ABM Advisor: The ABM Blog.
Category - Manufacturers

  • May 12 2016

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    The Australian food industry in close-up

    The Australian food industry is in a vibrant and profitable place currently, as good sentiment and positive financial returns grow steadily around importing, exporting, production and manufacturing. Following the ebbs and flows of such a dynamic industry is crucial in order to stay ahead of developments in new markets, legal developments and advancements in procedure and software.Demand for Australian products throughout AsiaThe Australian Trade and Investment Commission (ATIC) reports that a rise in living standards and a greater diversity of choice are two factors that play into the increased demand for products outside of China. In an interview with the Sydney Morning Herald, Tran Bao Minh, a chief executive of International Dairy Products, said that Australian food suppliers need to move quickly and operate at full efficiency to capture and deliver to the Asian markets."Demand is changing fast and consumers are constantly looking for new and better products," Mr. Minh said.The ATIC reports that the fastest-growing food and beverage market in Asia is China, with an impressive average annual growth rate of 35.4 per cent from 2011 to 2014."Demand is changing fast and consumers are constantly looking for new and better products," The opportunity is huge; China has a population of over 1.3 billion, as reported by Euromonitor, and is undeniably a strong market for the Australian food industry. Therefore, as demand for Australian products throughout Asia remains strong, Australian food and beverage businesses should be looking to manufacture and deliver in a smooth, timely fashion.Positivity across the Australian PMI index for food manufacturingAs a sub-index, the food industry has been performing well on the Australian Industry (Ai) Group's Australian Performance of Manufacturing Index (PMI). The index overall slightly dropped by 4.7 points to 53.4 points in April.This figure means that expansion has been at a slower rate than in March, as results on the Ai PMI that are above 50 points indicate expansion and a reading a below 50 suggests a decline in expansion. The PMI generates results from a monthly rotating sample of around 200 manufacturing companies.A drop of this size can be ignored for the most part, as it is small and sits within a wider upwards trend, and the PMI April result was the highest since April 2004. This manufacturing trend sits within the longest period of unwavering growth for the Australian PMI as a whole since September 2006.According to the Australian Trade and Investment Commission, food and beverage is a major industry sector for the Australian economy both because of its employment and its financial contribution. The various players differ in size, which provides the opportunity for niche products and large scale manufacturing of bulk items to both exist in fulfilling local and overseas needs.Ai Group's chief executive, Innes Willox, said this growth is a positive turn for an industry that has, until recently, been battling the choppy post-global financial crisis (GFC) economic seas. The Australian food industry is performing well on the PMI index. "While margins remain tight, recovering domestic market share and building momentum in a variety of export markets provide a strong foundation for the lift in confidence required for the sector to move up another gear. A budget that boosts incentives for business investment and innovation would come at just the right time for manufacturers to capitalise on recent gains," Mr. Willox said.According to the PMI April release, the Australian dollar as slightly appreciated, but the overall drop in the value of the Australian dollar across recent years is the main reason for the strength seen within the index. This depreciation assists sales in exporting and importing, providing room for growth.This is a positive outlook for the...

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  • Apr 13 2016

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    Why increased capacity is good for business

    There are a number of reasons why a business may not be operating at 100 per cent capacity utilisation: lower demand, inefficacy and an increase in capacity that does not match an increase in demand, to name a few. Some of these potential issues are ultimately out of the control of the business, yet their effects can be mitigated with careful planning at the right kind of smart business intelligence software. It is important for any sized business, if they are serious about growth, to look into the various ways they can expand their production and efficiency. Why increase capacity?It is important for any sized business, if they are serious about growth, to look into the various ways they can expand their production and efficiency. In the Australia Chamber of Commerce and Industry Small Business Survey for the December Quarter of 2015, stats showed that Australian businesses overall were expanding on their acquisition of structures and equipment, thus expanding on their capacity. This is a positive sign as we all know a business must expand capacity to grow, and reflects a confident market place.By increasing and expanding on vital components growth, such as production or manufacturing software, a business is showing innovation and postive risk taking - both signs of future growth. Therefore, increasing the maximum possible output for any small business is essential to survival in today's tough economy, and will usually require the purchasing and implementation of new technologies and software.But in some specific industries, such as manufacturing, capacity growth has begun to stall. As Professor Roy Green from UTS Business School reported in his May 5, 2015 feature in The Conversation, there are more than 80,000 manufacturing businesses in Australia - and most are small to medium business with under 100 employees. Being successful in the manufacturing industry requires innovation and investment in capacity. These companies have experienced a fall of $5.6 billion in manufacturing investment between 2005/06 and 2013/14. The latest statistics for the September quarter 2015 from the Australian Department of Industry, Innovation, and Science show this trend is continuing, with a documented decline in manufacturing gross domestic product from 6.4 per cent to 6.3 per cent.The information at hand suggests the issue is a complex one, made up of global economic circumstances and at-home attitudes to capacity and expansion. The manufacturing industry, if it wishes to stay competitive in a global market, must implement new technology, and fast.Business intelligence software is a sound investmentA small manufacturing firm would benefit from the introduction of Advanced Business Management software to improve efficiency, leaving room for expansion in other areas of the business. Designed to be the next generation of accounting software, it is a foundational business-wide IT solution, geared towards the future of small business management.

