While the federal government has identified food and beverage manufacturing as a priority sector, rising inflation and supply chain challenges create uncertainty for companies looking to expand. Kim Berry talked to RMR Process director Peter Taitoko about how to make the right decision for your business.
With food and beverage announced as a national manufacturing priority under the Australian government's Modern Manufacturing Initiative only last year, there has never been a better time forfood and beverage manufacturers to understand their existing capabilities and to invest in their process and smart automation, supporting the country’s vision for a strong industry future.
The government’s roadmap identified three major growth opportunities: smart food and beverage manufacturing; innovative foods and beverages; food safety, origin and traceability systems.
Within 10 years, it is hoped the value of food and beverage manufacturing would have doubled, cementing Australia’s reputation as ‘world-best’ supplier and manufacturer of premium, safe and authentic food.
With the current supply chain challenges and skyrocketing inflation, the idea of expanding or re-locating manufacturing facilities can be daunting.
Food process and facility designer, and director of RMR Process Peter Taitoko tells us how Australian manufacturers can navigate through the challenges and opportunities when considering upgrades or expansion of their operations.
Q: What is the biggest challenge facing food manufacturers since Covid?
As with most business in 2022, the biggest challenges revolve around supply chain issues. However, these challenges are also providing the greatest opportunities for food manufacturers here at home.
Many brands that were reliant on imported products and ingredients are now investing in local manufacturing options, either becoming manufacturers themselves or using Australian contract manufacturers.
This can only strengthen ourindustry for the future ifweactively increase our infrastructure and processing capabilities. There has also been a shift with companies wanting to incorporate direct to consumer products and distribution, as Covid has fast tracked the growth of the home delivery model.
Q: What has been the impact on the design and delivery of food manufacturing facilities?
The time and cost to complete a greenfield site (new site development) has increased significantly due to a shortage ofmaterials and labour, and some councils can no longer commit to planning timelines.
While greenfield sites allow maximum design flexibility,
it is important to consider minimising the construction footprint to reduce time andcost.
Opportunities still exist to re-purpose suitable brownfield sites (the transformation of an existing building). These sites may come with some legacy issues, but choosing the right site may significantly reduce the turnaround time and cost as much of the infrastructure is already in place. When strategically designed and planned, this can still result in a world-class, flexible and fit-for-purpose food manufacturing facility.
As such, it has always been my preferred method of expansion as the opportunities can significantly outweigh the challenges when executed correctly, more so now than ever before.
Q: What can food manufacturers do to cost effectively expand their current operations?
It’s actually a good time for us to rethink the traditional ‘build a bigger factory’ philosophy and look towards smarter and more cost-effective scaling options.
The facility is best designed as modular and fit for purpose for the first two to three years.
This is especially suited to small to mid-tier manufacturers needing to minimise the initial capital investment and enabling cash flow to finance their scalingprocess.
Traditionally, labour costs have taken the blame for manufacturing heading offshore. I believe the main reason is due to the high capital cost of establishing processing facilities in the first instance, but this doesn’t need to be the case.
From an infrastructure perspective, the growth strategy should focus firstly on the manufacturing processes before deciding how best to utilise existing real estate or move to a larger facility.
Process plants need to be more flexible than ever before. We are seeing a big shift in consumer demand for healthier, less processed foods. Fresh, extended shelf-life and shelf stable products will all impact on the ratio of raw materials and finished goods warehousing to processing rooms.
A great starting point is to conduct an end-to-end mass balance (material flow through the facility) of existing operations to gain a greater understanding of how a manufacturer can optimise their facility footprint and improve their processing capabilities. Optimising, automating, and removing bottle necks can significantly increase throughput rates, often reducing the need for additional real estate. This is also a great exercise for identifying and minimising waste.
Q: What are the key factors facing food and beverage manufacturing in Australia and how will this impact facility design?
The shift towards Australian provenance and authenticity is increasing and allowing us to realise new opportunities for our products to succeed both at home and abroad.
If not already exporting, manufacturers should consider the post Covid global demand for Australian food and beverage products for the next stage of growth.
This doesn’t mean manufacturers need to build an oversized facility for ‘what-if’ scenarios, but instead should consider adopting a staged and modular design that allows for future expansion in line with growth. This gives manufacturers the ability to remain flexible and ready to adapt to supply chain innovation, whilst keeping operating and capital costs as low as possible.
Considered facility design should lower capital costs for both the site and process equipment and should also encompass a level of staged automation that aligns with the business’ growth, reducing processing bottlenecks, waste and labour costs.
Utilising energy wisely will improve both conversion costs and carbon emissions, with new technology emerging in this field almost daily. For example, almost every food and beverage manufacturer can utilise heat recovery, using new technology such as heat pumps, which are only recently becoming commercially viable.
Heat pumps, solar battery storage and even bio-fuel options are becoming less costly, more effective technologies and will start featuring more commonly in facilities over the next few years.
Q: What advice would you give food and beverage manufacturers thinking about expanding?
I believe there has never been a better time to capitalise on the opportunities in our industry.
Manufacturing is coming back to Australia, and globally our products are in more demand than ever before.
Expansion projects can be a daunting experience, and I would recommend manufacturers seek advice fromas many industry experts as possible. However, if you plan for the unexpected with a staged, modular approach, and tackle the project strategically, it can be done quicker, and cost less than you think!
This article first appeared in the May 2022 edition of Food & Drink Business.
