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The Benefit of Hindsight In a Fast-changing World

By John Taylerson, Programme Manager of the Sustainable Scale Up Cluster.

With my dairy background, I have been a member of the Society of Dairy Technology (SDT) for a number of years. The SDT is the recognised professional body fostering scientific and technological developments in the dairy industries of the United Kingdom and the Republic of Ireland. I was recently asked to contribute to their quarterly bulletin and chose to reflect on some good advice that I was once given when weighing up whether I should purchase a piece of equipment and its relevance in today’s world.

If you would like to find out more about the SDT and how to become a member, visit their website here.

In my role as Programme Manager of the Food & Drink Wales Sustainable Scale Up Cluster, I frequently get into discussions with Welsh food and drink companies about buying pieces of equipment. Often the choice is based on what you can get for a price as opposed to the technical efficiency of that piece of equipment. The age-old dilemma of what you can afford versus what you might like.

There should be some better ways of deciding what to spend and or arriving at a value calculation. Some really good advice I was given many years ago by an accountant was “Buy the piece of kit you will wish you had bought a year from now.”

So, what will we wish we had bought a year from now?

The world is changing rapidly; from consumer tastes and the demands of the market through to technology advances and the rising cost of inputs such as energy.

Just to take one example of boilers: with gas prices increasing exponentially could the rush out of oil into gas be stopped dead in its tracks; or will gas prices settle down over the next year? Perhaps the thermal efficiency and the role of renewables might play a part in this? The role of renewables in heat treatment is becoming increasingly important. But, although alternative processes need exploring, it should be remembered that the law often defines what process must be used to make a food safe and marketable.

But what about fundamental issues like what products will we be processing in a year’s time, dairy alternatives perhaps?

Does the equipment need to reflect the change in market demand too? That means the run-time, specifications for channels and pipe sizes, as they may have to treat new products you hadn’t planned to process just a year or two ago. A tubular system suitable for dairy might not be optimal for a plant-based alternative.

Accreditation is changing with the new world of B corps, climate-change, energy and its sourcing will impact on choices. Segregation, process control and time-temperature choices might also change. Often process control is easily re-programmable but given the change in consumer tastes the standard treatments, homogenisation pressures and control and record keeping systems might need to reflect both the higher levels of record and data-capture as well as process control to enable segregation and process of products that become increasingly popular.

What of the future though? If things are changing, how do we anticipate what the implications of those changes might be if we are specifying kit and equipment or spending money?

Applying some simple decision-making tools and techniques could help. One I often use with businesses is a PESTEL analysis (the political, economic, social, technological, environmental and legislative implications for a business or the market it operates in) which helps you assess what is going on, what is coming and how you should react. This is best done as a team exercise and facilitated by someone who will ensure the team really thinks about the process. Successful businesses listen and respond to the market, but, as we all know, if we just listen to the commercial managers when they return from customer visits, you might never again run an efficient factory because of all the demands for size-change, label-change, product-change. That said, involving the commercial and marketing teams in the PESTEL exercise is worthwhile.

Another useful exercise is to audit what you do in terms of capacity and capability. This could be as simple as a matrix of the processes and pack formats you have. What capacity is needed to do what? What capability do you offer - what are the range of processes and formats you can offer? Is there something you don’t do anymore, or do you have very underutilised kit? Is there a constraint that might justify investing in more appropriate capacity?

What other factors might assist you with determining how to specify wisely? The cost of people is an obvious consideration, along with the costs of attracting and retaining those skills. The skills and labour shortages in the industry are well documented. Is there a business case for automation? Increasingly, the level of sophistication from cutting and packing product through to the ability to take delicate produce, gather, align and pack into a wrapper and then a box without human intervention means that, to remain cost-competitive, businesses are investing in kit. Reference visits, trials and performance guarantees all help to reduce the risks of these investment decisions.

In summary, the world is changing and expects you to change too by using less energy, less water and making working in the industry more interesting by removing the mundane.

Part of my role with the Sustainable Scale Up Cluster is to help Welsh food and drink businesses make informed decisions based on a better understanding of market demands and external forces and considerations. We try to help them “de-risk” their decision making, find the right finance and keep the cost of capital down. Afterall, someone must pay for all this, and that someone is the customer!

So, when you are trying to plan your investment decisions, fast forward a year - what will your future self wish you had chosen now?

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