Information technology is playing an ever increasing role in the arena of fresh produce. This month we take a look at some of the issues and systems that are shaping the sector, from RFID application from a Microsoft viewpoint, to the advantages of modern software when it come to business planning and forecasting.

The main obstacle to RFID in the UK has been the inability of the major retailers to incorporate it into their existing businesses, an industry expert told a seminar at Microsoft House this month .

“A year ago, everyone thought that all the main retailers would push out their mandates,” said Simon Holloway, part of a Microsoft team that looks at finding RFID solutions for different sectors.

“But they found out that most of the problems they thought they would have to sort out with RFID were within themselves and their own processes - from RDCs to back of store.”

Holloway added that there is still a commitment to implement RFID in the near future. “Once they [the retailers] have sorted themselves out, they will push this through and there will be huge costs involved.”

He said that in Europe, it will be the logistics giants that will start driving the RFID revolution, particularly those who use crates and pallets. One multi-national in the food industry is already conducting extensive “proof of concept” trials.

Holloway said that one of the major obstacles to the revolution is the inability of large companies to efficiently use the information and data that RFID tags provide. “There is no point implementing a system unless you know what you are going to do with the data. Wal-Mart, for instance, generates one trillion bytes of data a month through its RFID tags.

“The key is how you analyse and respond to that data and how you can use it to get the answers you need.”

He used the example of the British and US armies during the war in Iraq. “The US military RFID tags all of its crates, our army doesn’t. When the debate about the lack of bullet-proof vests was highlighted, the main difference was that the US army knew where their vests were. We had them, but we didn’t know how to find them.”

Although the initial costs will be high, suppliers and logistics providers can have far greater control over their products and processes when RFID becomes a commercial reality, Holloway said. “They will know when they leave, where they are during transit, when they arrive at the back of the store and when they are moved to the front of store. Suppliers have never had that information.”

The cost savings in the supply chain, he predicted, could in many cases mean that payback time on the initial investment will be around six months.

Holloway was speaking at a seminar organised by Anglia Business Solutions to outline its LinkFresh product for the fresh produce industry and to give customers and potential LinkFresh customers an overview of the relationships between ABS - a Microsoft gold certified partner - and the IT behemoth, as well as a preview of some of the products Microsoft is developing and tailoring for specific business uses in the near future.

A JUICY SOLUTION

Drinks producer Sunjuice, a division of The Serious Food Company which manufactures fresh juices and smoothies, has signed a deal for an integrated supply chain management solution.

Ross Systems, a leading provider of enterprise software solutions for food and beverage manufacturers will provide its iRenaissance SCM solution to support Sunjuice’s planning and forecasting in line with major business growth.

The solution will go live at the end of November, following an eight-week implementation process, with the APS module following in January 2006.

With considerable growth year-on-year, The Serious Food Company needed to implement a supply chain management solution which would enhance its forecasting and planning capabilities, increase its visibility and better integrate sales with production to improve customer service levels.

Sunjuice’s previous system had relied on spreadsheets, which provided no real visibility, lacking the sophistication required to take the business forward in what is an increasingly competitive marketplace.

Planning was more reactive than proactive and as a result, service levels were lagging behind where they should be.

Having made the decision to implement a new system in May of this year, Sunjuice set about a review of the marketplace and selected Ross from a final shortlist of two players.

Mark Way, planning manager at The Serious Food Company, said: “Having whittled our selection process down to two, Ross stood head and shoulders above the competition.

“We were impressed with its industry experience and expertise as well as in the functionality of the iRenaissance product itself.

“Ross demonstrated an excellent understanding of our business, the challenges we face and had a highly professional, honest approach.

“It’s early days in our relationship but we hope to work with the team at Ross to extrapolate more functionality from the solution over the next six months and potentially support other areas of the business going forward.”

A HELPING HAND ON SUPPLY AND DEMAND

In a dynamic industry such as fresh produce, one of the major challenges facing management teams is matching supply with volatile demand.

In the old days, a quick field inspection and a few phone calls to trusted sources told you all you needed to know.

