Linking growers to consumers, automated ordering replenishment, and forecasting are the next steps beyond traceability.
Many retailers already count on traceability software to let them know with the swipe of a label reader — should salmonella, E. coli or other food contaminants break out — where and when the offending produce was harvested, making it possible to surgically remove the unsafe food from the market with unprecedented speed and a minimum of waste.
Once traceability and food safety opened the door to using computer technology in produce, some of the larger shippers and retailers found it advantageous to also use software that records their orders, shipments, invoices, payments and inventory, including inventory that is still rolling down the highway.
“We have been deploying our business-to-business synchronization software for a number of years,” says Mick Heatherington, vice president of sales at Prophet North America, Bakersfield, CA. “A typical example of its use is when a supermarket buyer purchases produce on its own system, the communications module agent then takes this data and automatically creates an expected receiving record at the service center. At the service center, when the produce is received and counted, the system will transfer the receiving info to the retailer’s software system for setting up payments to suppliers, etc.”
Produce software, particularly electronic data interchange (EDI), could soon open the door to a world in which retailers have the ability to let their customers literally see where and how their fruits and vegetables were grown and harvested. “Retailers will have better two-way direct feeds from the packing house,” says Richard Jones, chief technology officer for Linkfresh Inc., based in Cambridge, England. “Advanced EDI will facilitate knowing where the produce was grown, and even who picked it.”
Traceability and related requirements are quickly bringing produce shippers and retailers to view high-tech as a necessary part of the business. “Increasing vendor regulations, requests and requirements are making EDI solutions a necessary part of doing business in today’s market,” says Tina Reminger, vice president and general manager at Silver Creek Software, Boise, ID. “With the onset of high traceability needs, EDI is another tool in our customers’ tool kit to speedy and accurate reporting.”
This detailed site-specific growing information will, while improving traceability, also allow retailers to reach entirely new levels in satisfying consumer desire for transparency about how their food is produced. “In addition to putting information about the farms on the labels, retailers will be able to use point-of-purchase materials that show pictures of the farm and the workers,” says Jones. “They will have information about the soil and the weather at the farm.”
This futuristic technology must pay for itself to be viable, and the next step in this regard could be a previously inconceivable level of inventory management. “Our inventory control module is at the core of our package, and although easy to operate, it provides authorized users with instant product profitability, traceability and usage information,” says Shelvia Smith, marketing manager at Houston-based Edible Software. “Our inventory module allows immediate drill-down access, so that authorized personnel can view the details of each item and each lot within the item. The details include the vendor and the receiving date, together with every cost incurred; which customers ordered the item, including the quantity ordered, date required, quantity and selling price; the quantity still available for sale to other customers; and the quantities on order from each vendor, together with the due date and cost.”
A Brave New World
There is already software available that will monitor your inventory and send an order to your suppliers’ computers in time to keep you in supply. “You can set an economic order point,” says Charles Shafae, president of dProduceman Software, Half Moon Bay, CA. “You can set it so when you have 50 boxes or 25 boxes of an item, you make an order. I don’t think this happens in produce, but it does in grocery.”
There are already programs that trigger an order based not just on the current inventory levels, but also on an analysis of how much of a product you can expect to need in the near and mid-term future. “Park City Group’s automated ordering solution doesn’t just react using point-of-sale data and inventory; we predict future demand for an accurate forecast, projecting out-of-stocks and excessive inventory,” says Randy Fields, chief executive of Park City Group, Park City, UT.
“Our inventory module allows immediate drill-down access, so that authorized personnel can view the details of each item and each lot within the item.
— Shelvia Smith, Edible Software
This ordering program can even take into account how the calendar or in-store promotions can be expected to affect demand. “It adapts to trends and seasonal changes by item and by location; maintains a perpetual inventory; considers location capacity and lead times; and analyzes past promotions for effective ordering,” says Fields. “It functions for any location in the supply chain. Distributors, as well as retailers, can utilize Park City Group’s automated ordering solution.”
