How Achieve Agility in Food Production - Sintef
How Achieve Agility in Food Production - Sintef
How Achieve Agility in Food Production - Sintef
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<strong>How</strong> to <strong>Achieve</strong> <strong>Agility</strong> <strong>in</strong> <strong>Food</strong> and Dr<strong>in</strong>k Manufactur<strong>in</strong>g<br />
S<strong>in</strong>dre Bolseth and Erlend Alfnes<br />
Department of <strong>Production</strong> and Quality Eng<strong>in</strong>eer<strong>in</strong>g<br />
Norwegian University of Science and Technology, NTNU<br />
Trondheim<br />
Norway<br />
S<strong>in</strong>dre.Bolseth@ipk.ntnu.no<br />
Erlend.Alfnes@ipk.ntnu.no<br />
ABSTRACT<br />
<strong>Food</strong> and Dr<strong>in</strong>k manufactures are fac<strong>in</strong>g competitive and customer pressures. The consumers are<br />
chang<strong>in</strong>g behavior, and the markets are fragmented and small niches emerge. This paper outl<strong>in</strong>es the<br />
characteristics and the specific problems <strong>in</strong> achiev<strong>in</strong>g efficient manufactur<strong>in</strong>g <strong>in</strong> this type of <strong>in</strong>dustry.<br />
Further, it discuss how to use manufactur<strong>in</strong>g strategies, methods and techniques, successfully used <strong>in</strong><br />
other <strong>in</strong>dustries (e.g. automobile and electronic <strong>in</strong>dustry), <strong>in</strong> order to meet present and future market<br />
challenges.<br />
KEYWORDS<br />
Agile Manufactur<strong>in</strong>g, <strong>Food</strong> an Dr<strong>in</strong>k Industry, Consumer Trends, Time<br />
Compression, Cooperation and Network<strong>in</strong>g<br />
INTRODUCTION<br />
<strong>Food</strong> and dr<strong>in</strong>k (F&D) manufactures face the same competitive pressures as every other<br />
manufactur<strong>in</strong>g sector, amplified by the special problems of their product and a relatively weak market<br />
position (Jones and Kruse, 1999). Traditional food products are produced <strong>in</strong> high volumes and with<br />
low marg<strong>in</strong>s. New consumer patterns and fierce competition enforces food companies to supply a<br />
broader range of products and simultaneously lower their costs. This requires improved efficiency <strong>in</strong><br />
production and logistics operations.<br />
Lead<strong>in</strong>g companies, particularly <strong>in</strong> the “Orig<strong>in</strong>al Equipment Manufacturer” (OEM) <strong>in</strong>dustry, have<br />
successfully applied agile and lean manufactur<strong>in</strong>g concepts to improve their competitiveness. In order<br />
to apply such concepts <strong>in</strong> the F&D <strong>in</strong>dustry, it is crucial to understand the dist<strong>in</strong>ctive characteristic of<br />
both the products and the production.<br />
The project “Competitive Logistics <strong>in</strong> Process<strong>in</strong>g Cha<strong>in</strong>s” focus on how the food and dr<strong>in</strong>k <strong>in</strong>dustry<br />
can improve their ability to meet customer’s demands through competitive logistics. The project aims<br />
to develop analysis- and decision-models that support the design of efficient and agile food<br />
manufactur<strong>in</strong>g systems. This paper will present the prerequisites and <strong>in</strong>itial project results and<br />
discusses some ideas for apply<strong>in</strong>g agile manufactur<strong>in</strong>g concepts <strong>in</strong> the Norwegian food <strong>in</strong>dustry as a<br />
response to the future markets challenges.<br />
CHARACTERISTICS OF FOOD AND DRINK MANUFACTURING<br />
The pr<strong>in</strong>ciples for agile manufactur<strong>in</strong>g that will be outl<strong>in</strong>ed <strong>in</strong> this paper, are written with references<br />
to the automobile and electronic <strong>in</strong>dustry. Manufactur<strong>in</strong>g systems <strong>in</strong> F&D <strong>in</strong>dustry share many of the<br />
