Keeping an eye on the Food Processing KPI

One of the fastest growing sectors of business over the last few years has been in the production of fresh and pre-processed foods for the large multiples. Everything from fresh salads to pizza, pre-prepared meals, soups, sauces etc are experiencing bumper demand.

So what are the problems that the producers have in this environment? Firstly the companies are often trying to deal with very short order cycles as well as short shelf life ingredients and end products. Multiples will provide provisional orders but then vary them 24 hours before delivery is required. Apart from balancing resources such as labour (the use of agency labour is extensive in this industry) there is an even greater headache in ensuring raw materials are available in the right quantity and, just as importantly, that the associated packaging is matched to the demand. This gets even more complicated when special offers make even the packaging have a shelf life as short as their contents!! Having the wrong match of orders to packaging/raw materials can be very costly both in terms wastage and penalties imposed by the multiples for not meeting minimum delivery service levels. This is often why planning and procurement staff are housed in the same office, where heated discussions take place every day.

One way of reducing the problem is to have emergency or alternative recipes to smooth out potential materials shortages and then balance the remaining shortages with the labour and equipment availability.

Another is to try and get ahead of the game by processing long shelf life ingredients early while leaving the short shelf life ingredient processing to as late as possible with final packaging (and date coding) taking place on the day of delivery. Some people call this managing the product residency but in order to make this effective some cultural changes must also take place. Typically a company would have Key Performance Indicators (KPIs) set for each department or section of the process.

In fresh salad production there might be one manager responsible for raw material preparation, another for automatic cleaning, slicing and dicing equipment, and yet another for the mixing and bagging. Each manager would have a KPI by which they are measured such as overall efficiency which tends to lead to maximising batch sizes that minimise changeovers and maximise throughput for that section.

Unfortunately the impact of this approach is felt by other sections and would not necessarily help in terms of the overall business. In this industry minimising product residency is more important (minimise work-in-process, WIP). This results in a better quality product.

Shifting the responsibility up a level to the planning department, which has a more holistic view of the constraints of the business as a whole is a revolutionary, but necessary step. Once this is done rules can be developed to help minimise shorting customers while minimising the residency of product going through the entire process.
So minimising WIP is the key with a discontinuous process, multiple process lines, variable manning available and ideally small batch sizes, this can be not quite as simple as it might seem and explains why many planners either have grey hair or none at all.

A good advanced planning and scheduling tool has been shown to reduce the problem to manageable proportions. Backward sequencing from the final process making a pull system would seem to be the most obvious way forward in terms of starting the orders as late as possible but in a heavily labour intensive process this might mean having a variable shift start time which is not very practical even for agency staff.

So a combination of backward and forward loading with the scheduling rule taking care of dynamic batch consolidation and minimising the lead time through the process has found to be a compromise that works for many companies.

Managers or supervisors can then be measured on how well they meet the schedules created for them by the planning department.

Keeping an eye on THE single KPI and managing the process at the planning level using APS tools provides the means to meet company objectives of high quality products and high customer service levels in the food processing industry.