The last few months have been quite a ride for New Zealand-based Compac, the supplier of turnkey sorting and packing solutions for the fresh produce industry. Earlier this year, Compac acquired Spanish post-harvest machinery manufacturer Fomesa, which gives it a physical presence in Europe for the first time – cemented when a brand new facility opened in Valencia last month. Produce Business UK caught up with the company to find out more
The business has also appointed a new CEO, Mike Riley, formerly the CEO of Endace, a technology company that operates in the network and cyber security space. Having initially joined to head up the firm’s sales and marketing efforts, he has swiftly moved up to run the whole business. Previously to that he was the CMO of a US-based technology security company, which is listed on the NASDAQ.
Riley is among a number of board-level appointments, brought in as part of a strategic initiative to raise governance functions to the next level and to bring a new raft of knowledge to the Compac team with expertise ranging from the produce industry across the technology spectrum and into other primary industries.
Riley last week [December, 10, 2015] announced the company’s new executive leadership team, which he says will lead the company in the next phase of its transformative growth and execute on its strategy for capturing the expanding global opportunities in the fresh produce industry.
And that came hard on the back of the launch of Spectrim, the firm’s much-anticipated optical sorting and grading system that it believes will play a huge role in revolutionising the way fruit is sorted and packed for the end consumer. Spectrim, it is said, “will provide the industry with technology that is simultaneously the highest performing and the most usable”. It has been “designed as a technology platform to allow customers to continuously update their system hardware and software to stay at the cutting edge”.
The launch is the latest rung on the ladder to achieving Riley’s vision of a “lights out packhouse” in the produce industry – a vision that can seem light years away to the typical packhouse operator, but one that he has already seen as reality in his previous role.
“This technology has been six years in the making – my timing is impeccable!” smiles the recently installed Riley.
Raising the bar
“We already knew that we grade better than anybody else in the industry. Now we have raised the bar by a considerable amount and we have a sales team that is fizzing,” he adds.
“I believe we’re at a technology inflection point, where we can fundamentally change the dynamic. This is a major leap forward. The whole issue of closing the loop in the supply and value chain is here and now, and when you start thinking like that, all of a sudden it feels awfully like a different industry to the produce industry.”
Compac aims to grow its extensive installed global customer base and develop a complete, integrated post-harvest solution. It operates a number of centres of excellence, regional offices and manufacturing locations within the United States, Europe, South America, Asia, Africa and Australasia.
And as produce users build their confidence in the power of technology, there will be less need of the failsafe option that most packhouses adopt at this point, Riley says. “I’m from the data network industry, where we’ve had this concept of lights-out for years and years. The average Google centre already runs with nobody in it. [In produce] it will take us a while as we still have to build trust in the technology,” he admits. “At the moment, they believe they can sleep easier at night because they know if a customer ever challenges them, they can say ‘we even had a person inspecting it’, but this technology can be trusted, sometimes a lot more than people.
Produce is not alone in its reluctance to fully trust the technology it has at its disposal, of course. “There is a good argument now that you don’t need pilots at the front of a plane to fly it, but it still feels good to know they are there.”
Back to produce though, and Riley is confident Spectrim heralds a new era. “Reliability, automation and traceability across multiple sites and the ability to extract timely, actionable business intelligence from produce data are increasingly critical for our customers to meet the exacting standards of presentation, product quality, safety and provenance now required by retailers and consumers,” he adds. “We see this platform as the next progression in significantly improving the consistency of retail consumer packs, reducing labour [costs] and a massive leap forward in our long-term goal of creating a “lights out” packhouse, with little or no direct human input.
“We’ve set ourselves that [lights out packhouse] target as a goal – it’s aspirational, but it’s also realistic in terms of what we can achieve.”
Compac is currently installing a solution at Univeg in the UK, which will service a number of UK retailers by developing smaller consumer packs that have been and continue to be a major area of growth. Riley describes the project with Univeg in the UK as an “exciting development” and “an interesting model”, adding that the multinational was encouraged to invest in the system by a grower already using Compac technology.
