The street fighter's advantage: What co-manufacturers figured out about SKU flexibility

SKU proliferation isn't a new problem. Most production managers have been living with it for years: more variants, shorter runs, tighter changeover windows, margins eroded by cleaning time. The analysis is familiar. The advice is, too: invest in flexible equipment, simplify changeovers, design for cleanability.

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So why are so many plants still struggling? And why are some smaller, less well-resourced operations handling it better than the big players?

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We put that question to Dion Metcalfe, PTL's Global Operations Officer, who spent decades building and running production facilities for Hershey and Kellogg across three continents. His answer is less about equipment selection than most people expect.

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The problem isn't that companies don't know what to do

Ask any operations director about SKU proliferation and they'll give you a coherent diagnosis. Capacity is eaten up by changeovers. Lines designed for long runs of a single SKU are being forced to handle weekly or even daily switches. Cleaning between runs that weren't engineered for frequent disassembly creates variance. Some of that variance eventually shows up in product quality. Most of it shows up in the cost column.

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The solution is equally well understood in principle: more flexible lines, equipment designed to be stripped and cleaned quickly, fewer guards and complicated assemblies slowing down changeovers. "The problem isn't new, and the solution seems obvious," as Dion puts it. "So why are companies still struggling?"

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Why inertia wins

Part of the answer is organizational. Procurement departments return to established suppliers because it's easier to justify a familiar vendor to senior management than to build a case for an unknown one. Engineers specify what they know. And the capital equipment that results reflects the priorities of an earlier era, designed for volume and throughput, not for the nimble changeover cycles that modern SKU portfolios demand.

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What co-manufacturers figured out

The more interesting part of Dion's answer involves co-manufacturers, and it runs counter to how most large producers think about them.

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For a long time, big chocolate and bar manufacturers looked at co-mans as a useful dumping ground, a place to offload the awkward SKUs that didn't fit cleanly into existing line configurations. Lower-margin products, short runs, experimental variants. Co-mans would take them. They didn't ask for much in return, and the relationship was transactional.

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That framing has quietly reversed. Co-manufacturers, working with thin margins and no tolerance for downtime, were forced to master the changeover problem out of necessity. They couldn't afford to have a line down for a full shift or more for cleaning. They couldn't afford complex equipment that required a specialist to disassemble. They built what Dion calls a street fighter's mindset.

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"They've mastered the art of those quick changeovers," Dion explains. "They've mastered the art of what they need to do to strip and clean to be profitable, whereas bigger corporations have rested on their laurels."

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From dumping ground to benchmark

The result is that co-manufacturers have become genuinely good at something the big players assumed was their own strength. Their facilities are often leaner, more configurable, and better suited to the multi-SKU reality of today's market. Several of them are now building out impressive facilities on the strength of it.

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Dion has watched this shift play out from both sides. Large producers visiting co-man sites for the first time often come away surprised, not by the scale, but by how cleanly the lines run and how quickly they turn over. That's the street fighter advantage made visible.

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Why the big players haven't followed

This is where the analysis gets uncomfortable for large producers, because the honest answer is that there's been little real pressure to change.

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As long as companies can continue routing difficult SKUs to co-manufacturers, the problem never lands squarely inside their own walls. The co-man absorbs the complexity. The internal lines keep running long, comfortable runs of high-volume product. Margins look fine because the costs of the awkward SKUs are externalized. No one is forced to confront the question of whether the internal lines are actually fit for purpose.

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Dion is frank about this: "Until someone goes, 'I want to bring all that stuff back in-house,' they're not going to look at it in detail."

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What finally forces the decision

That inflection point usually arrives in one of two ways. Either leadership does the math and realizes how much value is flowing to co-manufacturers, money that at scale represents real competitive exposure, or a competitor demonstrates it's possible. "Someone comes in and says, well, it's obviously achievable. We obviously don't have the same mindset as the co-man we're using. So how do we do that?"

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Neither of those forcing functions is comfortable, which is why many large producers continue deferring the question.

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The equipment side of the problem

There's a design dimension here that doesn't get enough attention. Most traditional chocolate processing lines weren't engineered with frequent disassembly in mind. Equipment from established European suppliers, well-regarded, durable, and familiar to procurement teams, was often optimized for high-volume continuous runs. Cleaning was something you did occasionally and thoroughly, not something operators needed to do quickly, repeatedly, between SKUs.

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That design philosophy is now a liability. When sanitation workers face equipment with multiple nested guards, hard-to-reach product contact surfaces, and disassembly procedures that require specialist knowledge, they don't clean it more carefully. They find the path of least resistance. They clean what they can reach, skip what they can't, and keep to the schedule.

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Spartan by design

Co-manufacturers, working with simpler, more accessible equipment from less prominent suppliers willing to design around their operational requirements, don't have this problem to the same degree. The cleaning is manageable. So it gets done properly.

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The principle Dion applies when evaluating equipment: "Less is more. Get rid of stuff. Make it more repeatable." Every component that isn't strictly necessary for function is a surface that needs cleaning, a potential failure point, and a reason changeovers take longer than they should.

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What your engineers don't know

The co-man mindset isn't just about equipment selection. It's about understanding your own lines the way sanitation workers and operators do. Companies that handle SKU complexity well tend to have engineers who've actually spent time on the production floor, who've cleaned the equipment themselves, who understand where the friction points are.

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Dion's experience across Hershey and Kellogg plants made this gap visible in a way that's hard to unsee. Engineers who've never disassembled the equipment they specify, never been covered in product, never had a plant manager standing over them during a difficult changeover, tend to underestimate the operational consequences of their design decisions. Equipment that looks clean and logical on a drawing can be a nightmare to strip and clean under shift pressure. That gap costs money, and it compounds over the life of the equipment.

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The harder question

None of this resolves the underlying tension Dion identifies: large producers are unlikely to develop a true co-man mindset at scale. The organizational structure, the procurement processes, the relationship with established suppliers, the cultural appetite for relentless simplification, most of it runs in the wrong direction.

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Finding the street fighters inside your organization

What's achievable is something more targeted: finding the operations managers and engineers who understand the problem and have the authority to act on it, and giving them the tools and runway to demonstrate what's possible on a line or two. Using those results to build the case for broader change.

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It's slower than declaring a strategic initiative. But Dion's experience suggests it's more reliable. Culture changes at the speed of demonstrated results. Equipment decisions follow.

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The co-manufacturers already ran this experiment. Their facilities are the proof of concept. The question is whether large producers will learn from it before a competitor forces the lesson.