Turning Smallgoods into Big Success

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-By Aleisha Parr

Supplying all major retail chains in Australia, as well as the catering industry, QSRs and restaurant and café distribution channel, Primo Smallgoods is the largest Australian manufacturer of ham, bacon and smallgoods. While the company has built its reputation on its bacon, it has become even more well-known for its specialty products including prosciutto, coppa, pancetta and sopressa. In fact, Primo Smallgoods has gained notoriety for its chorizo, as the commonwealth’s largest producer of this distinct product.

At the moment, the industry is very competitive with tight margins, which Primo Smallgoods Director, Robert Lederer says the real key is to continue to reinvest in the business. “That is something we see as crucial to longevity and even more so to prosperity,” he explains. “If you don’t reinvest in the latest technology you have a cost base that is too high and that makes it tough to compete. Thereafter starts the vicious cycle of not making enough money to reinvest, leaving you further and further behind.”

With an extraordinarily diverse client base, supplying the major Australian retail and wholesalers as well as QSRs, pubs, clubs, caterers and the export markets, Mr Lederer says that what Primo Smallgoods is most proud of is its service levels. Having supplied its customers for over six straight months now with service levels of nearly ninety-nine per cent, the company has ensured that its customers are for the most part getting every carton they order. Says Mr Lederer, “This means they are getting all the sales they plan on and we are getting all the production volume we can. It truly is an amazing effort by our production teams.”

The company employs a staff as broad and diverse as the customer base it serves, creating a dynamic and coherent team from manufacturing labour right up to the CFO. “We look for people with skills on the factory floor,” explains Mr Lederer, “with previous experience in a butcher shop or a TAFE course in processing, right through to university degrees in the management team, such as bachelor degrees and CPAs. We have a ‘can do’ culture and a ‘never say never’ attitude. It’s not for everyone; we’re definitely not the tied-up-in-red-tape corporate type, but it works well and it’s a great atmosphere to work in.”

This culture and attitude directly translates into strong relationships with both customers and suppliers. “Having a strong relationship,” says Mr Lederer, “means you know what the customer or supplier wants or offers and how to best help each other so that both sides can do well out of the arrangement. Businesses that operate from a one-sided point of view can do well in the short term, but we’ve been around for a long time and are investing a lot of capital back into the industry, so our time horizon is a long one, which is reflected in the way we treat people, be they customer, supplier or employee.”

As is the case for most Australian businesses, Primo Smallgoods is facing threats associated with rising labour costs. Mr Lederer says that the company has been able to weather this difficulty, confiding that “We manage this by implementing technology that helps minimise excessive labour as well as by employing the right labour, people who possess the skills to do the job efficiently.”

Another pertinent issue for the company is the regulation of raw material costs, which are more difficult to control as they are market driven. In recent times, the volatility of currency markets has made procurement even more difficult for smallgoods companies, making it essential for Primo to become especially selective in its business decisions.

“Get it wrong,” says Mr Lederer, “and you’re at a distinct disadvantage to the market; get it right and you might be in front with a slight edge. Over the course of a year it generally levels out and we try to do our best to pick the cycle, but sometimes, especially in recent times, you can be right in terms of ex-factory pricing but wrong in terms of landed price; such is the way the AUD behaves.”

He concludes, “Our guiding principle is to make the best product, in the safest and most hygienic environment, at the best cost. If we can achieve that, then we will truly stand out from the rest by a long way.”

With the company’s strong focus on keeping abreast of current technology, Mr Lederer says that much of Primo Smallgoods’ development has been driven by the company’s collaboration with machinery manufacturers. Every year the company sends a select group of its employees overseas to explore the latest in machinery, such that the company may remain at the forefront of the industry. Explains Mr Lederer, “We not only view what they develop but we have input into the development. They have the skills and we have the practical knowledge; when the two are combined the result is often better than anyone previously expected.”

“We’ve been growing at quite a rapid pace because we never lose sight of our guiding principle. We don’t take short cuts, we simply make the best product and if we can’t do it we won’t ever reduce our quality to force a sale.”

The company is currently gearing up for the opening of a brand new facility in Wacol, QLD in September of this year. This new facility will consolidate three previously established factories into one, allowing for more cohesive and cost-effective production. Alongside this facility will be an on-site cold storage and distribution centre.

“It is by far the most significant venture the company has undertaken,” says Mr Lederer, “but the result will surely be satisfying, as it will not only reduce costs and make us more competitive but rather it will be the newest smallgoods factory in the southern hemisphere, the most modern, the most efficient and the most hygienic. We are very excited to see it open and best of all we are on schedule and have no delays, so it should be an exciting year end.”

Following the completion of this new facility, Mr Lederer expects to move the company beyond Australia, hoping to make inroads into overseas markets, whether by distribution or manufacturing, joint venture or acquisition. The Asian market presents significant opportunities for the company, not only because of its proximity to Australia but also due to its rapid growth and a specific existing demand for Primo Smallgoods’ products.

“We never stop trying. That’s probably the best policy, method or process that we possess!” Mr Lederer concludes, “We don’t take our #1 market position for granted. We know how we got here and we don’t want to sit still – we want to continue to grow and to improve and to make people stand up and take notice of our effort to do so.”

Making Sense of Management

Management is the art, or science, of getting things done through people. Sounds fairly straightforward – except for the fact that people are not robots waiting to do our bidding. People have their own minds, motivations, and goals. So how do managers keep operations – and the people behind them – running as planned?

January 16, 2019, 3:58 PM AEDT