Investment in warehousing, road infrastructure, processing and other assets are essential to deliver quality products reliably to our customers around the world.
This can impact on financial capital in the short term but is essential for generating longer-term value. New developments must be undertaken in line with Social and Natural Capital principles and regulations, reducing negative impacts wherever possible.
Manufactured capital – desired outcomes
- Safe foods for customers and consumers
- Safe workplaces, machinery and transportation
- Globally competitive farming, processing and logistics capabilities aligned to commercial objectives
- Procurement efficiencies and economies of scale
- Capturing additional value through quality and innovation.
- Continuous improvement and upgrade initiatives to drive capital productivity and cost efficiency
- Vertical integration between crop production and processing for quality, safety and cost advantages
- FSSC 22000 or BRC certification for food processing
- Ongoing investment in farming and manufacturing technologies and equipment
- Replacement of manual systems by maximising technology for improved accuracy, real time knowledge and efficiencies e.g. barcode driven plant maintenance app through SAP for maintenance, spares inventory and verification of fixed assets.
Challenges and influencing factors in 2017
- Requirement to reduce fixed capital intensity during agri-sector down cycle
- Increased demands from customers for reduced environmental footprints in manufacturing and logistics
- Continuing to integrate acquisition sites.
Improvements across supply chains
- Australia Almonds introduced new Weed Seeking Technology using infra-red cameras to sense the presence of weeds which then activate the sprayers, only applying herbicides in areas where weeds are present. This technology reduces chemical spraying by 28% reducing impacts on financial and natural capital.
- As part of its continuous improvement programme, Olam Cocoa initiated the replacement of a number of legacy systems to improve visibility, efficiency and procedures between major locations across Europe, the Americas, Africa and Asia. This will support its strategy of being a global integrated supplier and sector leader in traceable and sustainable cocoa.
- The Monapo cashew processing unit in Mozambique introduced 70% mechanisation in shelling and 100% mechanisation in sorting and grading, but without human and social capital trade off. It maintained its workforce of over 1,500 casual workers by assigning them to other sections within the processing factory. Mechanisation has increased efficiencies and doubled production in the factory with plans to upgrade the entire facility to 100% mechanisation.
- 4 cargo vessels are now chartered by Olam Chartering under a Joint Venture company called Stamford Panasia1. The ships will help to hedge against short freight positions and being relatively new are lower on sulphur and fuel emissions.
- 1 new food processing site achieved certification in 2017 – Nutrifoods Biscuits (Ghana) became the first biscuits manufacturing facility in West Africa to be FSSC certified. 72% of relevant food processing facilities are now FSSC 2200 or BRC certified.
Factory of the Future
The Digital Task Force and Manufacturing and Technical Services (MATS) function collaborated to see how tech can be applied to improve quality, consistency, machine efficiency and cost reduction. Projects included:
Yield improvement through Internet of Things (IOT) and data analytics: For example, avoiding over-drying in processing by optimising moisture.
Production loss reduction through predictive capabilities: Motor breakdowns can be avoided using SMART sensors which help in predicting failure using IOT and data analytics. In the Malaysia Dairy plant, SMART sensors were installed on critical motors, helping to prevent breakdown and production loss.
Ensuring electrical system (transformer) reliability through condition monitoring: Transformers are critical elements of the electrical system in manufacturing units. The SMART sensor provides visibility with respect to the health of the transformer thereby ensuring reliable power supply throughout the year.
Manufacturing Operations and Procurement Transformation programme
Manufacturing Operations and Procurement plays a key role in supporting Olam’s vision. Four key value drivers support the business agenda and deliver value: (i) Achieving Safety, Health, Quality & Supporting Sustainability (SHQ&S) leadership (ii) Enabling business growth (iii) Driving capital productivity & (iv) Improving cost efficiencies. We have instituted a transformation programme, centred on establishing an Olam operating model in manufacturing operations and procurement and achieving global excellence. The journey to best-in-class will follow an integrated roadmap across several key initiatives and help achieve excellence in these 4 value drivers. Strategic roadmaps are being developed for all areas and the theme for 2018 will be focused on laying the foundations and building superior capabilities.
1. 49% Olam