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  • Feb 11 2016

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    Food standards vital for Australian manufacturing industry

    In any industry, maintaining high production standards is one of the keys for success. If your customers and clients trust what's on the shelves and how it is manufactured, there is no doubt that return business will be plentiful.Of course, an example where quality is essential is the food manufacturing industry. According to the Department of Industry, Innovation and Science, the food, beverage and tobacco manufacturing industry was worth $25.4 billion as of the 2013-14 financial year. In fact, this calculated to more than half (25.5 per cent) of the total manufacturing GDP and 1.6 per cent of Australia's total GDP worth.It is important to note that these figures mainly correlate to food products exported offshore. However, the domestic market is just as critical, and food manufacturing business leaders would be wise to keep Australians content.There are have been countless examples in the past of Australian food manufacturing businesses coming up short with local customers - potentially spooking international markets. This is the last thing that enterprises want, highlighting the need to establish strong production standards and improving process management.Lettuce salmonella scare

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  • Feb 5 2016

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    Manufacturing industry receives timely windfall

    There is no doubt the global manufacturing industry continues to go from strength to strength. With emerging markets in both the Middle East and Asia, it is important that Australian businesses keep up with latest trends and investments.According to Research and Markets, the global manufacturing execution system market has the potential to reach US$12.6 billion over the next five years. This marks a compound annual growth rate of 10.85 per cent - highlighting the ever-changing nature of this sector.

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  • Jan 20 2016

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    Six straight months of expansion for the manufacturing industry

    The festive season was a positive one for many business leaders in the manufacturing industry, with reports from the Australian Industry Group/ Australian Performance of Manufacturing Index showing that the sector finished the year in expansion.For the sixth straight month, the industry finished above the 50 point mark, a sign that the sector is in expansion rather than contraction. This despite a small decline of 0.6 points to 51.9 points in the final month of the year.

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  • Dec 15 2015

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    Business opportunities exist despite confidence fall

    While the concept of business confidence only takes in a snapshot of the Australian economy, it provides enterprise leaders will good oversight and the desire to invest in their operations moving forward.In recent months, Roy Morgan Research reported that confidence increased dramatically, rising 16.3 per cent over September and October thanks to the Prime Minister change. However, this sentiment didn't extend in November, with the latest release showing a drop of 0.6 points to 118.7 points.The forecast is certainly not all doom and gloom, with this mark still ahead of the five-year average (116.9 points) and the economy shaping up well for 2016.Why did business confidence drop in November?"In November, confidence increased in manufacturing, construction and accommodation/food services."The leadership spill wave couldn't last forever, but there were other factors that put a damper on the progress of recent months. Roy Morgan cited the Paris terrorist attacks and the global climate meeting as major impacts on the international scale. In regards to Australia's issues, the study acknowledged iron ore prices, tax reforms and budget deficits.Roy Morgan Research Industry Communications Director Norman Morris explained many industries are still enjoying growing confidence levels."There are some good indications that increased confidence in some sectors will help make up for the decline in mining. In November, confidence increased in manufacturing, construction and accommodation/food services," he said."The highest levels of confidence are currently in education/training and retail."NAB cites business growthThe Roy Morgan Research statistics are also backed up by the recent figures published by the NAB. Confidence is growing in the manufacturing sector. In its Monthly Business Survey, overall conditions were scored at +10 points. This is well above the long-term average (+5 points) and is the fourth consecutive month of growth - highlighting the fact that the Australian economy isn't dependent on mining.NAB Group Chief Economist Alan Oster explained this concept in more detail."This is basically another strong result for the NAB Survey, which in conjunction with signs of improvement in the labour market, means we can put more faith in the building non-mining sector recovery," he stated.How to build on confidenceIn comparison to previous months, Australian businesses are in a much better position for growth heading into the new year. However, to take full advantage, enterprises need to have the tools for streamlined operations and further market investment. This is where Advanced Business Manager can be of assistance.Regardless of your industry, we can provide industry-leading business management software that is adaptable to your needs and can boost productivity for a busy 2016 ahead. For more information, contact us today.

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  • Dec 10 2015

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    Australian manufacturing industry enjoying a strong end to 2015

    As a cornerstone of the Australian economy, the manufacturing industry represents a large portion of this country's past, present and future. In fact, according to the Parliament of Australia, it accounted for 6.5 per cent of the nation's total gross domestic product (GDP) and supported close to 1 million jobs in 2013-14.

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  • Oct 30 2015

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    Can businesses rise to the challenge in food manufacturing?

