Competing in the Big Box Age

Supplying big box stores like Wal-Mart is somewhat like survival of the fittest - adapt to their distribution model or lose the business. While most food manufacturers have adapted to meet the varying carton pack quantities and product mixes that these huge retailers demand, many have done so at the expense of product novelty.

Supplying big box stores like Wal-Mart is somewhat like survival of the fittest - adapt to their distribution model or lose the business. While most food manufacturers have adapted to meet the varying carton pack quantities and product mixes that these huge retailers demand, many have done so at the expense of product novelty. However, what food manufacturers must realize is that a lack of innovation will ultimately result in a failure to establish consumer brand loyalty, causing retailers to cut suppliers loose because their products don't move off the shelf.


        Some suppliers compete by offering lower pricing, but this will only erode profitability in the long run, while pegging the supplier as a market follower. Innovative products, on the other hand, not only command a premium price, but they also enable the supplier to seize and hold ownership of a given market. No doubt the best approach is a dual focus on innovation and flexibility in manufacturing.
       

Innovation challenges

Fear of putting one's "neck on the line" to champion a new innovation is possibly the single greatest impediment to achieving a market-leading product. This is compounded by the influx of low-cost imports shifting product development further away from innovation. The result is a deluge of newly modified products, not innovations.


        Working with an outside engineering firm can do much to alleviate these concerns, because products developed under such a partnership have a much higher rate of success. Aside from the depth and breadth of expertise, product and equipment design firms take a systematic approach to product development. This means conducting research to ensure that a strong market exists for the product, selecting the best technology for the product, and making sure that product designs are manufacture-able early on in the development process.


        Neutrality is of critical importance when selecting the principal technology to be used in a new product. An engineering firm that is not aligned with any particular manufacturing process provider will be able to select the newest and most advanced technology based on its suitability for the application. Being able to effectively assess a technology's maturation timeline is also a crucial factor in determining whether it will be capable of supporting the product and future iterations.


        With expertise across numerous scientific and engineering disciplines, the knowledge and capabilities that large outside engineering firms can provide go well beyond what most companies can feasibly maintain in-house. As the majority of project responsibilities fall on the engineering firm, internal staff are free to focus on their core business without feeling the pressure of the project slipping.
       

Manufacturing challenges

To adapt to the requirements of big box stores, suppliers have had to learn to "package on demand," shorten production runs for individual SKUs, and maintain lean inventories. In the face of these challenges, suppliers continue to look for ways to optimize production and reduce costs. For most companies, the answer can be found in flexible operations. However, like innovation, flexibility is not achieved by making a single equipment change. Instead, innovation is realized through a combination of strategies involving both customized and standard equipment, new operational approaches and easily programmable controllers.
       

Robotics

Robots have become an important part of the flexible manufacturing equation. Their rise in use is the result of several factors. Like most technologies, there is an inverse correlation between rising capabilities and falling costs with robots, which has made them a very compelling option, especially in harsh environments. An increase in the availability of customized robotic solutions has further strengthened the case for using this type of automation to optimize manufacturing. In addition, companies whose limited resources once required production to be outsourced are now able to internalize manufacturing functions thanks to advances in robotics and flexible manufacturing practices.


        The down side of robots, despite their speed and precision compared to manual labor, is that they lack the natural dexterity of humans. Factors such as shape and the surface on which products are being picked up have a significant impact on the reliability of robots. For this reason, end-effectors (grippers) must be effectively paired with the application. In some cases, such as irregularly shaped products, robots may not be the best solution.
       

One size doesn't fit all

There are many approaches to flexible manufacturing and the one that works best for a given facility is often dependant on its size, age, hours of operation, etc. In cases where space is not an issue, permanently installed equipment dedicated to a given product variety is the best answer to the varying demands of big retailers. In other instances, the use of roll-in/roll-out equipment may provide the needed flexibility without disrupting existing operations. Manufacturers may also want to consider whether contract labor, in-house workers or some combination thereof is the most cost-effective and flexible approach for their operations. Easily programmable inter-machine transfer conveyors play an important role in flexible manufacturing because they enable seamless transitions between product runs. Often, the best approach is one that combines at least two of these tactics. For example, the use of roll-in/roll-out equipment, robotics and contract labor may provide the perfect recipe for "manufacture on demand."
       

A holistic approach

If there is one piece of advice that manufacturers should bear in mind when competing for premium shelf space in big box stores, it is that product and equipment development are inextricably linked. A product is only as innovative as the process used to manufacture it. If the manufacturing process can be easily duplicated by the competition using standard equipment, than the product is probably better classified as a modification, not a new innovation. Similarly, advanced and flexible manufacturing processes may ensure that retailer demands are met, but will do nothing to ensure that the product moves off the shelf.


        An analysis of today's leading brands would surely reveal that a combination of product innovation and proprietary and flexible manufacturing processes were responsible for their eminent position in the market.

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