I have worked with companies in the food sector for two decades, and I don’t think that companies have ever faced a more dynamic and challenging business environment than they do now. The fundamental way organizations operate within the food industry is changing, and 2017 promises to see some major challenges for the business sector. Lean management is helping food companies make the necessary enterprise transformation plans for the year ahead. The following are some of the problems the food industry faces in 2017.
Food companies have a major global impact on the environment, and consumers know it. The food sector uses 70% of the freshwater supply in the world. People are holding food industry leaders responsible to reduce their water use and pollution impact. Major food companies are an effective force for scaling water stewardship, and are expected to take it down to the farm level.
Although there are yet to be significant regulations regarding water usage, several companies are adapting their processes now, before regulations are eventually passed (which most anticipate will happen). PepsiCo is working closely with agricultural suppliers to improve water efficiency, setting a goal of 15% by 2025.
Lean practices will allow major food companies to effectively trace their supply chain all the way back to the farmers themselves. One food company has developed a time-bound road map for their agricultural processes which allows them to use lean management to track their water stewardship over the course of the next 24 months.
Although this has always been an issue for the food industry, government regulations are becoming increasingly demanding, and in 2017, penalties could be disastrous for some companies. In the seafood industry, for example, fraud is an issue and companies are swiftly having to shift to lean processes to accommodate regulations. If a supplier mislabels a product, it is still the food company’s responsibility to have checks and balances in their supply chain to manage the issue.
Some seafood plants are turning to visual lean techniques like Kamishibai boards that will force them to continuously audit various parts of the supply chain throughout the day. This also holds workers accountable for meeting goals set to ward off fraud.
GMOs are another area where the government is forcing regulations. In 2017, more states are likely to ask companies to change the labeling on all products containing GMOs. This can be a considerably costly process if not anticipated, and many food companies are using lean techniques to avoid labeling issues. A 5S lean model (Sort, Simplify, Scrub, Standardize, Sustain) can help a company organize their food supply chain and address any GMO labeling issues that may occur.
The “silver tsunami” is a way to describe the fact that talented Baby Boomers are retiring at a higher velocity than ever before, taking with them critical skills, industry connections, and institutional knowledge. As a result, food companies are facing a leadership gap and a talent gap that they’re working hard to fill. For many food industry leaders, one of the big enterprise transformation areas that they’re focused on is human capital management.
Lean strategies will help companies to meet these challenges in 2017 in a variety of different ways. At a fundamental level, lean strategy helps businesses to create a culture of problem solving and growth to meet these expanded challenges. Lean recruiting techniques are also helping companies to more effectively source talent, and put a priority focus on employee retention throughout the year. 2017 will be a foundational year for many businesses to recruit the next generation of leaders, and begin to implement effective strategies to fill leadership gaps for the year ahead.
Are you ready to explore how lean strategy can help your company address its biggest challenges in the new year ahead? Contact Incito Consulting today to learn more about how our team of experienced consultants helps industry leaders implement lean strategy for growth, culture change, and better customer experiences.