Tag: Tyson

OM in the News: The Bullwhip Effect Hits Tyson Foods

Two years ago, chicken breasts were coming down the processing line at Tyson Foods’  Arkansas plant so fast the machine slicing them into 15-gram nuggets for Chick-fil-A would occasionally break down.

Now, the line has stopped—for good.

After pushing its plants and staff to increase production of nuggets, breasts and wings as the Covid-19 pandemic eased, Tyson is pulling back, reports The Wall Street Journal (Sept. 6, 2023). The company announced the Arkansas plant would close, one of six planned shutdowns in an effort to cut costs. Tyson’s chicken business, which produces 1/5 of the U.S. supply, is grappling with flat demand and a drop in wholesale prices, which some industry experts say Tyson itself exacerbated by ramping up production.

As the pandemic eased, demand for chicken surged as consumers headed back to restaurants, and fast-food chains capitalized on a craze for fried-chicken sandwiches. Chicken companies such as Tyson, Pilgrim’s Pride and Wayne-Sanderson Farms were challenged to keep up, as processing-plant jobs remained hard to fill.

Pumping out more poultry at each plant and capturing more market share from competitors became a central part of Tyson’s efforts to fix its struggling chicken business, which already had problems hatching enough birds and staffing its processing lines.

The company was killing 37 million birds a week at its processing plants during 2021. By 2022, the company had boosted that to 39 million, and Tyson said it intended to process 42 million chickens a week by the end of the 2023 to boost volume and gain market share.

Nationally, about 162 million chickens on average were slaughtered weekly during in 2021. That number rose to 164 million in 2022. As it pushed to produce more chicken, in a classic bullwhip effect (see pages 473-475 in Supp. 11 of your Heizer/Render/Munson text), Tyson miscalculated demand. In late 2022, the company wrongly predicted how much chicken grocery stores would buy for their meat cases and produced too much of the wrong type.

Tyson closed down two plants in May, laying off nearly 1,700 workers. (The company ousted the president of its poultry business shortly thereafter). Last month, the company closed an additional four plants, which employ about 3,000 workers. The four account for about 10% of its slaughter capacity.

Classroom discussion questions:

  1. Explain the bullwhip effect.
  2. What mistakes did Tyson make?

OM in the News: Why We Ran Out of Meat

Workers donned protective gear at a Tyson poultry-processing plant in Camilla, Ga.

The Covid-19 pandemic has been a debacle for the $213 billion U.S. meat industry, writes The Wall Street Journal (July 10, 2020). For the first time in memory, there wasn’t enough meat to go around. Reduced production forced grocery giants such as Kroger, Costco. and Albertsons to limit how much fresh meat shoppers could buy. Wendy’s had to tell customers that some restaurants couldn’t serve hamburgers.

Deboning livestock and slicing up chickens has long been hands-on labor. Low-paid workers using knives and saws work on carcasses moving steadily down production lines. It is labor-intensive and dangerous work. and remains one of the more hazardous jobs in the U.S. With 4.3 workplace injuries or illnesses per 100 workers in 2018, the industry’s rate is nearly 40% higher than the national average for all industries, surpassing logging, mining and construction.

And factory floors have been especially conducive to spreading coronavirus. In April and May, more than 17,300 meat and poultry processing workers in 29 states were infected and 91 died. Plant shutdowns reduced U.S. beef and pork production by more than 1/3 in April. The companies are searching for a solution–and they think the found one: robotic butchers.

Over the past 3 years, Tyson, the biggest U.S. company (with 122,000 employees out of 585,000 industry-wide) has invested about $500 million in technology and automation. It plans to increase the shift to robots in the aftermath of the pandemic. While some of these robots, such as automated “back saw” cutters that split hog carcasses along the spinal column, labor alongside humans in plants, the finer cutting, such as trimming fat, for now largely remains in the hands of human workers, many of them immigrants. Annual turnover in meat plants ranges from 40% to 70%, versus 31% average for manufacturers.

Yet a growing consumer appetite for products such as deboned chicken and skinless meat has required more people on processing lines. Decades ago, most Americans bought whole chickens. Now, 85% of chicken eaten is parts like breasts and wings or products such as chicken finger.

Classroom discussion questions:
1. Which of the 9 production technology tools described in Ch. 7 in your Heizer/Render/Munson text could be applied to this industry?

2. Why have robots not made a greater headway in meat plants?

 

OM in the News: Tyson’s Computer Vision Technology Improves Inventory Accuracy

Tyson is rolling out a computer-vision-enabled inventory tracking system at facilities where it packs chicken into trays for grocery stores, writes Supply Chain Dive (Feb. 11, 2020) The system can read SKU information and weight, replacing what Tyson described as communication by hand gestures followed by manual inventory entry. By the end of the year, Tyson’s automated inventory tracking technology will combine computer vision, machine-learning and edge computing to expand its speed and processing capability.

Automated inventory tracking using computer vision led to a double-digit increase in inventory accuracy in the 3 facilities currently using the technology. The company plans to expand the program to all 10 of its poultry plants.

Though cold, wet storage environments make implementing new technologies difficult, the payoff of real-time accurate inventory information is already evident for Tyson. The company recently opened the Tyson Manufacturing Automation Center, where it works with manufacturers and suppliers to develop new technologies and trains employees to use it. The company has spent $215 million on new technologies in the last 5 years.

Precise, real-time inventory visibility can increase the frequency with which Tyson fulfills grocery customer orders on time and in full in the best of times. But inventory management is particularly key in times of uncertainty, and Tyson is dealing with plenty. The disruptive forces of shifting global trade policy, a fire at an important Tyson facility, and African swine fever, which all distorted usual supply and demand patterns, made a relevant forecast next to impossible.

Major meat companies are leaning toward similar monitoring technologies and automation, whether through production or processing. Cargill is starting to use computer vision to track animal health in dairy operations. But a more consumer-directed application inspired Tyson’s work. Similar technology enables Amazon’s cashier-less stores, which led executives to explore applying it in poultry plants.

Classroom discussion questions:

  1. Describe what a vision system is (See Chapter 7 of your Heizer/Render/Munson text).
  2.  How will this help Tyson control inventory?