Produce distributors and wholesalers are benefiting from enhanced ERP software features that are geared toward their businesses.Originally printed in the December 2023 issue of Produce Business.
The produce wholesale and distribution industry has unique needs, and this remains true when it comes to software technology.
“Fresh produce and perishables is the fastest moving supply chain due to short life, high volume, low margin and long supply chains,” says Mick Heatherington, vice president, of sales, North America for UK-based Prophet ERP. “Produce can come from many different places and regions around the world with each harvest and region delivering different quality and sizes by season, grower, by load, by day, and to complicate matters, it’s got a different cost associated by load.”
Produce also is impacted by sudden and unexpected weather-related events or delays to make it even more complex.
“On top of that, supply and demand issues result in volatile selling prices fluctuating up and down, hourly in some cases,” Heatherington notes. “And there are many complicated supplier contract agreements including commission selling and ‘price to be agreed after,’ resulting in complex account sales requirements in order to pay vendors.”
To address these challenges, an increasing number of produce wholesalers and distributors are incorporating ERP software into their arsenal.
Miami-based Capro, Inc. is a produce distributor that was previously operating with spreadsheets and QuickBooks prior to incorporating Silo ERP software. After implementation, Capro saw immediate growth. In addition, the team now is able to think about their own business units strategically because it is using pricing intelligence and data to help them identify which customers and products are its best fit.
“ERP software makes things simple to understand, including our numbers,” says Franky Verdecia, Capro’s operations manager.
Because there is a wide range of ERPs to choose from, it can be overwhelming when choosing which one will work best for a business.
“Some are cloud-based versus on-premise, but we are telling people on-premise ERPs are a thing of the past,” says Lauren Contreras, director of product marketing for San Francisco, CA-based Silo, an ERP provider. “Cloud-based software and SaaS (Software as a Service) allow people to optimize their business by monitoring inventory, cash flow and understanding how much working capital they have.”
Produce wholesalers and distributors also need to check whether the technology will be sunsetted, meaning there will be no future updates.
“Finding the right solution that meets the size and demographic of their business is key,” Contreras notes.
The ERP software should be intuitive so team members can be easily trained to use it.
“A majority of larger businesses working in wholesale distribution have been working with ERPs for a long time, while small- and medium-size companies are more recently getting into it,” says Contreras. “A business leveraging an ERP should be looking at how intuitive the program is as well as find a program that allows them to know the inventory and age of inventory, what they’re selling and what they’re selling it for.”
Silo’s system is modular and designed to handle inventory management, logistics, buying and selling, payments, accounting and access to financing.
“Typically, this information is disjointed and not connected,” says Contreras. “An ERP platform like Silo puts all the departments on the same page.”
Silo facilitates and automates the transfer of information from one department to the next, giving each team (warehouse, sales, accounting and management) what is needed.
For this reason, ERP software allows businesses to make more data-driven decisions.
Silo gives businesses real-time insight into their cash on hand and where their cash flow is tied up so that they can prioritize better buying and collection (AR) initiatives that promote stability and fuel greater buying power, as they navigate market shifts. Its ERP provides a combination of United States Department of Agriculture (USDA) and customer pricing intelligence to help teams buy and sell at optimal prices that secure the necessary margins.
Management has insight into how to optimize sales outcomes, which customers are making them more profitable, and which customers or commodities are negatively impacting their businesses. By streamlining their business process, this reduces double-entry and prevents human errors.
ERP software also can positively impact employee retention.
With daily tasks, market pricing and commodity expertise taking years to acquire, Silo’s pricing trends, USDA pricing and Freight Quotes expedite this process.
Silo also helps provide accurate COGS (Cost of Goods Sold), Break Even Points, Target Margins, USDA Market Data and Historical Pricing Intelligence tools.
With the program’s customer and vendor data, companies can better predict if a customer hasn’t been buying recently, based on moving averages, or if it’s necessary to stop working with a certain supplier based on the number of inbound issues.
