Many ongoing trends were revisited at this year's conference, with a few of the most interesting including: the ever increasing level of manufacturing automation and controls; increasing levels of M&A activity; the continued globalization of the food manufacturing industry; associated international revenue generation by U.S.-based firms; and acquisition by overseas firms of U.S. brands and companies to gain logistics synergies and economies of scale.
These seemingly disparate topics were closely woven together. Production automation and globalization are intrinsically connected; decisions to move a plant toward either system are heavily based on multiple cost factors including labor, transportation/shipping, energy, ingredients and materials.
Production automation and globalization are intrinsically connected; decisions to move a plant toward either system are heavily based on multiple cost factors...
For example, the cost of Chinese labor is at 40% of the cost of U.S. labor. Labor in Indonesia or Vietnam, however, is at 12-15% of U.S. labor costs. This field is always changing, and as the margin of labor costs continues to reduce, the location of production centers will also change.
A recent shift in worldwide energy supplies and costs is also affecting production centers. Right now, energy costs in the United States are one third of energy costs in China and Europe, making U.S.-based manufacturing increasingly attractive.
Image courtesy of Boston Consulting Group - click the image to view the interactive chart
All of these factors must be taken into account when companies decide how to expand internationally. The individual power of the consumer is also driving many changes in production techniques, particularly in relation to sustainability and safety.
The manufacturing market is very reactive to the consumer. Take soup for example: it used to only be provided in a can, and that was the only choice consumers had. Now that consumers have demanded more eco-friendly and portable packaging options, soup can be purchased in a variety of vessels, including cans, pouches, cartons, etc. Production lines worldwide are being renovated to adjust to these consumer demands.
The individual power of the consumer is also driving many changes in production techniques...
The shifting world of health claims and a focus on simplifying life (think cultural trends like meditation and holistic living) brings an effect, too. Everything is consumer driven now. Consumers want their products simplified and 'my way,' with pre-measured portion control, easier to open packaging, and similar adjustments.
Standout sessions at the conference included a keynote speech by David Watson, vice president of Engineering, International, Baking Technology and Filling and Packaging at Campbell's Soup Company, about employing best practices to support consistent plant safety, food safety, and quality standards. Another highlight was a keynote speech by Bob Reed, vice president of Global Engineering at Kellogg Company, about the need for consistent innovation in manufacturing in order to achieve operational excellence.
Other educational sessions presented at the conference included innovation in greenfield supply chains, sanitary equipment design, streamlining operations management, managing water usage and enhancing food safety.