Procurement – Sourcing Quality Product
The commoditized nature of the fresh produce business makes it difficult to optimize sourcing of quality product. Uncontrollable events—poor weather, surprise retailer promotions, or transportation capacity shortages—may throw the supply chain into disarray. The result is a product quality, quantity, and demand mismatch accompanied by rapid shifts in spot market prices for fresh fruits and vegetables.
These uncontrollable factors, combined with the increasing concentration of retailers, is forcing produce companies to rethink purchasing tactics. As volume shifts from spot markets to forward contracts with retailers, it is imperative for produce companies to align their supply resources with these retail commitments. An experienced consultant can help improve quality and significantly lower the total costs of acquiring the required volume and flow of products.
Project initiation requires a detailed response to this question: How are procurement operations currently conducted? To ascertain this knowledge, the consultant will review existing contracts, analyze spending, and assess dependence on spot market sourcing.
The capabilities of key growers and suppliers also warrants attention. Does the company work with best-in-class suppliers that consistently meet volume needs and quality standards? The consultant can help investigate whether the number of suppliers provides adequate capacity, technology, and geographic dispersion to meet demand for year-round supply.
Another important question is: Are there contingency plans for handling supply disruptions? Having effective backup sources of supply, both domestic and international, provides protection should primary suppliers run short of product.
A strategic sourcing project will address these concerns. The consultant’s goal is to help your organization make a strategic move from transactional spot market buying to relational contract-based procurement. Reshaping your operations and supply base will drive better pricing not subject to the whims of the spot market and achieve more consistent product flows with fewer disruptions. You will also become a priority customer with suppliers, which will help maintain inventory supply to profitably serve customers.
Distribution – Meeting Customer Requirements
Amazon may not be a direct competitor in the produce industry, but the company has greatly influenced supply chain service requirements. All industries are being challenged to provide greater service, speed, and variety to downstream customers and end consumers. Buyers also want to hold less inventory and receive replenishment orders with greater frequency to reduce costs and waste.