“Companies are increasingly trying to de-commoditise products that have become commodities,” he says. “The vertically integrated players have recognised the potential and they are leveraging it first. They own their brand, their supply chain, their fruit, and they want to own their consumer too. So linking it all together should be the most natural connection they can make.
“Our technology makes a difference from the orchard through to the consumer; it’s being used in some of the biggest, baddest packhouses and from those facilities it is being delivered to distribution centres all around the world.”
Spectrim was launched with customers already in place in Washington State (apples) and California (citrus). Riley adds: “In the US, the world’s most technologically advanced country, people are willing to adapt. But northern Europe is also pretty advanced and, in industries such as GSM [global system for mobile communications], a lot of the standards were driven by Europe. The US was slow in comparison when it came to adopting roaming with telephones. Generally speaking though, the sheer scale of things in the US tends to drive the need for automation, and Europe then adopts those standards.”
NZ leads by necessity
For a country of its size, New Zealand is perhaps a surprising front-runner in the technologically advanced stakes. Riley believes his country has taken on the role out of geographical circumstance and necessity. “We are a country of reflective, inventive and entrepreneurial types,” says Riley. “The remoteness is definitely a big part of that. With distance comes perspective. We are big thinkers – Christmas comes in our summer and we take the time to go away and think about stuff.
“We are also very aware that Brand NZ takes a hit if we do something bad. Technology has to be something we get right, as our GDP relies on exports. Look at some of our brands, such as Fonterra, Mr Apple, Zespri, Rockit – the adoption of technology to improve yields and quality allows them to punch way above their weight.”
Compac has had considerable success in its homeland, and its technology, he adds, plays a crucial role in the ‘tag-team’ of elements businesses on any continent need to have in place to have any chance of addressing the needs of the evolving produce marketplace.
“It’s not always about replacing the capability of other systems, but we always enhance it,” he claims.
Compac invests more than 12% of its turnover in research and development to stay ahead of the post-harvest equipment competition. To support its progress, earlier this year, it received a three-year R&D grant of NZ$5.5 million (US$4.6m or £3.6m) from the New Zealand government’s funding division, Callaghan Innovation.
The company’s equipment has graded and sorted fruit around the world for years, and collected massive amounts of data, Riley says. But unless the company is able to use that information to fine-tune its technology, and share it to the benefit of the industry as a whole, the customers and consumers would not feel the whole benefit.
Spectrim embraces those ideals, he says. It is being marketed as “the most powerful optical sorting platform ever developed for the fresh produce industry”, which “builds on some of the latest developments in machine learning and 3D modelling, often leveraging capabilities from adjacent industries”.
Riley says it is a major breakthrough in terms of disease and defect detection and monitoring too. “It is only when things truly come together that they change,” he explains. “Spectrim takes 500 images of each piece of fruit per second. We are collecting more data on every piece of fruit than ever before, which takes precision agriculture to a totally new level.”
Compac already operates in more than 40 countries, but any boundaries to further expansion are being broken down. Compac Europe will be settled into its Valencia facility before the end of the year. “That will allow us to put the past behind us and Fomesa behind us and let us move forward as Compac,” Riley says, adding that a manufacturing facility in Europe could add significant value to its customers on the continent.
“The good news for us is that the large-scale players in the world are predominantly Compac customers already. We’re specialists at the integration of various products into overall solutions and [with Spectrim] economies of scale do come into play. It might not be for everybody – I recognise it could appear a little scary in the short term. But with provenance now accepted as the norm and with traceability and food safety of paramount important, those are the things that buyers latch onto of course and it gives them things to play with in terms of differentiation.”
In the telecommunications industry, Riley says he was used to two-way closed-loop systems, but he sees the produce industry supply chain as being “very transactional”. That loop needs to be closed if suppliers are to make real, sustainable progress, he says. “If you want to own shelf space and control promotions, you’d better make absolutely sure that you can have your product on the shelf where it’s meant to be every day of the year.
“There is growing consumer demand for new varieties and for new packaging concepts. And with everything so reliant on the supply chain being just-in-time, the whole thing is beginning to look a bit like Amazon.
“Everywhere we go, we see opportunity as an automation company.”
Click here to read Compac’s top 10 food trust issues affecting fruit packhouses.