If you were short of produce or hit quality or yield problems when you lifted the crop, people were more understanding. They knew that you could not control nature and would work with you on an acceptable solution.

Things are different in today’s price conscious quality driven environment - particularly if you are a supplier to the major multiples. Missing contracted delivery schedules, leading to empty supermarket shelves, is not an option. Telephoning one of the recent graduates responsible for supply chain management to explain why you cannot fulfil their order is unlikely to elicit a sympathetic response.

The fact that the last three days of torrential rain has meant that you cannot get onto the field to harvest the product is not their problem. The task of meeting the delivery requirements is yours, whatever the cost or impact on your company.

The question of cost brings an interesting dynamic into play. With average net margins within the industry running at just 1.7 per cent, you do not have much scope for error.

If your growers let you down, due to circumstances beyond their control, you have to make good the shortfall from another source whatever the cost.

Asking the supermarkets for a contribution when you have to ship product in from abroad, or buy on the spot market, is invariably a waste of time.

Furthermore, even if you bust a gut to fill their shelves and the produce is delivered late or incorrectly labelled, you are likely to incur a fine, adding insult to injury.

In such a harsh and unforgiving trading environment, advance warning of possible product shortfalls can make the difference between making and losing money. Up to now, people have adopted a number of technology applications to try to forecast future demand and match it with supply.

The most common is the ubiquitous spreadsheet. Even though the assumptions were rarely linked to other information sources, the combination of product and customer knowledge meant that they became an invaluable forecasting aid.

These worked well when fresh produce businesses were small and the products fairly simple. However, market consolidation has meant that many fresh produce companies are now relatively large businesses in their own right.

Furthermore, the quality and packaging demands of the retailers have grown more stringent as they battle for market share in the increasingly competitive consumer sector.

Engineering a spreadsheet to manage the volume and complexity of the task involved is no longer an option.

The dangers of relying on spreadsheets to manage mission critical information were covered in my article in May of this year.

What is needed today is a fully integrated solution that takes as many factors as possible into account when balancing supply and demand.

On September 29 at the fresh produce seminar held at Microsoft’s headquarters, such a facility was demonstrated within the LinkFresh application.

It created an immediate and very positive response from the audience. They quickly recognised how such a cleverly integrated application could take much of the guesswork out of the task of forecasting future demand.

The LinkFresh Planning Board collates all the latest information affecting demand and supply in one central repository.

It maintains a demand forecast by item, customer, ship-to location and day. It also maintains a supply forecast by item, vendor, location and day.

A harvest forecast can also be managed by recording item details, grower, grown location, location and day. The system facilitates maintenance of multiple forecasts, enabling the exploration of “what-if” scenarios. It also distinguishes between forecasts for own and third-party product.

Forecast information is used together with the latest real-time stock position and outstanding live sales orders, to produce a buyer’s planning board that instantly highlights any problems with the supply/demand situation, period-by-period, for any given produce type at any location. And all demand is uplifted automatically to take account of the expected yield from raw produce.

“Everybody we spoke to had difficulty in balancing supply and demand given the fast moving nature of the business,” explains LinkFresh product director, Mark Nixon. “We saw rooms filled with whiteboards and hugely complex spreadsheets that no one in the business understood any more. Various manual and technological solutions were also being tried with limited success.

“The big problem was keeping all of the information current because it was coming from so many disparate sources. It was clear that if we could centralise the information and create one version of the truth, it would be a major benefit,” he says.

“The overall design of the LinkFresh application took a long time, and we had this facility in mind right from the start. The core foundation module was structured to collate information in the correct way, including fresh produce inventory attributes such as variety, grade and country of origin which can vary at lot level.”

Nixon continues: “All this foundation data is made use of in the supply chain module. Customer feedback to date is very positive indicating that we have got it right. With the LinkFresh planning board in place, customers can quickly and reliably spot product shortages or oversupply and react accordingly, safe in the knowledge that they are viewing the most up-to-date information that the business has access to.

“This in turn will enable them to increase customer satisfaction by avoiding stock-outs without increasing administrative costs,” he adds.