What’s For Supper? The Challenge of Increased Demand

As consumers become more economically minded and stay home for
dinner more frequently, food companies are benefitting from a spike
in demand for their value-based products.  Certainly this is
good news, but this rise is temporary.  As soon as the
recession is over, demand will level off again as consumers go back
to their favorite restaurants again.  

Where most food producers habitually respond to rises in demand
with plans to expand their plants, there are two compelling reasons
not to do so in the current climate:

1. Given the temporary nature of the demand spike, permanent
expansions are not advisable.  The capacity increases
needed for today are not sustainable in the long term, and
if plants expand now, they will have idle lines later.
2. The credit crisis makes borrowing money for capital
improvements difficult or costly to get.  “Capital
Preservation” is the theme of the moment.  Board rooms
loathe borrowing and investing.

Food and beverage companies have a unique challenge, then:
how do they capitalize on this spike in demand in a timely
manner, while the current boon is upon us, and do so in a way that
gives them the flexibility to decrease capacity as demand settles
back down?

The answer is in the power of the plant floor.  New research
we’ve conducted with AMR Research, which I mentioned in an
earlier blog post, shows that through better processes and use of
the plant workers, it is easier than many food executives think to
immediately increase capacity to meet demand without capex. 
In fact, according to the research, many food companies are working
under false assumptions that they are already operating at or near
their peak efficiency levels when they actually have substantial
room for improvement.
However, as I discussed previously here, the first requirement is
metrics.  Without the ability to see what the shop floor is
doing — and without confidence in what you are seeing —
a food producer cannot see the people and process factors that
impact capacity.  In-plant metrics reveal the gap between the
perception of peak efficiency and the reality for improvement that
enables a lift in capacity — just when food companies need
it.

To request an
advance copy of the AMR Research/CDC Factory study report, click
here.