characteristics of such manufactur<strong>in</strong>g systems, but there are some vital differences:<br />
<strong>Food</strong> and Dr<strong>in</strong>k Products<br />
F&D products, when compared to OEM products, have five dist<strong>in</strong>ctive characteristics:
• Low complexity. The F&D products are often standard products consist<strong>in</strong>g of few<br />
components/<strong>in</strong>gredients.<br />
• Low marg<strong>in</strong>s and high volume. F&D manufactures are forced to accept low prices to keep<br />
their share of the market. <strong>Food</strong> products are typically high-volume products produced with<br />
low marg<strong>in</strong>s.<br />
• Perishability. Raw materials, semi-f<strong>in</strong>al products and the f<strong>in</strong>al products are perishable and<br />
have limited durability (1 day - 2 weeks)<br />
• Availability is crucial. Customers buy substitutes if a product not is available on the shelf.<br />
• The pack<strong>in</strong>g is an important element of food products. The pack<strong>in</strong>g serve two purposes:<br />
First it shall protect the product from the surround<strong>in</strong>gs, such as the sun, heat, cold, air etc.<br />
Secondly, the pack<strong>in</strong>g determ<strong>in</strong>es how the product appears for customers, and is a crucial<br />
part of market<strong>in</strong>g.<br />
<strong>Food</strong> and Dr<strong>in</strong>k manufactur<strong>in</strong>g<br />
Both the supply of raw material and the demand <strong>in</strong> the consumer market are often strongly<br />
seasonal and not necessarily <strong>in</strong> synchronism (Moore, 1991). This requires efficiency <strong>in</strong><br />
production and logistics operations.<br />
The production of F&D products can be characterized as batch-flow production, with many<br />
similarities to process <strong>in</strong>dustry. A number of <strong>in</strong>gredients or components are mixed and<br />
processed <strong>in</strong> one or a series of operations to create a batch of an end product. Rout<strong>in</strong>gs are<br />
simple, the flow is cont<strong>in</strong>uous and lead times are short. The number of <strong>in</strong>put materials and<br />
components depends on the product, but a few <strong>in</strong>put materials often result <strong>in</strong> an broad range of<br />
end-products variants, see Figure 1.<br />
Suppliers<br />
Factory<br />
Customers<br />
Procurement<br />
Raw Material<br />
handl<strong>in</strong>g &<br />
storage<br />
Primary<br />
process<strong>in</strong>g<br />
Secondary<br />
process<strong>in</strong>g<br />
F<strong>in</strong>ished Distribution<br />
goods store &<br />
dispatch<br />
Figure 1 Manufactur<strong>in</strong>g of <strong>Food</strong> and Dr<strong>in</strong>k Products<br />
Figure 1 shows the steps <strong>in</strong> a food supply cha<strong>in</strong>. Raw materials are delivered and stocked.<br />
These are perishable and the handl<strong>in</strong>g and storage is therefor crucial for the further process<strong>in</strong>g<br />
of the product. Primary process<strong>in</strong>g <strong>in</strong>volves the actual production of the F&D product and can<br />
consist of one or a series of processes. Secondary process<strong>in</strong>g is the handl<strong>in</strong>g and packag<strong>in</strong>g of<br />
the product. The packag<strong>in</strong>g implies a variant explosion, as the same products are wrapped-up<br />
<strong>in</strong> different pack<strong>in</strong>gs. Stored goods are dispatched and distributed to retailers.<br />
Figure 1 illustrates some of the differences between OEM and F&D manufactur<strong>in</strong>g. Six major<br />
differences are outl<strong>in</strong>ed below:<br />
• <strong>Production</strong> of F&D products has a high degree of similarity to process <strong>in</strong>dustry. The<br />
production is executed on process l<strong>in</strong>es with long setup times. This requires batch<br />
production.