Using Silo ERP’s audit log, permissions and internal trackability tools, it’s possible to see what’s happening across the business, raise necessary flags, block certain behaviors and take action to mitigate concerns.
In addition, navigating market shifts is easier, as businesses are provided with the insights to see trends coming and take advantage of a market shift with the cash flow health needed to execute a time-contingent opportunity.
Silo tracks freight via multiple order status. It also provides lot-tracking technology that connects orders to the originating PO for traceability in the supply chain. In addition, it allows users to input the “Pack-Date” and “Use-By-Date” as well as provides Inventory Aging Reports to better understand Inventory Age.
Silo programs mitigate waste by providing reports to quantify this and make the most of inventory by prioritizing the sale of aging product or getting tax write-offs for donations.
Among Silo’s ERP system’s new improvements are a new Order Management Solution geared for small- and medium-sized businesses; simplified quoting, managing and tracking commodities; and the ability to access additional working capital through Silo’s Capital solutions, a fast and flexible finance program.
San Francisco-based GrubMarket, maker of WholesaleWare, has an ERP program geared toward produce.
“Our ERP solution is meant for B2B transactions and can be used for foodservice broadliners that don’t have EDI, as it takes orders 24/7,” says Bryan Barsness, vice president of sales and marketing. “We have multiple software products, and the core is our ERP.”
With produce difficult from a coding perspective, GrubMarket is flexible to adapt to the industry’s idiosyncrasies.
“With warehouse management, it’s not just about FIFO,” Barness explains. “A customer may need your best products while another company can take [second tier] produce. We understand that.”
WholesaleWare has the ability to accommodate atypical situations, such as growers on a consignment-type basis where the shipper sells on behalf of a grower for commission and service fees.
“Non-produce specific systems aren’t designed for this, and companies can be charged extra to customize an ERP system to handle that,” says Barsness. “With WholesaleWare, you have a system created from a produce company that is fully functional, affordable, scalable, easy to use and will be around in the future.”
“From our perspective, we can handle every part of this vertically integrated supply chain, whether our clients are grower-shippers, importers or whether they’re exporters, value-added or packers distributors,” says Prophet’s Heatherington.
Prophet’s software provides visibility of all pallets, loads and containers with its attributes on both inwards and outbound and wherever they are in the supply chain and where the produce company needs to have visibility and control.
“We are providing all that estimated and actual cost information as it’s happening,” says Heatherington. “We are also providing all of the expected arrival information in advance into the various depots’ third-party logistics and production facilities.
And we are providing traceability as part of that, too, as we know what is on each pallet, who the growers are, and what the product is. We are calculating whether your selling prices are amenable to making a profit and then also providing the traceability data down to the individual cartons through that process, too.”
Prophet ERP’s planning and forecasting is activity-based, live, and a core engine in the software.
“So, everything that affects your supply chain and everything that happens to your supply chain, products, loads or distributions all affect the plan, and the plan will keep adjusting as changes are made and give you visibility so that you can see and predict better where potential issues are brewing, such as supply shortages or quality issues,” Heatherington explains.
“To describe a typical issue as an example, we’ve got a problem down in Chile or California where the product is coming from; they’ve had bad weather affecting harvesting resulting in poorer quality. The quantities harvested are less than I expected and are now potentially short on contracted produce and delayed to fulfill a program with a retailer or customer. You can see that you’re not going to have potentially enough product for that particular depot or retailer so you need to take action. You may need to move product to different facilities, or you need to source more product or pack more.”
This is where Prophet’s Planning (MRP) module provides wholesalers, importers or distribution companies the visibility across their supply chain with the data and ability to make fast, automated decisions such as automatically cutting POs, action cross docks, increase production and manage the supply chain to make sure that the correct product is at the right place and the right price and going to the right customer.
“This is the key stuff for operational efficiency and delivering profitability for produce operators in the supply chain,” says Heatherington.
In addition, Prophet has integration and automation features integrated with Prophet warehouse management modules (WMS), QA and production scheduling and control modules and the sales and accounting functions.
