Keith Chambers is vice president of operations management software for Aveva, a global industrial software company serving the food and other sectors.
Few foods offer the transportive effects of extra virgin olive oil. Wherever you are, just a mere splash on a bit of bread can instantly carry you to the Mediterranean’s sunny climes, to ancient olive groves and abundant tables, surrounded by friends and flowing conversation. But millions of people around the world would not be able to enjoy this experience if an entire chain of manufacturing processes didn’t work together flawlessly and in seamless harmony.
At Farchioni, a leading Italian producer of extra virgin olive oil, 32 million bottles of olive oil are produced and packaged each year. About a quarter of it is exported around the world — a far cry from the two farmers who began operations at a single mill in Umbria in 1780.
To achieve that kind of scale, the company has embraced the tenets of Industry 4.0 by automating traditional manufacturing processes through digital transformation. Food and beverage manufacturing increasingly relies on modern technology such as smart data capturing and analysis, inventory and operations management, value optimization, and personalized training. With manufacturing processes calibrated to optimum conditions, companies can maximize production while maintaining quality, reducing waste, and benefiting the environment.
For Farchioni, embracing these technologies offers the confidence that each individual bottle within a 3,000-quintal batch of olive oil looks, smells and tastes identical.
Developing the digital thread
As Farchioni shows, implementing digital technology at a plant can bring benefits that improve efficiency and productivity while raising the quality of finished goods. But is that enough to ensure success in the current marketplace, where the impact of COVID-19 remains an ever-present reality?
Perhaps more important in today’s market, digital operations management technologies provide CPG manufacturers the ability to respond to changing market and supply conditions. The industry has complex supply chains that can span continents. Their sensitivity to climate and other environmental issues can cause the cost and availability of ingredients to fluctuate dramatically. Since the outbreak of the coronavirus, shutdowns and work restrictions have amplified these disruptions, while changing consumer lifestyles and incomes have caused profound changes in how and where we buy our food.
For instance, in February 2020 — for the first time since records were kept — consumers in the U.S. spent more at foodservice establishments than at retail grocery stores. Six months later, a massive $6.5 billion of spending had shifted from foodservice to retail sales channels, completely upending supply chains. It’s at plants that these two ends of the supply chain intersected, and where workers had to simultaneously deal with supply shortages, rapid onboarding of new suppliers, wild demand swings, and fundamental changes in packaging to cater to the shift from foodservice to retail. This happened as stringent new workplace safety rules and remote working caused production labor costs in the U.S. to surge by up to 20%.
Digital manufacturing technologies can create resilience and agility in the value chain and build sustainable, future-proof industrial operations with swift responses to changing market dynamics.
At its heart, value chain optimization is a digital thread that connects the consumer to the plant floor and back again, allowing manufacturers to grow revenue, and improve profitability with sustainable practices that meet their commitments to customers, employees and communities.
This digital thread runs from when demand is first sensed in the supply chain through to building a realistic sales and operations plan that takes into account both the business priorities of customer service and growth. It factors in operational imperatives such as production costs and the availability of materials, labor and equipment.
These two often-contradicting drivers have to be reconciled into an optimized production schedule that balances these competing goals — in a plan that must be executed at the lowest possible cost. Manufacturing execution systems typically manage this work, using digital tools for mobility, collaboration and knowledge sharing to ensure maximum productivity.
But people and technology are only two elements of a transformation plan. The third — process — is where digital technology can have a major additional impact. As plants become increasingly agile, the pace of change accelerates. To keep up, continuous improvement must accelerate. Advanced analytics and AI can provide continual optimization of shop floor processes and provide operators with key insights to further improve their productivity.
Finally, it’s important for all stakeholders — from the customer to the supply chain planner to the plant floor operator — to have visibility into the plan’s execution. An agile plant needs to be able to respond quickly to the unexpected, so if a major piece of equipment fails, it’s important that plans can be reoptimized quickly and customer impacts communicated.
A resiliency plan
Whether it is an olive oil producer or a manufacturer of candy bars, digital manufacturing execution that optimizes the value chain has several significant benefits. These include improved manufacturing agility and resilience; on time and in full delivery; increased productivity and performance; improved quality; transparency and traceability; and reduced noncompliance.
Despite technological advances in processing and ingredients, most plants are still collecting and sorting data manually. Digitalizing this process helps optimize performance while supporting revenue growth and sustainability. With this approach, manufacturers can standardize systems across plants to leverage supply chain-wide improvements.
Over the past year, we have witnessed developments that might have taken decades to come about be compressed into the space of a few months. These events have led the World Economic Forum to describe a "Great Reset" of the business of manufacturing. With an uncertain business outlook likely to persist for the foreseeable future, advanced technology solutions can help manufacturers stay resilient and responsive. The time to hit the "reset" button is now.