Simplistic as this seems, all manufacturing processes are similar in that they all begin with a collection of raw materials, they all have a conversion process or processes and finished goods. Straightforward enough in concept but the difficulties begin with the variety of finished products required; the outputs. As each supermarket tries to gain market share, every other supermarket does the same. One cutthroat way is to compete on price but this is obviously self-limiting, and otherwise known as ‘A race to the bottom, rather than a race to improve the bottom line’
A second and increasingly popular route is through developing something new, a new taste, new combination, new packaging or special offer. This ensures a constant set of challenges for the NPD and packaging professionals. When each newly developed product goes into production, further challenges develop as the new product(s) serve to increase still further the already burgeoning range and variety of SKUs, leading to even shorter batch runs and more frequent product/label changes.
Recently, due to the obvious impact which such frequent changeovers have upon production efficiency and potential quality/coding/labelling risks, some companies have tried and managed to reduce their product portfolio. Sensible as such action is for all high volume packers, the cynic in me suggests that market forces will yet again reverse this process such that the portfolio grows to the size or even bigger than it was before.
So, like it or not, with ever-increasing retail competition, I can’t see how the future is going to be made easier for product packers than it is at present, not by their supermarket customers anyway. And of course, it isn’t all the fault of the supermarkets battling each other. We, as consumers, all like to try something new, don’t we? The way that the ethnic food market has grown exponentially by finding more spicy and tasty alternatives to titivate our modern-day taste buds and continues to be increasingly innovative and is a great testimony to the success of our multicultural society.
With raw material price increases, the minimum wage increasing year on year and supermarkets locked in their own battles to gain market share (and therefore not minded to accept price increases from their suppliers) the future for co-packers could seem quite bleak, especially for those determined to carry on as they have always done. Those open to and actively driving change, however, are indeed hopeful of a different future. Some of that difference will be bound to come from further automation, but most of all, it will require the people to accept the pace of change like never before.
According to latest statistics, the UK now ranks 23rd in the world as far as productivity is concerned. This statistic, coupled with the far lower minimum wage, even in some EU countries, UK manufacturers face unprecedented risks if they do not embrace change to improve productivity.
|Rank||Country||GPD per hour worked||Employed Population||GPD (USD)||Average work week (hrs)|
|5||United States||$ 68.3||151,000,000||$18,037b||33.6|
|15||United Kingdom||$ 52.1||31,293,000||$2,701b||31.9|
The companies who concern me the most are the ones we try to engage who say “We can see the merit in this, but it’s too early yet”. If we are already down at 23rd in world productivity, how will these companies know when it’s too late? Too many companies have already left it too late, lost a valuable contract and even called in the receiver.
This is such a pity and a valuable lost opportunity when there are so many tools, techniques, and consultancy available to help companies embrace the current challenges and thereby reduce operating costs to improve/sustain a competitive edge. Tools and techniques such as Statistical Process Control, Automated Short Interval Control, Lean Six Sigma, OEE, etc can make such a huge difference to the bottom line. One of our users increased annual net profit from £2million to £14million per annum on the same turnover.
Before you answer, we should add that it’s an unfair question. Most companies see the big picture and that their production costs are higher than they would like, without knowing why. Everyone, from the factory manager, through engineering to production and technical management has their own theory, but few have the accurate information necessary to back up their theories. One difficulty is that we often expect Continuous Improvement to be an orderly process of applied knowledge and procedure, but it is not. Continuous Improvement is very often an imperfect science, applied within an enterprise of constantly changing knowledge, changing product/customer base, uncertain information and fallible individuals. There is, of course, science to help us such as Statistical Process Control, Short Interval Control, Kaizen Bursts, OEE, and more; but also habit, intuition, and guesswork still plays its part. The gap between what we know and what we aim for persists to confound our best endeavours.
One of my favourite technical authors is Dr. Atul Gawande, a surgeon working within the American medical profession. He gave us this quote from his book ‘Better’ (A Surgeon’s Notes on Performance):
“We always hope for the easy fix; the one simple change that will erase a problem at a stroke. But few things in life work this way. Instead, success requires making a hundred small steps go right – no slipups, no goofs, everyone pitching in”
Though the quote specifically refers to his experience in medicine it fits just as well within our attempts at Continuous Improvement in the food and drink industry.
As manufacturers and system integrators of paperless continuous improvement systems, our clients recognise the value of accurate, structured, real-time, prioritised information to drive performance improvement, but they also recognise that getting everyone involved from the Top Floor to the Shop Floor is essential, if the desired beneficial changes are to be achieved and sustained.