Turning Information Into Insight

A failure to fulfill these three requirements will cause managers to lose their virtual line of sight to inventory, demand, and activities taking place across their produce supply chains. Blind spots will result and opportunities for collaboration will be lost, leaving decisions based on educated guesses and internal signals rather than chainwide knowledge.

PLANNING AND FORECASTING
Forecasting is an inexact science, greatly complicated in the fresh produce industry by a number of factors. Unanticipated competitor actions and fickle customers often render demand planning efforts ineffective, while unexpected variations of key inputs can lead to supply planning errors. A concerted effort is needed to assemble and analyze pertinent information from a variety of credible sources to achieve accurate forecasts.

Demand planning seeks to forecast consumer demand for a company’s product well into the future. Critical demand planning information includes pricing, historical sales, and a retailer’s promotional calendar. The overall inventory position of the industry would be valuable (if it were available) because supply availability drives price.

The lack of robust data combined with the price sensitivity of consumers makes fresh produce a complicated forecasting category, according to Eric Peters, former president and CEO of FoodLink. “Produce is like gasoline,” says Peters. “When prices go up, we crush demand. When prices go down, demand goes up. You need to understand the pricing.” For now, the solution is to adopt a short-term approach to demand planning and use qualitative forecasting techniques that leverage the marketplace knowledge of industry experts.

Supply planning seeks to ensure that a company has enough product to meet customer demand. Produce managers must project supply availability based on information from their grower community regarding planting and harvest expectations. Information from the U.S. Department of Agriculture (USDA) could potentially contribute to the analysis if the data is disseminated in a timely fashion.

Projected weather patterns from climate modeling experts and the National Weather Service are also used for planning. Finally, concerns about labor shortages or other potential disruptions at harvest time may dampen supply projections.

Accurate supply projections allow produce companies to effectively set prices, service contracts, and seek alternate sources of supply as needed. “When you think there’s a lot more product being grown, you can be more aggressive in certain contracts,” observes Daren Van Dyke, director of sales and marketing for Five Crowns Marketing in Brawley, CA. On the other hand, when there’s a dearth of product, it should be noted in contracts that available inventory will go to key accounts first.

LOGISTICS EXECUTION AND VISIBILITY
The fluidity of supply and demand in the fresh produce supply chain requires a constant flow of logistics information to be shared across the network. Timely execution relies on fundamental information from supply chain databases, customer orders, inventory records, contracts, and related knowledge sources. Inventory availability, transportation status, and order traceability intelligence are needed by decision makers.