Other software suppliers also offer packages that help predict demand for various produce items. “On the supermarket supplier side, the Demand and Forecast Engine also uses real data from many off-system external sources to help formulate supply and production plans,” says Prophet’s Heatherington. “Vendor forecasts, grower harvest estimates, shipping manifests, retailers’ forecasts are all used to create live supply and demand plans. Anything that achieves efficiency and provides more timely information helps prevent the erosion of margins. Accurate plans and data allow distributors to resource the business better and to be a few steps ahead so they can be pro-active instead of reactive to the demand of their customers.”
It remains to be seen, however, whether this technology — which is already used by some supermarkets in grocery — can overcome the unique obstacles encountered in produce. “The relationship between the buyer and seller is important in produce, as is the quality of the produce,” says Shafae.
No Substitute For Close Look
In judging the quality of fruits and vegetables, there is no substitute for a close look by an experienced set of eyes. The automated ordering function may only make sense in produce if the software is used to begin a process that includes looking at the fruits and vegetables before they are shipped. “All of our customers use EDI for automated ordering,” says Linkfresh’s Jones. “The automated ordering sets in motion a set of processes that includes looking at the quality of the produce. Because EDI is so fast, we can also use it to trigger the ripening process to get the produce ready sooner, or to trigger slowing down the ripening process.”
Even if EDI is not used to make ordering automatic, it can help make the process quick and efficient when need be. “Daily and weekly deliveries are common,” says Jena Carpenter, project manager at Silver Creek. “EDI helps speed up the order and invoicing process, essentially cutting out human error.”
In addition to the importance of seeing the product, there can also be challenges using software to order locally grown produce, which frequently comes from farmers who do not have computers set up to process orders. “With the demand for local produce this becomes difficult because the boutique growers don’t have the infrastructure for EDI,” says Shafae. “As the smaller, local growers get out of the way and you deal with large companies like Dole, maybe you could set an order point for produce.”
More recently, simplified user interfaces and technological advances have made the sending and receiving of information through an EDI interface as simple as sending an email. “As long as the small farmer can log into the retailer’s portal, he/she is able to perform most of the functions the large players in the market can do,” Jones says. “And using well understood standard web protocols makes it easier to interface with third parties.”
If the data can be integrated, retailers should benefit from greater efficiency, fresher produce and less shrink. “The more the retailer can see down the supply chain the better they can be with the ‘just in time’ delivery model, by achieving better replenishment, better quality, traceability, better shelf life and savings on waste,” says Prophet’s Heatherington. “It all adds up to a better customer experience and a more profitable produce department.”
Baby Steps Are Possible
The largest retailers have taken the lead in bringing their suppliers into the world of computerized transactions. “Retailers can communicate the necessary regulatory information, as well as inventory, ordering, pricing, custom menus when ordering online with a product such as online ordering with visual internet solutions,” says Silver Creek’s Reminger. “Retailers such as Wal-Mart have made it a major factor in doing business with our larger clients, so the EDI solution is much more robust for these relationships.”
The highest-end produce software programs are incredibly complex, and practical only for the largest shippers and retailers. “Other data exchange alternatives are also available through Silver Creek Software for our smaller to mid-size clients that may sell organic or specialty items that need to be sent in a digital format without the high price ticket that an EDI solution may bring,” says Reminger. “Digital sharing is possible at varying levels and all kept safe and secure through with us.”
“The EDI is the complete cycle of accounting. Everything is without paper. The larger companies have such large volume it makes it easier to handle. … This is too complex for the little guy.”
— Charles Shafae, dProduceman Software
Since the American National Standards Institute first established a uniform computer language for EDI in the 1980s, companies have been able to automatically share information about their transactions. The language works because the computers at one firm in a transaction can easily read information entered into the computers at another firm.
But these standards are too complex for shippers or retailers too small to have their own information technology staff, because EDI specifies one complex set of numbers for the invoice, another set for the product, yet another for the amount, and even more prescribed numbers for other information. “Large corporations have their inventory, orders and invoices all together,” Shafae says. “The EDI is the complete cycle of accounting. Everything is without paper. The larger companies have such large volume it makes it easier to handle. K-Marts, Target and Safeway can use it because they have an IT department. This is too complex for the little guy.”
The complexity of the software may be the single most important area that producers are working to overcome. “The enhancement that keeps coming up is to make it less complex,” says Shafae. “The reason not too many people use the EDI is because it is too complex. EDI, like any complex technology, keeps on improving itself. It keeps getting better and better.”
