Processor of the Year: Inside the Plant: Work in progress
Nestlé Prepared Foods’ plant in Jonesboro, Ark., is one busy place. With nearly 600 employees working up to seven days a week, this 325,000-square-foot operation produces as many as 50 different frozen entrees.
Then again, summertime visitors also saw plenty of people and machines outside the building. That’s because construction workers were erecting nearly 75,000 square feet of additional space for more production and packaging lines.
What’s going on? In keeping with a new “open innovation” program, Nestlé will have Chicago-area co-packer Nation Pizza Products bake pizza crusts in a 54,000-square-foot baking operation attached to the Jonesboro plant. Officials say the $60 million bakery and an adjacent packaging operation are scheduled for a 2009 start-up and will employ nearly 200 additional people.
From his office, Plant Manager Andy Darley easily can see the construction just outside. But this 21-year company veteran (who transferred last year from Nestlé Confections) isn’t about to be distracted by the activity. In fact, despite all the large figures associated with this operation, Darley says he focuses on just four basics: safety, quality, cost and people.
“We are committed to operating a safe work environment and I am proud to say that we have just passed three years and 3 million work hours without a lost-time accident,” he notes. “We’re also proud of the Nestlé name, which stands for quality. I tell our employees that if we don’t take care of our consumer, our competitors will. You cannot fool the consumer when it comes to quality and we have a reputation to uphold.”
He continues, “We realize that nobody’s going to pay $500 for a frozen lasagna. We have to produce high quality at the right price and that means continuous improvement. While we’re striving for excellence in every area, managing our costs to keep us competitive is important. Finally, I firmly believe that if you don’t look after your employees, you’re lost. At the end of the day, I don’t make product - our folks do. When they know what’s going on and understand a situation - whether it’s good, bad or indifferent - it just helps.”
For that matter, Jonesboro employees don’t have to wonder about plant news or paying attention to rumors. That’s because Darley posts hand-written notes - three or four each week - with his thoughts about what’s going well, what needs improvement or, simply, what’s happening.
Even after just 10 months, Darley says the added communication has helped dispel rumors, broadcast upcoming changes, promote employee benefits and solve small issues. For example, after employees told him about uniform problems, Darley penned a note saying that he would read and address every written complaint (about the operation’s supplier) and that’s exactly what he did.
These days, meanwhile, there’s more to talk about in regard to Nestlé Jonesboro’s operations.
Having managed confectionery facilities around the United States, Darley raves about Nestlé Jonesboro’s workforce. He says it’s hard working, family-oriented and well educated about business. Moreover, it’s enthusiastic with members holding each other - and visitors - accountable for in-plant rules and guidelines.
“As you walk from one end of our plant to the other, you’ll find that our people take responsibility and get their jobs done without much supervision,” notes Darley.
Starting next year, Darley says he plans to have members of Jonesboro’s new pizza topping line (and other areas of the plant) follow a different team-based organizational plan. Though details are limited, the structure is different than the traditional relationship between a team supervisor and line employee. Rather, all employees serve more as equal team members with one member providing coordination and direction.
In the meantime, Nestlé Jonesboro has introduced a 5S (lean processing) initiative in addition to a continuous improvement program whereby multi-functional employee teams explore process improvement and cost reduction measures across several key areas.
“Soon, we’ll have more than 800 people here. That means 800 minds that we can tap into for ideas to improve the way that we do business. These are folks who make our food every day,” Darley says. “We’ll empower employees to be more responsible for decision making and plant improvements. It’s already generating excitement - when we posted signs and recruited people to take part in the continuous improvement teams - [the positions] were quickly filled.”
A chemical engineer by training, Darley says one of his goals involves “absolutely automating the [plant] floor from one end to the other” while keeping and spreading labor to other areas.
“This is a more manual process [than in the candy industry] and I would like to see us become more automated,” he says. “Yet I also appreciate people power and the incredible flexibility that adds as we change to new dishes each day on each line.
“Yet I still want automation with flexibility,” he continues. “We’ve already made quite a bit of headway in this area and I appreciate that people here are willing to listen and consider radical changes. . . . If we’re going to automate, I’m going to need ideas from all of our employees and soon we’ll have more of a total productive management mindset and culture to get there.”
That said, any visitor can sense the passion that Darley brings to his job - it’s the same enthusiasm that generates hand-written notes each week.
