Current ‘Perfect Storm’ among food producers opportunity for (family) businesses

28 September 2018

28 September 2018

A “perfect storm” due to three different factors

It squeaks and creaks at many food companies. There seem to be three effects that are currently raging through the industry like some kind of “perfect storm.” First, the increasing and continuing need for retailers to differentiate themselves is leading to a tremendous increase in complexity within manufacturing. This is compounded by a strong inflow and, unfortunately, outflow of new introductions. Second, the proliferation of different (organic) labels leads to a drastic increase in the number of raw materials that must also be separated and traced throughout the chain. And finally, the lack of production personnel leads to situations where production lines have to be stopped, suppliers deliver late (because they are also short of personnel) and service levels are under pressure. As a result, claims are imminent, backlogs would have to be made up, and the pressure on the operation further increases. It is all hands on deck and the delusion of the day is becoming more and more prevalent. The good news is that everyone faces these issues, so there are opportunities to set yourself apart.

Differentiate from values and a long-term strategy

Of course, a continuous focus on innovation in products and processes is essential in achieving competitive advantage. But in the context of the “perfect storm,” other factors come into play. Especially those companies that are focused on continuity, have a long-term perspective and want to be good to their employees and relations could and should benefit from this. They can distinguish themselves just now by working on two fronts:

1) Attract new employees based on (family) values. Generation Y really thinks differently. They value working for and at a company with an appealing vision or purpose and that operates and acts from authentic values. The genuineness of the family business can be distinctive. But many companies hardly propagate this. In addition, look not at experience but at competencies, such as eagerness to learn, decisiveness or ownership. These competencies will likely align seamlessly with your company’s original values, making your story to the job market real. That also means giving more time and attention to training, from the master-mate philosophy. This extra investment will quickly pay for itself, as you will get employees with both the right personal and content competencies. Take advantage of this asset and open the doors!

2) See increasing complexity not as a temporary phenomenon, but as the new reality. This storm is far from over. In fact, assume that complexity will double in the next 4-5 years. And make a plan for that. Become a champion at dealing with complexity. By differentiating, scrapping complexity from your current factory and setting it aside, thinking more carefully about making your own versus outsourcing, partnering and understanding much better which products have profit and which have loss. And of course by sometimes saying no from a shared vision of marketing, sales and production. Not re-actively waiting for the storm to blow over, but proactively stepping forward and investing in people, resources and processes to be even more competitive three years from now. That is the only way to ensure continuity. Is there an alternative? I don’t think so, unless you can live with the idea that your business can only survive by the grace of the retailer.