“Scripting cubes and language embedded in Prophet is a crucial time saver, too, and is a key function and driver for Prophet and one that provides our clients the tool-sets to action data efficiently and being able to automate many daily and business processes and tasks,” says Heatherington. “This also brings some Artificial Intelligence (AI) into the equation, as well, because it’s all of this data, coupled with Prophet’s tool-sets and predictive ability of the software and calculation speed, definitely provides a forerunner to AI.”
To have data flow where it needs to be with access to multiple sets of data provides accurate pictures, snapshots and queries.
“We have a No Code Low Code ethos within our product,” Heatherington notes. “What that means is we build a wide range of configurability tools and features at the end-user interface levels to allow our clients to shape the software around their processes where they are good as opposed to changing everything to suit the system. This is delivering low customization projects and faster installs that are less costly with far more flexibility and the advantage of being constantly able to shape the software around new processes and business activity as the business expands or increases product range, etc.”
Prophet markets its ERP software on an annual license based on the number of users concurrently and the modules they have deployed; so the smaller the company or bigger the company, the more or less they pay.
AI is a major development with ERP software.
“Many retailers don’t want paper invoices, since today everything is electronic,” says Trevor Morris, chief executive, FreshByte Software, Houston, TX. “We can connect our customers with their customers electronically; the days of waiting for confirmation by paper or email is gone, since everything is sent by EDI.”
GrubMarket is building AI into its ERP for even more functionality.
“It will build in analytics and is geared toward farming and public pricing models,” Barsness explains.
“Once integrated with ERP, the AI feature will allow users to ask questions like, ‘How did I perform?’ or ‘Show me a graph of what my top 10 commodities were last year,’ or ‘Which warehouse was more profitable?’ It also can bring up historical data quickly and easily. Instead of having to run reports, users can just ask AI for that information.”
In addition, ERP software ensures faster payment.
“Also, one of the big-time savers and efficiency makers on our software is our scanning module,” says Morris. “When a truck comes back from making their deliveries, we have customers who had two or three employees whose sole job was to take invoices from a delivery and sort and file them, which took hours or a full day of work.”
With FreshByte Software’s ERP program, companies have the ability to take all invoices from a given route and digitally scan them. So what was taking a day’s worth of work can be accomplished in minutes.
“Technology can take many roles in making things faster,” says Morris. “With barcoding, produce can be received and picked by scanning, which is a huge timesaver.”
With the margins shrinking for pallets and cases, the goal is to lower expenses.
“ERPs help customers identify where they can lower their costs, thereby increasing their margins,” says Morris. “This includes using technology to pick more efficiently and correctly. The software can tell you it’s the right item but wrong lot, for example.”
Picking software and scanning bar codes helps eliminate costly second runs.
“With importing, it’s a mix of when you bring in product from overseas, you’ll get custom or inspection fees, so the goal is to identify those costs and include them in your landed cost,” says Morris. “Let’s assume you’re bringing in avocados from Mexico that may have cost $50 a case. If you sell it for $55 a case and you don’t factor in the extra customs and freight and inspection fees, the $50 case really costs $59 and you lost $4 a case. The ERP makes sure you’re capturing all costs and tying them into the lot you’re selling to get true profitability.”
Also, on the financial side and whole costing side, an ERP system goes to every department.
“Departments need to be unified in using ERP software to create an integrated business, rather than utilizing different solutions in different departments,” says
Andy Makeham, U.S. managing director, Consentio, an ERP provider with offices in Los Angeles and Europe.
These programs simplify the ordering process for customers as well as provide customer-based pricing capabilities.
“Some wholesalers and distributors use generic catalogs with one price for everyone, but produce isn’t like that; pricing for one customer may be different than for another,” says Makeham. “So, companies need solutions with the trading front end integrated to ERP to readily and easily trade.”
In fresh produce, retail customers want to see shortages and click on what they need to build an order.
