Strategic Drivers for Growth in the Hygienic Manufacturing Sector

Mikkel Svold (00:00):

The hygienic manufacturing sector is a dynamic landscape where growth isn't just decided. It's also pretty essential to survive. But what really underpins this growth and how can businesses tap into it and how can they kind of use growth trends to propel their success? Welcome to this first episode. We call it "Strategic Drivers for Growth in the Hygienic Manufacturing Sector." I'm Mikkel Svold, and today I have the pleasure of hosting Niels Vindsmark, who is the Chief Commercial Officer of NGI. Welcome to you, Niels.

Niels Vindsmark (00:43):

Thank you very much.

Mikkel Svold (00:45):

And I think to kind of kick this off, what would you say is the primary drivers in the current, like, the drivers currently shaping the growth in the hygienic manufacturing sector?

Niels Vindsmark (00:58):

Well, let's define, we are part of the food and beverage and pharmaceutical industry, and we see and have seen for years a significant growing attention towards hygienic design, hygienic designs, enhancing food safety so that we're not getting sick of eating food contamined with bacterias. And having a hygienic enhanced design is optimizing the resources that the industry uses in terms of cleaning.

(01:30):

So there is definitely multiple advantages that can be taken if you have a active approach towards using hygienic design on your machines.

Mikkel Svold (01:41):

And just to be super clear about it, because also this is the first episode, what does "hygienic design" even mean? What does that mean?

Niels Vindsmark (01:48):

Well, hygienic design means that if you think of a poultry, a meat production, there's going to be a lot of blood. There's going to be a lot of organic material. And the more places organic material and blood can stick to the equipment, the harder it is to clean it and the more likely it will be that residues will stay on the equipment even though it looks clean to the human eye. And therefore you will move that bacteria onto the food being worked on the process later on in your cleaning process.

(02:20):

So you're actually not removing the dirt, you are moving it around, and it goes from maybe floor not being a critical area onto the conveyor with the actual product on it and thereby you risk to have food poisoning.

Mikkel Svold (02:34):

Yeah, so that's, I would say, the entire reason also actually for this podcast, even the whole series, is to kind of counter this movement of bacteria from, I guess floor to-

Niels Vindsmark (02:46):

The entire machine, definitely.

Mikkel Svold (02:47):

... the entire machine.

Niels Vindsmark (02:48):

Yeah.

Mikkel Svold (02:48):

Yeah, yeah. And when you look at just the drivers, the growth drivers that is, how have you observed that these have evolved over time?

Niels Vindsmark (03:03):

So if you are a machine manufacturer making machines for this industry, you cannot choose to be a part of it or not be a part of it. If you want to have a competitive advantage, if you want to have a company that is growing in 10 years, you need actively to be a part of it. It's becoming more and more important, the total cost of ownership. Everybody is becoming more aware of this. They have more and more attention towards this, meaning the end users.

(03:33):

So that could be at Nestle, at Mondelez, and Arla, at Danish Crown. They need to look into this in order to optimize their processes and they need to look into this as per political green environmental profiles. They need to create sustainable growth. And you cannot create sustainable growth if you do not have focus on hygienic design.

Mikkel Svold (03:55):

And sustainable, you mean climate, or you mean-

Niels Vindsmark (03:57):

Climate sustainable-

Mikkel Svold (03:58):

... economic sustainability?

Niels Vindsmark (03:59):

... it's climate, both. I mean if you are a food-producing company, 25% of your entire cost indirectly and directly goes to the cleaning process.

Mikkel Svold (04:08):

Wow.

Niels Vindsmark (04:09):

That also means lack of production. You can't produce why you clean. So if you have a machine that's optimized, you can clean less, use less manpower, use less electricity, water, and you can produce more. We don't have water in many places in the world. We can take South America, we can take the West Coast of US of A, so they use a lot of water to clean the equipment. If we can save some of that water, we can have a more sustainable production and thereby talk into what is politically correct and what is actually a real need for us having a world tomorrow.

Mikkel Svold (04:46):

And for the machine manufacturers, or actually my question is, for the end user, so say, the food-producing companies, how would you say that this entire environmental footprint, all of this, how has this moved on the, so to say, strategic agenda?

Niels Vindsmark (05:10):

It's on everybody's agenda. It's not something you just talk about anymore. Before you thought about it, but you didn't talk about it. Then you wrote it in a PowerPoint, but you didn't do anything. Then you talked about it. Now we come to action. And it's not just, it's political. We hear about it in the news. You can see what we see in TV today in terms of climate changes. It's something everybody needs to move on.

