Less waste, more gain: boosting profits in food manufacturing

 
BY CHARLIE AHERN
GENERAL MANAGER, ADVANTA
 

During the past decade, the food and beverage manufacturing sector has grown to bring 30% more value than it did in the noughties. The industry is now worth a colossal $126 billion to the US economy. That said, generating profits in this industry is not without its challenges.

Today’s supermarkets are facing commodity deflation, which is complicating revenue growth. In addition, shifting consumer buying habits and growing demand for new flavours and trends are all forcing the industry to change the way it processes, manufactures and markets food products. In today’s competitive food environment, what can manufacturers do to boost profits?

Packaging reduction

One of the most well-known methods of boosting profits in manufacturing is to reduce waste, and a common way to eliminate unnecessary waste is to adopt lean manufacturing methodology. New technologies, such as advanced supervisory control and data acquisition (SCADA) systems, are enabling better monitoring and management of common wastages on the factory floor, particularly unnecessary and excess machine motion and non-required waiting time during production.

However, due to the perishable nature of many ingredients in food and beverage manufacturing, some of the priciest wastages are related to overproduction, unnecessary inventory and product defects. Unfortunately, these wastages are often unavoidable, even with advanced technology to monitor production. That said, there are ways to reduce waste from other resources in food manufacturing, including lessening the waste related to food packaging.

We’ve all heard about the problem of excessive packaging on food products — and plastics tends to be the prime culprit. According to the Environmental Protection Agency (EPA), over three quarters of plastic material generated in the United States is currently sent to landfill. The finger is often pointed to consumers, urging them to follow recycling recommendations. However, there are steps that food manufacturers can take to alleviate this problem — and boost their profits in the process.

By shifting to a more recyclable material for packaging, like aluminium, manufacturers can take advantage of reimbursement schemes to exchange their unused packaging materials for cash. Because aluminium can be melted and reformed repeatedly, some food packaging suppliers can offer financial reimbursement for excess foil packaging supplies. This means that any aluminium that is not used by the manufacturer can be resold back to the supplier, where recycling will be arranged. Good for the environment, and good for profit.

Invest in lifespan

Purchasing ingredients and supplies in bulk has long been considered a viable method of saving money for large manufacturers. However, not all manufacturers have the inventory space required to store these excess materials — and it’s certainly not ideal for manufacturers that rely on perishable products and raw materials. As an alternative, investments should be made to prolong the lifespan of products produced on site.

New packaging methods, such as modified atmosphere packaging (MAP), are enabling this. MAP describes the modification of the air inside packaging. By displacing regular air for low-oxygen gases, the potential microbial growth is minimised, therefore prolonging the shelf life of the product. This is particularly advantageous for meat and poultry. Chicken products, as an example, can expand its lifespan by three times, by using this method.

Skin pack, another method of extending the shelf-life of poultry, uses vacuum packing to seal the meat to an aluminium or plastic tray which is then sealed with plastic wrapping. This method, which was made aluminium-compatible by Advanta earlier this year, eliminates oxygen from the product. As a result, it can increase the shelf-life of poultry by similar levels as MAP.

Controlled atmosphere packaging (CAP) can also be used to prolong the storing time of products at a manufacturing facility. This method requires the addition of oxygen absorbers to food packaging to regulate the temperature and humidity of a product. This can be hugely beneficial for manufacturers that need to store food products for longer than initially expected.

Investing in these packaging methods can reduce the likelihood of spoiled inventory, particularly if a product line is not selling as well as expected, or if the product was overproduced. This can also reduce the impact of fines and reject orders from retailers if a particular batch of products is delivered with a shorter use-by date than agreed.

Food and drink production are the unsung heroes of the US’ manufacturing economy. Bringing a colossal $126 billion to the economy each year, it is no surprise that the sector is becoming more saturated and competitive than ever before.

Every manufacturer is fighting to grab a slice of the industry’s lucrative profits, however increasing costs should not be the first option for manufacturers in this sector. Instead, the industry should assess opportunities to reduce its waste, both for packaging and spoiled products, in order to reclaim potential profits.