Case Study

Hormel Foods

Hormel Foods turns to computerized control of packaging specifications to manage line extensions and comply with labeling regulations.


Appeared in Packaging World Magazine

Product line extensions are among the surest paths to growth and increased profitability these days. But they can seriously complicate a company's packaging specs. Add the changes brought about recently by the Nutrition Labeling and Education Act and the U.S. Dept. of Agriculture and it's clear that label revision has never been a more challenging task.

That's why Hormel Foods of Austin, MN, recently reexamined its methods of storing and communicating packaging specifications. The firm then chose a data base for packaging specifications called PC-Specs from Keene Systems, Inc. (Plano, Texas). It organizes complete specifications, including material composition, CAD drawings, graphics, and supporting text documents. Once entered into the system, material spec information is instantly available to users in various departments over a local area network (LAN). Results have included substantial time savings and an increase in accuracy.

The software system came in especially handy over the last year, as virtually all Hormel Foods' packaging had to go through a lengthy design cycle in order to meet NLEA requirements.

Before converting to the computerized system, Hormel Foods had a paper-based "routing form" method in place to accomplish the complicated redesign approval process. It began when a product manager in the marketing group initiated a design request for a package. The request moved through six or more parties in the design phase, and it resided in each department until action was taken and approval granted.

Each person involved in the approval process typically signed off on each label at least twice-- once in a rough format and a second time as finished art. Once the design was completed and approved, it was routed to Hormel Foods' 20 production facilities across the U.S. so that all who needed to be informed about the new design would be so informed. This normally took at least three weeks but extended considerably longer if it ran into a snag along the way such as a person being out of town or a clarification needed with the request.

At about the time new federal labeling regulations were being developed, Hormel Foods had already begun turning attention to methods for streamlining the approval process and managing the overall task of tracking packaging information. By installing PC-Specs software on a LAN that's accessible to multiple users, it became possible to present proposed designs simultaneously to everyone who needs to approve them.

At the same time, the system can recognize that certain participants in the process may not be able to begin their review until one or more other parties approves the design. The software has allowed Hormel Foods to reduce typical approval time from three weeks to seven days. Some labeling redesigns, especially those not requiring submissions to governmental agencies, have made it through the approval cycle in 48 hours.

Easier to prioritize

"A useful feature is that PC-Specs allows us to prioritize our work more effectively than before," says Larry Brown, packaging development at Hormel Foods. "The search features allow us to sort by brand, brand manager, originator, department, due date, etc. By using the search capabilities, we can call up the designs that are awaiting approvals and isolate the most urgent materials in any grouping. Obviously, with a paper based system, it was more cumbersome to sort through files based on changing criteria."

Though NLEA was a big influence in motivating Hormel Foods to use PC-SPECS, the software remains useful month in and month out because structural changes, product line extensions and market segmentation continually require package redesign. Hormel Foods' well-known Spam luncheon meat is a good example. It's now packaged in 7- and 12-oz cans and is available in Lite, Less Sodium and Smoked varieties. Further, the line is packaged in 4-, 6-, 12- or 24-pack cases. Even distribution channels affect packaging. Club stores and wholesale chains have their own unique packaging requirements, such as multiple packing of a single saleable item. Keeping all these configurations current and organized is a huge task made considerably easier by the computer-based system.

"All in all, we estimate that Hormel Foods has several thousand packaging combinations of saleable or orderable products," says Brown.

PC-Specs also serves as a valuable resource for managing compliance with the new regulations on a corporate basis. Queries can determine, for example, the status of every label that needs to be changed in response to the new regulations. An "exception" query could isolate every new label that's behind schedule. PC-Specs maintains a complete history of a particular product's label design. This provides a valuable resource, for example, if someone in the approval process questions the data for a particular element of the label.

Ultimately the computerized system is an example of how functions can be streamlined. It's greatly simplified the day-in/day-out process of managing and communicating packaging information at fast-growing meat processor Hormel Foods.

Lance Keene

CEO - Keene Systems, Inc.

Lance@KeeneSystems.com

603-726-5058

Lance Keene

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