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How CPG companies reinvent manufacturing to improve efficiency

This article first appeared in Food Dive

 When browsing a supermarket aisle, it feels like there are endless choices. Hundreds of products vie for consumers' attention with bright colors and bold logos. But when looking a little closer, products from competitors are incredibly similar. Snack bars are the same shape, kitchen towels are always on a roll and there are endless lines of soft drinks in bottles and cans.

That's because different companies make their products using identical machines. In the past, CPG companies would develop and build their own machines. An example would be the unique shape of Cheerios. But years of outsourcing means they no longer have the capability in-house and now rely on a handful of incumbent suppliers. And those equipment suppliers make the most money by selling variations of their platform designs to multiple organizations, so there's little innovation in manufacturing process equipment.

There's no shortage of creative product ideas. But the ones that make it to the supermarket shelves are those that established manufacturing machines can make. Companies typically alter product concepts, sometimes with significant compromise, to fit standard manufacturing assets.
That raises one question: How can CPG companies reinvent manufacturing to improve efficiency and bring differentiated products to market while remaining cost-effective?

Adapt legacy manufacturing equipment
Manufacturing reinvention doesn't always need whole new machines. The best approach is to examine legacy equipment in detail, applying the latest scientific and engineering techniques to adapt machines.

For example, it's possible to significantly increase capacity in a packaging operation by reinventing the filling equipment, based on an understanding of the behavior of the product and designing filling system optimized for the target package. Companies can create bespoke modules that sit at the end-of-line to deliver personalized finishing — decoration, flavor or nutrition. This enables multiple SKUs to be produced on a single production line without impacting productivity.

CPG manufacturing has an opportunity to break out of the cycle of continuous margin management and deliver step-changes in performance. Companies must identify the opportunities where there is a commercial imperative to expand capacity or radically reduce the cost-base. Those that have done this see an unexpected benefit —developing and owning key process IP enables them to drive competition between vendors. In some cases, this benefit alone can pay for the development of a bespoke manufacturing line.

Developing new manufacturing equipment
When an innovative idea is fundamentally different, it will take a whole new machine to get it to market. While major equipment suppliers are often unwilling to invest in one-off machines for such a purpose, others have developed unique manufacturing processes that deliver significant value.

In the U.K., for example, Ora changed the way consumers think about kitchen towels by removing the cardboard tube and stacking single sheets conically instead. Each stack holds the equivalent of two standard rolls, saving space in delivery trucks and kitchens. To achieve this, engineers had to design a system for cutting, folding and stacking circular sheets of paper, something never done before in the industry.

And then there's Skipping Rocks Lab who is focused on replacing plastic water bottles with edible seaweed-based containers. They designed and built a portable machine that can mass produce these innovative bubbles and fill them with water at events, like marathons and festivals, to eliminate plastic waste.

David Russell is a consumer goods and manufacturing expert at PA Consulting

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  • David Russell

    David Russell

    PA consumer goods and manufacturing expert

    David Russell has a demonstrated history of delivering breakout innovation in the consumer products sector

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