Getting Lean
Food-Processing Methodologies Offer Ideas to Chew On
Leveraging centralized resources for efficiencies across three facilities in as many countries.
Some industries have specialized end-market requirements. For example, corporate headquarters in fast food and fast casual restaurants dictate menu items and the equipment needed to support those items by region. Franchisees have choices in equipment configuration and a timeframe in which they need to buy it from a designated food processing original equipment manufacturer (OEM). They typically order very small quantities, however, making it challenging for a food-processing OEM to fulfill orders utilizing a single manufacturing location and centralized stocking model. There are also regional differences in input power voltages, cycles and plug styles. Preferred language for control overlays also varies. This creates a configure-to-order (CTO) dynamic that adds complexity to the variable demand model. Outsourcing adds flexibility to this equation because it gives food-processing OEMs access to shared production resources which help mitigate the production resource utilization inefficiencies that this type of high-mix, variable-demand production can create. It also helps OEMs more easily support a global customer base with minimal investment in production resources.

Regardless of whether the project is outsourced, when these units are manufactured in a single location, the wastes of overproduction, waiting, transportation and inventory are likely to be significant. At the same time, dividing variable-demand, small-lot production among multiple facilities has the potential to create inventory imbalances and production inefficiencies, particularly if the work is divided among contract manufacturers and managed separately by region. Lean manufacturing philosophy provides guidance on finding a balance that supports customer requirements while still leveraging some economies-of-scale.

In SigmaTron’s model, this type of project is built in the US, China and Mexico. There is a focus on standardizing project support and centralized resources to leverage economies-of-scale while utilizing local suppliers for regionally specific components.

For example, common components are sourced centrally via SigmaTron’s purchasing organization and shipped to each facility. This minimizes transactions and leverages purchasing power. A combination of proprietary and internally developed systems is used for enterprise and shop floor management. All facilities utilize a common ERP system. Proprietary real-time supply-chain management tools enable the project team to track demand, material on order, inventory, work-in-process, finished goods and shipments at both an international purchasing office (IPO) centralized level and the individual facility level. This system also can provide real-time status information to the food-processing OEMs. If demand is increasing in a specific region, the supplier is contacted, and shipments are redirected to the area of high demand. Regionally specific components related to input power and language-specific control overlays are sourced in proximity to the build site, reducing shipping cost and logistics lead-time; i.e., the waste of transportation. This combination of real-time visibility into demand and use of local suppliers for regionally specific components minimizes the potential for inventory imbalances due to variations in demand, while optimizing the supply chain pipeline and reducing logistics costs.

Equipment is another area of potential inefficiency. While most production equipment resources are shared with other projects, minimizing the waste of non-utilized talent, the test requirement is unique. Once again, the company has leveraged centralized resources. Their test engineering team has developed a standard test set capable of testing all product configurations and shipped those test sets to all facilities. This optimizes development, support and maintenance activities, while leveraging the economies-of-scale represented by a standardized test platform strategy.

Products are shipped directly to franchisees as they order, minimizing finished goods inventory requirements, shipping cost and transit time.

This type of solution provides the food-processing OEM with the standardization benefits and purchasing power of working with a global manufacturer and the advantages of a localized CTO solution to support end-markets where their customers are ordering small quantities of CTO product and want short lead-times. Just as visible factory layout helps a production team identify bottlenecks in production, company-wide real-time systems help identify imbalances in demand-to-forecast early enough to shift material to the correct facility.

Lean manufacturing philosophy is extended through the entire product realization cycle for the food-processing OEM. Raw materials are transformed into product based on an order (pull signal) from franchisee customers and built in each customer’s region, minimizing the wastes of overproduction, inventory, waiting and transportation. The cost-related benefits go far beyond the price paid for finished units, since the regional logistics efficiencies eliminate a number of costs that would otherwise be incurred.

Jim Barnes Headshot
Jim Barnes
is president at SigmaTron International (sigmatronintl.com); jim.barnes@sigmatronintl.com