Capital spending has fallen under the microscope with margins compressing under the weight of rising costs, labor shortages and supply chain issues, prompting bakeries and snack producers to examine the return on investment (ROI) with renewed vigor.
Normally, such an environment makes it more difficult for plant managers and the operations team to justify investments, but these times are anything but normal for most companies.
“If you look at ROI calculations, until now, it’s been fairly straightforward,” said John Hunter, sales account manager, bakery and ingredient handling, Bühler Group. “Now, the whole calculation for ROI involves, ‘What if I don’t have enough labor to run the plant?’ Suddenly, I have a new real risk to put into my ROI calculations.”
Historically, many bakeries have focused capital spending on mixing, makeup and packaging that offer the quickest ROI with a lower initial capital investment than ingredient handling. That’s still the case, but automating ingredient handling is getting a second or third look as companies find themselves turning away new business while struggling to consistently meet demand from existing customers.
“Honestly, the automation of ingredient handling tends to be a last area that is considered in bakery operations, but that is changing of late as customers are realizing the benefits are real and substantial,” said Jerry Murphy, vice president of sales and marketing, Gemini Bakery Equipment/KB Systems.
Specifically, more consistent quality, increasing capacity and eliminating manual labor, such as lifting and repetitive motion, top the reasons for automating and technological investments, noted the “2021 Workforce Gap/Automation Industry Study,” conducted by Cypress Research for Baking & Snack magazine. When it comes to ingredient handling, the survey of bakers indicated that recipe handling and traceability software along with other recipe-driven systems and the use of totes topped the list. More than a quarter of smaller to mid-sized bakeries with sales under $100 million indicated they are planning to purchase or upgrade micro and minor ingredient handling systems.
To mitigate the initial investments, many bakeries are taking a building-block approach to ingredient automation. This approach allows them to alleviate more immediate labor-related issues while providing them a foundation to expand the system as capacity grows, said Nathan Davis, sales engineer, The Fred D. Pfening Co.
“ROI used to be calculated on plant operators who historically were readily available if positions became vacant,” he said. “Today, bakeries are clamoring to find skilled workers and keep them in the bakery, so they don’t jump ship to someplace else. As a result, the ROI is at a different level because the plant operators who are working these systems are more valuable now.”
That’s why risk management has been added to the formula for investing. Call it R+ROI or ROI 2.0.
“In the past, many big players said they wanted to pay off investments in a year, or at most, two years,” Mr. Hunter said. “Now, how do you figure the ROI on the risk of the plant not running at full capacity? That’s the real question.”
The bakeries most impacted by the workforce gap are those relying on people to perform basic tasks such as scaling small ingredients and loading them into mixers. Kevin Pecha, director food sales, AZO Food, suggested that automation and strategic investments in technology minimize the repetitive tasks and allow for experienced operators to perform other key duties such as those related to production, sanitation or quality control.
“The greater the automation, the less reliant a bakery is on having skilled laborers,” he said. “Additionally, the level of automation takes the burden of inconsistency out of the finished product and can perform recordkeeping without the involvement of the operator.”
Mr. Hunter pointed out that skilled labor — specifically those who have experience in running a bakery — are in short supply.
“They’re temporary or coming from another industry and don’t have the knowledge or experience to run a bakery properly,” he observed. “It’s become such a big issue that new investments in ingredient handling are being considered, whether it’s in the bakery or snack industry.”
Along with preventing downtime through improved batch consistency, Mr. Pecha said, automating recordkeeping reduces the risk of recalls while alleviating physical labor that can improve worker retention.
“This can open the field for choosing operators that may not be as young, fit or experienced while maintaining consistency in the production quality and preserved batch genealogy,” he explained.
Doan Pendleton, president of Vac-U-Max, listed a litany of other burgeoning supply chain and operational issues — national driver shortages, production bottlenecks, rising ingredient costs and higher wages — putting pressure on the bottom line. Controlling production costs is fueling the drive toward leveraging the efficiencies from automation in ingredient handling.
“Vacuum conveying of dry bulk powders automates material handling, alleviating manual lifting, messy dumping and stair climbing,” he said. “Vacuum receivers automatically refill process vessels like feeders, mixers or blenders, and feeder accuracy allows the tweaking of expensive ingredients, furthering overall production cost savings. Bakeries also use significant labor resources to meet sanitation standards. Well-designed ingredient conveying systems reduce sanitation times and the associated labor costs and downtime. Production may be limited by physical human factors in the ingredient handling element. Automating ingredient loading can allow production lines to reach their full-rated capacity.”
Mr. Davis said having experienced operators at the front-end of the production line can’t be understated, especially when it comes to quality control. However, automation provides technical support for those who don’t have years of experience in the baking industry.
“A batch of dough that’s gone bad because you added too much water, too little flour or some other ingredients results in money down the drain, quite literally,” he explained. “The more automation that you can install to double- and triple-check the weighing of ingredients with less human involvement will guarantee more consistency and be part of that payback on the investment.”
Strategic upgrading of existing ingredient handling systems will provide other payoffs.
“If bakeries expend significant labor in sanitation because ingredient handling equipment is older and harder to clean properly, then an investment in new easy-to-clean systems will reduce that labor cost,” Mr. Pendleton said. “If they fight a constant battle with fugitive — and often combustible — dust because of older, worn-out equipment or older technology that leaks flour dust continuously, then an investment in new ingredient handling technology will reduce bakers’ housekeeping labor costs.”
To succeed in the long run, bakeries need to see the big picture with automating ingredient handling, even when companies are looking at capital spending under a microscope.
This article is an excerpt from the May 2022 issue of Baking & Snack. To read the entire feature on Ingredient Handling, click here.