Feb 14, 2010

The Flowers that say it all... [Analysis]

Happy Valentine’s day people!! Today’s the day to be happy and rejoice with yheartour loved one. Today’s the day to express your undying love through gifts – flowers maybe?! Well, in the spirit of Valentine’s Day, I’ve decided to take a look at how flowers get to the retail store – the Floral Supply Chain…

 

The floral industry was mostly a mom-and-pop industry until a few decades back.

The floral industry is one of the major industries in many developing and underdeveloped countries. Floriculture as an industry began in the late 1800s in England, where flowers were grown on a large scale on the vast estates. The present day floral industry is a dynamic, global, fast-growing industry, which has achieved significant growth rates during the past few decades. In the 1950s, the global flower trade was less than US$3 billion. By 1992, it had grown to US$100 billion. In recent years, the floral industry has grown six percent annually, while the global trade volume in 2003 was US$101.84 billion.

Source: Wikipedia Article 

The numbers are indeed numbing when you think about the money being spent on flowers. Over a hundred BILLION dollars worldwide up from just $3 billion in 1950?! That’s a huge jump. And for any industry, that rate of growth means there has been a lot of consolidation in terms of the players in the business and there has also been a widespread adoption of best practices throughout the industry. Below is a slide that I created that explains the “floral business chain” in all its simplicity. There is another detailed presentation you might want to look at the explains the same.

Also, last June, organizations from all segments of the floral industry came together to bring about a revolution in technology in the 21st century floral supply chain.

Automating manual processes, such as processing purchase orders and invoices, “will bring a significant amount of dollars to everyone in the supply chain,” says Gary Fleming, vice president of industry technology and standards for the Produce Marketing Association (PMA), one of the members of the Floral Logistics Coalition, which is spearheading and financing the project. “I’m talking not only cost savings but also cost improvements. There is a plethora of
both to be had with the incorporation of these standards and technologies.”

Link to Source

A look at the topics discussed at this meet tells us that the floral industry is looking to learn rapidly from other sectors where supply chain technologies have been successfully implemented.

An initiative by the Floral Logistics Coalition aims to improve the supply-chain process by using standard product identification numbers. Here are key
points:
PILOT STUDY Twenty-eight companies, representing all facets of the industry, are testing guidelines for implementing Global Trade Item Numbers (GTIN) and
Universal Product Codes (UPC) for all floral products.
BACKERS The Floral Logistics Coalition, composed of the Produce Marketing Association (PMA), Association of Floral Importers of Florida (AFIF), Wholesale
Florist & Florist Supplier Association (WF&FSA), California Cut Flower Commission (CCFC), California Association of Flower Growers and Shippers (CAFG&S),
Society of American Florists (SAF) and 12 other companies, is sponsoring the study.
BENEFITS The sponsors say the standards would cut costs by automating labor-intensive manual processes; increase visibility in the supply chain; and, in the
long run, sell more flowers.

Link to Source

The organizations comprising the Floral Logistics Coalition include,

  • Association of Floral Importers of Florida (AFIF)
  • Wholesale Florist & Florist Supplier Association (WF&FSA)
  • California Cut Flower Commission (CCFC)
  • California Association of Flower Growers and Shippers (CAFG&S)
  • Society of American Florists (SAF)

These and 12 other companies from the industries attended the meet and made some key decisions. The floral supply chain will greatly benefit form these best-of-breed technologies. Once they’re implemented, the efficiency of the system as a whole should increase by leaps and bounds. A problem they’re also looking to address is transportation and distribution. This is reflected in the Wikipedia Article on this topic.

The assignment guidelines are important because the project’s goal is to use the GTIN and UPC numbers when referencing floral boxes and items, respectively.
These numbers will be the standard numbers used in the various supply chain technologies that will bring the savings to the floral industry through bar coding, electronic commerce, data synchronization and radio-frequency identification (RFID).
STANDARD BAR CODES By using the GTIN standards, Mr. Fleming says, “everyone in the supply chain can understand that the number encoded inside the bar code as the GTIN is based on an industry standard protocol, not a proprietary number.” That means that at each step, from grower or importer to transportation company to wholesaler to retailer, the bar code information will tell receivers exactly what is in the boxes.
UPC TRACKING This is expected to benefit both retailers and wholesalers. By attaching UPCs at the original source to items for sale, such as bouquets or bunches, retailers and wholesalers can better track where their best-selling products and poor performers come from. “The UPC numbers identifying the items will link directly to the GTIN number identifying the box containing those items, which will be specific for the farms or importers,” Ms. Boldt says, making tracking easy.
ELECTRONIC COMMERCE This allows trading partners to send purchase orders, invoices and up to 32 other business transactions electronically so they automatically will be fed into computer systems instead of having to be entered manually. Mr. Fleming says studies have shown electronic commerce offers significant return on investment: The cost to manually process a purchase order or invoice is estimated at $18, compared with less than $9 for one processed electronically.
RFID RFID tags store GTINs and other information in tags that don’t have to be seen to be scanned. This “no-touch” receiving would significantly reduce product unloading time, Mr. Fleming shares. RFID also allows for real-time inventory counts. In addition, “you can use RFID for temperature monitoring so you know exactly how much shelf life is left on products,” Mr. Fleming says.

Link to Source

Another outcome of this conference is that the industry has started talking about “supply chain visibility”. The importance of the supply chain

is not obvious in every industry. But there are efficiencies to be achieved by looking and learning from other industries and how they are handling their supply chains. And for those who are in the flower business, here’s a video analysis about the same. Its an old video but nevertheless a gem of a video.

