Why Food Manufacturers Need To Rethink Operational Efficiency
In the food manufacturing world, there’s an idea we hear time and time again: It’s just the cost of doing business. Sustainability costs, employee training costs, unscheduled downtime costs, soul-crushing audit stress – these things are unavoidable, but that doesn’t mean you can’t reduce them significantly by putting some strategic thought into your operational efficiency.
In fact, facilities that focus on small, frequent improvements see big impacts in the long-term that enable them to propel forward beyond the competition.
But before this streamlining and growth can occur, food manufacturers need a change of approach. Rather than accepting operational challenges and costs as unavoidable due to low margins and insufficient time, we need to be able to visualize the end-goal and find the pathway to achieve it. There’s no better way to do this than to explore the gains that others are already enjoying.
The Key Benefits Of Operational Efficiency
Hundreds of food manufacturers are already journeying down the path to greater operational efficiency – and the benefits are significant. In 2015, The Aberdeen Group released an insightful report on how efficiency leaders differ from manufacturers who aren’t making focused steps towards improving operations. Here are some of the ways that intentional efforts towards streamlining operations has benefited these companies.
- Lower Cost of Quality: Efficiency-focused manufacturers outperform the average manufacturer and experience 3.8% prevention costs (down from 4.9%), 2.8% assurance costs (down from 4.5%), 2.7% internal failure costs (down from 5.2%), and 2.7% external failure costs (down from 3.8%).
- 47% Fewer Delayed Shipments: Leaders in operational efficiency, thanks to streamlined and automated processes, have a dramatically lower frequency of delayed shipments, which means fewer irritated clients and less lost business.
- 52% Less Unscheduled Downtime: A down food packaging line can cost as much as $150 per minute, and when you consider that the average plant has 400 hours of unplanned downtime per year, the cost of this productivity loss adds up quickly.
- A Boost To Your Bottom Line: Leaders in efficiency have greater yields, larger margins, and far fewer mistakes, ultimately outperforming planned margin goals by +9%. Can you imagine how that would impact your business?
Improving your operational efficiency isn’t just something to be done when you find yourself with some extra time. When you make it a priority of the business as a whole, the effects can completely supercharge your rate of growth.
Let’s Bust The Myth That Improved Efficiency Is Out Of Reach
Even with these shining statistics, the road to becoming a leader in efficiency can still seem unnavigable. Will it require more resources than you can dedicate? Will switching focus throw off everything you’re currently working on now? Will you end up putting in a lot of effort only to see small gains?
Here’s the good news: incremental changes can have a big impact. And for many companies, these smaller, inexpensive adjustments spread out over time have worked wonders.
FreeYumm is an example of success in this way. Vice President of Operations Terry Goulah realized that their manual systems weren’t just going to cut it when it came to exporting their allergen-free packaged goods to the US. Traceability, records, audits – the manual note-keeping was going to end up being a huge nightmare, especially with SQF certification and new markets within sight.
Terry slowly began adopting Icicle’s traceability automation software, and in just a few weeks, he wasn’t handwriting any more notes or having to call up suppliers to ask about certifications. It all flowed into the digital system naturally.
He implemented some additional features like food safety plans and efficiency analytics, and a year later, FreeYumm was running a streamlined and heavily automated food management system. This has enabled the brand to do several things they wouldn’t have been able to otherwise:
- Avoid hiring another full-time staff member while still producing at full-speed
- Pass an SQF audit with flying colors
- Appeal to bigger customers like Costco
“I can’t imagine having all the paper reports for shipping or receiving, traceability documents. I couldn’t even fathom doing all of that manually. It’s easy to say that we have saved at least half to full-time headcount at current volume. As we grow, I could see that growing. Icicle has definitely made us more efficient.” – Terry Goulah, FreeYumm
You don’t have to be a thriving, multi-facility manufacturer to see the rewards of optimization. Even small, time-strapped companies can experience minor wins that, over time, add up to company-altering improvements.
Start Thinking About Optimizing Your Operations
Like with all changes to your systems and processes, efficiency adjustments need to be carried out strategically. You’re already low on time and margins, so we suggest starting with some easier wins, rather than big projects. These help get you and your team excited about further improvements and the rewards they can provide.
Here are some questions you can ask yourself to find these easy wins:
- What processes tend to irritate or lower morale for staff?
- Where are the productivity bottlenecks for staff or equipment?
- At what steps do mistakes frequently throw off efficiency?
- What manual systems could be optimized by becoming digital?
Spend some time identifying these tension points, then assess which systems could most easily be streamlined with some clever software or a process adjustment. This is the type of strategic planning that can make your business better.
We’re willing to bet many of these early wins could be achieved by digitizing all the record keeping that goes with food production. Pen and paper have served us well, but it’s now the 21st century, and digital information that can be accessed by anyone on your team from any place has provided many manufacturers with operational efficiency boosts already over the past few years.