Can packaging automation reduce inventory carrying costs, streamline supply chains and enable marketing strategies?
Yes, according to Packaging Automation Forum speakers that included automation experts from General Mills, Eli Lilly, Procter & Gamble, Nestlé, Frito-Lay, Tropicana and the Make2Pack group.
And the trend was clear. Packagers are looking beyond incremental throughput improvements and faster changeovers – although important -- to strategically uncover hidden savings and new revenue generators.
Vision versus gaps
Gregg Stedronsky, vice president of engineering for General Mills, was the keynote speaker. And he nailed the topic of “between the vision and the plant floor,” identifying the gaps between innovation and standards, business imperatives and enabling technologies.
For example, with the acquisition of Pillsbury -- which doubled the company’s size overnight -- they inherited plants with a “one size fits all” standard – and discovered that it no longer fit.
The sixth largest food company in the world, General Mills has evolved into a $12 billion food company with an international footprint in over 100 countries -- rather than a cereal company with just a few plants.
Part of the vision is supply chain performance, critical to the company’s future in order to maintain margins, enable innovation and create flexibility
For food companies, supply chain is “field to fork,” or at General Mills “wheat to Wheatie.” Supply chain has generated a 9% drop in the cost of goods for the company from 1991 to 2000.
Now, packaging has become recognized as a supply chain solution with the flexibility to, for instance, run more than one product on a line.
And amid changing consumer habits, packaging has been a key driver for their product innovation, channel and international expansion, margin growth and brand building.
‘Can’t shrink to greatness’
But, “You can’t shrink to greatness,” Stedronsky reminded the audience, meaning that while cost cutting accounts for 20% of productivity increases, innovation is the other 80%.
Commodity prices, retailer power, new product complexity, rising health care costs and pricing pressure all point toward “growing a demand-driven supply chain network to accelerate the manufacturing process”. This requires agility in manufacturing, better inventory visibility, faster replenishment and in general running faster and better than their competitors.
The concept of “information everywhere” means that factories must be connected to suppliers and corporate offices. Other industries, such as UPS in the shipping business, understand this.
The vision is to reduce working capital with less inventory and faster replenishment, and to improve asset utilization with the right product manufactured at the right time and faster changeovers. That, according to Stedronsky, is a billion dollar equation.
It will mean direct customer ordering, flexibility to decrease inventory, better lot tracking and better diagnostic tools to speed repair.
From art to science
General Mills has made great progress. Production efficiency has exceeded expectations. Plant dashboards track which unit operation caused a problem. Electronic capture of information helps diagnose problems that can be elusive to determine: a problem at the cartoner may be caused by missing a bag upstream, and that can be difficult to track down.
He emphasized the need for a single plant database, not multiple databases. For a centralized corporate information system. And for standard technology. OEMs and contractors need access to the networks. Plants need to understand and take part in the process.
Their MES system turned process quality from “art to science.” This provided standardized recipes for products such as Cheerios, so that tweaking was not part of the solution. They also partnered with IT to make data handling a by-product of the control systems.
Packaging priorities
Stedronsky defined packaging priorities as innovation, performance, flexibility, capital cost and footprint.
To begin with, he noted that servos and PC technology have reduced packaging machinery footprint and cost while increasing efficiency.
He described innovation as equipment that can make a new consumer product or package that in turn increases incremental sales, revenues and profits.
The desired performance increases the efficiency of the entire system, reduces costs, and increases margins and therefore profits..
Flexibility equates to fast changeovers to be able to run lots of products on the same platform -- or more than one format on same line -- and reduce inventory, improve return on assets.
Capital efficiency means doing more projects with same capital budget.
Footprint means no need to make new investments in bricks and mortar. This is especially true for mitigating the risk of new product launches. Therefore, getting better asset utilization by shrinking equipment size is preferable to building. Smaller footprint reduces cost per case and increases margins.
The power of invention
While controls and information are enabling technologies, the competitive advantage doesn’t come from the controller itself, it comes from the motions performed.
“We may love what the inventor did even though the control scheme doesn’t fit our technology,” Stedronsky said. “Inventors should stay focused on innovation. System reliability should be so high that the choice of underlying control system should be transparent.”
The trend is to become less likely to demand a single controls platform. Instead, packagers are seeking connectivity with dissimilar platforms. Companies are unable to afford to ‘rebuild’ controls to meet their standards and end up with equipment that isn’t as good as it was before. There is a greater need for diagnostics and there is pressure for the plant floor to align with company information systems.
In turn, technology partners need to provide more connectivity, downtime analysis and diagnostics across the system, not just the unit ops, and for free. They want to be able to buy the HMI that comes with the equipment and have an industrywide level of standardization to connect with the equipment -- for free.
Stedronsky said that packagers can no longer afford to limit invention by limiting their OEMs’ choice of technology. Packagers cannot accept the time and cost to force their absolute controller standardization on machinery inventors -- who are then pushed into developing “hidden prototypes.”
Source: packworld
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