Planning for Success

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Varðin Pelagic leads the way in frozen produce — nonetheless, with excellent product quality a minimum requirement from customers, controlling the flow of production remains critical, according to sales manager Bogi Johannesen.

[Bui Tyril]

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As a leader in the Faroese pelagic business, Gøta-based fishing company Varðin and its processing unit Varðin Pelagic at Tvøroyri have invested significant resources into developing an operation that is internationally competitive. Over a short period of time, the fishing company set up a highly sophisticated freezing plant in collaboration with processor Delta Seafood to quickly become the Faroe Islands’ largest exporter of frozen pelagic fish products.

More lately investing in a new processing line for mince and surimi, Varðin Pelagic is taking its blue whiting produce up the value chain in what is seen as an important step for the new Faroese pelagic fish processing industry.

With yearly exports amounting to about 80,000 tonnes of Atlantic mackerel, herring, blue whiting  and capelin, at a value of 625 million dkk (84M eur) in 2016 figures, Varðin Pelagic has become a major employer, generating an upturn in the local economy since opening in 2012.

None of this has come easy though, as sales manager Bogi Johannesen noted.

“In the fresh fish trade you have a spot market with its own set of rules,” he said. “In the market for frozen seafood where we operate, you’ll find that things are completely different. In this trade quantities are much larger, with longer but very definite time frames, which makes effective and accurate planning absolutely critical. In other words, when you are dealing with frozen products, orders are placed months ahead, and that means you need to know exactly what kind of quantities you are going to have available of the required product quality and specification at such and such date months down the road. And your customer is not going to accept any unplanned deviations from the  contract, neither when it comes the product itself nor when it comes to the scheduled time of delivery. The customer has all his campaigns and promotions planned well ahead, so you need to make sure your part of the plan works. In general, the larger the operations involved, the greater the need for perfect planning.”

In this context, ensuring excellent product quality calls for mechanisms of control that go beyond quality assurance systems.

‘Still early stage’

“To avoid unnecessary waste of time and resources in the event of quality issues, we need to be one stop ahead of the curve,” Mr. Johannesen added.

“That means besides applying long perspectives, we need to be good at logistics in several ways—there are many schedules involved, from daily and weekly to monthly and yearly and beyond. We have to constantly plan ahead to make sure all steps and processes are properly arranged and coordinated once they occur.”

Coordination with the catch sector is one example.

“We work very closely with the fishing vessels that land to our facility and they follow certain protocols. Maintaining good contact with the fishermen is part of it, as we want to make sure our operations are aligned in the best way possible, which is necessary for achieving a smooth flow of production—and that, again, is a minimum requirement for long-term success in this business.”

With the new processing line for mince and surimi from blue whiting, the need to secure prime condition for catches has become even more crucial, as the species can be notoriously difficult to handle, depending on season. The location of Varðin Pelagic, only six to eight hours from fishing grounds, is seen as a key advantage.

“What we seek is maximum freshness and top quality catch—anything less will not work, not least when it comes to blue whiting for the new processing line,” Mr. Johannesen said.

Being able to control the value chain from catch to final product is fundamental to staying competitive, Varðin office manager Tórheðin Jensen pointed out. “Buyers demand top quality,” Mr. Jensen said, “so to be able to deliver, we need to maintain control throughout. The further we can integrate our value chain, the higher the reward from the marketplace. But with the extensive efforts and and time it takes to build such business structures, people should have no illusions about any easy way to develop a new product or market, not to mention value-added products. It took Varðin many years to become profitable in the first place. Not before many years after that point were we able to expand into processing. Now Varðin Pelagic had a great start and is developing fast; yet we’re still at an early stage.”

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