“Solutions geared toward shelf life require special ERP systems,” says Makeham. “And having instant data access provides key visibility for decision making. For example, if you are loading a pallet for shipment in a warehouse and aren’t cognizant, you may end up putting mushrooms on the bottom and potatoes on top; with software that is geared for produce that takes fragility into account you can automate packing and shipping of produce.”
Produce distributors and wholesalers are seeing a wide range of benefits from ERP systems.
Matthew Park, chief executive/president, CJ Brothers, Bronx, NY, says Silo is a modern ERP system that is intuitive for sales, invoicing, counting warehouse stock, analytics and inventory.
“It does everything,” says Park. “The biggest benefit is how easy it is to learn how to use; it’s like using a smartphone app.”
He also appreciates the advanced functions.
“I find it’s a system I can show to young and old people without training, where with the previous system this was not the case,” says Park. “We can enter in purchase orders, include notes on orders and the warehouse marks as received. We also can upload photos.”
On an advanced level, the ERP system provides accurate data to make informed decisions.
“Now it is increasingly important to analyze and look at metrics, how much is inventory moving, how much salespeople are making; I need the same data in many formats, and the system helps me do that.”
He says what sets Silo apart is that the company is constantly upgrading and building on its systems.
“The company has a culture of innovation,” he says. “We’ve been giving them a lot of feedback, and they listen and implement our suggestions.”
Nicho Produce, Edinburg, TX, has been using FreshBytes’ ERP system for several years.
“I love it, as it has very nice features and is very intuitive and easy to work with,” says Nicho Produce Chief Executive Tommy Villarreal. “The support has been very good as they help us with issues we may encounter along the way.”
The company’s biggest pain point is order entry.
“We get a lot of orders, and the ERP has the ability to bring orders into the system that people are savvy enough to place,” he says. “We use it for customers to place orders, since they know what they’re looking for; and it minimizes errors and is faster.”
The company also uses the ERP’s general ledger to see accounting reporting.
“Also, the ERP’s sales module has order entry, receivables and payables, so we can scan invoices once they come back. If someone needs a copy of an invoice, we go into receivables and can email it. We can see details of past invoices without having to dig through paper files. ERP has created efficiencies across the board.”
Villarreal adds that the company could not handle the volume it does today with systems from years ago.
“Another nice feature is packouts,” he says. “We’re a fresh-cut processor, so this system has the ability to convert one inventory to another and do all add-on costs.”
For example, if the company purchases whole pineapples in a box and a customer wants cut pineapple in 4- or 5-pound packaging, the ERP provides insight into how many boxes of pineapples were used to get the true cost of the packout, while also fixing the inventory with the proper deductions.
Traceability is another useful feature.
“If we’re doing a mock recall and someone says we have box of lettuce, we get the box PO number, and with that one number, I can trace when I received the lettuce, who I bought it from and when, how many boxes I had and with FIFO (first in, first out) system, I know where it went,” says Villarreal. “I can run a report and find out who received the lettuce to do recalls much quicker.”
The ERP systems also specify country of origin, which is a requirement with school government programs.
“We still have room to grow with the software,” Villarreal notes. “Companies looking to integrate ERP software should do their homework, as it’s not always about the initial price of the software but also the service agreements and support.”
Another Silo user, Capro, finds benefits in the ERP system due to its diverse inventory.
“We have a lot of inventory and offer a service for customers who may want different products in a pallet,” Verdecia explains. “Normally, this causes an inventory nightmare, as we need a way to identify product and where each box is going. The ERP helps us organize our inventory and sales.”
It also helps the company stay on top of customers when it comes time for collection, tracks purchases, and provides a visual on profits and margins.
“It gives us a visual map of how the flow of our inventory is going and our capital, helps with moving and loading orders and fulfilling deliveries, allows us to easily print labels, and basically helps everyone know what’s going on,” says Verdecia. “We can track country of origin and shelf life as well as stay on top of food quality regulations.”
Because a purchase order can’t be created without a country of origin, errors are prevented.
“It also helps determine weights on the truck,” says Verdecia. “Every month, Silo continuously updates its software, which is a big plus since it brings us visibility with capital and cash flow.”