Two articles ago, I laid out my view of a possible strategic plan for “Canada Food Inc.” It included a mission, vision, objectives, and some possible strategies to pursue. In the last article I expanded my view on Strategy 1, becoming the most innovative food sector in the world. Now I would like to move on to Strategy 2.
Strategy 2: Focus on becoming the most productive food sector in the world
Again, it is often said, backed up by studies done by several research institutes, that the Canadian food sector is not as productive, i.e. efficient and cost effective, as competing sectors in other countries. Most often this is attributed to a smaller scale of operations versus, say, American competitors, and this is certainly a factor.
There are, however, few reasons why smaller scale operations cannot be as competitive as larger ones. If the Japanese auto industry, with its smaller scale beginnings in the post-WWII era, had not rejected that idea by focusing on quality, process performance and continuous improvement, they would not have become the highly productive, dominant global players that they are today. And one must understand that the food sector is not an assembly industry, but is rather a processing industry subject to a wider range of variability, as is agriculture due to its nature.
The techniques to achieve this productivity improvement were developed back in the 1950s to 1990s and continue to evolve. They were developed by the likes of Deming, Juran and Crosby, focused on quality and productivity improvement while lowering costs. Total Quality Management evolved into Quality Function Deployment, Statistical Process Control, Six Sigma and Lean Operations. These are all techniques that can be used in process industries like food production and processing, but haven’t been adopted as widely as they could/should be. There is likely a minimum 15 to 20 per cent or more cost improvement possible with application of these techniques broadly across our industry.
Added to this approach is the rapidly evolving Value Chain Management approach in which a company works more closely and collaboratively with its suppliers and customers along the entire supply chain to reduce costs, improve productivity, and improve quality in the final product. This again has great potential for cost reduction, quality improvement, and improved efficiency along the entire chain leading to improved profitability at all levels. It would also lead to increased preservation of our natural resources, such as land and water, needed for food production because we would be using those resources more effectively. More on that aspect in the next article.
All of this could bring Canada Food Inc. into a position of being the most productive food sector in the world.
1) Benchmark Analysis: The first action that should be taken is to carry out a Global Benchmark Analysis of productivity at all levels of the industry and in all sectors and to determine how we rate overall in the global picture. Some of this work has been done, but may need to be updated and/or expanded into more detail and then pulled together into reports for all sectors of Canada Food Inc. as well as an overall report for the whole industry. This action will show us what degree of productivity improvement we require and where the biggest gaps are by sector and level of the industry.
Then we must take those learnings and show participants in the industry what needs to be done and teach them the techniques and how to apply them to their operations. In the same way the HACCP-based food safety systems now exist in virtually all aspects of food production and processing, we need to have continuous productivity improvement become another mainstay of food operations of all kinds. It is possible, and it would not be expensive to accomplish.
2) Improve Value Chain Management: The second action would be to begin a more structured approach to value chain management. Again, this may be an area that the Agriculture and Agri-food Canada (AAFC) Sector Roundtables could become the drivers for. There are roundtables for virtually all of the key sectors in the industry, as well as the food processing roundtable. Utilizing their knowledge and influence, combined with some outside expertise on Value Chain Management techniques, we could continue to improve productivity and increase profitability.
All of this will lead to higher-quality products produced at lower costs and provided at higher service levels than our global competition. And since continuous improvement is also one of the key ideas inherent in all of these approaches, we will continue to improve on that…forever.
We have a great opportunity to become the most productive food sector in the world. Again, it just needs to be pulled together on a national value chain basis and done with a global view in mind. I think the AAFC Sector Roundtables could make it happen. Let’s do it. We can do it.
Gary Fread is president of Fread & Associates Ltd., consultants to the food industry. He has spent more than 25 years in management positions in the food processing industry, with a background in sales, logistics, purchasing and technical areas. He has worked with Procter & Gamble, Campbell Soup and Morrison Lamothe, and is the past president and CEO of the Guelph Food Technology Centre. He is active in many food industry associations and organizations, serving on the boards of several. Contact him at [email protected]