For Floridia Cheese, a more than 60-years-old, third-generation family cheesemaking business, one of the most time consuming tasks is paying its farmers for milk.
Currently, this payment process is managed through a series of Microsoft Excel spreadsheets that are overseen by multiple people within the business, and double checked by an accountant with every change.
But the price of milk isn’t fixed; it’s dependent on fat content, protein, general quality (with step ups or step downs), and then the volume.
Considering Floridia Cheese buys some 22 million litres of milk every year — around 450,000 litres per week — it’s a huge admin challenge to stay on top of payments, and ensure each farmer is getting the right amount, at the right time.
“We put in the figures, then an in-house accountant checks them, an external consultant checks them, and then another third-party checks them,” explains Rose Portella, general manager finance and marketing at Floridia Cheese.
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Portella is part of the third-generation of family ownership for Floridia Cheese.
The company was founded by Mauro Montalto, her grandfather, and first passed on to her father, Tom Montalto, who is now semi-retired and spends most of his time as a beef cattle farmer.
Her brothers, Mauro Montalto, and Daniel Montalto are directors of the company, while her sister, Lisa Montalto, heads up HR. Rose’s husband, Fabio Portella, is production manager and has been in the business for 31 years. And the fourth generation of the family now comes in on weekends and serves in their retail shop.
In the last financial year, Floridia Cheese turned over roughly $40 million in revenue. It has 80 full time staff, with casuals and contractors bringing the number of people in the factory to 100 on any given day. The business has also grown at 3-5% annually over the last four years, Portella tells SmartCompany Plus.
“The business reached a point where it plateaued, but cheese became popular again. The yuppies want cheese and wine again,” says Portella.
Long-running family businesses can be resistant to change when it comes to processes.
As Portella puts it, “Families get into habits. Some families don’t like change, especially the older generation. ‘It has always worked for me, why do you want to change it now?’”
But the company knew it had a system not fit for purpose. Its Excel-based process worked fine when it was first built; yet, over the years, it had been added to and tweaked without clear documentation of how things had changed.
The revamp for its new process started with a connection at Melbourne North Food Group, an industry body representing food, beverage, and fibre manufacturers, and part of the NORTH Link networking group.
Based at the R&D centre at LaTrobe university, the industry body offers projects where students in the business school work with local SMEs.
Margaret McLelland, general manager events, membership, international trade at Melbourne North Food Group, says, “With third-generation food manufacturers in the North of Melbourne, changing to digital and adding data analytics are a big deal to get over the line. Most of them are too busy working in the business to work on the business.”
But it’s also necessary for many producers if they want to get their products in supermarket giants.
“There are hoops and obstacles to go through. They use sophisticated systems, and businesses need to be able to fit within that. You can’t have a product that goes well at a farmers market, and suddenly go into Coles or Woolworths,” says McLellend.
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In the case of Floridia Cheese, the family explained their milk payment system to the business school students, and said they needed it built in a way where they had full transparency, and automated calculations.
“We thought we set the students a task they could not achieve, and no way they would nail the brief. But they did,” says Portella.
It was then a matter of moving the project from the students’ hands to a consultant in the milk industry, Neil Longstaff, who contracted a third-party IT business to build it out, with one of the students remaining on the project.
“Being a family business, you need to recognise where your strengths don’t lie, and use consultants to get the best outcome,” says Portella.
When updating data processes, Longstaff says the first thing you need to understand is what you’re trying to achieve, then what your existing process is made up of, and how it works.
“The biggest challenge was in getting everyone to understand the intricacies of a milk-payment system. It’s a process that requires milk price, discounts, bonuses, incentive schemes, and how they are calculated and then applied can be quite intricate,” says Longstaff.
Of course, for other SMEs there will be different systems, with different complexities. It comes down to an issue of translation.
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Longstaff came in halfway through the project, after the students, and started by putting together documents explaining all the background terminology and how payments are calculated.
In the test phase, the IT team reproduce a payment using the same information, Longstaff checks that the answers are correct on both ends, and they repeat the process.
To manage the project remotely, they operate from a single platform, Teamwork, which holds all the information, messages shared between everyone, and progress of each individual step.
During lockdowns especially, it’s critical to keep all the information in one place, with a unified sense of purpose between outside contractors and the company.
But there’s no value in a data system built by a third party if it can’t be integrated back into your day-to-day business admin, which is why it’s crucial to have input from the people who will be using it.
Longstaff says, “During the process I’ve had conversations with people who use the existing system, and input data in the system, so that they’re aware of the changes we’re making.
“We give each of those people a login to play around with the system, using dummy data.
“They can get used to what the system looks like, and feels like, and I can feed back their comments to the developers comments.”
For Portella, the difference between the new system and the old one couldn’t be more stark.
“From lab results to keying in data will take five minutes. You know the pricing is saved in the background, everything is being processed correctly, there are less T’s to cross and I’s to dot.
“It will save at least 70% of the time once it’s fully up and running.”
With seven farmers that it has to pay, and milk being harder to come by as some of its multi-generational dairy farmers close their business, it’s important to keep suppliers happy and onside.
It’s not just a time benefit too — the new system gives much more transparency to the absolute key metric of a dairy business, milk.
Longstaff says, “There is definitely going to be a lower number of touchpoints, easier to modify, change, and add new suppliers into the system.
“It will also allow us to analyse the business. There are reports that we can use to analyse what’s going on in our business that we didn’t have previously.”
Floridia Cheese offers lessons for many SMEs — you don’t need to be data experts to improve your systems, and even convoluted processes can be revamped if you’re committed and can find the right outside experts.
In Portella’s words, “Change is good. A lot of people tend to think if it’s not broken, don’t change it.
“But there’s always, especially with technology, a better, smarter, more efficient way to do something.”
Paul Brescia is a freelance journalist and regular contributor to SmartCompany Plus. You can follow him on twitter: @pwbrescia
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