HOW TO AVOID CREATING A HOUSE OF HORRORS!
Building a packhouse is a massive undertaking both financially & emotionally. Here's how to focus investments on areas that affect SKU creation and throughput which can have a huge pay off over time. This blog will help you define and understand the 10-to-20-year operational life of your foundational equipment investments and to do it right the first time so as to avoid costly ad-hoc additions later.
Halloween has just been and gone. For me, the best part of this time of year is not the costumes or the piles of free candy, it is the replays of some of my favourite classic horror movies. I have always had a dread-fascination with horror films. Even as a child I loved watching them; Freddie Kruger, Jason, Pinhead and Leatherface, they may have terrified my friends and family, but me, I could not get enough of them.
Growing up on a steady diet of these horror classics, you would be forgiven for thinking that I am now completely immune to ‘things that go bump in the night’, however, the one thing that gives me the chills and keeps me up at night is Frankenstein, well Frankenstein Packhouse installations to be more precise.
Over the years I have engaged with hundreds of customers about new projects, new packhouses, and seen almost every kind of installation possible. Building a packhouse is a massive undertaking both financially and emotionally for those involved. For many smaller or family run operations the stakes are even higher, they are not just building as a financial investment, they are building a legacy, designed to pass down through the generations.
With so much on the line how can you be sure that you are not about to create a house of horrors?
Having spent most of my career developing optimized packhouse designs, I can now spot a house of horrors as soon as I step foot in the door. Nothing breaks my heart more than walking into a Frankenstein install. That big lumbering monster that is almost there but not quite what was wanted. It gives me nightmares to think of all the effort that has gone into the design and build, yet no matter how many fixes are applied, if you don’t start with the right foundations, it will never reach its full potential.
There is a myth in our industry that we should settle for “good enough” but this notion is as fictional as my favorite horror villains. Good enough for what anyway? Good enough to meet your current requirements, your current minimum grading standards, your current SKU’s – well that is just getting Frankenstein 'Alive’. What about ’all singing, all dancing’? Packhouses build their profitability on their ability to maximize their pack out, minimize waste and reduce give-away. The key to profitability lies in the margins between cut points/grades. Having the optimization and control to maximize this is what separates the great from the ordinary.
Getting to 80% is easy, 90% achievable, everyone can do that, but the true art and science is realizing the final 10% today!
This is where you must be very careful as people will tell you that small gains are not worth the effort to realize them. Think of the volumes that will pass across your machine in just one year? Now multiply by the expected life span of the machine, ten, fifteen, twenty times. Just a small percentage gain at those volumes can be the difference between being good and being great. Between doing OK for yourself and building a legacy for generations to come. Between average and being a true success.
It is not only volumes or throughput that matter. Where you really need to be great is the ‘grey areas’ in between cut points. Tightening the bands, differentiating your product is where you will find pure profitability. If you can implement truly great grading and sizing, you have the granular control and the accuracy needed to move a few extra fruit in your production across to your top grade whilst maintaining or improving standards, then that is ‘Pure Profit’. To achieve the same financial gains through other means, you would have to be able to generate significantly more additional turnover with even more additional throughput.
Do not be fooled… ‘Good Enough’ is the enemy of ‘Great’!
Just as a simple illustration. You make your customers’ grade standards but are suddenly able to move just an additional 1% of your pack out into your first grade, then on a typical machine we’ve modelled, you could be realizing an additional $250k a year as Pure Profit. Multiply that across the 10 to 15 years minimum expected lifespan of a machine and you can see that we are talking about huge money versus the upfront investments, and that paying attention to the small details can equate to some big payoffs.
Even if you want to dispute my calculations and cut these numbers in half, you can still easily see that “good enough” is just not good enough! In fact, the opposite is typically true, there is often a lot more than 1% to play with and it shows that it pays to be pedantic and to demand the best accuracy and tightest processes.
When you design a packhouse it is essential that you do it right. Focusing investments on the areas that affect your SKU creation and throughput can have a huge pay off over time. It is essential to understand the ten-to-twenty-year operational life of your foundational equipment investments. The equation is simple, do not try and save cents in your initial setup, at the cost of dollars later. What is most important is not to make decisions that will be hard or more expensive to fix later.
You need to think about your packing line with the same critical eye as an advanced car-manufacturing or semiconductor plant would. It may sound overkill but, you cannot afford or accept any points of weakness. The days of agricultural meaning ‘unsophisticated’ are long gone, we are now as hi-tech as any industry out there, and our mentality needs to embrace innovation to remain competitive… You must seek out every small incremental gain and invest in the technologies that deliver the most benefit to your business over time. There is no one silver bullet, and the immediate and obvious cost reductions can sometimes overshadow the value of increased profitability and scale for growth when measuring the ‘ROI’.
Most of all you must reject the notion of “good enough’ and embrace the production-line design principles of absolute efficiency that we see not only in other adjacent industries, but in some of the world’s largest and most profitable packhouses.
As I mentioned earlier, If you are looking to build a new packhouse or retrofit an existing facility, it is vital to do it right first time and avoid the need to stitch on random unplanned additions afterwards. I understand how big a decision it is for most investors or owners to commit to creating a new packhouse, so I have created a simple guide to help you.
And yes, perhaps my motives are a little selfish - l hope to avoid losing any more sleep worrying about walking into another Frankenstein packhouse!
Download the Guide