Tag Archives: ROI

Dollar

Quantifying the ROI of Environmental Monitoring Program Automation

By Joseph Heinzelmann
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Dollar

The COVID-19 pandemic heightened the urgency for food brands to adopt technology solutions that support remote management of environmental monitoring programs (EMPs) as they strive to provide safe products to customers. While digital transformation has progressed within the food safety industry, food and beverage manufacturers often have lower profitability as compared to other manufacturing industries, such as pharmaceutical and high-tech equipment, which can lead to smaller IT spend.1 Many companies still rely on manual processes for environmental monitoring and reporting, which are prone to error, fail to provide organizations with visibility into all of their facilities and limit the ability to quickly take corrective actions.

Despite growing recognition of the value of automating testing, diagnostics, corrective actions and analytic workflows to prevent contamination issues in food production environments, barriers to adoption persist. One key obstacle is the recurring mindset that food safety is a necessary compliance cost. Instead, we need to recognize that EMP workflow automation can create real business value. While the downside of food safety issues is easy to quantify, organizations still struggle to understand the upside, such as positive contributions to productivity and a stronger bottom-line achieved by automating certain food safety processes.

To understand how organizations are using workflow automation and analytics to drive quantifiable business ROI, a two-year study that included interviews and anonymized data collection with food safety, operations, and executive leadership at 34 food organizations was conducted.

The respondents represent more than 120 facilities using advanced EMP workflow automation and analytics. Based on the interviews and the shared experience of food organization leaders, two key examples emerged that demonstrate the ROI of EMP automation.

Improved Production Performance

According to those interviewed, one of the primary benefits of EMP automation (and driver of ROI) is minimizing production disruptions. A temporary conveyor shutdown, unplanned cleaning, or extensive investigatory testing can add up to an astounding 500 hours annually at a multi-facility organization, and cost on average $20,000 to $30,000 per hour.2 So, it’s obvious that eliminating costly disruptions and downtime has a direct impact on ROI from this perspective.

But organizations with systems where information collected through the EMP is highly accessible have another advantage. They are able to take corrective actions to reduce production impacts very quickly. In some cases, even before a disruption happens.
By automatically feeding EMP data into an analytics program, organizations can rapidly detect the root cause of issues and implement corrective actions BEFORE issues cause production delays or shutdowns.

In one example, over the course of several months, a large dairy company with manual EMP processes automated its food safety workflows, improved efficiencies, reduced pathogen positives and improved its bottom line. At the start of the study, the company increased systematic pathogen testing schedules to identify where issues existed and understand the effectiveness of current sanitation efforts. With improved access to data on testing, test types and correlated sanitation procedures, the company was able to implement a revamped remediation program with more effective corrective action steps.

Ultimately, the automated workflows and analytics led to reduced positive results and more efficient EMP operations for the company as compared to the “crisis-mode” approach of the past. The associated costs of waste, rework, delayed production starts, and downtime caused by food safety issues were significantly reduced as illustrated in Figure 1.

EMP automation
Figure 1: Reduction of food safety testing costs through EMP automation. Customer Study 2016-2018. All figures courtesy of Corvium, Inc.

Quantifying the ROI of Production Performance Improvements

The financial impact of reducing production downtime by just 90 minutes per week can be dramatic when looked at by cumulative results over multiple weeks. In fact, eliminating just a few delayed starts or unplanned re-cleaning can have significant financial gains.

Figure 2 shows the business impact of gaining 90 minutes of production up-time per week by automating food safety operations. For the purposes of this analysis, the “sample organization” depicted operates two facilities where there are assumptions that down-time equates to a cost value of $30,000 per hour, and that both plants experience an average of 90 minutes of downtime per week that can be re-gained.

Production Performance Improvement ROI Calculation
Figure 2: Sample Production Performance Improvement ROI Calculation.

Reduced Food Waste

The second key insight uncovered in the two-year study was the impact that automating the EMP process had on waste. An estimated 30–40% of all food produced in the United States is wasted, and preventable food safety and quality issues account for a substantial portion of this waste.3

A key challenge shared by study participants was detecting food safety issues early enough to avoid wasting an entire production run. Clearly, the later in a processing or manufacturing run that issues are discovered, the greater the potential waste. To limit this, organizations needed near real-time visibility into relevant food safety and EMP data.

By automating EMP workflows, they solved this issue and created value. By tracking and analyzing data in near real time, production teams were able to keep up with ever-moving production schedules. They could define rules to trigger the system to automatically analyze diagnostic results data and alert stakeholders to outliers. Impacted food product could be quickly identified and quarantined when needed before an entire production run was wasted.

Companies included in the study realized substantial benefits from the increased efficiencies in their testing program. According to a food safety quality assurance manager at a large U.S. protein manufacturer, “Our environmental monitoring program has reached new heights in terms of accuracy, communication, visibility and efficiency. Manual, time-intensive tasks have been automated and optimized, such as the ability to search individual sample or submittal IDs, locate them quickly and make any necessary changes.”

Quantifying the ROI of Food Waste Reductions

Figure 3 shows how measuring the business impact of gaining back just 10% of scrapped food per week. For the purposes of this analysis, the “sample organization” depicted operates two facilities where there are 500 lbs. of finished product scrapped each week, and the value per pound of finished product is valued at a cost of $1 per pound.

Sample Waste Reduction ROI Calculation
Figure 3. Sample Waste Reduction ROI Calculation.

Conclusion

Automating EMP workflows decreases the time required to receive and analyze critical EMP data, helping food manufacturers achieve significant improvements in production performance, waste reduction and overall testing efficiency. By using these same ROI calculations, food brands can better illustrate how improved food safety processes can build value, and help leaders see food safety as a brand imperative rather than a cost center. As food organizations progress through each stage of digital transformation, studies like this can show real-world examples of business challenges and how other organizations uncovered value in adoption of new technologies and tools.