“I tell people that we’re going to make our mistakes along the way as we grow here,” Darley says. “But we’re already a good plant. I think we can quickly become an outstanding facility.”
Refrigerated & Frozen Foods talks with Dale Morsefield, Nestlé Prepared Foods’ vice president of supply chain and operations.
Q: What led you to partner with Nation Pizza in such an unusual, attached co-packing arrangement?
A: The Jonesboro project is predicated on a string of marketplace successes in which Nation Pizza has had a major role as both a provider of innovative concepts and a manufacturer of quality products. Nestlé’s relationship with Nation has been different than that of the typical co-manufacturer for some time. So, the approach we have taken with the Jonesboro bakery and topping line - while perhaps somewhat unusual for the food industry - is a logical extension of our strategies.
If you think about the collaboration in other industries such as electronics or automotive, the integration with key suppliers - including the close coupling of manufacturing operations - is not so unique. You also may recall that we have had a similar approach with Millard Refrigerated Services for warehousing and distribution operations support for many years.
Q: In what ways does Nation Pizza complement Nestlé?
A: Nation provides innovative product ideas, baking expertise, flexibility and a unique heritage with authentic pizza and sandwich products. Nestlé has industry leading brands, national sales and distribution resources, manufacturing scale and strong technical, R&D and culinary capability. The combination of these attributes has yielded a steady stream of innovative and successful new products.
The Jonesboro project seeks to leverage our respective organizational strengths. In fact, this formula we refer to as “Open Innovation” has become a significant addition to our multi-stream innovation strategy. We now actively scout for similar opportunities with other creative organizations.
Q: What else has your group been working on during the past 18 months?
A: You may be aware that we reorganized our manufacturing and logistics groups about a year and a half ago and now have a fully integrated operations team. Among the benefits of this approach has been a finer focus on “total delivered cost” and customer service. This focus - and an ability to design and apply complex sourcing models - allows for greater opportunity to leverage our existing manufacturing/distribution network.
Historically, we have sited factories in such a way that they can take advantage of good structural costs and are logistically efficient for finished goods distribution. This is why we have built factory-area or factory-attached distribution centers. In this era of rapidly escalating fuel prices, our ability to better execute against a regional pull demand-and-supply model presents opportunities to reduce transportation costs by increasing direct-from-producing-plant customer shipments. We also seek to further improve customer service while reducing inventory. Enhanced factory flexibility is a key to such an approach and the manufacturing team is driving this effort.
Q: What are you most proud of?
A: I suppose the thing that I am most pleased with is that we continue to identify ways to better leverage the infrastructure and scale of our manufacturing and distribution network. This is essential in an ever-more competitive food industry.
Q: On the flip side, what have been your biggest challenges?
A: It wouldn’t be possible to discuss big challenges without addressing commodity costs. Our input costs (fuel, grains, dairy, etc.) are up dramatically over the past 18 months. And, it appears that these cost pressures are unlike the historical cycles we have seen in that they are driven by fundamental shifts in global demand. To moderate the effect of these escalating costs - especially as they may impact the pricing of our product - we must be even more creative and urgent with cost reduction and efficiency improvement efforts.
We also see extraordinary pressure on the cost of equipment, which has made replacements, upgrades and automation significantly more costly. This is particularly true for equipment sourced from overseas, where the relative value of the U.S. dollar exaggerates general inflation. We have a number of process innovation and automation projects in the pipeline that we are determined to execute as part of our continuous improvement initiatives.
Q: How is your group addressing the issue of sustainability?
A: Certainly the issue of sustainability has taken on even greater importance with respect to manufacturing and logistics. We are addressing this issue on multiple fronts and have done so for many years. In short, conservation, waste reduction, recycling, material yield gains, packaging efficiency improvement, etc., are not only environmentally responsible but they are completely compatible with good business practices.
I’ve already mentioned the relative value of our regional pull demand-and-supply model. Using less fuel to get our product in the hands of consumers is a huge component of the total sustainability continuum. I could list dozens of other projects. For example, we utilize landfill methane to fuel our Solon, Ohio, plant boilers, we recycle paperboard at our factories, we redesigned packaging for more efficient materials utilization and case cube and we have embraced new line sanitation techniques that require less water and energy. We are very much committed to sustainable business practices.