JOINT WINNER: NATURES WAY FOODS
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Over the year, Natures Way Foods runs its salad preparation plant at Runcton, near Chichester, at 42% of capacity. And it plans to keep it that way so that during the peak summer months it can meet 100% of the orders of its main customers, Tesco, McDonald's, Morrisons and Pret a Manger. By risking subcontracting the last 5% 'we'd have a very different capital expenditure and operations performance profile', concedes operations director Tony Macken. 'But our strategy is to go for 100% customer satisfaction and service.'
Many companies say that, of course. But to live up to its promise, Natures Way has flown carrots from Australia and lettuce from California to fill temporary shortages - 'with no short cases or price increases,' boasts Macken. 'In our first million-case week we made a loss.' Why? Because the company is focused on making itself the preferred supplier of winners in each market for the long term. 'We're not interested in supplying those who put out for tender every year,' he says. 'Tesco, McDonald's and Morrisons really develop their suppliers.'
Natures Way has an open-book relationship with McDonald's, and belying Tesco's fearsome reputation, is enviably close to the supermarket, at whose behest the Runcton plant was created in 1994. There are no formal contracts - which means 'there's joint ownership of problems because we're both exposed to each other', notes sales and marketing director James Truscott. NW's talks with Tesco now go well beyond pricing, with an NW employee co-located at Tesco HQ once a week to help with forecasting and other issues.
Prepared salad is one area where improved quality is automatically reflected in increased sales. Better quality can also add to shelf life, which in turn helps smooth demand and aids profitability. The expansion of corporate NW is spectacular proof of the hard work it has put into this particular pudding. The Runcton site has already been upgraded three times, while a second production facility was built at Selsey in 1996. Substantial new investment is planned at both sites in the next five years to meet demand, which is growing at double the 15% rate of the overall market. Maintaining this rate of progress won't be easy.
Salads are living, outdoor plants which are crucially dependent on the weather, as well as subsequent handling. One key area of innovation is the supply chain, where Natures Way is committed to developing the same positive relationships with its own suppliers as it has with Tesco and McDonald's.
The other area is people. Says Macken: 'The key challenges are matching up people and culture with the capital programme and demand growth. Innovation and continuous improvement has to come from teams on the spot. You can't drive business from the front office.'
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