From The Editor | July 21, 2015

Is Smart Manufacturing The Food Industry's Next Revolution?

John Kalkowski

By John Kalkowski, editor in chief, Food Online

Smart manufacturing is beginning to have a major impact on the food and beverage industry. No matter what you call it — Internet of Things, Industry 4.0, or connected enterprise — that influence will continue to grow.

Brian Kennell, North American president and CEO of packaging manufacturer Tetra Pak, recently blogged that smart manufacturing is “a bullet train leaving the station, and it promises to transform and propel U.S. manufacturers that climb on board.”

Simply put, smart manufacturing uses the Internet to connect all aspects of manufacturing and report on its activities throughout the supply chain. By linking machines, production lines, operators, and support services, smart manufacturing can help companies to optimize their business processes to a level that could previously only be imagined. As Johann Hofmann, consultant and senior VP of the German firm ValueFacturing, says, “Industry 4.0 offers interdisciplinary and integrated manufacturing, which connects and combines formerly independent disciplines and methods for the best possible outcomes.”

The Wall Street Journal calls smart manufacturing, “the New Industrial Revolution — a wave of technologies and ideas that are creating a computer-driven manufacturing environment that bears little resemblance to the gritty and grimy shop floors of the past.”

In a recent industry conference, Rockwell Automation’s Frank Kulaszewicz, Senior VP, Architecture and Software, described smart manufacturing as marrying information, technology, and human ingenuity throughout the value chain. The Internet of Things can create a highly-connected, knowledge-enabled enterprise that boosts a company’s business and operating activities across the board, leading to optimized productivity, sustainability, and economic performance.

Connections Allow Continuous Improvement

Kulaszewicz says this pervasive optimization has the potential to reinvent how products are designed, manufactured, shipped, and sold through increased technological capabilities; greater collaboration among stakeholders, including employees, retailers and even consumers; and better responsiveness. Food and beverage producers, with the foresight and commitment to embrace these changes and gradually integrate them into their operations, can achieve notable, continued rewards.

According to the Smart Manufacturing Consortium, improvements in U.S. manufacturing productivity began with less capital-intensive methods, such as TQM, Six Sigma, and Kaizan strategies. Now, productivity is increasingly reliant on larger investments in automation. On its website, the consortium cites a Harvard study that says technology investments can drive the next era of greater industrial productivity and global competitiveness, and at the same time that these flexible factories of the future will be safer, cleaner, and more energy efficient.

Many industry observers say implementing smart manufacturing is the key to U.S. companies “onshoring” their production capabilities while staying competitive with overseas operations that might  offer substantially cheaper labor rates. Eric Isaacs, director of the Argonne National Laboratory, recently wrote, “Today’s factories replace unskilled labor with high-tech automation that can produce spotless precision 24 hours a day, seven days a week.”

Small Percentage Taking  Advantage

So, it would seem that food and beverage companies would jump right in. What company wouldn’t want to maximize its efficiency and productivity? Still, a 2014 survey by the American Society for Quality shows that only about 13 percent of U.S. companies have begun implementing smart manufacturing. The report indicates that those companies are enjoying substantial improvements in efficiency, fewer products, and greater customer satisfaction.

Industry representatives say there are numerous reasons that food and beverage companies are not immediately implementing smart manufacturing. First, and foremost, is the fact that the Internet of   Things is not quite “there” yet. The technology for linking manufacturing and supply chain is still under development. It requires collaboration and a high level of trust between diverse businesses at the production, processing and packaging, wholesale, and retail levels. Sharing that much information just does not come naturally to companies. That kind of transparency also requires improvements in Internet security.

Facing Up To Capital Costs

In addition, many food and beverage companies are using processing and packaging equipment that was installed well before the Internet of Things became a reality. They have millions of dollars tied up in this capital equipment. Replacing it may or may not be an immediate possibility. This manufacturing equipment may have years of useful service remaining if companies are able to upgrade the electronics, the drives, and software.

Another concern for many manufacturers is finding the ideal labor force to run their transformed facilities. A majority of the 5 million manufacturing workers displaced by automation had only a high school education or less. Less than 40 percent of U.S. manufacturing employees today are engaged in actual production.

Finding tech-savvy employees is not easy. Argonne’s Isaacs says a major reason is that America lacks enough people with the education and know-how to fill positions as skilled laborers, technicians, scientists, and engineers. “Something is very wrong when good jobs go overseas because American corporations can’t find enough qualified Americans to fill them here,” he writes.

Industry 4.0 can offer a distinct competitive advantage to those businesses that utilize it effectively. Astute food and beverage manufacturers will recognize the opportunities afforded by the application of smart manufacturing, and won’t allow themselves to be left at the station.