Food Product Development - Chapter 6 - Managing the product development process

As the product development project progresses, more and more agencies can be brought in to provide contract processing, physical distribution, market distribution and marketing. The raw materials suppliers and the equipment suppliers fall within both the knowledge and systems acquisitions; they can be supplying knowledge on product qualities, formulation and processing conditions, but of course in the end hope to supply raw materials and equipment.

Knowledge acquisition methods can vary from casual conversations to binding contracts. The outside agencies can come into the product development project for a one-off piece of work or they can be advising throughout the PD Process. The usual pattern of short-term contracts consists of:

outline brief from the company;

proposal from the outside agency;

discussion and adaptation of proposal;

contract agreement;

research reporting;

acceptance and coordination into product development project.

One of the problems in, say, employing a food designer either to design the basic product or to contribute aesthetic values to the product, is to give accurate descriptions of the consumer and their needs and wants, production/distribution limitations and price/cost limitations. The outline brief needs to include this information as well as the place of the new product in the company and the market. Otherwise there will be endless redesign and discussions to get the design the company will accept, ending in a frustrated designer and unhappy product development personnel. Another problem is with work that takes a long time, for example a research programme with a university that involves postgraduate students. Basically the project is a teaching process for them, and the company must not expect results that can be accepted immediately into the product development project; they will need further development to bring them into the project. Also there are often teaching needs that require the students to do the R&D in a certain way, which is not the accepted procedure in the company. The company takes risks and cuts corners, which the university project cannot do if it is to be accepted academically. Using undergraduate or postgraduate students can be much cheaper than using company staff, but the company needs to realise the limitations, particularly of extended time.

How problems in building systems for the final stages of the PD Process can be solved by outside agencies is shown in Table 6.5.

Table 6.5 Some problems in building systems solved by outside agencies

Problem	Some solutions
Little knowledge of process Need to trial production No packaging line Process control inaccurate Microbiological safety Need ISO 9001 QA (quality assurance)	Buy a turnkey plant Use contract processor Use contract packer Contract process control company Contract microbiological laboratories Contract QA accredited auditors
No physical distribution No storage in market Poor control over distribution	Contract international distribution company Contract storage company Contract logistics expert
No marketing system in this area	Sell product to distributor Buy marketing company
Poor contact with retailers No contact with media Little knowledge of importing/exporting	Contract food broker, manufacturer’s agent Use advertising agency Sell to exporter Use an export agent
Not enough working capital Need investment capital to start	Borrow from bank Loan from bank Agreement with venture capital company

The list is not all-encompassing; many other problems arise; for example importing regulations and clearance of foods at entry will need a qualified person representing the company, the risk of loss of product or deterioration of product in transit will need insurance, and so on. This list is to bring attention to the many problems that have to be solved, and the systems/people that are available which the company can contract to use or actually buy. Little in the product development literature describes research in this area, but it is of course the most costly part of product development and can also have the greatest risk of failure.

The interrelationships between the company and the systems providers are commercial relationships and they are judged as usual by their effectiveness and efficiencies. Very often these relationships are already in place and it is a case of involving them with the new product. During the product commercialisation stage, they have to be brought into the discussions on the production, marketing or financial developments so the procedures cannot only be put in place but have the support of the outside agencies. There is a balancing of confidentiality on the product with the need to have strong cooperation. Where new agencies have to be sought, the procedures are much more complex, especially working in overseas markets, where there may not be knowledge of the distribution/ marketing systems, culture or even the language. The primary producer can be a very long way from the consumer in the other country, and designing a fresh food for export to an overseas market can provide many headaches as the producer tries to work through a complex network of export agencies/import agencies/trading houses/auction markets/retailers. Reactions to products can take a long time - even years! The larger companies have built up subsidiary companies in the overseas countries, and may even have product development groups working in the country, so they have overcome the hurdles and can proceed with product development in a systematic way. Joint ventures and licensing operations can also overcome the problems in the new country.

Another problem is that foods are biological products, which can deteriorate with time. The distribution system looks suitable on paper but when the distribution development is taking place, there are discoveries of blocks in the system, for example slow unloading of cargo, changes from one container to another in using several airlines and bad vibrations in transport.