Between labor shortages, challenges in sourcing vital components and materials and the need to develop new products for a constantly changing market, it’s not easy being a manufacturer in any industry – let alone one whose end users touch every American’s life every single day.
But it’s because they continuously rise to those challenges that c-suite executives in the foodservice equipment and supplies industry are seen as leaders. They are individuals helping to guide the industry during one of its most consequential periods of transition. Attendees of the 2022 FEDA Annual Conference will have the opportunity to hear directly from some of those manufacturing leaders during the opening general session on Sept. 21. In a preview of what attendees can expect to learn, the session’s participants offered some preliminary thoughts on a handful of topics that will be explored with moderator, David M. Stafford, president and CEO of Stafford-Smith.
Supply chain disruptions have been a constant presence for more than a year, as distributors struggle to source the equipment an operator needs or identify an available alternative. Manufacturers in all industries have found it difficult to keep pace with the surge in demand that occurred as COVID-19 restrictions lifted, and the challenges posed by labor and component shortage have only aggravated the issue. According to the U.S. Bureau of Labor Statistics, worker productivity fell by 7.3 percent in the first quarter of 2022, representing the most drastic decline in quarterly productivity in nearly 80 years. Further, output decreased by 2.3 percent while hours worked increased by 5.4 percent, showing that manufacturers are under increased pressure to produce equipment as quickly as possible.
“Productivity is absolutely a challenge right now for manufacturers,” says Steve Maahs, president of Alto Shaam. “We’re all trying to keep assembly flow moving. With the work in progress and supply chain issues, it can easily compound itself and greatly reduce productivity.” As evidence that supply chain issues are a pain still shared across industries, Maahs points to Ford’s decision earlier this year to idle some of its assembly plants because the global chip shortage led to a large stockpile of trucks that were waiting for control boards.
Productivity is unlikely to improve up until those underlying issues are resolved. “Labor efficiency has been a challenge,” adds Rob August, vice president of Ali Group. “Parts availability and training new employees both play a role.”
Fortunately, there are signs that actual equipment output is at a turning point. The St. Louis Fed has reported an upward trend in the manufacturing of commercial and service industry machinery, with production levels reaching their highest since 2014. Still, it’s going to take more time before the supply of foodservice equipment reaches an equilibrium with customer demand.
“Material flow and availability needs to correct itself before supply can catch up to demand. It’s not just chips and control boards either,” Maahs says. “For manufacturers who have adopted a global supply chain, there is now a push to reshore as much as possible. In Europe and Asia, there are ongoing challenges that need to be solved. Improvements have been minimal, mostly with logistics and freight easing from Asia to the United States.”
August is optimistic that as pent-up demand eases and materials become more readily available, true progress can be made in the near future. “I think that over the next six to 12 months, we’ll gain some traction on shipping our backlog.”
Yet for conditions to truly normalize, the consensus is that the very concept of “normal” needs to be redefined. With today’s rising inflation and gas prices presenting a much different economy than the one that existed pre-pandemic, adaptability is crucial. “Being nimble and able to react is critical right now,” August says. “We might be facing a recession. We could even be looking at stagflation, so I’m not looking at our business as returning to something called ‘normal.’ We’re just looking to work within what exists today, keeping an eye on material costs, labor costs and incoming orders. We’ve all done the best we can to increase production, but certainly don’t look at where we are today in shipping as a guarantee that this is just going to continue.”
Maahs believes the market is starting to develop a better understanding of that new normal. “I don’t look back and say, ‘When will we be back to normal?’ I don’t believe that happens,” he says. “It’s more a question of what does a new normal look like, and how can we do our best to get there? Many of us are operating in a world of capacity restraint. Many are reducing product offerings. There will be improvements in some areas, but I don’t see the electronic component issues improving near term. That will take long term infrastructure improvements in production capacity, which doesn’t come quickly.”
Efficiency Through Automation
As manufacturers are trying to settle on a new normal for their operations, the end users of their equipment are likewise looking for technology solutions to help them adapt to the post-pandemic world. Automation has been hovering at the fringes of the industry for years – popping up in the form of cooking controls or specialized devices like robotic pizza makers. But it has not yet become the widespread technology that no kitchen can live without.
The pandemic and the labor shortage that followed could become the spark that pushes automation into the foodservice mainstream. Germ conscious customers have accelerated the desire for the kind of contactless service automation can provide. Meanwhile, consumers are craving affordable, healthy food on-demand, with operators challenged to meet those needs amid staffing shortages and skyrocketing operational costs. Could those combined factors mean that now is the time for automation to truly permeate throughout the foodservice equipment industry?
Maahs doesn’t see automation proliferating at the operator level, just yet. “My concern with automation is the service and support needed to keep operators up and running,” he says. “If I automate the entirety of a process and a robot goes down and can’t be serviced or I can’t get parts, I’m fully down. Knowing the service technician shortage and parts availability shortage, are we going to be able to keep it up and running? If a manufacturer can demonstrate reliability with their automation solution, that is the key.”
With Ali Group’s acquisition of Welbilt, a leader in kitchen automation, August is eager to learn more about what the technology can do for operators. “We know that chains and other large users would like more automation and for equipment to be able to communicate so they can easily change recipes and things like that. There’s a lot of interest in any kind of automation that can speed up food prep and service, especially on the fast food side,” he says, noting that there’s some novelty appeal to customers as well. “You see things like coffee robots at airports where you can pay a few dollars and the robot will go brew the coffee and serve it to you. It appeared to me that it took some time for the coffee to be served, so some of that is entertainment at the end user level.”
Although consumer-facing robots might generate the most excitement, there is a lot of opportunity for these emerging technologies to assist in the kitchen. “I also see a higher likelihood to automate back of the house operations,” Maahs adds. “We have to remember that this is the hospitality industry. It’s about humans connecting and socializing with each other. Operators are very in-tune with the fact that if their customers must serve themselves entirely or are being served fully by robots, they might just decide to stay home. We’re a social industry, and we can’t eliminate all human service, because that’s the heart of who we are.”
New Industry Technology
Historically, the foodservice equipment and supplies industry has been behind other industries when it comes to technology adoption. “Despite all the consolidation, our industry is still very fragmented,” August explains. “That’s one of the challenges with tech when it comes to pricing, quoting, e-commerce and things like that – one size doesn’t always fit all in our business.”
That picture is finally starting to change. One of the most significant undertakings is the FEDA Data Repository, a robust database of product information that follows formatting standards developed in coordination with dealers and manufacturers. Because of its well-defined data governance, the repository is laying the groundwork for future technological innovations that require easily accessible and standardized data. During the conference, the manufacturer panel will share their experiences with using the FEDA Data Repository and explain how it simplifies processes and boosts efficiency.
Although the FEDA Data Repository is an exciting new industry tool, manufacturers are also looking for other ways technology can make a meaningful impact to their operations. Maahs believes education and training is another area where technology could inspire improvement throughout the industry.