References

  1. CSIMarket, Inc. (2021). Total Market Profitability.
  2. Senkbeil, T. (2014). Built to Last: Maintaining Reliability and Uptime of Critical Connected Systems in Industrial Settings. Anixter.
  3. USDA. Food Waste FAQs.
Paperstack

Taking Your Operations Digital? Bring in the Stakeholders Early

By Maria Fontanazza
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Paperstack

Going digital is a hot topic in the food industry, but making the investment can be a tough choice for organizations. Jeremy Schneider, business development director, food safety and quality assurance at Controlant, reviews some of the factors that food companies should consider when making the decision, along with the value that digital technologies can bring from the perspective of ROI and improving food safety culture.

Food Safety Tech: For businesses that have been historically paper-driven, where do they start on the technology adoption journey?

Jeremy Schneider, Controlant
Jeremy Schneider, business development director, food safety and quality assurance at Controlant

Schneider: There are a number of questions that firms, both small and large, should consider when deciding to move to a paperless operation. Have you considered what moving away from a paper-based system would mean for your enterprise? What are the perceived challenges to making this move? Or perhaps, what are the risks of not moving to digital? How would utilizing systems provide your organization with the ability to access data in transformative ways?

For organizations that are making the transition from paper documentation to digital, it is critical to develop a roadmap with tangible milestones and objectives. Although there are a variety of reasons to make the switch to digital, what is most important for your organization will determine what those are, as they will play a critical role in developing a roadmap of priorities. We often find that organizations identify a ‘’pain-point’’ in their current process, and this is a leading driver to wanting to make a change in their process. Perhaps this is the inability to easily access information in a timely manner, or the challenges with making sense of the data that you are currently collecting. Whatever your challenges may be, begin by developing a plan, and prioritize this, as it will provide you with early positive results that will keep you working towards the goal. As you experience these early benefits from going digital, you will begin to see the value that this will bring your organization at scale.

One significant issue that many organizations face when beginning this journey is not bringing the appropriate stakeholders into a program early enough. It is critical for the success of new supply chain programs to make sure you bring in members of purchasing, logistics, quality, finance, IT, and others as early as possible so that any questions or concerns are properly vetted early in the process. In addition to this, getting buy-in from these teams at the earliest phase of a project will allow others to vet the system in their own way, potentially helping them solve challenges they have been

FST: Talk about measuring the success of a technology: How do the metrics translate into ROI?

Schneider: A question that is often raised is how to measure the success of the technology. Simply put, does the program make your life easier and solve the problem you set out to, or not? Does it meet the concise objectives that you outlined in the beginning of the process, or does it fall short in some way? If your answer to any of these questions is yes, and it does meet the objectives, then you are well on your way to defining success of your program.

Read Food Safety Tech’s previous discussion with Schneider, Using Technology for Traceability Adds Dimension to Supply Chain, Promises ROIIt is critical that programs are able to show their value through their return on investment, but how do you measure this? If you have recently implemented a real-time supply chain temperature monitoring program, for instance, you may want to consider metrics such as reduced loss, spoilage, shortages, or restaurant-level outages as metrics of success. Or perhaps you would want to translate this into a dollar figure. For instance, in the previous year, your organization counted 10 rejected shipments due to suspected temperature abuse, at a loss of $500,000. In the year following your implementation, your new system was able to help the organization intervene and minimize that loss to just one rejected shipment at a cost of $50,000, thus leading to a reduced loss rate of $450,000.

In collaboration with other stakeholders in your organization, you may be able to identify additional metrics, such as reduced freight rates from optimized shipping lanes, reduced insurance premiums from reduced losses, or reduced quantities of on-hand inventories as you are able to truly manage a just-in-time supply chain. If your organization actively measures your Cost to Serve, savings within your supply chain would likely be an important data point to consider.
Beyond the identifiable money savings, consider some of the soft ROI attributes, such as enhanced collaboration with supply chain and supplier partners, improved customer loyalty, brand protection generally, and sustainability initiatives. Does your organization have goals to reduce food waste? If so, perhaps waste minimization is an important attribute to measure. When evaluated holistically, significant savings can be realized.

FST: How does technology facilitate a more effective food safety culture?

Schneider: Building an effective food safety culture is a process that requires commitment from every level of your organization. The ways that we promote food safety culture within each organization differs, from rewarding team members when they identify an unsafe practice, to actively promoting food safety throughout the organization, to encouraging quality assurance teams to identify state-of-the-art technologies and implementing them to improve the systems, programs, and processes throughout the company.

As food safety professionals, our toolboxes are filled with a variety of tools for the job, and technology as a tool is no exception. Technology should enable our organizations to be more efficient, allowing them to focus their attention on high-priority projects while minimizing work that can be automated. An example of this is setting parameters to allow organizations to work based on exception instead of requiring a review of all documentation.

As we enter the New Era of Smarter Food Safety, and the tenants of it being people-led, technology-enabled, and FSMA-based, we have a mandate to try new technologies to help solve previously unsolvable supply chain challenges. Organizations are actively pursuing real-time supply chain temperature monitoring as a way to provide insights into their cold chain and allowing them to move from reaction to a position of prevention.

Organizations are finding that investments in food safety technologies pay dividends in customer commitment over the long term. It is no longer acceptable to only meet regulatory standards. It is now an expectation that companies do anything possible within their power to assure customer safety and, per the FDA’s new mandate, to help create a more digital, traceable, and safer food system.