(05:32):

So the food-producing companies are pushed from the environment, from their stakeholders, from their customers being supermarkets. Everybody needs to make sure that we have a pragmatic approach towards solving and working with these matters.

Mikkel Svold (05:49):

And now we are talking, both of us coming from mainly a Danish perspective, or at least with the Danish background. And definitely in Denmark we see this trend very clearly. But do you see the same trend when you visit other countries when you visit some of your clients around the world?

Niels Vindsmark (06:09):

It is a global trend.

Mikkel Svold (06:11):

Okay.

Niels Vindsmark (06:11):

And our customer's customers being the Nestles, the Mondelez, the Unilevers, are global companies. So whether the site is in America, it's in Europe, it's in North Africa, or it's in Asia, it's global trends. So the standardization principle, both in terms of solutions, in terms of mindsets, in terms of how we approach it, is global.

(06:36):

That's a privilege because everybody is delivering on the same lines, on the same machines, on the same problems. So it is a global trend.

Mikkel Svold (06:45):

And do you also see the global trend that you mentioned here, but you mentioned it on the end user or the food-producing companies.

Niels Vindsmark (06:55):

Yes?

Mikkel Svold (06:56):

Do you see that strategic driver dripping down to the machine producers?

Niels Vindsmark (07:01):

Yes and no. The brand owners, the end users are defining more and more actively what they want and they try to share that with their suppliers being our customers, the machine builders. Some machine builders are very pragmatic and willing to change behavior, looking into new innovative solutions, but not everybody. So it's definitely a competitive advantage, being able to know and have insight in what is going to be tomorrow's needs, being able to convert that knowledge into change behavior in how to approach hygienic design, how to approach changing and upgrading of existing equipment, how to convert ideas and needs into real products, how to apply them and how to sell them.

Mikkel Svold (07:54):

And to push this transition, what do you think needs to be done?

Niels Vindsmark (07:58):

Well, what we are doing is we are knowledge-sharing a lot. So we tend to talk to the entire stakeholders in the supply chain, our direct customers being machine builders. Then we talk to the brand owners being the food-producing companies. We talk to supermarkets having to sell the products that also have a stake in this. We talk with the certification identities, USDA, EH, and 3-A.

(08:24):

And we try to combine all this knowledge in some parameters that we can counsel to our customers that they can change their behaviors and become more competitive. So, knowledge-sharing is a very vital thing. Talk to the entire supply chain, all the stakeholders, and capitalize on the knowledge you see. But it's not just something you need to see and talk about. It's something you pragmatically need to do something about.

Mikkel Svold (08:55):

And how do you get over that barrier? Because that, I guess, is the strategic transitioning. That is the main barrier that is going from the PowerPoints to the actual action on the floor.

Niels Vindsmark (09:08):

So it's top down, right?

Mikkel Svold (09:10):

Mm-hmm.

Niels Vindsmark (09:10):

So management, the leaders, the owners of the companies needs to acknowledge that they have this issue, need to acknowledge that they might not be good enough to go from the PowerPoint to a pragmatic action plan. They need to, once acknowledged, they need to find the manpower that are willing to convert ideas into action.

(09:32):

And then they need to have specific programs transitioning from action and actually getting it done and following up on it. And that's where we help a lot of our customers to talk about how they approach the design changes of an existing machine, how they make sure that they convert the needs of their customers, brand owners, to actually be a part of the solution for the new machines.

(09:56):

So it's very much about knowledge-sharing, it's very much about being active and proactive, not just reactive. Many machine builders are reactive. They do not change anything before it's actually demanded by their customers. But if you deliver a machine that is in a high-risk, clean area-needed zone, in a food production facility, I won't say you commit a crime, but you do something that's definitely putting the risk of the company you supply to in a great danger.

Mikkel Svold (10:27):

Mh-hm. And now you talk about knowledge-sharing, and we are picking that topic up in a later episode also.

Niels Vindsmark (10:33):

Yes.

Mikkel Svold (10:34):

And you often hear that technology is the answer to different problems. Is there a technological answer to pushing this growth for the machine builders? What technologies would you point to?

Niels Vindsmark (10:48):

Technologies-

Mikkel Svold (10:49):

It could be in practicalities to see if you do this with this new kind of method?

Niels Vindsmark (10:57):

Well, methods, I mean they're teaching optimized hygienic design at university. So we need to start with the behavior of the engineers who are designing the machines and solutions in order to support this method. We need to make sure that the people are aware of the certification identities so that we actually, because the certification identities define what has to be modified in order to optimize the hygienic design, but they're not converting the concept into a product.

