Strategic transportation relationships can also provide valuable expertise, capacity, and freight tools. “A good broker helps you avoid the complexity of running a transportation department and gives you access to the fleet of owner-operators that dominate produce transportation,” says Kenny Lund, vice president of support operations at Allen Lund Company, Inc. in Los Angeles, CA. “You can leverage their relationships, transportation management systems, EDI capabilities, and contracting skills.”
Reaching Out to Retailers
Collaboration with downstream customers also helps produce companies develop accurate and timely forecasts of future inventory needs. If a retailer is planning a major promotion for a particular commodity, it is essential for produce suppliers to have such information well in advance, which allows enough time to procure appropriate levels of supply to support the promotion.
The most collaborative relationships lead to retailers sharing promotional calendars and point of sale information with trusted partners.
“If you’re actively involved with retailers, they will share their advertising plans, typically about three months in advance,” says Julia Inestroza, marketing director for Gourmet Trading Company in Los Angeles. “The key is working with retailers to align their big ads and aggressive pricing with your flush production.”
Category data from retailer cash registers, holiday sales, and other historical information are essential for developing predictive models to understand demand, according to Roger Pepperl, marketing director for Wenatchee, WA-based Stemilt Growers, LLC. “We graph out our crops to create a supply-demand curve for our products,” he indicates. “The goal is to make sure we’re in stock at the right time and plant orchards at the right time to keep the graph stable.”
Capacity
Though seasonal demand spikes can be difficult to manage, accurate forecasting helps proactively determine additional needs for product, transportation, and storage. The real challenges occur when there are disruptions of unknown frequency or timing such as extreme weather, supplier failure, or product recall.
Sourcing from multiple regions is a valuable strategy to help avoid or temper the effects of extreme weather. When feasible, a network of geographically dispersed growers reduces supply risk in the event of a drought, late season freeze, or other climatological event that disrupts product availability and quality.
Also needed is a contingency plan to rapidly access this capacity in the event of an interruption. Orders must be quickly placed with backup growers, transportation equipment must be secured, and customer delivery schedules must be modified to avoid inventory shortages and empty store shelves.
Hayes and Zehe highlighted the importance of geographically dispersed domestic suppliers while Inestroza notes the value of having offshore suppliers to source needed product year-round.
“We have diversified our growing region so we’re not just relying on Peru,” Inestroza states. “We depend on Peru and Mexico during certain timeframes; at other times, we rely on Washington and California. If a weather issue takes out one region, we have another to fall back on.”
