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The theme of 2022 is disruption. For food and beverage manufacturers, these disruptions come in the form of mounting challenges and rising opportunities that require fast adaptation for survival. In this article, we will look at how these external disruptions impact how food and beverage manufacturers operate and how they can capture the opportunities they bring about while off-setting any negative impacts with human-centric operations.
Manufacturers are facing significant changes in both the external environment and their internal operations.
Externally, organizations are facing a post-pandemic world that looks very different from the economy for which they had initially built their operations. Customer demands and behaviors are changing. Ordering and take-out food are among the changes that continue to stick even after the pandemic. With a 37% increase in March 2022 and a 43% increase in August 2022 compared to the pre-pandemic level, this new mode of food consumption demands manufacturers to quickly expand their operations and get better efficiency out of their existing infrastructure to meet rising demands.
Besides take-out, plant-based and sustainable food is another category making headway in the food and beverage industry. In 2022, plant-based food sales totaled $7.4 billion - a 54% increase compared to 2018 and 3x the average growth of other food categories. Coupled with the expansion of take-out food, manufacturers are presented with a tremendous opportunity to grow, scale, and define new categories in the industry.
Due to global inflation, food cost is rising. On average, the price of raw materials for food production increased by 17% in 2022, and this is directly impacting manufacturers’ bottom lines. One of our customers has seen a 15% increase in the cost of eggs, which translates to an increase of $10 million in their operational costs. Macroeconomic conditions like this are outside the control of manufacturers. In order to offset its negative impact, they have to look inwardly to find ways to improve efficiency and get more out of the production line.
Yet, internal operations are also facing significant pressures from the lack of skilled workers. The food and beverage industry is not immune to the Great Resignation. Almost half of the manufacturers surveyed in a recent study by Deloitte ranked worker retention as the biggest concern for 2022. Another study finds 16% of companies suffer from a lack of worker availability. A high turnover rate means expertise and knowledge loss, low efficiency, and more errors in the production process. Fortunately, a high worker turnover rate is something that manufacturers CAN solve.
Many organizations have turned to automation as the silver bullet to cure their operational challenges. However, automation has failed to deliver on their expectations. Not only is it costly to implement and requires a rip-and-replace of your existing infrastructure, but automation also takes time to deliver values and risks leading operators to the pitfall of chasing vanity metrics, such as OEE. Most importantly, automation doesn’t bring continuous and sustainable improvements to your daily operations.
The failure of automation sheds light on the limitations of technology in manufacturing: technology alone is not enough to solve your operational challenges. You need skilled workers standing behind the machines to operate them and make use of operational data to create process improvements. In short, you need to augment your human workers with technology rather than replace them with it.
Standing at the center of all these disruptions are the human operators. Regardless of whether you are looking to scale up operations or break into new food categories, you need skilled and motivated workers to quickly adapt to changes in the systems and make timely and informed decisions in frontline operations. To mitigate rising costs, organizations need to become leaner in operations and reduce waste through improving operators' productivity. To retain workers, you need to liberate them from labor-intensive processes and empower them to be more involved in the decision-making process. By solving your human problems, you can solve all other operational challenges that are holding you back from sustainable growth and continuous improvements.
Your human operators are your most important asset, so who are they? These are the four main personas that you need to empower.
The experienced workers: these people understand the ins and outs of your operations, but they are usually tribal knowledge experts, lacking a reliable and efficient method of transfer to newcomers. Experienced workers want access to operational data to improve processes and make their life easier.
The temporary workers: these are newcomers at your plants. They provide a quick rise to your workforce, but they need to be onboarded quickly and consistent guides for task completion.
The plant managers: these people are in charge of monitoring your plant performances, foreseeing and mitigating any potential risks. They want quick access to scorecards and dashboards for an overall view of the operations.
The systems engineers: these are people who design and build the systems at your plant. They want to be able to implement changes and turn ideas into reality efficiently. In order to do that, they need feedback from frontline operators who are using their system daily.
Only when you can augment the abilities of your human workers, satisfy the needs of all these four personas and connect them into one streamlined workflow can you bring meaningful changes to your production line. That’s why food and beverage manufacturers need to shift to a human-centric mindset to adapt and grow in this challenging environment.
Learn what a human-centric mindset looks like in food and beverage manufacturing and the 4 pillars of a successful digitization strategy that can help you transform your operation in our on-demand webinar, “Future Proof Your Food and Beverage Production with Human-Centric Digitization.”