Automation in Automation in The Food SectorThe Food Sector

Rakesh Verma Rakesh Verma –– Nestle India LtdNestle India Ltd8th November, 20048th November, 2004

Automation Tech 2004Automation Tech 2004

Outline

• Food business emerging trends / challenges

• Nestle Business drivers and key initiatives

• Nestle automation strategy and the challenges

• Benefits leveraged from automation solutions

• Feedback and way forward

Food Industry - emerging trends & challenges...

• Food Safety & Stricter regulatory norms

• Process consistency and traceability across Supply Chain from farm to fork

• Focus on raw material potential contaminants, foreign body management, net contents control

• Proactive liaison with regulatory authorities with in-house know-how and competence

• Freshness of stocks

• Taste, aroma, flavor, texture of processed food expected close to fresh stock

• Optimum stock covers demand reliable and consistent Plant operations

Food Industry - emerging trends & challenges...

• “Value for Money” first for the consumer

• Low Cost, highly efficient & flexible operations, irrespective of business size and complexity

• Leadership through Innovation- Renovation using R & D, market research and Consumer in-sight

• Market penetration with smaller packs, price point strategy

• Increased input cost brings added challenge

• Tapping market penetration with appropriate consumer communication

Food Industry - emerging trends & challenges...

•Discerning consumer

• Less disposable income for food, more for consumer durables e.g. Mobile phones, cars etc.

• Consumer education towards health- well being

•Strong hope into future• Food is fundamental to basic need for human

masses• 800 million people still go to bed without food,

another 1200 million yet to touch processed food

• Need for affordable, convenient food that provide health and wellness

Evolution of Need States in Food ...

GOOD FOOD GOOD FOOD, GOOD LIFE

Sustenance Enjoyment Health/ Nutrition Psychological Contentment

Good Food Health & Wellness Wellbeing

Feeling GoodTaking Control

EquilibriumBody & Mind

PerceivedNutritional

value +Taste/Pleasure

Variety/BalanceSafety/Quality

For all+

Nestlé – globally a leader...

Ø Established: year 1867 by Henri Nestlé

Ø Worldwide Sales: CHF 89,160 mio

Ø Factories: 511 in 86 Countries

Ø Employees: 254,199

Ø Product Brands: 8,500

Nestle Logo, universally understood, simultaneously evokes security & affection, nature & nourishing,

family & tradition.

Nestle India – partner to economic growth

Ø Established: year 1912

Ø Manufacturing: Year 1961

Ø Sales: INR 22,800 mio

Ø Factories: 6

Ø Employees: 3,500

Ø Product Brands: 8,500

Ø Sales: 4 Branches, 3900

distributors and 601,000 outlets

Ø Third largest Food Industry in

India

Nestlé India - manufacturing ...

NANJANGUD….1989NANJANGUD….1989Instant coffeeInstant coffeeHealth BeveragesHealth Beverages

CHOLADICHOLADI…19671967

Instant TeaInstant Tea

MOGA ...1962MOGA ...1962Milk ProductsMilk ProductsInfant Milk ProductsInfant Milk ProductsWeaning CerealsWeaning CerealsCulinary ProductsCulinary Products

HEAD OFFICE HEAD OFFICE

GurgaonGurgaon

SAMALKHA…1992SAMALKHA…1992Weaning CerealsWeaning CerealsMilk ProductsMilk ProductsDahi & Vending MixesDahi & Vending MixesNoodlesNoodles

PONDA…1995PONDA…1995ChocolatesChocolates

BICHOLIM…..1997BICHOLIM…..1997

Culinary ProductsCulinary Products

Global Business drivers• Long term Sustainable & profitable growth

– Low cost highly efficient operations

– Product availability whenever, wherever, however

– Innovation and Renovation

– Consumer communication

• Focus on its biggest assets: people, brands, products

• High quality products for health, nutrition & well-being

• Culture of continuous improvement

Key initiatives: GLOBEGlobal Business Excellence

Leveraging size and strength of Nestle group– Increased Business visibility and improved decision

making across Geography, Category, Channel– Leveraging purchasing– Common IS/ IT network to support common best

practices and data» Through

– Creation of a Common Business Process Architecture– Standardization of Internal and External Master data– Standardization of Information Systems Infrastructure

Key initiatives- Operational Excellence

A group-wide drive for efficiencies and Earning margin improvement

– Application of Group best practices repository

– Lean technical overheads

– Product complexity optimization

– Joint Technical/ Purchasing/ Supply Chain/ Marketing effort

– High performing logistics and Optimized planning processes

Operation Excellence at work

Lean Technical Overheads

Product Complexity Optimization

GLOBE

Low cost / High effective operations

Total Delivered Costs

improvement

Challenge for Automation solutions…

• Process consistency

– Optimize variances and reduced non-quality costs

– Net content control

• Robust recipe management

– A necessity for continuous and integrated process

– Human error avoidance

• Traceability

– Process conditions including CCP from HACCP

– Lot traceability of finished product back to Raw materials

• Integrating in-line quality data for instant product release

– Empowering line operators to take product release ownership

Challenge for Automation solutions…

World class plant performance

– Flexibility: “fast pit stop” changeovers mindset

– Maximized asset utilization

– Longer production runs

– Plant reliability: M&R to “Prevent, Maintain, Improve”

