Seafood processing best practices

The US TV program Deadliest Catch has familiarized many viewers with the wildness that commercial fishermen face in the Alaska environment. The same extreme and risky conditions.....and more..... impact Alaska seafood processors too.

The Alaska seafood processing business is risky and fraught with business failures. To survive and succeed seafood processors have to do everything right, be nimble and pay attention to the fish details.

The Alaska seafood processing business has many specific characteristics that impact the nature of the industry and companies that succeed and fail.

• It is a highly competitive industry
• Most of the firms are privately held, not public companies
• Mother nature rules with highly variable fish runs, changes in timing and quality
• Alaska fishermen and seafood processors must operate in remote roadless areas in extreme weather and topographies.
• The majority of Alaska seafoods go to foreign export markets.

Yet is is like many industries it is highly impacted by the global market - whether it is currency exchange rates, foreign seafood imports to the US, advances in competitive aquaculture products or sudden volume changes in foreign wild fishery products.

Ten Lessons from a Life of Fish

1. Top Quality= Top Brand – Quality starts with buying fish. The quality of fish can never be improved; it can only go downhill after it is harvested. Quality can only be preserved. Buy quality fish to supply quality products to customers. Recruit quality fishermen that take pride in their catch. Train all fishermen how to care for their fish and instill an ethic of improving quality. Train all tenders to properly preserve quality from the fishermen to the processing dock. Teach respect and worship of your fish in your plant by all employees. The path to the top price in the market starts with being known in the market place as the top quality brand.
2. Securing Fish Supply - An oversupply of fish can be challenging and have many detrimental effects. A lack of fish is sure death for an operation due to the high proportion of fixed costs and overhead. Some companies have kept the plant full but gone broke paying too much for fish. The challenge is keeping the plant optimally full with fish that have margin. The proven formula for fish buying is a mix of competitive prices, cost effective services for fishermen and the personal touch with the fishermen. The American Fisheries Act of 1998 by the US Congress provided a huge amendment by allowing seafood processors in Alaska Bering Sea fisheries to "own" the fish in the water and guarantee a specific supply percentage of the annual catch (quota).
3. Effective Cost Controls – Seafood is a high volume and low-margin business. If your margin is 5 %, saving $ 1 is equal to $ 20 in revenue. Only the most cost effective companies survive. The first step is having a budget to establish cost and performance goals. Costs must be measured to control them. Sharing budgets, cost performance with the management team ensures cost controls filters throughout the operation.
4. Sales & Production Synergy – Many seafood companies fail to optimize profits because of the fundamental disconnect between sales and production (operations) divisions. The goal is to put each fish into the highest and best value market. Sales and production must constantly communicate about the fish, costs and markets to achieve this. Through this exchange of information will come the synergy that meets market timings, market opportunities and customer specifications. Sales must understand the realities of production in remote and high volume Alaskan seasonal operations. Production must understand the realities of the customers.
5. Maximizing Recovery – A focus on recovery of fish from buying to selling of finished products will save thousands every day. Shrinkage at the buying scale can be your annual profits. Buying water and ice from fishermen is a good way to go broke. Loss of roe from herring and salmon can be the difference between a mediocre and a superior company. A plant manager must know on a daily basis the buying shrinkage, roe recoveries, H&G recoveries, Fillet recoveries, surimi yields and grades and the yield of Number One Grade.
6. Controlling by Measurement & Information – If you don’t measure it you cannot control it. If you do not measure your production it will control you. You cannot achieve goals unless you measure progress. You cannot achieve change unless you measure achievements. To make intelligent decisions objective information is needed. Consistently measuring key indicators will provide relevant and objective information for decision-making. Develop an effective and efficient quality control system that fits your size and type of company.
7. Quality People & A High Performance Team – Recruit stars, keep winners and get rid of losers. You are only as good as the team surrounding you. Constantly assess your team and ask yourself if you have the best personnel in the industry. Not everyone is cut out for the peculiar dynamics of the Alaska seafood industry. Mold your staff into a high performance team. Expect and demand excellence from all employees. Do not accommodate poor performance. Accommodation of poor performance is a deadly message to your top performing employees. Form a management team of key players such as Office, Production, QC, Engineering and Roe Managers. Use this team for planning, problem solving, AAR’s, creative sessions, financial review, information sharing and other activities where two heads are better than one.
8. Critical R&M – Never have a major breakdown that costs you lost production is the number one rule of maintenance. Preventative maintenance has been proven in all studies to be very cost effective. Study and find the critical points in your processing that can cost lost production. Have backup plans and spare parts for these critical areas. You cannot afford spares for everything, but you cannot afford not to have a spare for critical items that could stop your entire production line while you wait days for a spare to arrive.
9. Manager as Leader – Remote and diverse locations in the Alaska seafood business require local leaders and managers to be independently capable. Be a leader at your operation. Set the example of values, culture and performance and your team will follow those standards. Build your culture don’t let it happen. Define the elements of a successful culture and root out the attitudes that do not fit. There can only be one culture. Cultural elements that have proven to are a strong work ethic; ability to change; can-do attitude; teamwork environment; people oriented environment; pride; commitment; and quality in your work. A good leader listens to his troops, involves his troops, sets goals, makes timely decisions and is there when the buck stops. The leader needs to develop the plans, communicate them, monitor and adjust as necessary along the way.
10. Enhancing Productivity – Constant enhancement of productivity is necessary to stay competitive in the global market place. Mechanization, improved management, improved quality, labor efficiencies and new systems will enhance productivity. A culture of constant reassessment and evaluation of productivity is the first step. Being open to the ideas of others and constantly scouring the planet for betters ways will find the relevant ideas. Set goals, measure, give feedback and engage all your troops in the quest. Constantly raise the bar of productivity and your troops will surprise you and surpass the goal.

Related Best Practices

• Startup CEO Best Practices
• The Living Company - Learning Organizations
• Why Companies Fail

Author

The author of this page is Terry Gardiner

Terry Gardiner is the founder and President of Silver Lining Seafoods and NorQuest Seafoods - a medium-size Alaska seafood processing company; and currently a Board member of the Anvil Corporation, an employee-owned company specializing in oil and gas engineering.

His co-operative experiences include member director of the Commercial Fishermen Co-operative association; creation of legislation for the Alaska Commercial Fishing and Agriculture Bank; and advisor to the US Dept of Health and Social Services for the state Health CO-OPs.

Terry served ten years as a member of the Alaska House of Representatives -several legislative committee chairmanships, Speaker of the House, Chairman of the Alaska Criminal Code Commission and board member on various state and federal boards and commissions.

His non-profit experiences include National Policy Director for the Small Business Majority in Washington DC; working with the Herndon Alliance and ForTerra.

Terry authored the leadership book, "Six-Word Lessons to Build Effective Leaders: 100 Lessons to Equip Your People to Create Winning Organizations".

For more check: Terry Gardiner Long bio