• The manufactur<strong>in</strong>g equipment has a high degree of specialization. Each l<strong>in</strong>e is eng<strong>in</strong>eered<br />
for a few products, and it can be difficult to <strong>in</strong>troduce new products on an exist<strong>in</strong>g l<strong>in</strong>e.<br />
• Str<strong>in</strong>gent hygienic demands necessitate periodic (daily) clean<strong>in</strong>g, and also clean<strong>in</strong>g<br />
between production of different products. The result is long setup times and reduced<br />
capacity utilization.<br />
• Manufactur<strong>in</strong>g of F&D products is normally make-to-stock. Long set-up times comb<strong>in</strong>ed<br />
with short delivery times makes it necessary to supply from a f<strong>in</strong>al stock.<br />
• Raw materials are organic and supply can be erratic because of seasonal variations and<br />
other variations like e.g. weather. As a consequence it is necessary to carry stocks of raw<br />
materials.<br />
• The production l<strong>in</strong>e is very vulnerable to stop dur<strong>in</strong>g production. A stop can cause serious<br />
damage on products, damages that not can be restored.<br />
It is not straightforward to transfer manufactur<strong>in</strong>g pr<strong>in</strong>ciples to the F&D <strong>in</strong>dustry. The special<br />
problems of F&D productions make it difficult to apply agile pr<strong>in</strong>ciples like e.g. just-<strong>in</strong>-time supply or<br />
s<strong>in</strong>gle-m<strong>in</strong>ute-exchange-of-die. <strong>How</strong>ever, the next section will show the necessity of apply<strong>in</strong>g<br />
(modified versions of) agile pr<strong>in</strong>ciples <strong>in</strong> order to become more responsive to the market.<br />
MARKET SITUATION IN THE FOOD AND DRINK INDUSTRY<br />
The market situations for many food and dr<strong>in</strong>k (F&D) manufactures are under great alteration with<br />
regard to both consumer trends and the collaboration with retailers.<br />
The consumer and customization<br />
Most customers can still be regarded as conventional with high focus on cost. But there is a<br />
tendency that they change behavior depend<strong>in</strong>g of what circumstance they occur <strong>in</strong>. A<br />
consumer today can both be (Strandhagen et. al., 1999):<br />
• Conventional – with focus on cost and with decl<strong>in</strong><strong>in</strong>g loyalty to brands.<br />
• Critical – with focus on food quality, ecology and freshness.<br />
• Identity seek<strong>in</strong>g – with focus on the symbolic value represented by the food.<br />
As a result the homogenous markets are fragmented and food companies are <strong>in</strong>creas<strong>in</strong>gly<br />
forced to compete <strong>in</strong> smaller market segments.<br />
Demand situation<br />
In the last 10-15 years, there has been a restructur<strong>in</strong>g of the food retailers <strong>in</strong> Norway. Today,<br />
four companies control more than 98% of the retailer market (Borch and Stræte, 1999). These<br />
retailers have traditionally based their sale on low costs and restricted assortment. <strong>How</strong>ever,<br />
chang<strong>in</strong>g consumer patterns and <strong>in</strong>creas<strong>in</strong>g <strong>in</strong>ternational competition have <strong>in</strong>itiated new trends<br />
<strong>in</strong> the Norwegian retailer market.<br />
• The product range is <strong>in</strong>creas<strong>in</strong>g. The assortment seems to grow and a variety of profiles<br />
and concepts are <strong>in</strong>troduced <strong>in</strong> the market. These profiles <strong>in</strong>clude high-quality and lowvolume<br />
products that allow higher marg<strong>in</strong>s.<br />
• The consumer expects a higher degree of freshness. This requires shorter throughput times<br />
and agile supply.<br />
• Retailers <strong>in</strong>creas<strong>in</strong>gly promote them self through national wide advertis<strong>in</strong>g campaigns.<br />
This implies huge volume fluctuations and fast refill<strong>in</strong>g of products. Profitable sale<br />
campaigns require shorter plann<strong>in</strong>g time, the ability to handle variable quantities and<br />
improved delivery performance <strong>in</strong> the total supply cha<strong>in</strong>.
