Every situation is unique, with the spectrum potential so disparate, that it's pointless to try to write anything specific here. What I will do is cover a few general business basics, for those looking to get into the environment, and for those that may be looking for hints as to how to remodel their established situation. It will be far from a complete treatise.
The production process is something that, I believe, has to be rethought by many. It has to be designed, rather than put together over a number of years in haphazard fashion, and aspects such as efficiency and flexibility need to be built in at inception. In my perception, the production process is not something that begins at the receiving dock and ends at the dispatch department; being an integral part of the entire business process in the same way the business entity, itself, is an integral part of the community it depends on for survival.
Production, along with associated processes such as quality assurance programmes, start well before the receiving dock with sourcing the ingredients/materials required for the end product, but only after the market for that end product has been analysed, and the product it demands has been accurately determined, costed out, and assessed as viable. So, immediately, you are interacting with the community, and this is a process that has to be continuously maintained throughout the life of the business, because communities change and, therefore, so do supply and demand potentials. You've got to be on top of that and in a position to adapt with it, or you wind up paying for the discrepancy, and that cost can be exceedingly high.
Once base materials are decided upon, they need to be sourced, along with auxiliary sources in case of primary source failure, and they need to be sourced within a certain mind-set. A mindset that is defined by the one ingredient of successful business, consistency, expressed in three different aspects: product quality, service standard and price; and this has to become a litany throughout the production process, right into the hands of the end customer. The usual perception is that suppliers are separate business entities, but it pays to view them as your partners in a seamless production enterprise, and interact with them on a little bit more than invoice level. Take an interest in their business and if you can put them in the way of something, do so. Their welfare is your welfare, but it makes business enjoyable also.
Planning the method of your process is important and keeping it simple works. Sit down with the basic tools of pencil and paper and plan out what needs to be done to those raw materials, step by step, in order to transform them into your end product and deliver them into the hands of your satisfied customer. Again, the production process is not over until this is achieved. Organise your production process so that your people are working and not walking. Depending on type and scope of operation, e.g., how intensive it is, determine how much needs to be done by hand, and how much can feasibly be done by machinery. Do your research on what machinery is available, and never go cheap on machinery. Never go cheap on anything, because cheap is always false economy. Read the manuals. I repeat: read the manuals, and from those, make up a coherent preventative maintenance programme, along with associated standard operating procedures for your operators. Machinery that is operated the way it is supposed to, within capability, will save you considerable money and automatically assist in your preventative maintenance programme. Regularly overloaded machinery, poorly maintained, will break down in the middle of a production run and can cost you your business. Unsafe work practices can cause worker injury, create a bad employer brand name, and give you the appearance of being a bad risk in the eyes of insurance companies.
If this is an already established commercial situation, many problems have already been solved or embedded, but just to quickly cover some of them for a new operation: where are your customers situated? Are you sited conveniently for them? If you are a retail operation, do you have enough effective display frontage? Are you sited conveniently to keep logistics and other overheads down? Spend time in the area watching the people. How are they dressed? What's the demographic composition? What side of the street does everybody walk down? This decides maximum exposure, passing trade and impulse buying potentials for your business. If you are in some aspects of the retail food industry, this can be as high as 50% of your potential sales. Or if you are a bigger concern, can you build closer to your raw material suppliers, saving on logistics factors? Why pay freight costs on a wastage percentage? How much would that add up to over the lifetime of a business? Many of the costs that cause business demise are hidden ones. Pre-planning is a major step in any business, and 85% of a successful business is determined before the door is opened for the first day of trade. It's where a major portion of time should be directed, but too many people rush in and it's a major cause of business failure. Where passion provides the ride, reason should hold the reins. Any mistake you make at this stage you continuously pay for over the full life of the business, and you will always be able to find better uses for working capital than that.
People are the other aspect in the equation and, as a commodity, the most expensive. Add all your other fixed and variable overheads together and they still won't equal your labour bill, but your people are your most important production asset. People are not machines, it's a mistake to treat them as though they are, and it's important to take an active interest in them. Understand that they have private lives, that this can reflect on their work performance, and vice versa. Don't be inaccessible: come down onto the production floor, occasionally, and chat while they work. Do this without allowing yourself to be employed politically. If they have problems, help them with them, but don't get trapped into being an 'easy touch'.
To iterate, this is not a comprehensive treatise on business practice: just some very brief notes to provide perspective to those who may be new to the environment.
The following are a couple of initial, rough sketches of a proposition, tendered to a client to initiate discussion. The client in question is situated in the Pasifika region, had established a basic blanch and freeze
operation of local produce and even a small export market, but with minimal profit margin and was unsure of how to progress from there. There were distinct budgetary restraints and, as is common with primary produce processing, an extremely high 35% wastage percentage.
The first sketch shows three proposed, progressive implementations of development, going from left to right. The first stage is of an initial production line to produce two new, value-added lines, based
on produce already used. This to increase his profit margin with added earning potentials, giving the bank something to look at in order to facilitate funding for stage two.
Stage two expanded on the value-added factor with an additional eight product lines, all of which were based on the client's established primary produce lines, in this way expanding on minimal overhead, with the initial market factor in the already established export trade. Telaman Consultancies formulated all recipes, sourced all equipment and ingredients, and designed the production sequences.
Stage three introduced the wastage control factor in a further two product lines: one a rehydrated mash flake, and the other a secondary line, which entailed putting all the waste peel through the same process at the end of the production day, dehydrated to a powder, tested for nutrient aspect and water content for stability, then blended and sold as a stock-feed composite. This reduced the exorbitant wastage factor to very close to zero: any negligible excess recycled as compost and returned to the farms that were doing the growing.
Ideally, I should have liked to have introduced this latter aspect right at the beginning, but the cost aspect was simply too prohibitive and the need to establish an increase in financial traffic was essential in order to generate finance for further development.
This second sketch shows how it is possible to arrange production process efficiently to handle a number of product lines, employing the same employee numbers, and still having space enough left over for a second production line if market demand requires that.
Over a considerable number of years, Telaman Consultancies has cultivated relationships with national and international market leaders in the manufacture and supply of production equipment, ingredients, and materials of all types. We know what is worth buying, and what costs a lot of money, implying quality, and isn't. The logical process of production planning, with flexibility incorporated, is something that comes naturally with us, so serious amounts of money are conserved down through the years.