(11:31):

So basically it's very much, it's manpower. I mean technology is one thing, but it's very much the human beings, the engineers and commercial, and the nerds, the bacteria nerds that has to sit down and together, convert ideas into very often low, practical, hygienically-optimized solutions.

Mikkel Svold (11:51):

And to me, this sounds like there's going to be a lot of investment in changing processes, changing production lines.

Niels Vindsmark (12:00):

No, not-

Mikkel Svold (12:03):

No?

Niels Vindsmark (12:03):

... necessarily. It's small things. I mean it's not, in the beginning, if you take components, very, very small part of the total supplier is hygienically-optimized, they are more expensive. But the total cost of ownership, the return on investment, if you buy a more expensive piece that will save you everyday life, the return on investment is relatively short and very, very effective, actually.

(12:28):

And the total cost of ownership starts to be a concept much more known to the industry that we've seen before. So it's small things that can do a big change, actually.

Mikkel Svold (12:38):

And here we are talking about the total cost of ownership of the machine. So that'll be the brand owners.

Niels Vindsmark (12:43):

Yeah, the brand owner-

Mikkel Svold (12:43):

Yeah.

Niels Vindsmark (12:44):

... needs to invest. He needs to pay more for hygienic equipment, but he's aware of it and he's willing to do it because it's both economically, environmentally, and politically correct to do it. He needs to do it. It's not a question of either/or. Either he does it and he's competitive in 10 years, or he's not.

Mikkel Svold (13:02):

That's actually a pretty good seg-way to my last question because as we look forward into, let's say, the next decade or so, how do you see or what drivers do you see have the most potential to drive growth for machine builders? And I guess also consequently the brand owners, the food producers?

Niels Vindsmark (13:25):

Many things, but definitely what we need to, it's not just product. I mean I think it's going to be much more intelligent products. We'll see intelligent things on the line. We are making components that can pick up data and transfer data to a knowledge-sharing online center where you can measure different processes and optimize and do proactive maintenance. So definitely intelligent machines that will close a communication and thereby improve and following up on if what you've done work. And if it doesn't work, you need to know that so that you can fix it proactively.

(14:02):

Because otherwise you'll end up with a production, a lot of food that has to be recalled and that's very expensive and unwished for everybody.

Mikkel Svold (14:09):

Yeah, it's also not just expensive, but it can also damage the brand, which will be-

Niels Vindsmark (14:13):

It will damage the brand.

Mikkel Svold (14:14):

... even more impactful than-

Niels Vindsmark (14:15):

We see recalls every day. We have people being hospitalized every day because the hygiene hasn't been very optimized, and the hygiene in the hospital is not optimized. So it goes from day hospital to be a week in the hospital. So it's penalizing global economy, and it's penalizing global resources that are already rather limited.

Mikkel Svold (14:36):

Now, before we wrap this up, are there any key takeaways or something that you think we should mention now that we have the listeners' attention hopefully, yeah, before we wrap up?

Niels Vindsmark (14:48):

I think the most important thing for our customers would be you need to be involved. You need to have a clear stand on this. You cannot wait to have a stand on it. And once you've made a stand, you need to move on it. You cannot survive on the long-term being reactive. You need to be proactive. And it's quite amazing how far you can come with a proactive, dynamic, pragmatic approach.

Mikkel Svold (15:12):

And do you see that companies that you work with or in generally the market, do they dare to take a stand?

Niels Vindsmark (15:21):

They do.

Mikkel Svold (15:21):

Yeah.

Niels Vindsmark (15:21):

Every day we have more that dare and are pushed to have a stand. They have stakeholders, they need to make money. We are in a competitive market. We have pro-macro trends that challenge everything. So either you, it's hard times, so you need to be hard and stand up now, it's not going overall well. So you need to stand up for yourself and make sure that you catch the competitive edge. Definitely.

Mikkel Svold (15:47):

Perfect. Thank you so much Niels Vindsmarks for joining today, Niels Vindsmark.

Niels Vindsmark (15:53):

Thank you very much. It was a good correction.

Mikkel Svold (15:55):

Oh thank you. And to you, our listeners, if you're keen to stay at the forefront of hygienic manufacturing and deciding and innovating inside the hygienic food industry, please do hit the subscribe button. And if you liked the episode, go give us a five-star rating. It really helps us spread this podcast to other people in the industry and will be a great help for us. So, thank you so much for tuning in, and thank you so much for joining us.

Niels Vindsmark (16:23):

Thank you.