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Who are the plant operators and decision makers in food and beverage manufacturing and what are their primary concerns?
Hello! Thanks for your question about primary concerns of plant operators and decision makers in food and beverage manufacturing industry. The most useful sources I found to answer your question are Plex's survey report, and J.P. Morgan's equipment report. The short version is current issues in this sector focus on ICT and smart technologies, supply chain difficulties, energy planning, and renovation of physical equipment. Below you will find a deep dive of my findings.
OVERVIEW
I started by searching and reading articles and news on the food manufacturing industry. Since you mentioned you were aware of concerns regarding food safety, contamination, and quality control, I excluded the information found on those topics and focused on other issues driving change in the food and beverage manufacturing industry. From the research, I found four main categories where most of the current trends and issues fall in:
ICT AND SMART TECHNOLOGIES
Recent data suggests manufacturing jobs in the food and beverage industry will continue to grow in the coming years. It is expected 3.5 million jobs will be needed over the next decade, but it is also likely 2 million of those jobs will be unfilled due to a lack of qualified applicants. Here, it is important to highlight the changes in job requirements for the sector.
Currently, technology has modernized manufacturing considerably, making automation an essential part of the process in all industries. Workers in the manufacturing industry in general, but the food and beverage sector in particular, are not necessarily required to operate machines and carry out heavy duty work. As Plex's State of Manufacturing 2016 report mentions, "today’s factories are highly automated, from connected stamping machines to robotics and autonomous vehicles. Even mid-sized operations rely heavily on sophisticated equipment." According to their survey, the most important skills required by employers in the sector are knowledge of lean manufacturing, data analysis, and mechanical engineering. These are necessary for understanding the areas of opportunity of plants and businesses, and building or adjusting equipment that will help them be more competitive.
The need for these skills is only going to increase. According to the survey, 98% of respondents believe "connectivity to systems,
machines, suppliers, and customers is either somewhat or very
valuable to their business today." Furthermore, they see great opportunities derived from big data and the information that can potentially be gathered with the Industrial Internet-of-Things (IIoT). Already 50% of organizations deploy smart sensors to collect data in order to improve planning on the plant floor and the supply chain; supporting more efficient processes and with better quality. 73% agreed cloud solutions had "improved their level of insight," and 65% believe "the cloud is enabling them
to implement new initiatives to enhance quality and increase plant or enterprise integration."
However, the possibilities of the IIoT have not completely come to fruition. Manufacturers in general need to develop systems that best provide them with the tools to improve all their processes. As a report from Capgemini details, there are still areas where the implementation of sophisticated big data systems has not been as successful; or requires higher investments, or an overhaul of the processes in place. Figure 12 in the report shows the areas where difficulties for implementation have not been overcome, namely Quality Management, Forecasting and Planning, Predictive Maintenance, and Asset Investment Planning, among others. The development and implementation of these new technologies, and the proper use of the information they provide in order to address different steps of the manufacturing process, will continue to be a concern in the coming years.
SUPPLY CHAIN DIFFICULTIES
The effectiveness of data analytics has helped manufacturers identify supply chain issues that may be driving their operational costs up. One of the cited complications, mentioned in Plex, Capgemini, Quintiq and Llamasoft reports is the fluctuations in the consumer demand or in commodity prices. Thanks to real time data, it has been possible to understand when the fluctuations in demand will happen. The issue then becomes how to optimize the supply chain in order to adjust overall production accordingly. Supply chain design is the proposed solution, it allows businesses to model their supply chain in order to forecast and adjust results, considering variations in each step of the process.
The supply chain difficulties require plant operators and manufacturing decision makers to maintain supply chain models, develop plans of adjustment for variations in the supply chain, define product allocation, operational decisions for output production, plan ahead considering the supply and demand of raw materials, inventory management, etc. These are likely part of their day to day activities. Depending on the tools available, each of these decisions and operations have to be pondered according to the available data. Therefore, obtaining the correct data, and having the appropriate plans and operation changes in place for adjusting to supply chain issues, is a major concern of modern food and beverage manufacturing plants.
ENERGY PLANNING
The food and beverage sector is one of the largest energy users in the manufacturing industry. According to the U.S. Department of Energy, it is ranked 5th, using 7% of total manufacturing process heating energy. Furthermore, 56% of process heating energy
is lost within this sector. The Department of Energy suggests there is a great potential in refocusing the energy use of the sector in order to make it more environmentally friendly, while also reducing costs for companies. Although their report clearly proposes the reuse of waste energy as a relevant opportunity for food and beverage manufacturers, reports show manufacturers are already taking action to reduce their energy consumption.
Flex's survey shows 25% of respondents already use smart thermostats or energy control devices. They allow manufacturers to improve safety by having real-time or nearly real-time information of energy consumption. They are also instrumental in reducing energy costs, by identifying energy activity throughout the supply chain, and detailing processes that could be more efficient. Real-time measuring of energy consumption is also likely to improve in the coming years, making it easier for plant managers to identify high energy consumption processes, as well as business managers estimate investments in equipment or additional installations more efficient, favoring lower operation costs.
RENOVATION OF PHYSICAL EQUIPMENT
Physical equipment for the food and beverage manufacturing sector is closely related to the three main issues highlighted above. According to a J.P. Morgan report, automation is the current main driver of equipment demand. It allows companies to complete their processes faster, and more accurately. Providing them opportunities to adjust line production quickly thanks to modern networked systems.
Nonetheless, there are differences depending on the specific sector of the industry. Animal products are still labor intensive, while dairy, agricultural, and processed foods are mostly automated. This allows companies to also have a greater control on health and sanitary measures, which is one of the main concerns within the sector.
Current issues regarding equipment renovation are also linked to regulations and consumer needs. New labeling rules, and the exclusion of certain chemicals from the manufacturing process (like PHO) have an effect on supply chains and the equipment necessary for processing food and beverages. The overall trends in consumer needs are also having an impact, as a greater desire for transparency in food production, coupled with new dietary guidelines, may affect the demand on finished products. In fact, according to recent surveys, 43% of consumers believe it is very important for food to be made with natural ingredients, and 42% dislike artificial colors and flavors. Consequently, J.P. Morgan finds "manufacturers are striving to achieve preservation through organic additives, irradiation and hyperbaric processing (rather than with chemical additives), which raises new technological and infrastructure needs."
To wrap it up, the main concerns of manufacturers from the food and beverage sector focus on four main categories: ICT and smart technologies, supply chain difficulties, energy planning, and renovation of physical equipment. Most of the drivers for change come from current tech innovations, which provide opportunities for cutting costs and making the manufacturing process more efficient. Additionally, consumer trends are now more accessible thanks to technology, and manufacturers are able to adjust their processes accordingly.
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