Design Improves Supply Chains for Processors & Distributors
The COVID-19 pandemic created bottlenecks and backlogs in protein processing supply chains. As processors look to meet demand in 2021, possibly on the other side of the pandemic, they have an opportunity to re-imagine their business models and make necessary changes and upgrades to their existing sites using design/build strategies.
One of these strategies is consolidation, which actually started to happen before COVID-19 hit. Industry experts estimate that 50 U.S. meat packers account for 98% of the production. An article in MidAmerica Farmer Grower explains that the larger the plant, the lower the per pound processing costs. And, these larger facilities operate at near full capacity and balance out shifts in consumer demand.
The decision to expand upon an existing facility is often land driven. Andrew Nelson, regional manager, ESI Group USA, says a facility with available land on which to make improvements is sometimes a better option than looking for property elsewhere, which could be expensive and drive up operational costs. Additionally, many county, city, and state jurisdictions provide incentives for new job creation and offer rebate programs or tax deductions for reinvestment in existing facilities. This can help offset the cost for infrastructure improvements for the benefit of the community as a whole.
ESI Group USA has witnessed first-hand this move toward consolidation to address supply chain inefficiencies as customers are choosing to expand through design. “While we have certainly seen several projects put on a temporary hold during this pandemic due to pricing, more often than not it has been due to market uncertainty and the rethinking of traditional business models,” says Nelson. “Consolidating smaller facilities into larger, regional facilities may become a trend across the industry, especially in regards to supply and distribution. For example, smaller facility operations have to outsource a lot of the daily operations that larger operators keep in house such as pallet management, vehicle maintenance, sanitation, etc. To efficiently operate a facility with as many moving parts, as is common with our projects, centralized control of operations is critical. Specifically, control over the many expenses across the board also limits liability for the organization.”
Internal Design Changes
In addition to rethinking the external supply chain, processors and distributors should consider the internal design of their plant in the wake of COVID-19. Design/build companies must work closely with its client’s operations staff to make improvements related to employee movement according to CDC guidelines. These changes may include reducing the number of employees in areas at a given time by staggering shifts. Operational methods may be revised to promote a safely distanced staff, and adding spaces for temperature check stations, safer employee welfare areas, and sanitizing stations. “It requires a comprehensive review of all activities inside and outside of a facility to ensure the safety of all,” says Nelson.
There is also growing interest in implementing automation into facility design to alleviate the number of people working closely together, such as in processing and distribution. This technology may include smart conveying systems with photo-eye technology, in-line scales, and other sophisticated options engineered specifically for the processes they are performing. Nelson says these systems can increase floor productivity by 25% over their traditional counterparts.
“Although the upfront investment in automation is usually significant, the return on investment may make the decision to automate parts of the process easier,” he says. “Employee retention, safety, less damage to plant assets, and depreciation of equipment costs and operations should be considered when discussing the upgrade to automation.”
When making improvements to existing facilities, Nelson recommends identifying key areas that can be more efficient. These include mechanical systems, LED lighting, thermal improvements like a new roofing system, and energy-efficient insulated metal panel walls. In addition to the savings these systems can provide, installing them may qualify for tax incentives and rebates.
Looking for a silver lining in this pandemic may sound Pollyanna, but, in fact, researchers claim that COVID-19 is actually benefitting the meat and poultry industry as consumer demand in grocery stores remains high. Growing demand requires more efficient processing and increased warehousing and distribution – all of which can be improved by working with a design/build company to expand existing facilities for increased productivity.
- Automation can increase floor productivity by 25%.
- Meat processing plants operated at 95% to 98% of 2019 levels, following the president’s executive order to remain open during the pandemic.
- Global cold chain market size is $233.8B; projected to reach $340.3B by 2025.