“Small-volume high-quality supply chains are a growing sector of the food industry,” said Tom Ridgman of IfM ECS – the disseminating arm of the Cambridge University Institute for Manufacturing. “We need to support their growth into viable businesses.”
Earlier in the year, IfM ECS was commissioned by The Technology Strategy Board (TSB) to map out the future of high-value manufacturing in the UK over the next 15 to 20 years. This study was announced at the government’s Growth Summit and will be used to inform public policies, research strategies and investment programmes.
Ridgman applauded the dynamism of the rising numbers of start-up food and drink firms and described the food manufacturing industry as one of the most innovative sectors of British industry in general.
Food businesses
“There are very low barriers of entry in the food business,” he said. “You can start as a micro with an innovative idea and a niche market product at relatively cheap cost. But the challenge then is to scale up and build your idea into a sustainable and viable business with long-term growth.”
His team was looking at gaps in expertise and what sources of advice would best plug them so that small firms did not hit a ceiling through lack of skills. Some firms needed help with their marketing, while others needed process engineering or business planning advice.
“The one thing that’s difficult to fix is helping people scale their ambition,” he said. “A lot of businesses stay small because they lack the application of standard business principles of planning, understanding markets, production processes and supply chain management.”
It emerged from the study that core process engineering skills weren’t readily available and there was a knowledge gap between the food scientists and the people who run the equipment.
“We’ve had discussions about optimising energy use, as the sector is such a major consumer,” Ridgman said. “Can they take energy from the cooling down process and use it to heat food up, for example? Even the larger companies are not coping with this so the smaller companies are going to take a while to get into a good state.”
Engineering management
Engineering management was key to sustaining profits. As energy costs rise, so will product costs. Government should help firms develop the fundamental technical skills to help micro and small and medium enterprises businesses grow for the benefit of the economy.
“We’ve been involved with all sorts of endeavours with manufacturing advisory services,” said Ridgman. “But the government has been slow to understand the importance of the food industry. Take the TSB: when they first set up they had a manufacturing sector, which was looking at things like Rolls Royce. When you told them the largest sector was food they looked surprised.”
Now there are signs of things coming together. Ridgman highlighted the strong trend of farmers building up processing businesses attached to their farms to extract more profit. What was seen as a fruit farm 15 years ago was now a jam processor with a fruit farm.
This trend had sparked novel investment ideas, such as using small‑scale angel investors to, say, sponsor a bullock. This provides funds for undercapitalised farmers and gives investors a better return than they would get from savings accounts and stock market investments.