    Following on from another month of expansion, the manufacturing industry is standing strong in Australia, particularly in food production. Despite positive growth figures in September, food companies will need to address future challenges to see further growth in the coming months. Can businesses harness creative solutions through business intelligence software to remain efficient and productive?Food manufacturing sector expands for 16th consecutive monthAs measured by Ai Group's Performance Index, a rating above the neutral benchmark of 50 indicates expansion, and the overall index saw a rise of 0.4 points to 52.1 in September. Ai Group Chief Executive Innes Willox pointed to wider economic conditions as major factors in propelling the industry.The rate of growth in food manufacturing has eased somewhat in September."In encouraging news for an economy searching for sources of growth outside mining, September saw the manufacturing sector consolidate on gains generated in recent months," he said.  "The lower Australian dollar is a clear driver with local producers winning against imports in the domestic market and making further progress in export markets."Despite seeing a period of growth for 16 months, the food, beverage and tobacco index fell 0.7 points to a rating of 53.5 during the previous month. When you consider the July rating of 58.9, the rate of growth has eased somewhat for this sector. Firms may need to seek measures such as business management software to help see continued success. Factory shutdown poses challenges for WA potato growersAlthough the numbers have been strong for the industry overall, some sub-sectors have faced considerable obstacles to growth. After a long-standing debate between the government and industry representatives from Western Australia, a local manufacturer will cease operations next year. As reported in an October 1 ABC article, the Canning Valley factory plant, owned by Smith's Snackfood Company, will close during mid to late 2016. For the local potato farmers, this announcement has struck a major blow as many supplied directly to the factory. This includes Bendotti Exporters, which provided 1,000 tonnes per year to the Canning Valley factory, around 20 per cent of its yearly output. CEO Gary Bendotti said that the shutdown had changed the nature of the industry in Western Australia , especially given the current deregulation measures in the state.Structured stock software can help businesses mitigate supply chain adjustments.In times of unexpected change, structured stock software can help businesses deal with surplus stock and mitigate supply chain adjustments. Identifying potential suppliers along the chain is also a good step to build an alternative strategy in the event of external disruption. ACIL Allen Consulting explained that the Potato Marketing Corporation of Western Australia (PMC) removing regulatory barriers only benefits smaller firms within the industry. Although the consulting firm found evidence that PMC's actions could reduce shortfalls and over-supply, deregulation is not an effective strategy for the industry overall. There is potential for producers in the market to address challenges through their own means. Innovation key to future growthWhen it comes to implementing innovative practices, firms must consider the entire value chain. A joint report from consulting firm Wiley and the University of Southern Queensland stated that consumers have a more vested interest in the processes involved in making the final product, reaching as far as the primary production stage. In the short term, collaboration between different points of the value chain can be an effective way to share ideas to improve processes. This can be done through innovation hubs and growth centres, allowing industry professionals to access a wider range of perspectives.  Farmers can collaborate with other industry bodies to spur innovation. Heading further into the future, exciting developments in technology and science will become more commonplace, such as traceability through DNA, the use of autonomous equipment and the creation of...

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  • Sep 23 2015

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    Australian manufacturing industry remains stable in September

    A recent joint analysis from Westpac and the Australian Chamber of Commerce and Industry has revealed a period of relative stability for the manufacturing sector.

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  • Sep 2 2015

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    Leveraging opportunities in food manufacturing

    As the manufacturing industry has seen a second straight quarter of growth, the food and beverage sector may be in a better position to advance new initiatives, possibly aided by business intelligence software. The Ai group performance ranking uses an index rating to determine growth in an industry, with any reading above 50 indicating expansion. The overall index rating for manufacturing rose by 1.3 points to 51.7 points.The food and beverage industry has been expanding for 15 consecutive months.Despite a 4.7-point drop, the food and beverage subsector had a positive index rating of 54.2, indicating an expansive period over August. This is the 15th consecutive month that this particular area has seen growth, which indicates that external factors have not dampened the overall prospects for firms. At the Crawford Fund's annual conference, VISY Industries Executive Chairman Anthony Pratt stated that the food industry is a significant contributor to the Australian economy and that it is "here to stay"."We must better communicate the fact that food is critical to Australia's future, just as wool and minerals have been in the past," he said, as quoted in an August 14 Farm Weekly article. How can this sector react to external forces?The cheese making sector offers a good example of how to implement your strategy when faced with challenges.Overall, IBISWorld has predicted that this specialisation will see a 0.7 per cent decline between 2015 and 2016. This was due to a number of external forces such as a drop in consumption trends, a rise in world dairy price and competition from overseas exports.However, two companies have defied the industry expectations. Murray Goulburn Co-operative and Bega Cheese Limited are expected to see growth rates of 2.5 per cent and 2.8 per cent respectively.Both of these firms have secured a positive outlook by improving their supply chain and securing deals. Murray Goulburn offered initiatives to their suppliers to ensure a steady flow of resources, while Bega Cheese gained a number of exclusive supply contracts. Australian consumers are buying more fresh cheeses, which presents an opportunity to explore niche strategies. For firms that do not have the resources to action these plans, there are still strategic measures you can action to take advantage of consumer trends.For example, IBISWorld stated that many customers were moving away from staple cheeses like cheddar in favour of fresh cheeses. This presents a perfect opportunity to move into a valuable niche and tap into a market that is not being met by your competitors.Trends apply to all food manufacturers and there are many opportunities to serve small, but increasingly valuable markets that haven't had their needs met. As the food industry continues to develop, a creative and adaptable strategy, amended with small business management software, will ensure the longevity of your firm in this growing area. 

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