Why investing in technical talent is essential in times of pricing pressure
Food and beverage manufacturers and suppliers continue to be under exceptional pressure in the face of rising inflation, to keep prices low to meet retailer demands. Manufacturers are now finding themselves in a position where a balance must be struck between keeping costs low and ensuring that the final product is not compromised, whether that be in terms of size, safety or quality. In difficult times the role of a Technical Director becomes even more important; ensuring that the fate of a product is not solely driven by commercials, and that the company remains compliant to standards, true to agreed specifications and protected from food fraud.
The recent Lockton Food and Beverage Report made for worrying reading, with almost all (98%) of the 200 UK manufacturers who participated in the survey, agreeing that continued price pressures will have an effect on the end product. We are increasingly seeing products that have succumbed to ‘shrinkflation’ and in the survey only 1% of manufacturers completely ruled this out as a cost cutting measure for the future. But once this option is exhausted, what’s next? If customer expectations are not managed on price and they continue to assume they can pay the same or less for their shopping, then something else will have to be sacrificed. And the next areas in danger appear to be quality and safety.
In the Lockton Report, 72% of respondents said they would be prepared to use cheaper raw ingredients in their products. This can have serious consequences as changing from ingredient ‘a’ to ingredient ‘b’ is not so simple. It is therefore essential that Technical Directors keep close to these internal discussions and are responsible for the projects related to changes in raw materials. Supplier assessment and auditing, traceability, allergen assessment, specification changes, shelf-life testing and taste tests are just some of the things that need to be carried out prior to an ingredient being substituted by a cheaper one. This is not a decision that can be driven purely by price. If it is then the manufacturer is at risk of even greater financial (and reputational) difficulty if a product is recalled from shelves or if they find themselves at the centre of a food fraud scandal.
It is at times like these when a Technical Director has the opportunity to make a significant impact on a business, but they must be prepared to stand up and be heard and challenge commercially driven decisions when that is the right thing to do. This will not be easy, but if managed in the right way with evidence and a true passion for product integrity then the Technical Director will add significant value in both the immediate and long term. It is for reasons such as this that many companies now require much more than just ‘technical expertise’ when searching for a Technical Director. The ability to understand commercials, have the gravitas to challenge senior stakeholders and the ability to provide inspirational leadership and direction is what today’s Technical Director needs to bring to the table.
Investing in senior technical talent may not seem like an obvious solution when quality and safety cuts are on the horizon, but the right technical leader will safely steer the company through these turbulent times and is an essential long-term investment.
Katie Hart specialises in recruiting senior technical management and leadership across the consumer and retail sectors.