These trends po<strong>in</strong>t toward <strong>in</strong>creas<strong>in</strong>g demand fluctuations and broader product ranges <strong>in</strong> a<br />
market situation characterized by strong competition and low marg<strong>in</strong>s. The new market<br />
situation is illustrated <strong>in</strong> Terry Hills volume/variety matrix (Hill 1993).<br />
Increas<strong>in</strong>g focus on flexibility<br />
Decreas<strong>in</strong>g focus on lower costs<br />
Variety<br />
Niche<br />
products<br />
Figure 2 Volume and variety for food products<br />
A majority of consumers are price-oriented <strong>in</strong> their consumer patterns. Thus, traditional highvolume<br />
products still constitute a major share of the Norwegian food market. Success <strong>in</strong> this<br />
market segment requires cont<strong>in</strong>uos improvements <strong>in</strong> order to utilize capacity and provide<br />
efficient replenishment. <strong>How</strong>ever, the market share of niche products is <strong>in</strong>creas<strong>in</strong>g. Such lowvolume<br />
products forward new requirements for flexible and responsive processes, and many<br />
companies experience that their system design no longer matches their market situation.<br />
Success will <strong>in</strong>creas<strong>in</strong>gly require agile manufactur<strong>in</strong>g and closer collaboration through the<br />
supply cha<strong>in</strong>.<br />
AGILE MANUFACTURING<br />
Traditional<br />
products<br />
Volume<br />
An agile enterprise is flexible, adaptable and has the ability to thrive <strong>in</strong>to a cont<strong>in</strong>uously chang<strong>in</strong>g<br />
bus<strong>in</strong>ess environment where markets consist of rapidly chang<strong>in</strong>g niches, serv<strong>in</strong>g <strong>in</strong>creas<strong>in</strong>gly<br />
sophisticated customer demand. The major pr<strong>in</strong>ciples of agility are outl<strong>in</strong>ed by Goldman et al. (1995):<br />
• Enrich<strong>in</strong>g the customer<br />
• Co-operat<strong>in</strong>g to enhance competitiveness<br />
• Master<strong>in</strong>g change and uncerta<strong>in</strong>ty<br />
• Leverag<strong>in</strong>g people and <strong>in</strong>formation<br />
Some authors, like Huang and Nof (1999), po<strong>in</strong>t out that agility can be viewed from two different<br />
perspectives. <strong>Agility</strong> is the dynamic collaboration with other companies <strong>in</strong> order to exploit market<br />
opportunities. The focus is on effective management of relationships between participat<strong>in</strong>g<br />
enterprises. Secondly, agility is the capability of each <strong>in</strong>dividual company to handle variations and<br />
respond to customer demand. The focus is on effective operations and logistics that enable flexibility<br />
and speed. This paper holds the second perspective and focus on agile manufactur<strong>in</strong>g.<br />
Agile manufactur<strong>in</strong>g can be def<strong>in</strong>ed as a manufactur<strong>in</strong>g system with extraord<strong>in</strong>ary capability to meet<br />
the rapidly chang<strong>in</strong>g needs of the marketplace (Youssef, 1994). An agile manufactur<strong>in</strong>g system must<br />
have the ability to shift rapidly amongst product models or between product l<strong>in</strong>es, ideally <strong>in</strong> real-time<br />
response to customer demands. Agile manufactur<strong>in</strong>g is based on a mixture of techniques and methods<br />
from various manufactur<strong>in</strong>g strategies (Kidd, 1994). These techniques and methods are applied <strong>in</strong> the<br />
<strong>in</strong>tention to become flexible and respond quickly to market demands. This paper claims that the most<br />
important manufactur<strong>in</strong>g strategies for agile manufactur<strong>in</strong>g are:<br />
• lean production<br />
• time-based competition
• socio-technical system design<br />
