in Northern Europe, which has begun to standardize documentation and reporting for greater corporate visibility and control.

As accounting, manufacturing and supply-chain planning systems cascade from headquarters to each plant, he adds, "every employee will have to adjust the way they do their job." For example, many plants currently use some paper-based quality record-keeping, while others use automated systems. Under SAP, both of these practices will change and in some cases be eliminated to create "one integrated system that ties to the rest of our systems," Shannan explains.

"That way, if something's out of spec, we can immediately eliminate lag-time and human error to more effectively take corrective action."

Going forward, plant automation is another area where greater integration and visibility of plant data "represents one of our biggest areas of opportunity," Shannan says. While sensors, machine controls and operator and supervisory software systems necessarily vary from process to process, standardizing automation vendors and platforms someday may help connect more dots from plants to Heinz's global business systems.

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