Centralized and distributed food manufacture: A modeling platform for technological, environmental and economic assessment at different production scales

Highlights

• A novel tool to scale-down and assess manufacturing scenarios has been developed.

• A simple dry food model was used to illustrate the methodology presented.

• Artisanal manufacture is a route for scaling down industrial processes.

• Profitable operating regions for each manufacturing scale have been identified.

• Decentralized methods are more profitable than multi-plant production for UK demand.

Abstract

Centralized manufacturing methods have been increasingly implemented in the food manufacturing sector. Proving to be more cost-efficient in terms of production, centralization also involves rigid and lengthy supply chains with high environmental and cost impacts. Distributed manufacturing, based on local production at small scale, represents an alternative that could provide flexibility to the currently established centralized supply chains, together with environmental and social benefits. A modeling tool for process design, evaluation and comparison of different centralized and decentralized manufacturing scenarios, both in economic and environmental terms, is presented in this work. The production of a dried food product (cereal baby porridge) has been chosen as a case study. Three decentralized – (i) Home Manufacturing (HM), (ii) Food Incubator (FI), (iii) Distributed Manufacturing (DM) – and two centralized – (iv) Single Plant (SP) and (v) Multi-plant (MP) – production scales were evaluated for throughput values ranging from 0.5 kg/h to 6000 kg/h, and different operational regions (i.e. unfeasible, transition and plateau) were identified for each scale. A production scenario using UK dry baby food demand was also studied. The most decentralized scales (HM and FI) become profitable (i.e. production cost below market prices) at very low production rates (e.g. 1 kg/h) that industrial manufacturing (showing a lower boundary for SP profitability at 200 kg/h) cannot achieve. HM and FI remain competitive to SP at national demands such as UK dimension — HM has a cost just 1% higher. DM scenarios require low management costs to represent an efficient alternative to SP. Finally, for equal power source, decentralized manufacture does not imply saving in energy or greenhouse gases emissions (GHG) but demand more manpower.

Introduction

At the beginning of the 18th Century, manufacturing was carried out by small facilities located close to consumers. Products were developed using craft methods by artisan manufacturers spread across communities. Their target market was the local neighborhood, and in this way local demand was satisfied (Cipolla, 2003). The Industrial Revolution established a factory system, which combined machinery with sources of power, and gathered a high number of workers under supervision (Schmenner, 2001). The production of goods was relocated into big facilities, achieving rise in productivity and great cost reduction. Such Centralized Manufacturing, taking advantage of technology and economies of scale (Helpman, 1981), uses a small number of very large production plants to satisfy the whole demand for a good in a certain country, and possibly overseas demand via exports (Roos et al., 2016). The final product must be standardized as large-scale production requires a standard product for the entire market. Many regional characteristics were therefore lost. These plants can be built far from the market, seeking cheaper labor and taxes. As a consequence of such centralization, the concept of supply chain arises (Fahimnia et al., 2013).

The food Industry is the largest industry sector in the UK contributing £113 billion to the economy (DEFRA, 2017). The food supply chain comprises several stages (Tassou et al., 2014): (i) production or farming of raw materials (ii) transport of raw materials to the processing facility (iii) manufacture of the food product (iv) distribution from manufacturers to retailers (shop or restaurant) (v) retail storage (vi) sale. Each stage involves financial cost, energy consumption and environmental impact. The UK food supply chain consumes 367 TWh every year (18% of total energy) and is responsible for 147 Mt CO2 e. emissions (15% of total associated to UK) (DEFRA, 2017). Transport costs are significant.

Thus, a partial return to low scale manufacture situated near customers could be more environmentally acceptable, minimizing transport and storage cost is the up-to-date research in this field. These two attributes, i.e. small scale and location close to customers (decentralization), set the basis for Distributed Manufacturing (Cottee, 2014). Drivers for this change include new technologies, rising logistics costs, and changing global economies (Matt et al., 2015). Fig. 1 schematically shows Centralized and Distributed Manufacturing.

At low throughput, fixed costs become too expensive for large plants and this drives the cost above the market price. The advantages of the economies of scale are lost (Ruffo et al., 2006) so an alternative manufacturing system must be found. Such alternative could be Artisan Manufacture. Craft production at small scale can provide fresh and trusted local food, for example following traditional recipes developed by local chefs (Kuznesof et al., 1997). Each local craft manufacturer can introduce variations on the product, resulting in local customization (Rauch et al., 2016). Locating manufacture close to consumers shortens the supply chain, so energy use related to distribution and storage will decrease (Srai et al., 2016) as well as emissions caused by transportation. Shorter supply chains can also provide fresher and natural products. The brewery sector in the UK can be taken as a good example of this return to artisan/craft manufacture, with a growth of 184% in the number of microbreweries between 2002 and 2013 (Ellis and Bosworth, 2015).

Decentralization is a scale-down problem, addressing the loss of economies of scale. There are few studies (Angeles-Martinez et al., 2018) on how these scenarios might unfold. In this work, we proposed a model-based methodology to evaluate and compare the profitability of different food manufacturing scenarios across a wide range of production scales and decentralization alternatives.

The basis of this methodology will be illustrated using a dry food product (dry cereal porridge, reconstitutable with the addition of water or milk). The manufacture of dried foods is energy intensive due to the heat loads required to remove all the water in the products (Ladha-Sabur et al., 2019), although transportation and storage is cheap, as no energy is required for preservation and its specific volume is low as they are dehydrated. An efficient result for dry foods would suggest profitability for products that could take more potential advantages from decentralized manufacture methods, such as refrigerated and frozen goods.