• demand cha<strong>in</strong> management<br />
The strategies are outl<strong>in</strong>ed below:<br />
Lean <strong>Production</strong>.<br />
The term ‘lean’ was co<strong>in</strong>ed by IMVP (the 5 year International Motor Vehicle Program at MIT)<br />
and was based on a thorough study of American, European and Japanese automobile<br />
manufactures (<strong>in</strong> particularly the Toyota <strong>Production</strong> System TPS). The term ‘lean’ was used<br />
because TPS banish waste and used significantly less of every resource than mass production<br />
systems (Womack et al, 1990).<br />
Accord<strong>in</strong>g to Nicholas (1998) there are seven fundamental elements of lean production,<br />
because they all deal directly with sources of manufactur<strong>in</strong>g waste, <strong>in</strong>clud<strong>in</strong>g waste from<br />
defects and quality problems: 1) Small-lot production, 2) setup-time reduction, 3) ma<strong>in</strong>ta<strong>in</strong><strong>in</strong>g<br />
and improv<strong>in</strong>g equipment, 4) pull production systems, 5) focused factories and group<br />
technology, 6) workcells and cellular manufactur<strong>in</strong>g and 7) standard operations.<br />
Time-based Competition.<br />
Manufactur<strong>in</strong>g companies can compete <strong>in</strong> terms of time <strong>in</strong> two different ways. On the one<br />
hand, they can achieve competitive advantage by a faster development and <strong>in</strong>troduction of new<br />
products. On the other hand, manufactur<strong>in</strong>g companies can achieve susta<strong>in</strong>able competitive<br />
advantage through a faster fill<strong>in</strong>g of customer orders. Those firms emphasize speed <strong>in</strong> terms of<br />
respond<strong>in</strong>g to customer’s orders demands for established products (Handfield, 1995).<br />
Time compression is a major enabler for cost efficient, responsiveness and flexibility. Stalk<br />
and Hout (1990) outl<strong>in</strong>e four strategic advantages by compress<strong>in</strong>g the throughput time:<br />
• Productivity is <strong>in</strong>creased<br />
• Prices can be <strong>in</strong>creased<br />
• Risks are reduced<br />
• Market share is <strong>in</strong>creased<br />
Thun et al. (2000) present a framework for time-based manufactur<strong>in</strong>g, which is def<strong>in</strong>ed as a<br />
set of six practices designed to reduce cycle time: Simplification, standardization, availability,<br />
acceleration, <strong>in</strong>tegration and control. The compression of throughput times is crucial <strong>in</strong><br />
achiev<strong>in</strong>g agility.<br />
Socio-technical System Design.<br />
The “socio-technical” concept reflects a focus on jo<strong>in</strong>t optimisation of technology and social<br />
systems, <strong>in</strong>dicat<strong>in</strong>g that really effective systems can only be generated when technology and<br />
people are properly matched (Trist, 1981). In a socio-technical system, activities are no longer<br />
separated <strong>in</strong>to narrow areas of responsibility. Teams of multi-skilled and empowered workers<br />
replace the conventional hierarchy (Taylor & Felten, 1993). Major socio-technical pr<strong>in</strong>ciples<br />
are outl<strong>in</strong>ed below:<br />
• Semi-autonomous groups. - the best decisions are based on the decision makers' practical<br />
knowledge and <strong>in</strong>sight <strong>in</strong> a specific situation, and <strong>in</strong>formation must be provided at the<br />
place where decision and actions will be taken.<br />
• Boundary management. - the degree of self-regulation should be maximized throughout the<br />
enterprise. This is enabled though a design guided by the m<strong>in</strong>imum specification criteria<br />
(Trist, 1981), which is to specify no more than is absolutely necessary regard<strong>in</strong>g tasks,<br />
jobs, roles etc.
