The reason why so many of the latest trends in operational excellence are now emerging is because of a wide spectrum of rising challenges that the food industry is facing today. One of the most interesting cases to look at to understand the influence of operational excellence on the operations of this industry is the difference in sales of the ‘Watermelon Oreos’ and ‘Veetaday Milk Toast’ biscuits. The sales of the milk toast trumped that of the watermelon Oreos, even though the latter is the product of the more globally renowned brand – Oreos. The reason why there was a landslide victory in the former’s sales solely lies in its researched marketing and customer-oriented product manufacturing.
Unless the target customers of a company are the “harbingers of failure”, integrating the latest operational excellence trends should be a priority of companies. Let us look at the major challenges that the food industry is currently facing, which can be turned around by adopting operational excellence.
Lack of Interdepartmental Synchronization
With the call on food quality and product traceability being prominent in the food industry, collaborations among factory processes, IT departments, quality checks, maintenance, etc. are necessary. The goals of these departments need to be complementary to ensure a leveled platform of equal growth and continuous improvement within the company.
Failed Food Tests
Ever since the introduction of the new regulations of the FSSAI in the food industry, it has been reported that more than 1 in 4 samples fail quality tests. According to them, 737 of the 2,929 food samples of Haryana did not comply with the new regulations, and 95 of the items were outright ‘unsafe’.
The fact that regulatory bodies have become more stringent in food quality-testing than before is a sign of the health-safety prioritization of customers. However, it makes the job of food industries that much more difficult.
Removing Impurities Comes at a Price
Costs of compliance with state-enforced regulations on food quality and production have led to a price hike – which is a shock to customers in a price-sensitive category such as biscuits, thereby potentially affecting the demand of these FMCGs. This, combined with the increased prices of raw materials such as sugar, wheat flour, and oil, has led Parle and Britannia to raise their biscuit prices by approximately 6%. To address this concern, food companies must implement other ways by which costs of manufacturing may be cut, and how the overall prices at which they are delivered are favorable by the customers.
Food Processing – where the magic, or its lack thereof, happens
With the focus in the food industry shifting to satisfying regulation demands, other typical issues in biscuit manufacturing are being overlooked, (improperly cooked cookies, packaging material, variations in the number of products in different shifts, etc.). Companies need to monitor these aspects of food production if they are to engender customer-satisfaction and increase demand for products.
How to Stay One Step Ahead of the Game?
The latest trends in operational excellence focus on addressing these concerns and ensure that their integration in the food industry will restore the demand for FMCGs in the market. By the implementation of analytics and tools such as lean manufacturing/ lean, six sigma, kaizen, among others, companies can stay in sync with their customer, and 2 steps ahead of their competitors.
Lean
Lean focuses on eliminating waste products from the production cycle of food – thus saving time and excess expenses. Lean implementation will help in reducing lead-time and inventory and add more value to better quality food products. The reduction of expenses behind waste products can be utilized to provide markets with higher quality food such as biscuits at a reduced price – hence staying ahead of competitors.
Six Sigma
Six sigma analyses data via statistical tools and interprets it such that a maximum of 3.4 faults per million units can be made by a company’s production unit (Bicheno, 2006). If integrated effectively, the food industry can identify and eliminate the root causes of errors and defects within companies and their production cycles. This aids in efficient quality control – which is a prerequisite in biscuit and other food industries – reduced distribution costs, and enhance productivity.
Kaizen
Kaizen is a Sino-Japanese word that refers to an organizational culture of continuous improvement, whereby teamwork, morale-building, increased productivity, saving costs in fuel, personal discipline, and suggestions for improvement are focused upon. Bakery industries can hire kaizen experts to monitor cleanliness (5S), Muda (waste production), and Kanban (methods to reduce delivery time and inventories).
Dashboard
With the customer-call for data-reporting and product traceability, the food industry needs to provide publicly available, visual representations of their company data. This will garner trust and transparency with consumers, and provide an easy-to-comprehend way to assess the current company position. Dashboards are an effective business analytics tool, whereby management and customers can monitor the process of quality control measures, and provide time-saving insight into analyzing production costs, decision-making results, and sales performances.
This real-time reporting via dashboards will also guide the management in fast decision-making, while the data reported is still actionable.
The Latest Trends
Sustainability, Transparency and Product Traceability
Two of the most popular trends revolutionizing the way FMCGs are manufactured in today’s world are sustainability and transparency. We are currently undergoing a major paradigm shift from prioritizing immediate gratification to now focusing on environmental sustainability and preservation.
Eco-friendliness has taken the front-seat in food health and safety regulations, and adhering to these guidelines will help build a loyal customer base and resonate a sense of accountability. The adoption of recycling practices, enforcing plastic bans in the company manufacturing, supply chain, and delivery processes, and incorporating a zero-waste policy are all ways by which the food industry is striving toward sustainability. The next time that you order a Subway sandwich or pizza from Dominos, take a minute to notice that almost everything delivered will be in paper bags.
Building customer-trust via transparency ensures a hike in the sales of food items as well. With the growing advent of veganism and health-consciousness, consumers are scrutinizing what they put into their bodies – more so than ever before. Contributing to this, the products manufactured by the food industry are directly responsible for the health and safety of its consumers.
This is where the concept of product traceability emerges. The idea of knowing exactly where their food comes from, how it is made, and what ingredients went into it, ensures that there remains transparency between brands and customers. Detailed and accurate labeling of food and beverage items is encouraged, which makes product traceability easier, thereby increasing brand-transparency and accountability. Honesty breeds trust and trust breeds brand-loyalty.
AI and Robotics
Recently, robotics has been integrated into the industries which prioritize flexibility and consistency. They aid bakery and food industries in ‘pick-and-place applications’, wrapping and boxing. It has been reported, for instance, that a biscuit production line based in the United States increased daily production from 12 to 20 tones of cookies, after the integration of robotics and artificial intelligence. The “reduced waste and increased quality by 20%”. So, incorporating artificial intelligence in baking processes would be able to help bakeries to manufacture cheaper items with better quality and longer shelf-life – the perfect ingredient for success and demand-hike. Scheduled maintenances of machinery and detection of equipment issues before they malfunction, to eliminate wastage, are top priorities of companies in the food industry.
Customer-Oriented Production
With consumer behavior determining sales and food production, operational excellence focuses on analyzing and predicting their pattern of consumption. This demand forecasting is essential for the food industry to ascertain which FMCGs will be a success.
Today, the world is transitioning toward a health-conscious environment, and it has been reported that a Mintel study found approximately 63% of Indian consumers to purchase ‘healthy biscuits’ (multigrain, no sugar, and high fiber products) since the beginning of 2020. Addressing customer feedback and dealing with their complaints is hence essential if corrective action and improved sales are to be seen.
What’s the Next Step?
If simplification of data, complying with regulatory bodies, enforcing full audit trails, and maintaining customer-loyalty is your goal, the necessity of integrating these trends into the organizational culture cannot be understated. The key is to unlock customer expectations – and this is where Watermelon Oreos went wrong. Lack of research before selling the cookies led to a low degree of receptivity among buyers, and that led sales to tank. Veetaday’s Milk Toast, on the other hand, used efficient operational excellence in terms of customer-oriented product-manufacturing – thereby releasing a flavor of rusks biscuits that customers wanted, but which were not present in the market.
“The bakery products industry is…expected to grow at a CAGR of 2.7% between 2020 and 2025 to reach a value of almost USD 580.8 billion by 2025.”
(Global Bakery Products Market)
Want to be a part of this momentum? Integrating the latest trends in operational excellence is the way forward.