Case study: Westland Milk Products' R&D edge

Case study: Westland Milk Products' R&D edge
Using research and development as a primary factor in its marketing has paid huge dividends for Westland Milk Products, with its innovative research – helped along by a top award – proving a key to its success in securing new customers.

Using research and development as a primary factor in its marketing has paid huge dividends for Westland Milk Products, with its innovative research – helped along by a top award – proving a key to its success in securing new customers.

In a market where there are much bigger bulk commodity suppliers, Westland is finding that its smaller size, versatility and reputation for R&D gives it a competitive edge with customers looking for innovative specialist products with demanding specifications.

An important factor has been its willingness to have R&D staff engage directly with the customer. This means the customer’s ideas and specifications can be workshopped by the people whose role is to turn a good idea into a commercial reality.

This dedication to the value of R&D saw Westland Milk Products win the Ministry of Science and Innovation Best Use of Research and Development category at  the New Zealand International Business Awards last year. The accolade has paid numerous dividends, helping attract new staff and increasing the company’s credibility with customers.

“The independent endorsement that comes with an award like this has boosted our credibility and helped open doors to new customers,” says general manager of innovation Michael Teen. “We promote it every chance we get and the engagement is definitely there. Being able to say to customers in technical presentations that we won this award and why, and here’s what it means to you, makes a real difference.”

The 75-year-old Hokitika-based Westland Milk Products company was one of two co-ops (along with Morrinsville’s Tatua) to eschew joining dairy giant Fonterra in 2001. It is New Zealand’s largest dairy cooperative next to Fonterra, processing some 102,000 tonnes of product per year with a turnover of $530 million. It employs 400 staff and has more than 350 farmer shareholders. The main processing plant in Hokitika is capable of producing 250 different products, from milk powders, fats and proteins to bioactives and nutritional products. These are supplied to more than 30 countries worldwide.

It is also a hotbed of R&D, 75 percent of which is dedicated to development of commercial projects with customers, and 25 percent to research in partnership with universities and Crown Research Institutes.

During the past three years Westland’s approach to R&D has focused more on developing and proving products conceived by the customer to meet an identified market need. Previously, Westland’s R&D was more internally driven and therefore it was sometimes harder to find commercial applications and markets.

Now, initial high-level contact is made between the sales and the procurement teams to establish the customer’s needs before research begins. If it’s agreed the companies can work together and projects are identified, the technical teams from each company then communicate directly.

“Before we won the award and got official recognition that this approach works, it was a little bit more difficult to convince people,” Teen says. “Getting technical people talking together really does have a good effect, and we proved that by winning the award. That’s something the whole team has been aiming for, for a while.”

General manager of sales and marketing Gregg Wafelbakker counts Westland’s size as a competitive advantage.

“Because of the flexibility of our processing site, we can react more quickly to adapt opportunities that are the right size for us – opportunities that might be too small for our bigger competitors.”

“Flexibility, high quality, and strength of customer relationships have always been well recognised as an integrated component of the value Westland Milk Products offers its customers.”

Wafelbakker says most of the company’s new developments this year will be in infant nutrition. In September last year it put in place a new infant nutrition plant in Hokitika, with commercial production starting in February. The customer set is already established, primarily in China and Southeast Asia. The background research required to get access to these customers was done two years ago with the help of NZTE.

Finally, while recognition was a major part of the award, having the $50,000 prize was a bit of a bonus to Westland. It meant the company could buy equipment that wasn’t on its essential equipment list. While Teen has his lips sealed about exactly what it is, he says it helps the company’s technical capability quite a lot.

“It’s something our team can play around with rather than having to commit definite projects and have a business case and something that enables us to be a bit more free and innovative.”

David Green, managing director institutional banking with New Zealand International Business Awards strategic partner ANZ, says R&D plays an important role in growing New Zealand’s exports.

“Westland Milk Products has shown what is possible when R&D capability is delivered as an integral part of the customer proposition and positioned to receive direct signals from the market,” Green says.

Entries for the NZ International Business Awards are now open. To enter, visit www.nzte.govt.nz/awards.