Food Processing Industry Overview

Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agriculture inputs for manufacturing of edible products. Food processing industry has seen significant growth and changes over the past few years, driven by changing trends in markets, consumer segments and regulations. These trends, such as changing demographics, growing population and rapid urbanization are expected to continue in the future and, therefore, will shape the demand for value added products and thus for food processing industry worldwide. The share of organized and unorganized sector varies depending on the market segment, but it is highly fragmented in developing countries. Segmentation of different sectors in food processing industry is as follows

Food Processing Industry Value Chain

CHALLENGES FACED BY THE INDUSTRY

The market forces are compelling for the food processing industry to increase the quality of their product and services while continuing to maintain their cost competitiveness in order to be able to compete effectively in the global food market.

Production Challenges – Food Processing Industry observed to have few common issues in the areas of production like,

• Low productivity and throughput
• High production costs
• Suboptimal manpower utilisation
• Inefficient inventory management
• Seasonal production Vs Year-round Processing Operations
• Ensuring timely availability of inputs
• Highly perishable nature of raw materials
• Variable quality of raw materials due to cyclic variations and changing weather conditions
• Discouragement for processing units to reach optimum size and achieve economies of scale.
• Lack of requisite controls across the agri-value chain-from farm inputs to storage of produce to food processing techniques

SCM Challenges –  Long and fragmented supply chain leading to high wastage and high costs especially due to seasonality, perishability and variability of produce. Compared to other industries, food processing industry often need to cover large sales geographies and rural interior locations. SCM plays crucial role to provide right product at right place at right time and in the right quantities. Challenges observed in SCM were,

• Higher distribution costs on transport, handling, storage, and bagging operations
• Coordination between various operators at supply chain

Sales & Marketing Challenges – Often disconnect between market realities and the marketing plan prevents sales team to achieving desired outcomes. The common issues observed are,

• Market information and intelligence flow to top managers
• Sales force effectiveness

KEY OPPORTUNTIES IN FOOD PROCESSING SECTOR

• Processable varieties of crop
• Contract farming
• Investments in infrastructure through Public Private partnership (PPP)
• Mega Food parks
• Integrated cold chain
• Food safety Management Systems

CRITICAL SUCCESS FACTOR

• Integrated Supply Chain and Scale of Operations
• Processing Technology
• Increasing Penetration in Domestic Market
• Competitive Pricing
• Brand Competitiveness
• Product Innovation

VEDZEN'S PAST EXPERIENCE IN THE SAME/SIMILAR INDUSTRY

Over the years, Vedzen's approach has very effectively engaged our clients employees, creating buy-in, ownership and change from within. Our core competency, however, remains implemented change programs focused on those building blocks: management systems, business processes improvement, utilisation of assets and behaviours. Vedzen has been able to successfully carry out projects in virtually any industry, listing few case studies from our clients in food processing industry.

Productivity Improvement

“Key Results of the project were implementation of New TPM system. It dramatically improved OEE’s, 14% reduction in plant operation, Better shop floor ownership and understanding”

Cost Reduction

“Key Results of project with client resulted in 25% throughput improvement, implementation of new forecasting & planning model, Significant behavior change among employees”

Efficiency Improvement and Waste Reduction

“Golden Wonder is a leading manufacturer of own brand and supermarket crisps and snacks operating three crisp and snack manufacturing sites in the UK.

The project achieved the high end waste reduction target of 1.5% and exceeded the efficiency target by gaining 15%.”

Sales & Marketing Improvement

“Client’s business had gone through a period of dramatic but uncontrolled growth, resulting in substantial losses and serious distribution channel issues. 

Jointly worked on 6 identified critical issues which were lack of market information, little control over its sales force, little control over the distribution channel, High levels of debt, High levels of inventory and channel stocks, Poor availability at retail level.

The project saw key results as + 18 crores (£2.6 million) bottom line improvement, 375 percent return on its investment, vastly improved customer service, and better performance management”

Development of Proactive Management and Result Oriented Behavior

“Outcome of the project was the development of more professional profit orientation organization; results orientated culture, better management and supervisory skills”.

WHAT VEDZEN CAN DO FOR YOU?

Vedzen Group has earned an enviable reputation for our ability to implement predictable, significant, rapid and sustainable change, assisting CEO's, worldwide, in executing their vision, mission and goals. Vedzen offers a low risk approach and investment that delivers real and very significant results to the bottom line, in timeframes that will surprise. Our implemented solutions and measurable financial results have a lasting impact on the competitiveness and performance of our clients with the safety of a fixed price.

Vedzen has the Capacity to see the opportunities within your business and the Power to Change them into bottom line improvements. We offer our expertise in the following areas,

Productivity Improvement

• Improving productivity and throughput while keeping low production cost
• Identify factors that reduce productivity and develop solutions to tackle them
• Optimising manpower utilisation
• Designing & implementing management control systems to ensure effective control on shop floor operations
• Measure, monitor & improve manpower productivity through improved supervisory behaviour, training & awareness

Sales & Marketing Effectiveness

• Better customer segmentation, understanding and targeting, improve market information and intelligence flow
• Improve marketing effort to ensure better capacity utilization
• Improve sales force effectiveness to increase revenue from profitable customers
• Improve market coverage & reach

Reduce Cost

• Improve throughput & yield while keeping costs same or lowering them
• Develop & implement best practices of inventory management to ensure elimination & avoidance of obsolete inventory
• Improve house-keeping drastically through one-time mission and ensure sustainability so as to reduce wastage & damage to goods
• Implement ‘first-in & first-out’ or other such practices to avoid wastage & damage of goods
• Reduce idle time, downtime & wastage of material
• Identify key cost contributors and develop solutions to control them

Improve efficiency

• Implement 5S system thoroughly to ensure quick retrieval, storage & handling of goods
• Conduct Value Stream mapping to identify bottlenecks and improve various process centers
• Reduce vehicle turnaround time and thus increase utilization
• Improve material handling & movement through improvement of processes, better upkeep of equipment, SOPs, training & improved awareness
• Improve procurement efficiency by reducing purchase lead times

Improve asset utilization

• Conduct capacity utilization studies, bottleneck identification studies and propose measures to optimize utilization
• Conduct studies & analysis to clearly identify areas requiring capacity enhancement through investments and
• Clearly identify areas where idle capacity exists and improve utilization through improved sales & marketing
• Improve planning and allocation of resources

Improve Management Control System

• Implementing management control systems across all of the departments
• Developing a more proactive management style by empowering management and supervision to take more effective decisions
• Establishing more effective performance indicators

Design and implement a review structure for the entire organisation to bring in accountability at all levels in the organisation

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