The manufacturing sector is responsible for taking raw materials and turning them into finished products. While manufacturing may be a tough business, it can also be a satisfying one.
Instead of producing a service or experience, a manufacturer creates an item, which provides the satisfaction of having made something that people want and deeply value.
Given the constant demand for finished products, new manufacturing companies are launched frequently.
One of the downsides of starting a manufacturing company is the cost. A company that creates products must pay for marketing, materials, labor and overhead. This generally leads to a low profit margin, making manufacturing a risky venture unless the business model is well thought through.
Risks of the industry
Although a successful manufacturing company hinges upon a competent business model, the hope is that demand for those manufactured products continues to grow.
Today, the business must be flexible for the business to stay strong.
When a company produces manufactured products, it must always purchase raw materials. Given that these materials are required to produce the product, a company will be forced to purchase the materials for whatever price they go for or cease production. Therefore, a manufacturing company may see a steep decline in profits if the price of raw materials spike.
Not as simple as it seems
Chocolate manufacturing involves turning a complex group of ingredients into a somewhat delicate product designed to melt into a delicious mouthful of flavor. It sounds simple, but there really is a lot to chocolate production.
The cocoa beans alone need growing, harvesting, drying, transporting, roasting, grinding and pressing before they are even ready to be manufactured into chocolate.
Rising cocoa prices, coupled with increasing prices of other key confectionary components used in the chocolate-making process, can have a major impact on chocolate production.
There are several strategies chocolate manufacturers can take to reduce the impact of rising cocoa and ingredient prices while maximizing production efficiencies, but they all come with risks, such as passing price increases onto customers, which could jeopardize sales.
Another option is to reduce the size or weight of the product. Although this is becoming very common in the food industry, it often makes consumers feel cheated.
Third, is to reduce or replace the amount of cocoa and other expensive ingredients. However, changing recipes could turn some customers off. Sarris Candies prides itself on quality and never compromises recipes for less expensive ingredients.
It’s always a challenge to continue to find ways to operate more efficiently so you don’t have to employ strategies that may compromise customer loyalties.
I love a challenge and that’s what brought me into the business and what has taken me where I am today. Ultimately, I want to produce the exact same product that we have been producing for over 50 years — by finding new and improved ways to do this — all while satisfying my customers and providing jobs.
That’s the reward that makes it all worthwhile.
Bill Sarris is the president of Sarris Candies Inc. While focusing on growth in several areas, from fundraising programs to new retail territories and corporate sales, the Sarris family maintains the old-fashioned values and customer service standards set by the company’s founder, Frank Sarris.
