“For decades, Kraft Foods produced Oscar Mayer cold cuts out of a 6-story, former slaughterhouse built in 1872,” reports The Wall Street Journal (Feb. 13, 2018). The systems seemed out of another era. Workers drove forklifts loaded with giant vats of ham, turkey and chicken parts on and off freight elevators to different processing points. A typical turkey breast required 4 rides between floors to get from raw meat to packaged slices. Breakdowns could slow production to a crawl. The inefficiency was easy to spot for 3G Capital, which took over Kraft in 2015.
3G started by moving production to a new, $225 million plant, where the first cold cuts rolled off the assembly line in June. Gone are the elevators. Instead, conveyor belts whisk “stick meat”—macerated proteins stuffed into 6-foot-long casings—through processing rooms. New machines can handle 15,000-pound batches. Robotic arms pick up trays and place them in room-size ovens. Automated slicers deliver perfect 9-ounce portions that drop into plastic containers.
Changing the open-floor plan of the old plant to one with separated work rooms means less downtime from sanitizing the lines. In the slicing room, cooked stick meat enters one end of a carving machine and emerges in identical sets of cold cuts that drop into containers, which have been folded into shape seconds before from plastic sheets. Sensors in the conveyor belt weigh each portion, automatically pushing away extra slices.
When it hits full capacity in a few weeks, the plant will be able to churn out 2.8 million pounds of sliced meat a week, about 17% more than the old factory, while employing 500 fewer people. “We look at pretty much any opportunity we have to drive efficiency,” says Kraft’s supply chain head.
In the broader overhaul of nationwide production, 3G used computer modeling to analyze where it sourced ingredients, where it needed to ship finished products, and the cost and availability of labor and other resources.
Classroom discussion questions:
- How did the reorganization and move improve productivity?
- What OM techniques were used to guide the changes?
