Business and Operations
The Future of Food Factories
November 5, 2007 By Rob McMahon
Will consumers turn our bakeries into mere producers of dough for outlets like gas stations?
Imagine a future in which every loaf of bread is sold fresh to consumers. Muffins are customized to consumer demands and baked on site at supermarkets or gas stations, the smell of baked goods wafting through the stores.
Most bakers are aware of “bake-off” products that have already made a dent in the industry. According to a Swedish researcher, these products are the first step in an evolution in food production taking off in Europe and North America.
Professor Thomas Ohlsson from the Swedish Institute for Food and Biotechnology – an industry-funded research body – is part of a 30-person team of researchers examining food processing, retail and consumption trends, and how these are affecting the building of manufacturing plants. While focused on food production in Europe, Dr. Ohlsson said his findings are equally applicable to the baking industry in North America.
Dr. Olhsson says we’re seeing more and more the impact of the bake-off industry in Europe. “More and more large bakeries are trying to become
producers of dough products that are sold to retailers and small businesses – even gas stations – who do the actual finished baking closer to the buyer.
[At the same time], they’re filling the store with the aroma of fresh bread.” At a presentation during the “Perspectives for Food 2030” conference in Brussels last April, Dr. Ohlsson spoke about the promises and challenges of this shift in practice. Reached by phone later, he elaborated on his group’s predictions.
“The concept is like McDonald’s,” he said. “[There] producers receive a very detailed order from the industry – for example, french fries, a staple food. [Those fries] are delivered to different restaurants, and then prepared close to consumers. That system will cross over to the food industry.”
Along with McDonald’s, Dr. Ohlsson pointed to innovations in the steel and vehicle industries as fore-runners of this concept. Rather than large-scale manufacturing plants that produce finished products, these two industries have shifted to smaller, more efficient facilities that produce specialized “pieces.” These pieces are assembled into finished products off site – saving on transportation costs – and can be more easily customized to match consumer demand, and incorporate industry and ingredient innovations.
Dr. Ohlsson’s predictions come at the same time as a U.K.-based study that concludes the food production industry should be thinking about investing in more automation. Ishida Europe, a company that manufactures weighing and packing machines, funded the six-month study, which looked at a range of companies, from owner-oper-ators to multi-national producers. The study found that support for automation in industry is strong in all three countries examined – Germany, France, and Britain. This is due to perceived benefits, which range from reduced labour costs to improved efficiency and consistency – in spite of worries over high capital costs for the new equipment.
Michael Dudbridge, a senior lecturer in Food Manufacturing at the University of Lincoln who worked on the study, explained in an interview that his group’s findings complement those of Dr. Ohlsson.
“I believe that Dr. Ohlsson’s pre-dictions for the future are well founded,” he wrote. “Transport costs will be a key factor in the future.” Dudbridge explained the higher overhead costs of running many small fac-tories as opposed to a single large one (as in the current model) means that the current situation of rationalization will extend for some time. Though he couldn’t specifically comment on the North American industry, Dudbridge wrote that increasingly, automation is in the cards for the baking industry. This is due to a pronounced difference in innovations in automation that take into consideration the shelf life of the food product being manufactured.
“Companies who produce short shelf life goods value their flexibility and ability to respond,” he wrote. “[The] baking industry tends to be towards the short shelf life end of the market, and so follows this need to be flexible and responsive. Short production runs and quick changeovers are a characteristic of the industry.”
This need for flexibility among baking companies is born out in Dr. Ohlsson’s predictions. He explained that in the food industry, custom-designed plants are already emerging to match consumer desires for a wider variety of fresh products. Called “food assembly” rather than food production facilities, these plants allow retailers to create finished products very close to consumers. He explained the new production style will provide products like a dough or muffin mixture that will be assembled on site, in facilities that will be much smaller than traditional factories.
“People conceive of things that come out of agriculture or fisheries – [products] that are preserved and stored,” he said. “Like an oil refinery or sugar refinery, [these factories are] producing ingredients used in food production.”
Dudbridge wrote that flexibility is key to making increased automation work for the food industry. While the perceived benefits of increased automation are shared across the industry – lower labour costs being the primary one – companies are also worried about installation and commissioning issues.
“It is vital that the technology developed improves efficiency and enhances flexibility because, as Dr. Ohlsson predicts, the move towards short production runs and shorter product life cycles is [coming],” he wrote.
Dr. Ohlsson said that a big driver of these trends is a need for more efficient manufacturing processes in the agri-food business. With cheaper labour available in emerging economies like Brazil, China and Thailand, companies in developed economies that pay higher wages need to improve efficiency in order to stay competitive. For this reason, Dr. Ohlsson said that more efficient factories will require more automation – a trend already highlighted in the decreasing numbers of skilled people employed in the food production industry.
“Automation will have a huge impact in the future,” he said. “Robots will become smarter and smarter. [At present] they don’t have the ability to handle the variability the food industry needs.”
In order to ensure these functions work smoothly, companies must develop a learning culture, wrote Dudbridge. He explained that a business must develop systems and learning techniques that spread new knowledge across the company.
The shift to automation will update the character of the industry, Dr. Ohlsson said. Most food production equipment is very old, and better equipment will help food producers catch up with the current push towards sustainability. He said efficiency – that is, using resources more efficiently – goes hand-in-hand with sustainability.
Supply-chain relationships will also have to change when these innovations are introduced, Dr. Ohlsson said. He described the current climate as a “tough game” of buying and selling between retailers and food industry. The trends he’s studied point towards lots of opportunities to further build efficiency by co-operating through building alliances along the food chain, and simplifying sub-operations through automation.
“It might seem a little idealistic, but it’s essential for long-range sustainability. These changes will make a better system overall,” he said. “I’m not advocating socialism, but something needs to change.”
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