How to Improve Agribusiness Competitiveness!
Updated: Dec 16, 2018
Create a strategic growth plan!
I believe that every agribusiness company, SMEs and the private sector must create a strategic growth plan, lead and improve their quality, productivity, profitability, competitiveness and customer loyalty.
How can we succeed in the strategic plan?
Of course, this strategic plan can be achieved through effective innovation and marketing management. Many leaders/managers see the innovation as the new product development and launching. Some others see innovation as a magic. These are not correct.
Innovation is a systematic and continuous development and improvement processes that cover all of the business operations of an organization. People from the top level to the bottom, everybody should work in highest alignment and improve and also make better their daily operations faster than competitors.
Innovation is a management process. Traditional industries such as manufacturing, retail and agriculture continue to suffer in the current economic climate and the role of innovation is being a key competitive factor for future domestic and global competitiveness. In order a company to compete on the local and global stage, not just on price but also quality, consistent, fresh and new ideas and their execution are key.
The growth potential of the agribusiness subsectors:
Production and Processing of Fruits, Vegetables and Other Industrial Plants;Production and Processing of Animal Feed;Production and Processing of Livestock;Production and Processing of Milk and Milk Products;Production and Processing of Functional Foods;Production and Processing of Medicinal and aromatic plants;Enablers (e.g. Cold Chain, Greenhouse).
The Main Elements of Agriculture and Food Industry Value Chain:
Primary Agriculture and Commercial AgricultureFood and beverage manufacturingWholesale and distributionFood and beverage stores and floristsFood and beverage services
Our Food Value Chain Experience
I have intensively worked as an expert and/or leader in the EU technical assistance projects, pharmaceutical manufacturing operations, the baby food industry, agribusiness, and food manufacturing operations, quality assurance, research and development, capacity development, marketing, innovation, and supply chain management. After that, I have collaborated with certain agriculture and food companies in Turkey as an expert to improve their quality, product portfolio, workforce, supply chain, operations, strategic growth, profit margins, and competitive power. I have completed and delivered a European Union funded agribusiness project (10 million Euro) to increase the competitiveness of the Turkish tea industry including farmers, SMEs, and the private sector. We have established a pilot plant and research and development laboratory and an accredited tea analysis laboratory.
I know that the key priorities for a great leadership in agribusiness and food industry are;
Increasing production; Improving quality; Developing skills; Driving competitiveness; Building domestic and international markets and customer loyalty; Creating collaboration and networking;
Developing and launching new products.
Key Profit Drivers in Agribusiness and food industry:
1. Differentiate your supply chain and business strategies. Bring together leaders from across your business to define the supply chain that will work for you and ensure they provide the data your organization needs to deliver;
2. Extend visibility and connectivity to value chain partners, reducing costs and risks across the value chain;
3. Create a modern, end-to-end supply chain organization. Make sure your supply chain organization combines operational excellence and organizational agility with strong analytical capabilities and data-driven, cross-functional decision making;
4. Set the high-performance standards for the entire organization. Incentivize your supply chain organization to work in ways that deliver the most value to your business, while protecting against its biggest risks. That means using more than the traditional metrics of cost, service, and capital. Use the right KPIs;
5. Increase the productivity of your people and operational efficiency in the company. Recognise and reward workforce contributions with performance reviews, and teach them sales skills how to upsell products so customers make multiple purchases at one time;
6. Customer service and loyalty. Improve your customer service and make training needs analysis (TNA) and apply a people training program to develop skills in the organization;
7. Decrease in direct costs. Make sure you have the right suppliers for your business. And negotiate for better prices or discounts for buying in bulk;
8. Decrease indirect costs. Try to minimize waste and errors in your business by training people, or reduce marketing costs by using low-cost marketing;
9. Develop a new product portfolio. Survey your customers and competitors from local and international markets about new products, services, and technologies. Establish an R&D laboratory, and continuously design, develop and launch new agrifood products;
10. Find new customers. Make this in the local market and global markets. New customers can help grow your business;
11. Increase your prices. Check and analyze if you have priced your products and services correctly and if you could increase prices without reducing sales against competitors;
12. Make price discounts. Consider price discounts and promotions to increase your customer base, market share, and customer loyalty;
13. Retail displays. Use effective retail displays to increase your sales;
14. Decrease inventory. Stock control is a crucial way to streamline your business;
15. Decrease in overheads. Save energy wherever possible or try to find a cheaper energy supply company;
16. Benchmark key financials. Analysing and benchmarking your business help you compare your costs to similar businesses and competitors in your industry to see if you are paying too much;
17. Make regular competitive intelligence in local and global markets to detect short and long-term changes in customer needs, technology, services and required skills;
18. Make a regular long-term sector analysis and if necessary make healthy disengagements.
19. Work with the great leaders and/or consider using a business expert to help you;
20. Apply a strategic marketing and innovation growth plan that encourages innovation, grow and promote safe and high quality Turkish agrifood products to domestic and international markets;
21. Apply an operational excellence and organizational program that brings competitive productivity and investment opportunities;
22. Develop and commercialize higher margin products;
23. Use new technology, robots and communication systems;
24. Apply a competitive talent and workforce management strategy. Train and develop your people. Reward the success;
25. Perform collaboration and networking in the domestic and international markets.
Clearly, I have to say that we have to identify and measure our key profit drivers and develop strategies to grow them, without increasing costs. We have to increase our sales revenue as well as decrease our costs and benchmark our business to see where we can save money and where we can invest for now and future in domestic and international markets.
1. Business owners have to realize that leadership and workforce skills are being a crucial factor in today’s hypercompetitive business world and they have to take suitable actions. According to the surveys; only 12% of the business leaders are truly effective. The business world is entering into the fourth industrial revolution and 35% of the skills will have changed in 5 years in some of the developed countries. They have to develop and implement an effective talent management strategy and work with the great leaders and/or agribusiness and food industry experts;
2. They have to focus on the excellence in the supply chain, manufacturing operations, quality, inventory level, developing and commercialization the NPDs, marketing, sales, finance, investments, collaboration and networking, and entering global markets and competitive innovation management;
3. They have to benchmark their business and measure the key performance indicators (KPIs) to see where they can save money;
4. Developing and implementing all of the above strategic business elements can increase the profit margin by 4 percent (from 11 to 15), labor productivity by 11 percent and investment opportunity in research and development by 20 percent;
5. The result will be excellence in business, growth in the agribusiness and food industries and an increase in the welfare of the nation and an improvement in the biodiversity and soil productivity.