Scaling up — how SMEs can grow into larger food manufacturing facilities
For small- and mid-sized food manufacturers, one of the biggest challenges is how to start scaling up operations. Today there is an endless amount of information available but interpreting this and making the best choices for your business is not simple.
There are plenty of opportunities today for Australia’s small- to mid-tier food manufacturers, especially for companies that are agile and manufacture high-quality products. However, the entrepreneurial spirit that saw owners start businesses can easily be replaced with uncertainty as organic growth leads to the need to scale up. Lack of knowledge about how to scale up is frequently the main obstacle to growth. The initial entrepreneurial ‘nothing-to-lose attitude’ makes way for a defensive risk management strategy and while in the food industry this is critical, it doesn’t need to stand in the way of growing businesses safely and even improving risk management along the way.
Scaling up can start by simply optimising and sweating your current assets or adding a shift or two, but as demand continues to build along with operational costs then the options start narrowing towards the need for a larger, newer facility. Often manufacturers at this stage become almost paralysed by the challenges: “What do I do now, how much will it cost and how long will it take?”
Control scale-up for great results
If there is good news then it is this: the transition, when planned properly, can lead to an extremely controlled scale-up with great results. The strategy must be planned with precision yet the execution must allow for flexibility along the way as demand changes course.
The more you can define where you want to drive growth for your business and define your target market, the easier it will be to gain direction. It’s important to be clear up front what controls and regulatory requirements need to be in place from your existing and future customers and collaborate closely with their quality teams to ensure that you are designing food-safe facilities and processes.
One important thing to keep in mind is that the food safety auditors are unlikely to accept ‘unfavourable practices’ in your current facility to continue in a newly designed facility.
When reviewing expansion options, you may be lucky enough to already have enough room in your factory or on your site to expand into. If not, the next best option is to find an existing site with the building in place (often referred to as a brownfield site) as typically this will be a lower cost option, even if you need to completely strip out the existing fit-out and flooring to renovate. If finance allows, then a new site and new building (referred to as a greenfield site) can give you the best long-term results and allows a blank canvas approach.
Design fit for purpose
Probably the biggest challenge for manufacturers when scaling up is working out where the capital should be spent.
For the facility, thankfully there are not too many options to confuse you with when choosing drainage, flooring, internal walls and ceiling materials, doors and lighting. It is critical that the materials and installation all comply with current food safety standards and are installed by industry experts that can demonstrate excellent track records specifically within the food industry. When designed and executed properly, your new facility will be of a world-class standard and export ready.
Consider the following practical ideas for your facility upgrade:
- Sub-floor works such as drainage must be well designed and should not be compromised. Consider the impact of high-care rooms and the integration of drainage. A high-care room may not be required today but future opportunities or changes in food safety standards can lead to issues with unsuitable drainage plans in the future.
- The drain points and floor slopes must be designed accurately to prevent water pooling. Ensure that the drain points are well positioned around equipment. Strip or trench drains should be avoided as they provide a greater risk of microbial growth problems. Some retailer standards will not allow these types of drains in some rooms. If the floor slopes are correctly designed and installed you should not have any water pooling concerns with point drains.
- Ensure that walls and ceilings comply with food safety requirements as well as fire codes. Consider using FM approved fire-rated wall and ceiling panels.
- Consider ventilation, room pressures and temperatures. Navigating through the food safety requirements for HVAC is difficult and an area where you should most certainly seek advice from industry experts.
The process and packing lines are often the starting point for manufacturers when starting to evaluate options for scaling up operations. This can be a daunting task as competing suppliers can often provide solutions without seeking enough detail about the project, and that can lead you into a state of confusion with the direction you need to take.
Firstly, develop a plant layout that reflects your long-term ‘wish list’. This will help to futureproof your factory footprint. Then determine which equipment is going to give you the best investment return at start-up and which equipment is the hardest to acquire quickly if demand exceeds your post start-up forecast (and it often does!).
Typically, these items are one and the same and may be high-speed filling machines or a spiral chiller or even retorts. Automated packing lines tend to be more modular and easier to add on later when cashflow allows, but you also need to understand how you will redeploy or scale up your workforce at start-up if considering this type of option.
Again, ask for examples, videos and referrals from suppliers when discussing process and packaging options. Remember that there are some great local equipment manufacturers in Australasia but one supplier alone does not usually have the silver bullet solution for your entire process and packaging requirements.
One of the best decisions that you can make when scaling up your facility will be to automate tasks throughout your plant to guarantee repeatable, accurate and efficient processing. Properly executed process control allows your operators to focus on high-value dynamic tasks that require flexibility. Automation can provide some of the best returns for your business as it can significantly reduce labour costs as well as facilitate simple scaling up of processes and services for the future.
Consider the following when designing your processes:
- Develop a plant layout incorporating future lines and design from an operator’s perspective of how the factory will be controlled safely.
- Design for hygiene — ensure that all equipment and rooms can be easily cleaned. Involve your quality managers early in the project.
- Consider allergen control and elimination of cross-contamination from warehousing to processing and filling.
- Automate where practicable to reduce labour costs and waste. Integrating key equipment and ancillary equipment will also minimise unnecessary line stoppages.
Services and infrastructure
Factory and process services must be designed with further scale-up in mind so try to establish what additional capacity will be required in the future. It is worth investing a bit more up front as modifying and upgrading services once the facility is operational will be far more costly and time consuming, especially for services such as steam or gas supply.
Consider the following when evaluating a potential site:
- Check that there is enough power to service the new site with growth in mind. The upgrade or replacement of a substation can be the longest lead time item on the project so it’s important to establish the requirements early.
- Check the gas supply to the site. If one or more new boilers are to be installed then it is important to check that the gas meter and gas line into the site are adequately sized.
- Check that the town water supply and line sizes are adequate. Upgrades are normally inexpensive and can be carried out relatively quickly.
- Engage a town planning consultant to check that your plans will meet the planning conditions.
Financial and resource assistance
There are a number of government and private sector groups that will review your project, conduct a business health check and provide assistance by way of grants for items such as consulting fees, equipment purchase, loans for working capital and resources to advise on business matters such as scaling up, marketing and exporting. It is well worth exploring all of these options.
So finally, if you are considering expanding or upgrading your manufacturing facility, remember that it doesn’t need to be a long stressful journey. Plan for the long term and plan for success. Once you have a visual plan and financial strategy on the table then seek help from industry experts to execute your plan.
The right advice up front will allow scaling up to happen quickly, cost-effectively and safely, and make it a highly successful and rewarding journey!
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