Fortunately, many software companies already offer programs of numerous levels of complexity, capable of handling varying quantities of information, and suited to different budgets. “Produce Pro’s EDI team continues to provide a variety of systems integration solutions to our user base in order to keep up with the ever-changing requirements of their trading partners,” says Bobby Tsioles, senior developer and EDI specialist at Produce Pro in Oak Brook, IL.
There can also be an inertia factor, however, that delays adoption of this technology.
Change Can Be Challenging
“It’s often difficult and time consuming for retailers to change their software,” says Linkfresh’s Jones. “This can slow down the adoption of these more modern, beneficial technologies. The pace of change in available technologies is rapid, and business may find it hard to keep up. However, paperless communication and system-to-system interfaces are expected as the norm rather than the exception.”
Entry-level use of produce software usually begins with transmitting orders and invoices electronically. “Many small buyers are requiring their suppliers to send invoices electronically,” says Shafae. “Electronically can mean by e-mail, directly to the server or to a third party. Sending and receiving a purchase order is becoming more common, because it is cheaper.”
Even relatively simple programs that can be used to send and record orders and invoices can bring a substantial share of the potential savings from produce software. “If I were starting out, I would purchase orders first, then invoices,” says Shafae. “Seventy to 80 percent of your benefit from EDI is from purchase orders and invoices. The next benefit is the inventory. It helps with rotating the inventory. You can cut back on mistakes of ordering too much of one thing, and not enough of another. It also helps with traceability.”
“The pace of change in available technologies is rapid, and business may find it hard to keep up. However, paperless communication and system-to-system interfaces are expected as the norm rather than the exception.”
— Richard Jones, Linkfresh, Inc.
Programs that let you send and receive orders and invoices, and maintain records of the transaction, give smaller shippers and retailers an entry point into the world of produce software without investing in the full package. “Maybe 20 to 25 percent of the medium-sized grocery chains are using complete EDI,” says Shafae. “With smaller buyers, like restaurants, it’s as little as 5 percent.”
To make this technology work well, you need to have the right hardware everywhere produce is handled, not just at headquarters. “A need for professional-grade technology in all produce warehouses is essential for wireless interaction to be effective,” says Silver Creek’s Carpenter. “There seems to be a minor shift toward smart phone ordering. Although the market for this is small, customers are inquiring.”
Where Has Your Produce Been?
The starting point for the computer revolution in produce has always been the need to know where the fruits, vegetables and nuts have been for the purpose of tracking contamination back to a particular field. “Food safety is very important to us,” says Edible Software’s Smith. “The software was designed to trace where your food has been distributed. Therefore, in the case of a food recall, you will know where the affected product is located. Our software is used by wholesalers, distributors and manufacturers. We’re able to trace where the product has been. We don’t deal with Wal-Mart, we deal with the distributors and wholesalers who supply Wal-Mart. We have close to 200 customers; they are medium to large suppliers.”
Some advanced programs will let you track the movement of a shipment all the way down to the pallet level. “As more trading partners begin to request product traceability information, it is important to have the tools necessary to track and provide this information with ease,” says Produce Pro’s Tsioles. “Recently, we developed a module that enables distributors to generate advanced shipping notice pallet level information, regardless of how they pick product. Our advanced shipping notice pallet module allows distributors to easily pass along important product traceability and receiving information to retailers. Retailers can rest assured knowing they are provided with the information needed to accurately receive product at their facility and can efficiently react to any product recalls.”
As programs become ever more complex, this tracking software becomes a component of a larger system that also includes orders, invoices, payment and inventory management systems. “Product traceability and inventory management has always been a fundamental part of Produce Pro,” says Tsioles. “The advanced shipping notice module further simplifies inventory management information gathering for distributors. That information is then seamlessly passed along to trading partners, since our EDI module exists within Produce Pro.”
The issue of how of this technology is worth buying comes down to what you need your software to do for you. “If your system is working for you the way it is, keep it,” says Silver Creek’s Reminger. “Does it need to be tweaked to enable some of these new digital and required reporting tools? Find a way to do it with the software you have. If your current system is not up to par, look around, get a demo, both online and onsite. It’s not the system you have — it’s the system that works for you, not anyone else.