Produce and floral marketers are drawn to the new, the trendy and the growth areas. What excites us less are barriers preventing us from seizing the opportunities for growth. They generate less attention and often get shorter shrift from senior management because they are less exciting. But they are no less critical.
Three elements are vital to maintaining a healthy produce or floral supply chain. The first is the products themselves. The second is getting the products moved from point A to point B. And the third is information about those products: where they came from, when and from whom they were received, where they are and who bought them.
I see two major areas where barriers exist between the industry’s increasing ability to grow products anywhere and our desire to have them consumed everywhere: The first centers on transportation, the second on sharing our product information. We’ll address the transportation barrier in another column.
Today, being a market leader is as much about what you know as what you grow. The past year has only reinforced that belief, particularly as food safety concerns arise.
The most fundamental cause of industry inefficiency is “bad or inconsistent data.” The end result is mis-shipments, invoice deductions, inaccurate inventory management and strained customer relations.
Knowledge-based on better information will be the defining competitive factor for industry market leaders — both the information we have about a product’s attributes and benefits and the information we’ll share with our trading partners about its origin, growing conditions, quality, harvest or processing date, etc. Sharing that information through the supply chain is essential. And that sharing must be automated and must happen electronically using standard descriptions.
PMA created a Technology and Standards Council in 2005. Led by Jeff Patterson of BJ’s Wholesale Club and Alan Newton of Duda, the Council is helping PMA identify and provide solutions to the critical technology issues facing us. At its December meeting in Dallas, the consensus was that our industry must get more companies to understand and use the appropriate data standards.
PMA’s recent research examines where the industry stands in using standards to identify products at three levels of packaging: pallet, case, and item. The responses were measured against the standards prescribed by GS1 (the successor to the Uniform Code Council) for pallet and case levels. These are the de facto product identification standards used in North America and 102 other countries by more than 1.2 million companies.
At the pallet level, the survey included questions on the use of the SSCC-18 number used to identify pallets and a critical element in the efficient application of electronic commerce, traceability best practices, bar coding and radio frequency identification (RFID). At the case level, the survey asked about the use of the GTIN numbering standard, the key element in almost every identification initiative currently used in the food industry.
The results of the survey, which was conducted by Opinion Dynamics Corporation on PMA’s behalf and included grower/shippers and retailers of all sizes, reinforced my belief that we have a long way to go.
We did not attempt to differentiate respondents by company size so this is a snapshot of the industry. This was a baseline study of how many companies are — and are not — using the standard codes mentioned above. It does not show what percentage of industry volume is shipped using these standards.
Many companies need help adopting standards to improve the flow of information about their products. Without them, electronic commerce, traceability, bar coding, RFID and data synchronization cannot be effectively implemented. The lack of standards impacts how a product is ordered, shipped and invoiced. This stops us from improving the downstream portion of our supply chain loop, never mind the upstream portion that might tell suppliers how their products fare in the marketplace.
While industry-leading companies are taking on this challenge, many others appear too confused or unaware of these standards. It does not matter whether you represent a multi-national conglomerate or a small family operation. The use of product identification standards can help you and your customers operate more efficiently and effectively.
The research also shows too many companies still using identification numbers that do not follow GS1 standards and so have only internal use and limited value. For example, a large number of companies do not even use case level barcoding. For some that do, the lack of standard practice forces them to bear the cost of using multiple solutions for different customers or suppliers and requires maintaining inefficient cross-references. This redundancy is costing us money. We need to focus on incorporating standards as basic “building blocks” to create a viable flow of information between supply chain partners.
There is good news, however. Although a sizeable knowledge and awareness gap exists, there is a real desire among the companies surveyed to learn more about data standardization and its benefits. That is why PMA’s Technology and Standards Council will be working hard to provide the industry with a clearer picture of the business benefits flowing from data standardization.
Few will debate that data standardization is a critical element to an efficient supply chain. So why are we discussing the same issues we did 10 years ago? At the start, I suggested one reason: data standards aren’t the sexy, attention-getting subjects that grab us as marketers. Nevertheless, we have to adopt the technology tools now available with the same passion and focus with which we approach new products, new packaging or new markets.
Let’s make a focus on data standardization our No. 1 New Year’s resolution for 2006. Let’s knock down the barriers preventing us from realizing our goal to build a more efficient and profitable produce and floral supply chain.