02 February 2017
This article was originally published in Inside FMCG Magazine.
There are six key tips to consider for companies looking to supply major food retailers. Wiley, who design build and maintain food manufacturing processes and facilities, frequently work with food processors to manage capital expansion projects to satisfy the needs of their key customers. Wiley’s Advisory Services Director, Andrew Newby takes us through his top 6 key areas to focus on.
To be in the best position possible when a major retailer wants you to increase supply volumes or develop and add a new product line, the manufacturer must respond by increasing production to meet that demand. Be sure to have completed a market development plan, your ‘how to go to market plan’. A project to meet these needs often requires significant capital expenditure, and to have your best foot forward you need to have completed extensive planning and research.
The biggest risk to the retailers is a serious food contamination issue. Their name and reputation is at risk and a breakdown from one processor can result in plummeting sales across the whole industry. This has led to increasingly stringent hygiene controls, particularly on staff hygiene entries, construction standards and process controls for food safety.
Hygiene controls are driving a trend to higher standards in staff entry design. These trends include higher quality entry design with wash stations, air showers and shoe change facilities. There is also a greater emphasis on ensuring production flows and staff movements are right, throughout various well defined hygiene zones.
Major retailers have become increasingly prescriptive of their standards. Their requirements have become a marathon read but fall short of telling exactly how to meet them. Auditors too will tell you what needs to be done or improved but often will not tell you how to do it.
Seek professional advice appropriate to the needs of the problem to decide how to remedy or comply. Each retailer has their own standards and the British Retail Consortium (BRC) is used by most as a basis. It is good insurance to build plants compliant with these standards.
Discussions with retailers may be along the lines that “if you produce that new product then we may be interested in buying from you”. Sounds good, except in the case where time is invested and possibly millions of dollars to produce a product they may buy. For unique products, partnering with a retailer will provide more certainty over the business.
Be prepared to spend a little to push ahead with planning the required project in order to meet their critical timeframe or launch date. Seek early advice on realistic timeframes, and capital project costs. The emphasis here is on being realistic. This is not the time to go in with the tightest of time and cost only to find out later that these were impossible to achieve.
There have been some long term contracts signed by retailers to underwrite large capital investment. It is worth trying to get a bankable contract to secure a project.
If the product is for a launch date and promotion, then it must be ready for that once a year launch. The consequences of not meeting that date can be severe. Typically, these deadlines are very tight. A number of issues can present a very high risk to meeting a date commitment:
New product development (NPD) has been driving growth as retailers look for innovative products. You will need an NPD Plan which takes you through idea phases, marketing strategy, product development, trials and finally commercialisation.
This can mean the complex task of assessing global process technology to meet your customer’s needs, or evaluating a number of suppliers and being able to evaluate various options and commercial terms in your favour. This can be challenging if you do not have sufficient technical expertise in your organisation. Evaluate your options with expert advice to ensure the solution meets everyone’s needs, not just the ability to deliver.
Don’t plan for today, plan for tomorrow. Research industry trends locally and internationally and plan for the future as much as possible. Flexibility is often the most important consideration for food manufacturers. Consider a masterplan which helps with future planning. Flexibility can come in many forms: room to grow, eliminate or limit internal restrictions (columns, low heights), serviceability, standardise or safety access.
Build as flexibly as practical in case the contract isn’t renewed in its current form. Packaging is the area that has seen the most change so be generous in the space allowed for these activities, just in case you have to quickly add another machine.
These six key tips will put companies looking to supply major food retailers in good stead.
Connect with Advisory Services Director, Andrew Newby, 07 3859 8874