– Start up/ shutdown loss management- avoidance

• Productive and motivated shop floor personnel

• Energy optimization

Shop Floor Process Management

S 8

8 S

truc

ture

s

Control & Measuring Systems & ToolsPC Based (Ethernet) User Interface, Data Storage & Reporting

Real Time Data (INSQL Server), Event Data (SQL Sever)Sensors, Actuators, Logical Devices(PLC), Drives

Recipe Management Batch / Continuous Process

ManufacturingWork

Processes

ProductionManagementTransaction

PlanDefinition InformationCapabilityProductionS95-01S95-02S95-03

Overview Nestle Enterprise model

SAP Business Planning & Supply Chain Management

BusinessProcess

TransactionsBusiness

WorkProcesses

GLOBE IS-IT

Process Focus Traceability

Process Consistency

Mid

dlew

are

M E SM E SM E S

Time

Functionality /Expected Benefit

Strategy: Integration Scalability

LEGACY ERP

Control System& Measuring.

Pneumatic Inst.Hard wiredEquipment

Local implementationFactory based Legacy ERP

Manual Data entry

& Measuring..

MES

Control System

BPCS/R3

Digital ControllersFirst Generation PLCs

Local implementationFactory based Legacy ERP

Manual ERP Data Entry andPoint to point computerisedData exchange.

TTooddaayy

& Measuring.

MiddleWare

MES

Control System

SAP 2

Ethernet Based PCNew Generation PLCs

Networked Integrated controls

Global SAPimplementation

Manual SAP Data Entry and "basic" computerised MES information integration via middleware

MiddleWare

Control System

& Measuring.

MES

MiddleWare

Ethernet Based PCNet worked SystemsAdvanced Application

For Data Mgmt.

Global SAPimplementation Template 1.5

"extended" SAP and MES information integration via Nestec standard solution(for some Businesses)

Measuring

MES

Control System

Global SAPimplementation

"full" SAP and MES information integration via embedded integration(for some selected Businesses)

MiddleWare

Control System& Measuring.

MES

MiddleWare

Ethernet Based PCNet worked SystemsAdvanced ApplicationSoftware to link with

Business Systems (SAP)

MiddleWare

Tool BoxTool Box

Non P

roductS

pecific

ProductSpecificLocal

ProductSpecific

Re-usable

Coffee MES

SAP

Strategy: MES Integration

Factories

Factory FloorMES & Control SystemsApplications

Standard "XML Dialect" for control systems

SAP "Native Dialects, IDOC, XML, PCS Messages"

Data centers

Horizontal WorkflowApplication Software tools to Accomplish Full Fledged MES

GLOBE IS-IT Mapping and Mailing

Tool BoxTool Box

Non P

roductS

pecific

ProductSpecificLocal

ProductSpecific

Re-usable

Milk MES

Tool BoxTool Box

Non P

roductS

pecific

ProductSpecificLocal

FactoryA

FactoryB

FactoryXProduct

SpecificRe-usable

Milo MES

Middleware

Horizontal WorkflowApplication Software tools to Accomplish Full Fledged MES

Horizontal WorkflowApplication Software tools to

Accomplish Full Fledged MES

Net working Process ControlNet working Process Control

APC OFF% TC Mean Value - 43.7

APC ON% TC Mean Value - 46.3

Advanced Process Controls - Process consistency

Advanced Process Controls - Process consistency

6 m Egron Output (Kg/Hr)

1500

2000

2500

3000

3500

4000

1999 2000 2001 2002 2003 2004

Current output at ~3200 Kg/HrCurrent output at ~3200 Kg/Hr

Plant throughputs

ProductivityKg/man hr

26.027.5

30.9

34.0

37.43.433.41

3.32

3.18

3.02

2.90

3.00

3.10

3.20

3.30

3.40

3.50

2000 2001 2002 2003 Tgt 200420.0

22.0

24.0

26.0

28.0

30.0

32.0

34.0

36.0

38.0

40.0Mio Man Hours Used

Productivity -- Increasing trends

MH97 / Target 2004+ Savings

1.5 1.51.8

2.22.5

1.41.4

2.5

0

25

50

75

100

125

150

175

200

1997 1998 1999 2000 2001 2002 2003 Tgt 2004

YEARS

SA

VIN

GS

IN

R M

IO

-

0.5

1.0

1.5

2.0

2.5

3.0

% O

F C

OP

Savings INR Mio % OF COP

MH’97 Target 1.8%

TGT 20042.5%

Savings on COP

Feedback….• End users have problem: do not demand enough….

•“No news is good news mentality”-little efforts to get customer feedback

• Complacency creeps in where business is assured

• Technology upgrade costs fortunes: systematic integration approach recommended

• Customized solutions for Food business not readily available unless jointly developed

• Little indigenous manufacturing in hardware

Way forward…. • Visit customers proactively: get feedback and improve

• Educate customer on your product: build trust

• On-going tailor-made training modules for users

• Nurture local talent for service support

• Global principles but local culture

• Ensure success for customers and you win too

• More frequent updating on new technology desired

Business Partnership is name of mutual success