More Poultry Profits with Better Integrated System

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More Poultry Profits with Better Integrated System

By Tom Bruhn, Vice President of Advanced Manufacturing Solutions at Stone Technologies, a certified member of the Control System Integrators Association (CSIA). 

I had a mentor in my career who taught me quite a lot about the business of manufacturing, the protein industry, and especially the poultry industry.

Don Wisdom, who was a physics teacher before joining the protein industry, compared manufacturing to music. He said, “Harmony is created when wavelengths of sound complement each other in such a way that the wavelengths are enhanced and reinforced due to being mathematical multiples of each other. Discord is created when wavelengths of sound have no mathematical relationship and tend to work against each other to destroy the fundamental patterns.”

Harmony and discord are a part of what we experience every day in manufacturing. Often in manufacturing operations, we have systems that do not work in harmony to produce the desired results. To create the equivalence of musical harmony in business, systems must be designed to work together to achieve the desired result.

Don further explained that, “Most executives in the poultry industry will agree that to drive profitability and consistency in an organization, one needs accurate and timely information. The ability to optimize the meat block and the best product mix in a poultry company is essential to driving profitability and enabling a company to capture new market share. Pulling together all the essential information to accomplish this is much like conducting a symphony. All of the parts have to work in harmony, at the right time, and with precision to create the desired results.”

The meat block dilemma

In poultry plants, the problem is that applications are often implemented on a project-by-project basis with no overarching application road map. Applications implemented in this manner usually turn into point solutions that may be optimized for individual project requirements but are sub-optimized for the overall manufacturing environment.

To meet interoperability requirements, we must avoid manual data entry, spreadsheets, custom applications and integration points that drive up implementation complexity and support costs. In addition, growth through mergers and acquisitions often result in multiple applications to manage the same processes which also creates barriers to enterprise interoperability, and higher complexity and support costs.

The poultry industry is especially complex in that most of the profits come from the butterfly breast meat. It would be easy if a butterfly breast could be cut up as per the demand and then what was left over could be patted back together like cookie dough and then cut up further and sold for the same price. Unfortunately, it does not work that way. Once a fillet (or two) are removed and then maybe a strip and a few nuggets are produced, what is left over is called trim, and trim is virtually worthless compared to whole muscle.

It is not uncommon to see companies operate with beast yields of less than 70 pecent. Think about how much lost profit that represents.

To compound this level of complexity further, the filets, strips, chunks, nuggets and pieces of all sorts must conform to precise customer specifications. And while poultry plants may still use manual labor for many tasks, automation is playing a significant role in the production process. All of this can make it exceedingly difficult to determine what mix of products to produce and the cost of producing them, without accurate contextualized and timely information.

The solution

This is where mastery of the meat block becomes so vital. A good way to gain a deeper understanding of the potential offered by focusing on the meat block and on how to produce the optimal product mix is to consider the ideal systems architecture.

When a strategic approach is enacted, the company can save money in several ways. For example, decisions can be made concerning the most profitable schedule with respect to several critical factors, such as:

  • Inventory
  • Current production levels
  • Upcoming orders
  • Capital assets
  • Production capacity
  • Relative costs of different production routings
  • Supply of chickens and other ingredients

Additionally, the mix can be evaluated in terms of whether certain parts of the chicken should be sold in one form or another, such as using breast meat for nuggets or using it for filets.

How to get started (according to my mentor)

Meat block optimization is a complex challenge that should be pursued incrementally. This path to optimizing the meat block involves work in six basic areas:

    • Bills of materials and routings should be created and maintained to drive the scheduling and optimization engine. At the same time, data or place holders should be created in the effort to enable the routings to drive actual cost by SKU in the future. While these costs may not be collected in the meat block optimization effort, they will be important to driving mix optimization in the future.
    • Accurate inventory and production information from upstream processes is vital — live bird size distribution, WOG size distribution, butterfly size distributions, fillet size distributions, yields and costing is critical to any planning system. In this case, it is essential to use KPIs to create the expectations and drive the efforts to deliver accurate inventory and production information. Additional benefits can be achieved through various reporting efforts.
    • A vital part of optimizing the meat block is understanding which inputs are necessary to complete orders, and choosing the best option for each input. The ability to create and process orders is critical for satisfying scheduling requirements. People must be taught to look for the best options. The work of determining the best options can involve the use of a range of tools, from complex Advanced Planning engines to practical heuristic-based simulation tools, including spreadsheets. Regardless of the tool, improvement rests on the ability to make decisions based on an understanding of the relationship of yield, throughput, labor cost and downgrade value.
    • MRP tools should be used to help define which inputs must be available to satisfy demand. To generate optimized or heuristic-based schedules, the planning system must have an interface with the live bird grow-out and third-party meat procurement system so that there is visibility beyond current inventory.
    • Shop-floor data collection systems may use bar code technology in real-time or rely on back-office systems where consumption is entered in near real-time, but either way, they need to be in place and cover all critical areas. One approach is to focus only on the meat block and ignore other ingredients’ inputs and availability.
    • Choosing the right planning engine (optimization or heuristic-based engine) is critical. Even though there are several optimization engines that do reverse bills of materials (that is, create parts from a whole) and then recombine them, most fall short in some area of functionality that will be needed. When choosing whether to use existing systems or a new technology, the value received out of the box must be weighed against the cost of modifications and maintenance.

Four steps to optimization success

Define the business strategy:

  • Create a well-defined document.
  • Communicate the plan throughout the organization.
  • Make expectations clear.
  • Establish a mechanism for obtaining feedback.

Design a systems architecture plan:

  • Define the systems and relationships necessary to support the business strategy.
  • Include current and future systems.
  • Pay specific attention to defining data ownership and resolving integration challenges.
  • Ensure there is a systematic approach to data collection.

Create an implementation plan:

  • Lay out the path for enacting changes.
  • Define the reasons for systems changes and the results that can be expected.
  • Use a process evaluation plan to create “as is” and “to be” pictures, and then a gap analysis to define outstanding issues.
  • Include a change management plan to manage training, provide support, and foster ownership.

Execute the plan:

    • Use detailed project plans for each step in the process. These plans should outline the effort required, the timeline, the resources, the budget, and the expected return on the effort.
    • Look for ways to create early success. Success factors should include improved margin, lower cost, reduced effort for success, improved visibility and movement toward strategic goals.

Credits: Published 10/9/2017  in Meatingplace

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