How Tyson Foods CEO reduces labor costs with AI

Artificial intelligence (AI) can still feel like a novel concept that prompts visions of sci-fi futures where the lives of humanity are reduced to binary code.

However, AI is having a serious impact on enterprises and is helping them to get rid of repetitive or mind-numbing tasks.

Whether it’s getting rid of bias in the recruitment process, automating tasks, or finding suggested materials for employees; AI can be leveraged to improve operations.

One company that has seen the benefits of AI and intends to invest heavily in the area is Tyson Foods. The company is one of the world’s largest processors of chicken, beef, and pork.

During Tyson’s Q1 2022 earnings call on Monday, CEO and President Donnie King made it clear how he views the future of work and why AI is an essential investment after thanking teams for their continued work.

AI within Tyson Foods

The meat industry isn’t often considered to be forward-thinking, but King intends to spend $1.3 billion in the next three years to increase automation in its processes.

King explained the plans: “The productivity program aims to deliver $1 billion in recurring productivity savings by the end of fiscal ’24 relative to a fiscal 2021 cost baseline and has three critical focus areas—operational and functional excellence, digital solutions, and automation.”

Going into more detail, King noted “we’re making use of supply chain, digitization, and advanced analytics.

“Our digital manufacturing platform allows us to analyze real-time data to take actions to optimize process conditions that drive better yields, lower costs, consistent quality, and increased output.”

The company also hopes that automation can fill gaps in difficult-to-hire jobs. Technology cannot replace all areas, but there are tangible benefits from this investment already.

Financial benefits from AI

On the back of its investments, the company hopes to make between $300 million to $400 million in productivity savings in the fiscal year of 2022.

Reflecting on the profits already seen through AI investment, Stewart Glendinning, Tyson EVP and CFO, noted: “First-quarter earnings per share grew 48% to $2.87.”

Looking elsewhere at profits, Glendinning said: “Our sales were up approximately 24% in the first quarter, largely a function of our pricing initiatives to offset inflationary pressures.”

With the benefits seen through artificial intelligence in mind, it could be a way to increase the profits and productivity of more food suppliers. This is particularly if it reduces the time spent on repetitive tasks, and enables staff to focus on more important projects.

In general, the automation market is expected to grow significantly in the coming years. Meticulous Research has reported that automation will grow at a compound annual growth (CAGR) rate of 9.5% through 2027 and reach a market value of $29.4 billion.

Of course, there will be a need to manage staff when new technologies are put in place. Whether it’s training workers on how to operate and monitor the new systems, or reallocating their roles to work that needs a human touch.

Alongside Tyson Foods investment in AI, the company’s stock price has climbed from $88.29 on February 4 2022 to $99.09 on February 7. To maintain this positive growth in value, the company will want to avoid mass firings and remain a positive environment for those that are not hardware.

Fortunately, The World Economic Forum has predicted that automation will lead to a net increase of 58 million jobs, and enable employees to develop higher skills.

On the back of this, the investment in automation could be a smart move by Tyson Foods.