ABM Advisor: The ABM Blog.
Showing News Filtered By Date from: 2018-05-01 - 2018-05-31
The Australian Competition and Consumer Commission (ACCC) recently released their report on the Dairy industry. Among it's 200 odd pages is extensive discussion of the commercial relationships that exist between dairy farmers, dairy food processors or manufacturers and retailers like supermarkets. Changes to the industry are being mooted as a result.What do dairy product manufacturers need to keep an eye out for moving forward?What does the Dairy Inquiry report say?Of most interest to dairy food manufacturers is the report's finding that supermarket prices for milk don't have a direct impact on the price farmers get for their product. The report states that the impact of cheap house-brand milk in supermarkets falls mostly on the processors, cutting into their profit margins, rather than influencing the farm-gate price. The report also explains that farmers themselves are the ones in the supply chain with the least bargaining power. With most being small compared to other players, as well as selling a generic product, there is little that farmers can do to bargain their way into better prices. Conversely, dairy processors have a fair degree of influence over farmers and the makeup of the contracts they sign with them.As the ACCC Commissioner Mick Keogh explained, "processors can impose milk prices and other terms of milk supply contract terms that are heavily weighted in their favour. Some milk supply contracts also contain terms that restrict farmers' ability to change processors for a better offer. These issues ultimately harm dairy production efficiency and reduce the effectiveness of competition between processors."Read Full Story
The organic food market in Australia is currently in the midst of a boom. According to the recently released Australian Organic Market Report 2018, the total value of the market sits somewhere around $2.4 billion dollars. The same report states one in six Australian households has purchased organic products in the last year.With ABM's manufacturing module, making the shift into new market segments is manageable. But what are organics and is adding them to your product portfolio a good idea?What is 'organic' in Australia?While the common meaning of organic is to be produced without the benefits of artificial chemicals, there are specific criteria products must meet to be certified organic.There are six separate organisations in Australia that can certify goods as organic - products need to meet at least one of these party's criteria before they can be sold as organic.For food products to be certified organic in Australia, they have to meet a number of criteria.A fast growing marketThe organics market is growing at a rapid pace. Compared with 2016, an additional 384,000 households purchased organic products in 2017 and the market grew by 13.6 per cent overall, according to the Australian Organic Market Report 2018Andrew Monk, the chair of Australia Organic said that the millennial generation was driving the majority of the demand."Millennials know more, they demand more and they expect more," he recently told the AAP.For them, the increased price is justified for the peace of mind eating organic products brings. Fortunately for organic food manufacturers, millennials are only growing as a proportion of the food buying market. Currently, cost is the greatest barrier to people buying organic, according to the Organic Market Report. As the purchasing power of millennials increases, those who want to buy organic but currently can't afford to will begin to enter this premium market.How can you expand into organics?There are some hoops to jump through but if you can find a niche that's profitable it may well be worth doing entering the organics sector. Organic products often retail for a far greater price than their non-organic counterparts. Providing you can find a manufacturing process and suppliers that keep your costs low enough, organic products command a premium that others can't. In an era of $1 supermarket milk, going organic is one of the few surefire ways to both command a higher price for your product and still have a customer base willing to make the purchases.For more information on how ABM's software can take your food manufacturing operation to the next level, request a no-obligation product demo today.Read Full Story
The Australian food manufacturing industry is a place where innovation thrives. It's a sector that's often under pressure due to slim margins, high inputs and fierce competition.It's also an industry that faces many troubles, one of the most significant being the massive amount of food that's wasted both pre and post consumer. Here we take a look at the efforts of one company, Freeze Dry Industries, to minimise food waste and increase revenues for food manufacturers.Food waste in AustraliaAustralia has a food waste problem. That's not quite fair - the world has a food waste problem, in which Australia plays its part. Approximately a third of the food produced worldwide each year for human consumption is wasted, according to the United Nations. In absolute terms, that's some 1.3 billion tonnes being lost or destroyed every year.A great deal of food is wasted before it even hits supermarket shelves because it's too ugly. A series run by ABC called "War on Waste" revealed, for example, that banana farmers are sometimes forced to throw away 40 per cent of their crop yield because the bananas don't fit the standards that supermarkets and other retailers set.Read Full Story
In times when business confidence is high, the natural inclination is to expand. But while expansion can be rewarding for those who succeed, it can wreak havoc on businesses should they fail.So, how can you expand your business without running the risk of ruin?Manufacturers in Australia have high business confidenceThe Sensis Business Index for March 2018 has revealed that manufacturers in the Australian economy are the most confident about their businesses they've ever been in the last ten yearsScores are calculated by subtracting the percentage of business that are worried about their business future from the percentage that are confident about it. The manufacturing industry got a score of +55, the highest Sensis has recorded since beginning in 2008. A further insight speaks volumes about the great position manufacturers feel themselves to be in - only once before in the last decade has manufacturing confidence been higher than business confidence overall.The reason for the confidence is multifaceted, but it's due in part to the profitability manufacturing experienced in the last quarter - the best performing sector by some margin.What is the result of all this confidence? For many food manufacturers, it will manifest itself in the desire to expand operations. When you're feeling optimistic about the future of your business, it makes perfect sense to try and grow.Food manufacturers are feeling confident about their business futures. What's next?The dangers of business expansionMany businesses, for example, can have issues with cash flow.It should be made clear at the outset - business expansion is a good thing. It's what's needed to continue making profits and reaching more customers with great products. But it's also something that shouldn't approached recklessly.Many businesses, for example, can have issues with cash flow. They take loans to finance their expansion and subsequently find their stocks of available cash for operating has been absorbed by debt servicing. Another example is staffing issues. A small business can be managed effectively by one person that knows everybody's name and works with them closely. But as you get bigger and bigger, this direct-contact approach becomes less and less tenable. Businesses that don't have systems in place to automate aspects of production or standardise management techniques can get into hot water when one person can no longer keep things under control.How can ABM help?Successful expansion requires a lot of things to work in concert, including the software you choose base your business operations on. For this, ABM is king. Our software works by starting at the core with a solid accounting system. To this, further modules can be added, including our manufacturing module. It manages and controls every step of the manufacturing chain, aiming to give you quality, efficient and productive results. When you can trust that the fundamentals are handled right, successful expansion becomes that much easier to manage.For more information on how ABM can help you expand your food manufacturing business, get in touch with a member of the team today.Read Full Story
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