How Can We Improve Profit Margins in Agrifood Industry in Turkey?

Strategic growth plan

I believe that every agrifood company must create a strategic growth plan, lead and improve their profit margins.

The Turkish labour force is 28.8 million and 25% of this workforce works in agrifood sector.

I know that Turkey has enormous opportunities in agriculture and  food industry. It accounts for 7.1 percent of the country’s GDP. The sector’s financial contribution to the overall GDP increased 43 percent from 2002 to 2014, reaching USD 57.2 billion in 2014.

Clearly, Turkey is one of the largest exporters of agricultural exports in the region and it has a USD 5 billion of trade surplus.

When we look at the strategic plan, Turkey aims to export USD 40 billion agricultural export and create USD 150 billion gross agricultural domestic product in 2023.

How can we success the strategic plan?

Of course, this strategic plan can be achieved by effective innovation management. Many leaders/managers see the innovation as the new product development and launching. Some others see innovation as a magic. These are not correct.

Innovation is a systematic and continuous development and improvement processes that cover all of the business operations in an organization. People from top level to the bottom, everybody should work in highest alignment and improve and also make better their daily operations faster than competitors.

Innovation is a management process. Traditional industries such as manufacturing, retail and agriculture continue to suffer in the current economic climate and the role of innovation is being a key competitive factor for future local and global competitiveness. In order a company to compete on the local and global stage, not just on price but also quality, consistent, fresh and new ideas and their execution are key.

The growth potential of the agrifood subsectors in Turkey

• Fruits and Vegetables processing
• Animal Feed
• Livestock
• Dairy
• Functional Food
• Enablers (e.g. Cold Chain, Greenhouse)

The Main Elements of Agrifood Value Chain in Turkey

• Primary Agriculture and Commercial Agriculture
• Food and beverage manufacturing
• Wholesale and distribution
• Food and beverage stores and florists
• Food and beverage services

I have intensively worked as a leader in pharmaceutical manufacturing operations, baby food industry and agrifood manufacturing operations and supply chain management. After that I have collaborated with some agrifood companies in Turkey as an expert to improve their product portfolio, workforce, supply chain, operations, strategic growth, profit margins and competitive power.

I always believe that the key priorities for a great leader in agrifood business are

• Increasing production
• Driving competitiveness
• Building markets and customer loyalty

Key Profit Drivers in Agrifood industry

1. Differentiate your supply chain and business strategies. Bring together leaders from across your business to define the supply chain that will work for you and ensure they provide the data your organization needs to deliver.
2. Extend visibility and connectivity to value chain partners, reducing costs and risks across the value chain.
3. Create a modern, end-to-end supply chain organization. Make sure your supply chain organization combines operational excellence and organizational agility with strong analytical capabilities and data-driven, crossfunctional decision making.
4. Set the high performance standards for the entire organization. Incentivize your supply chain organization to work in ways that deliver the most value for your business, while protecting against its biggest risks. That means using more than the traditional metrics of cost, service, and capital. Use the right KPIs.
5. Increase productivity of your people and operational efficiency in the company.Recognise and reward workforce contributions with performance reviews, and teach them sales skills and how to upsell products so customers make multiple purchases at one time.
6. Customer service and loyalty. Improve your customer service and develop a people training program in the organization
7. Decrease direct costs. Make sure you have the right suppliers for your business. And negotiate for better prices or discounts for buying in bulk.
8. Decrease indirect costs. Try to minimise waste and errors in your business by training people, or reduce marketing costs by using low-cost marketing

1. Develop a new product portfolio. Survey your customers and competitors from local and international markets about new products, services and technologies.
2. Find new customers. Make this in local market and global markets. New customers  can help grow your business.

1. Increase your prices. Check and analyse if you have priced your products and services correctly and if you could increase prices without reducing sales against competitors.
2. Make price discounts. Consider price discounts and promotions to increase your customer base, market share and customer loyalty.
3. Retail displays. Use effective retail displays to increase your sales.
4. Decrease inventory. Stock control is a crucial way to streamline your business.

1. Decrease overheads. Save energy wherever possible or try find a cheaper energy supply company.
2. Benchmark key financials. Analysing and benchmarking your business help you compare your costs to similar businesses and competitors in your industry to see if you are paying too much
3. Make regular competitive intelligence in local and global markets to detect short and long-term changes in customer needs, technology, services and required skills.
4. Make a regular long-term sector analysis and if necessary make healthy disengagements.
5. Work with the great leaders and/or consider using a business adviser to help you.
6. Apply a strategic marketing and innovation growth plan that encourages innovation, grow and promote safe and high quality Turkish agrifood products to domestic and international markets.
7. Apply an operational excellence and organizational program that brings competitive productivity and investment opportunities.
8. Develop and commercialize higher margin products.
9. Use new technology, robots and communication systems.
10. Apply a competitive talent and workforce management strategy. Train and develop your people. Reward the success.

Conclusion

Clearly, I have to say that we have to identify and measure our key profit drivers and develop strategies to grow them, without increasing costs. We have to increase our sales revenue as well as decrease our costs and benchmark our business to see where we can save money and where we can invest for now and future in domestic and international markets.

• Business owners have to realize that leadership and workforce skills are being a crucial factor in today’s hypercompetitive business world and they have to take suitable actions. According to the surveys; only 12% of the business leaders are truly effective. The business world is entering into fourth industrial revolution and 35% of the skills will have changed in 5 years in some of the developed countries. They have to develop and implement an effective talent management strategy and work with the great leaders and/or agrifood industry experts.
• They have to focus on the excellence in the supply chain, manufacturing operations, quality, inventory level, developing and commercialization the NPDs, marketing, sales, finance, investments, entering global markets and competitive innovation management.
• They have to benchmark their business and measure the performance to see where they can save money.
• Developing and implementing all of the above strategic business elements can increase the profit margin by 4 percent (from 11 to 15), labour productivity by 11 percent and investment opportunity in research and development by 20 percent.
• The result will be excellence in business, growth in the Turkish agrifood sector and an increase in the welfare of the nation.

Thank you for sharing your experience and insights.