There are many complex challenges facing food manufacturers. Competition for the consumer dollar is intense, margins are shrinking, material prices often fluctuate, and the overall cost of doing business continues to grow. Against this backdrop, many businesses are evaluating their facilities to determine how best to position themselves for the future.
One overarching goal of many food manufacturing businesses is to increase efficiency throughout the facility. This means examining the way food is delivered, stored, and prepared, along with how equipment and personnel are utilized. By optimizing the facility and focusing on efficiency, the business can work toward improving profitability.
When debating the efficiency of a facility and whether to build new, it’s important to start with a wider financial view. Then the focus can turn to key real estate decisions, such as the land site and square footage.
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Among the key questions to ask are: What are the company’s short and long-term growth projections? Does the company have a merger or acquisition on the horizon that would impact the size and scope of the facility? What capital resources are available for building a facility or making modification to the existing location?
Proper planning is the key to success with any facility initiative. Company executives should start with a detailed discussion on financials. If steady growth is expected, consider selecting a site that can accommodate a building expansion in the 25 to 35 percent range.
When discussions turn to the real estate, it is important to examine the local market. In many cities, land is one of the least costly items in the overall building process. In those scenarios, it is less costly to buy additional land to set aside for future building than to risk not having it later. The same is true for utilities, as it is less costly to add to the utility capacity during initial construction.
In prime real estate markets, such as San Francisco, however, the reverse is true. Land costs can make “banking land” too costly. Companies should focus instead on designing a facility that could lend itself to different food processing applications. Again, this is predicated on what types of growth a company is projecting — i.e. additional square footage or increased production capacity.
During the site evaluation process, one important tool for food manufacturers to consider is a utility feasibility study. This process will help determine if the site has adequate water capacity, gas and electrical power to meet the business’ needs into the future. This is an important step, as many food manufacturers consume large volumes of water.
As productivity and efficiency are key decision drivers, a business must ensure that the utility capacity can meet future production requirements. Otherwise, a state-of-the-art facility might quickly become obsolete and unable to meet growth demands. By planning ahead, businesses can help create a facility plan that works for the long term.
Any new facility should be designed around sustainability as well. This is true whether manufacturing products for large corporations or smaller distributors. Environmental initiatives, including LEED Certification and Energy Star ratings, have become an important component in many businesses. In order to be competitive in the global marketplace, manufacturers need to demonstrate their commitment and implementation of key environmental initiatives.
Many new facilities, for example, include a water recapturing system to help reduce water usage by recapturing and reusing greywater. This can have tremendous benefits on both environmental impact and production efficiency. By adding sustainability initiatives into a facility from the beginning, manufacturers can streamline their costs and boost their competitive standing with key clients and potential clients.
In today’s global food manufacturing environment, “going green” does not always equate to higher costs. In fact, a well thought out plan can produce a relatively short return on investment through utility cost savings, tax incentives and other means. Some companies are hiring sustainability experts or third party firms to audit their needs and help create financial modeling to break down the costs and benefits.
There are many factors to consider when evaluating a food manufacturing facility. By identifying corporate goals and initiatives, defining growth projections, implementing well developed sustainability plans and utilizing industry tactics such as feasibility studies, manufacturing businesses can vastly increase their efficiency and productivity.