Bernie Panchot, senior V.P. of R&D, discusses the role of the R&D teams in the resurgent success that AdvancePierre Foods has experienced in recent years, leading to the company’s winning The National Provisioner’s 2015 Processor of the Year award. Below is a transcript of the video.
Andy Hanacek: I'm sitting here with Bernie Panchot, Senior Vice President of Research and Development for AdvancePierre Foods. Bernie, thanks for sitting with me for a little bit. We had gone through the interviews here for the processor of the year story and you know, we talked a little bit about a wide variety of the success story that APF has kind of been over the last year and a half, but I wanted to talk a little bit more in detail with you about the research and development side, how it's contributed. So, let's get into, you know, you and I have talked in the past for coverage stories. And product development, product innovation has kind of been a backbone of the AdvancedPierre world forever. So, talk about how that has laid the foundation for the success leading up to the really good success you've had in the last year and a half.
Bernie Panchot: We're really fortunate that the companies that came together all had really unique and great tasting products that met a customer need and so it's a great foundation to build on. That's a wonderful place to start from. And each of the companies independently had R&D teams that knew a lot about their products. I think what's unique now is we're more closely aligned with the business leaders and brought in the piece of consumer insights that I think adds huge value. We've invested in three consumer insights members that spend time on both primary and secondary research that really bring great ideas to us that we can build on. And great ideas for customers - they really value that as a partner when AdvancePierre comes to the table to work with them.
Andy Hanacek: So the success story that has been the last year or so, year and a half, year or so product innovation has played into that but research and development has also benefited from that as well. You guys have added people, you've refined your focus a little bit. Talk about some of the changes that have occurred leading to and because of the success.
Panchot: We have been able to add to the team, which has been fabulous. We've put 12 new scientists on the team this year. We did centralize the R&D organization, so we have a core group that works here in Cincinnati. But then we keep critical players out at our manufacturing hubs, so we have teams that are aligned with the Enid Manufacturing Facility, Portland, Maine, Claremont, North Carolina and Amherst, Ohio. And so, those members not only execute development and commercialization of new products, but they also work really closely with manufacturing when it comes to productivity and optimizing the current products that are produced in those factories. We were able to redesign the team and so we're organized by technical competency. I have a sandwich team, a protein team and then we really carved out a separate bakery team, because we know how important our bread is to the success of our sandwiches. And so, Connie Banning leads that team with a team of scientists that are really about capitalizing on that bread and making that bread even a more important part of our sandwiches.
Andy Hanacek: Talk about one of the things that came up in the interview was the unique position in which the company sits being bread, a bread baker basically and a protein manufacturer makes all the bread and how that synergistically really helps the company. Talk about how that helps you guys in the research and development space in terms of that coming together.
Panchot: And so when we go to one of our customers and have a great idea or when we're working with our marketing teams, on a product to go to the marketplace, we're able to design that to the last detail. We work very closely with some of our suppliers when it comes to the ingredients that goes in there. But then when we get our hands on the meat and the bakery products to make that sandwich, we own every bit of that. And so I have technical specialists that design protein products like the burger patty that is going to deliver exactly the right flavor that we're looking for. If we're trying to emulate a Burger King burger, we get exactly that grill flavor. We bring in consumer insights and measure that side by side. And we're able to dial that into exactly what the right product is to go on the shelf. Our competitors don't have that advantage and I think that makes a huge difference for us.
Andy Hanacek: Cool. So, like I said, products have kind of helped push the company forward and what not. To put you on the spot a little bit, I'm going to ask you to name one or two of the key products and key innovations in the product space over the last year that have really carried the load, if you will, for the company, leading into this award, really.
Panchot: And so you know, we are absolutely, our core is a burger supplier and our charred burgers are the best in the industry. And we're able to capitalize on that and turn it into great burger products. We've worked closely with a lot of our customers to put private label burgers on the shelf, and so that really is the foundation of who we are in the sandwich space. We have products that are tailored exactly for convenience customers, a big hardy burger that's filling and ready to heat and eat. We have products that are microwavable for retail and that's the core and we've been developing that in a very big way. I think our barber stuffed chicken breast also is an area that we've been able to meet consumer need and we're going to be renovating that line to make it even more relevant to consumers right now. And a great time to do that in our 60th anniversary year, and so we'll have new news in that category this summer. We've continued to grow a great deal based on our Philly and Kentucky fried steak as well. We're able to find customers that work with us and design those products specifically for what they need in their operations.
Andy Hanacek: And then lastly, I wanted to ask you about the Landshire acquisition and how that fits into the R&D space and what has your team and you and your team and R&D most excited about the Landshire products coming into the fold moving forward?
Panchot: We are so excited about that acquisition. It's a perfect fit for what we needed to build our business. It brings us sliced meats capability that we just weren't able to do well in our other facilities. And so that's a platform that we can jump on and spring forward. It also gives us an opportunity to expand our microwaveable bun capacity and so we are in the process now of qualifying that bakery to produce our bun. And it's not an easy thing to do. We're going to have to make some capital changes to make that happen, but we're very far along the way and hope to have that up and running in the next month or so.
Andy Hanacek: Great. Anything else that we didn't touch on that you wanted to point out as far as R&D goes, as far as the success of the company, you know, building off of that?
Panchot: You know, I could say probably the biggest change that's happened in the last 18 months as far as innovation is really the engagement of the whole company in the process. I think we are beyond the point that you believe that an R&D department runs new products and product renovations. We've embraced it as a company and so we meet with each of our business units every week to talk about what's in their portfolio, and so that partnership with the front end and consumer facing side is really important to us. But we also meet regularly and have participation from our Operations Team and our Strategic Sourcing Team. And on the same side, when the Strategic Sourcing Team finds an opportunity for raw materials, they come to us and say, "How do we manage this into our systems?" And so that partnership really flows both ways.
I think a huge advantage of having our R&D members that are closely aligned with the factories helps us with that communication with our factory teams. And they're very involved. Our R&D members are very involved in what goes on a daily basis just as our Operations Teams are heavily involved in what's coming their direction and how do we influence the design of those products. And so, I just think that huge teamwork approach has made a huge difference for us.
Andy Hanacek: Great. Well, Bernie, again. Thanks for joining me. Congratulations on the award and everything your team has done to help APF secure it.
Panchot: Thank you.