Woody's World

“Pig production is a techno-scientific internationalized business that is continuously exposed to change and risk. Changes in the Agri-Business are inter alia caused by changes in globalization, information technology, biotechnology and changes in consumer trends.”  DP Visser

Woodys’ goal is to create quality through vertical integration of the supply chain – from the level of genetic’s to the point where consumers enjoy the product, thus achieving total quality.

“To embrace the concept of quality (a consumer demand principle) all levels in the production chain (at the genetic level through the breeding objectives, at the farm level through the entire production system, in transit and at the slaughterhouse and processing levels) should be integrated.”  DP Visser

Development:

It is a known pattern for small competitors to enter a market based on opportunistic advantages.  It utilizes these advantages while conditions prevail that create the opportunity.  However, these conditions never prevail indefinitely since the new competitor has limited control over external factors.  In particular factors pertaining to the supply of raw material and production.

Woodys entered the market in exactly the same way.

Having survived the “opportunistic years” , the challenge is to transform Woodys from an opportunistic player to a mature and stable entity.

Maturity is brought about by integrating the supply chain and will be predicated on maturity.  Integration means control over every aspect of the value chain, notably the supply of raw material, processing and distribution.

Control over these will result in stability which will translate into consistent quality, which will result in profit-stability and maximization.  During the opportunistic phase, profits are sporadic and dependent on “the last good deal”.

By contrast, a well integrated supply chain results in consistent quality and sustained profitability, contingent on overall supply-chain and value-chain structures.

For things to become better, we had to begin by cutting out the unstable parts which resulted in reduced output.

Start-up’s are often reliant on many suppliers.  This was the case with Woodys and we bought meat wherever we could get a good deal.

As companies mature, they cut down on their suppliers and become reliant on a limited number of good suppliers.

Three supplier categories:

The three categories of suppliers that Woodys has to integrate are:

a.  raw material supply (meat, spices),

b.  processing and equipment, and

c.  distribution

Every supply category and every supplier have to be directed to contribute  materially to the end goal of delivering a quality product that consumers enjoy.

The integration must be deliberately designed along the flow of information between the different suppliers.

Let me mention a few specific’s:

-  Pigs must be used that consumers are happy with.  Meaning,  they must be healthy, bread in humane, clean conditions and free from growth hormones and other questionable chemicals;

-  The fat content in the carcasses and the size of the different muscles must be determined by choosing the right pig breed which will result in an improved meat quality and greater consumer acceptance;

-  The animal must be slaughtered using techniques that will eliminate PSE;

- Slaughtering, deboning and processing must be integrated as far as possible to reduce wastage due to thawing loss and minimize pre- and post-processing contamination;

-  the latest processing and packaging technology must be used.  This is a science and an art and must be approached as such.

-  Distribution must be effective to ensure the shortest possible time period between production and delivery to the retail store;

-  Cold-chain management must be considered as a non-negotiable and only the best supply chain techniques must be used.

Woodys is aggressively addressing every aspect mentioned above.

Integrating and re-designing in light of quality requirements of raw material is being put in place.

“Genetics is the hidden golden thread running through any livestock supply chain. If a substantial portion of consumer satisfaction and quality assurance can be resolved (guaranteed) at the genetic level (thus conception), these guarantees will be conducive to quality assurance further down the supply chain. Carcass and meat quality have become increasingly important in modern day pig production, despite the fact that the emphasis has been too long on input efficiency and too short on output efficiency in South Africa.”  DP Visser

Supply of raw material will remain a balance between local supply and imports with an expectation for South Africa’s reliance on pork imports to  increase from 20% to 30% between 2011 and 2017 (OECD, 2008).

The trend that researchers have identified of “less suppliers” will be one of the results of a far greater organisational clarity about meat and processing quality.

Even imports will be done, not on an opportunistic basis, but based on sourcing products from suppliers who conform to the Woodys requirements and that of its distribution channels in terms of quality.

The 2nd element that must be integrated is processing.

The local processing industry is not nearly as well developed as the production side of pigs through the various university departments of agriculture and economics and their graduate and post graduate research programs.

South African Pork Producers’ Organisation  (SAPPO) plays a key role in coordinating the pork supply industry.  No such organisation exist for meat processors and industry standards imposed by retailers such as Pick ‘n Pay, Shoprite/ Checkers and Spar are by far the most important “coordinating” factors”.

The problem is that these standards focus exclusively on food safety and not on the “how to” in terms of processing of meat.

Woodys uses a strategy of growing contract packers such as German Butchery as well as setting up its own factories to produce its products.   Its goal will remain growing both aspects under the the leadership of a top German fleischmeister through Woodys Manufacturing (Pty) Ltd.

Even though all processing plants are audited and approved for supply to the leading retailers of Pick ‘n Pay, Shoprite/ Checkers and Spar, Woodys continues to work on transforming its current processing capacity by aligning it to best practices internationally and growing its overall processing capacity.

The 3rd supply component to be integrated is distribution.

Woodys has made significant progress in setting up an effective distribution system during 2010 and these efforts will continue.

The Woodys Supply Chain is variety oriented.  It is complex.  Some components identified by Anupind & Bassok which we see in Woodys are:

-  product design

-  production

-  third party logistics

-  incentives

-  performance measures

-  multi location inventory control

The overall challenge is daunting, but is one that the Woodys management team gladly embraces.

DP Visser says:

“Lack of comprehensive supply chain vision linked with an obsessive drive to improve pork quality holds serious implications for the international competitiveness, consumer confidence and sustained quality assurance.”

Conclusion:

Woodys is integrating its raw material supply, processing and distribution and all three must be done at international “best practices” levels.  Continued relevance of the brand in the market depends in this.

This overall process must be predicated on good relationships which must become more integrated and must rest on the following pillars.

i.  flow of information across and through the entire network;

ii.  strong relationships with partners in the value chain;

iii.  close and loyal relationships with the consumers.

The Woodys team is obsessed with achieving quality.  Quality is however far more than simply appointing a few QA managers.  It requires complete integration along international “best practices” in every aspect of the supply chain in order to deliver an exceptional product to the consumer, at the lowest possible price.