• Participatory design. Technology (tools, <strong>in</strong>formation, mach<strong>in</strong>es, procedures etc) should be<br />
designed for competent worker performance, rather than for automation or command and<br />
control. This requires extensive worker participation <strong>in</strong> design (Ehn, 1992).<br />
Design by socio-technical pr<strong>in</strong>ciples enables enterprises to handle variation and uncerta<strong>in</strong>ty,<br />
and provide solutions that improve peoples' work quality and performance<br />
Demand Cha<strong>in</strong> Management.<br />
Supply cha<strong>in</strong> management (SCM) can be def<strong>in</strong>ed as the management of upstream and<br />
downstream relationships with suppliers and customers to deliver superior customer value at<br />
less cost to the supply cha<strong>in</strong> as a whole (Christopher, 1998). At the operational level, the<br />
supply cha<strong>in</strong> supports three types of flows that require careful control and extensive<br />
communication:<br />
• Material flows, which represent physical product flows from the suppliers to the customers<br />
• Requirement flows, which represent order transmission<br />
• F<strong>in</strong>ancial flows, which represent credit terms and payments.<br />
Accord<strong>in</strong>g to Wortmann (1999) the basics pr<strong>in</strong>ciples of SCM are: Postponement, partnerships<br />
to streaml<strong>in</strong>e merchandis<strong>in</strong>g and distribution processes, shar<strong>in</strong>g of resources and capabilities<br />
between manufactures and distributors, shar<strong>in</strong>g demand <strong>in</strong>formation to improve forecasts,<br />
us<strong>in</strong>g modern <strong>in</strong>formation technology to reth<strong>in</strong>k (de)centralization of processes.<br />
SCM may give the impression that the general task is manag<strong>in</strong>g supplies to be fed or pushed to<br />
the customers down the cha<strong>in</strong>. But the cha<strong>in</strong> of supplies and deliveries should be driven by<br />
true end-customer demand, and thereby the term Demand Cha<strong>in</strong> Management (DCM).<br />
AGILE MANUFACTURING PRINCIPLES APPLIED IN THE FOOD AND DRINK<br />
INDUSTRY<br />
In the previous chapters we have on one hand discussed the characteristics of the food and dr<strong>in</strong>k<br />
products, manufactur<strong>in</strong>g and market. On the other hand we have presented agile manufactur<strong>in</strong>g and<br />
discussed some its prerequisites. We will now like to comb<strong>in</strong>e these to discussions.<br />
In the follow<strong>in</strong>g we will present and discuss some major pr<strong>in</strong>ciples that are crucial <strong>in</strong> achiev<strong>in</strong>g agility<br />
<strong>in</strong> the F&D <strong>in</strong>dustry. These pr<strong>in</strong>ciples are chosen with consideration of the special market situation <strong>in</strong><br />
the F&D <strong>in</strong>dustry and the characteristic of F&D products and production.<br />
Strategic Posit<strong>in</strong>g of the Decoupl<strong>in</strong>g Po<strong>in</strong>t.<br />
The decoupl<strong>in</strong>g po<strong>in</strong>t separates the part of the enterprise where manufactur<strong>in</strong>g is based on<br />
customers' orders from the part that is based on plann<strong>in</strong>g and level control. The decoupl<strong>in</strong>g<br />
po<strong>in</strong>t is also a po<strong>in</strong>t to stock components as a buffer that smoothes demand variety<br />
(Strandhagen & Skarlo, 1995). Such strategic position<strong>in</strong>g of stocks enables the variant<br />
explosion, speed and cost efficiency required for mass customization of products.<br />
In the F&D <strong>in</strong>dustry, a natural choice of decoupl<strong>in</strong>g po<strong>in</strong>t would be the stage between primary<br />
and secondary process<strong>in</strong>g, see Figure 1. In do<strong>in</strong>g so, the manufacturer is able to present a<br />
standard product <strong>in</strong> a unique way to each customer.<br />
Focused production l<strong>in</strong>es.<br />
The robustness and flexibility of an enterprise depend on a product-oriented and flow-oriented<br />
layout. The design is carried out through Burbidge’s material flow analysis and group<br />
technology (Burbidge, 1979). Material flow is analyzed and resources are grouped <strong>in</strong>to<br />
segments that form clusters of operations with jo<strong>in</strong>t <strong>in</strong>put and output channels.
In F&D manufactur<strong>in</strong>g, it is often beneficial to separate niche products from traditional<br />
products (see Figure 2). Traditional products require automated, high speed and specialized<br />
process l<strong>in</strong>es that can produce high volumes of a limited product range. Niche products require<br />
flexible l<strong>in</strong>es that rapidly can produce low volumes of many different products. Flexible l<strong>in</strong>es<br />
are not as efficient as high volume l<strong>in</strong>es and often <strong>in</strong>volve a greater share of manual work.<br />
Setup Time Reduction<br />
The food and dr<strong>in</strong>k <strong>in</strong>dustry has traditional been known to have long setup times. Reduced<br />
setup time permit reduced lot-size production and result <strong>in</strong> <strong>in</strong>creased production capacity,<br />
flexibility and resource utilization, as well as improved quality and customer satisfaction.<br />
Sh<strong>in</strong>go (1985) has developed a methodology to improve setup time, called s<strong>in</strong>gle-m<strong>in</strong>uteexchange-of-die.<br />
This methodology can also be used to improve setup times <strong>in</strong> food<br />
manufactur<strong>in</strong>g. <strong>How</strong>ever, cont<strong>in</strong>uous production and hygienic regulations makes it more<br />
difficult to achieve rapid setup times <strong>in</strong> food manufactur<strong>in</strong>g, (F&D manufacturers are often<br />
obligated to do clean<strong>in</strong>g between product changes). Still, <strong>in</strong> order to <strong>in</strong>crease productivity and<br />
flexibility <strong>in</strong> the F&D <strong>in</strong>dustry, reduction of setup time is of extreme importance.<br />
Flexible and Multi-Skilled Workforce<br />
As the demand for different products varies, different production l<strong>in</strong>es will be bottlenecks <strong>in</strong><br />
the manufactur<strong>in</strong>g system. To exploit the full potential of the production l<strong>in</strong>es, multi-skilled<br />
workers should alternate between different production tasks. Tra<strong>in</strong><strong>in</strong>g and job-rotation enable<br />
manufactures to allocate their operators <strong>in</strong> l<strong>in</strong>e with demand fluctuations.<br />
Integration of process across company border.<br />
Close supplier coord<strong>in</strong>ation/<strong>in</strong>tegration <strong>in</strong> the delivery process is viewed necessary for several<br />
reasons. The overall issues are time compression, quality requirements, process improvement to<br />
reduce cost and <strong>in</strong>formation shar<strong>in</strong>g. Integration with customers are argued to give the<br />
follow<strong>in</strong>gs effects (Raabe, 1999):<br />
1. Efficient replenishment - fast and frequent refill<strong>in</strong>g of products <strong>in</strong> the stores.<br />
2. Efficient assortment – seeks to optimize the sale per sqm.<br />
3. Efficient promotion – order, produce, ship and stock exactly what sells<br />
4. Efficient product <strong>in</strong>troduction – product development and <strong>in</strong>troduction is a jo<strong>in</strong>t effort<br />
The <strong>in</strong>tegration of suppliers and customers is achieved through l<strong>in</strong>k<strong>in</strong>g processes across the<br />
companies’ boarder. Perhaps the most crucial element <strong>in</strong> l<strong>in</strong>k<strong>in</strong>g processes together is the use<br />
of Information and Communication Technology (ICT). Allow<strong>in</strong>g <strong>in</strong>formation exchange<br />
between companies ERP systems, through e.g. EDI or portals technologies, gives the parties<br />
access to real time <strong>in</strong>formation about activities both upstream and downstream <strong>in</strong> the value<br />
cha<strong>in</strong>.<br />
CONCLUSION<br />
In attempt<strong>in</strong>g to achieve agile manufactur<strong>in</strong>g of food and dr<strong>in</strong>k products, there are some pitfalls that<br />
have to be exam<strong>in</strong>ed. First, these methods and techniques applied <strong>in</strong> agile manufactur<strong>in</strong>g are not<br />
developed for the food and dr<strong>in</strong>k <strong>in</strong>dustry. They have their orig<strong>in</strong> <strong>in</strong> other <strong>in</strong>dustries like e.g.<br />
automobile and electronic <strong>in</strong>dustry (OEM), and therefor not perfectly adaptable. Secondly, the F&D<br />
manufactures are under great alteration with regard to both consumer trends and the power structure<br />
of the <strong>in</strong>dustry. By focus<strong>in</strong>g on the market situation and consumer trends <strong>in</strong> the food and dr<strong>in</strong>k<br />
<strong>in</strong>dustry, together with the characteristics of both the F&D products and the manufactur<strong>in</strong>g of these<br />
products, we have tried give an understand<strong>in</strong>g of some of the challenges <strong>in</strong> this <strong>in</strong>dustry.
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