 

This article is an attempt to give you an insight to an industry many of us wouldn’t have given much though to (unless of course your livelihood depended on it). I hope to highlight the benefits an industry can accrue just by paying attention to best practices across the board. Do email me suggestions of other industries you would like to learn about.

Feb 14, 2010

The Flowers that say it all... [Analysis]

Happy Valentine’s day people!! Today’s the day to be happy and rejoice with yheartour loved one. Today’s the day to express your undying love through gifts – flowers maybe?! Well, in the spirit of Valentine’s Day, I’ve decided to take a look at how flowers get to the retail store – the Floral Supply Chain…

 

The floral industry was mostly a mom-and-pop industry until a few decades back.

The floral industry is one of the major industries in many developing and underdeveloped countries. Floriculture as an industry began in the late 1800s in England, where flowers were grown on a large scale on the vast estates. The present day floral industry is a dynamic, global, fast-growing industry, which has achieved significant growth rates during the past few decades. In the 1950s, the global flower trade was less than US$3 billion. By 1992, it had grown to US$100 billion. In recent years, the floral industry has grown six percent annually, while the global trade volume in 2003 was US$101.84 billion.

Source: Wikipedia Article 

The numbers are indeed numbing when you think about the money being spent on flowers. Over a hundred BILLION dollars worldwide up from just $3 billion in 1950?! That’s a huge jump. And for any industry, that rate of growth means there has been a lot of consolidation in terms of the players in the business and there has also been a widespread adoption of best practices throughout the industry. Below is a slide that I created that explains the “floral business chain” in all its simplicity. There is another detailed presentation you might want to look at the explains the same.

Also, last June, organizations from all segments of the floral industry came together to bring about a revolution in technology in the 21st century floral supply chain.

Automating manual processes, such as processing purchase orders and invoices, “will bring a significant amount of dollars to everyone in the supply chain,” says Gary Fleming, vice president of industry technology and standards for the Produce Marketing Association (PMA), one of the members of the Floral Logistics Coalition, which is spearheading and financing the project. “I’m talking not only cost savings but also cost improvements. There is a plethora of
both to be had with the incorporation of these standards and technologies.”

Link to Source

A look at the topics discussed at this meet tells us that the floral industry is looking to learn rapidly from other sectors where supply chain technologies have been successfully implemented.

An initiative by the Floral Logistics Coalition aims to improve the supply-chain process by using standard product identification numbers. Here are key
points:
PILOT STUDY Twenty-eight companies, representing all facets of the industry, are testing guidelines for implementing Global Trade Item Numbers (GTIN) and
Universal Product Codes (UPC) for all floral products.
BACKERS The Floral Logistics Coalition, composed of the Produce Marketing Association (PMA), Association of Floral Importers of Florida (AFIF), Wholesale
Florist & Florist Supplier Association (WF&FSA), California Cut Flower Commission (CCFC), California Association of Flower Growers and Shippers (CAFG&S),
Society of American Florists (SAF) and 12 other companies, is sponsoring the study.
BENEFITS The sponsors say the standards would cut costs by automating labor-intensive manual processes; increase visibility in the supply chain; and, in the
long run, sell more flowers.

Link to Source

The organizations comprising the Floral Logistics Coalition include,

  • Association of Floral Importers of Florida (AFIF)
  • Wholesale Florist & Florist Supplier Association (WF&FSA)
  • California Cut Flower Commission (CCFC)
  • California Association of Flower Growers and Shippers (CAFG&S)
  • Society of American Florists (SAF)

These and 12 other companies from the industries attended the meet and made some key decisions. The floral supply chain will greatly benefit form these best-of-breed technologies. Once they’re implemented, the efficiency of the system as a whole should increase by leaps and bounds. A problem they’re also looking to address is transportation and distribution. This is reflected in the Wikipedia Article on this topic.

The assignment guidelines are important because the project’s goal is to use the GTIN and UPC numbers when referencing floral boxes and items, respectively.
These numbers will be the standard numbers used in the various supply chain technologies that will bring the savings to the floral industry through bar coding, electronic commerce, data synchronization and radio-frequency identification (RFID).
STANDARD BAR CODES By using the GTIN standards, Mr. Fleming says, “everyone in the supply chain can understand that the number encoded inside the bar code as the GTIN is based on an industry standard protocol, not a proprietary number.” That means that at each step, from grower or importer to transportation company to wholesaler to retailer, the bar code information will tell receivers exactly what is in the boxes.
UPC TRACKING This is expected to benefit both retailers and wholesalers. By attaching UPCs at the original source to items for sale, such as bouquets or bunches, retailers and wholesalers can better track where their best-selling products and poor performers come from. “The UPC numbers identifying the items will link directly to the GTIN number identifying the box containing those items, which will be specific for the farms or importers,” Ms. Boldt says, making tracking easy.
ELECTRONIC COMMERCE This allows trading partners to send purchase orders, invoices and up to 32 other business transactions electronically so they automatically will be fed into computer systems instead of having to be entered manually. Mr. Fleming says studies have shown electronic commerce offers significant return on investment: The cost to manually process a purchase order or invoice is estimated at $18, compared with less than $9 for one processed electronically.
RFID RFID tags store GTINs and other information in tags that don’t have to be seen to be scanned. This “no-touch” receiving would significantly reduce product unloading time, Mr. Fleming shares. RFID also allows for real-time inventory counts. In addition, “you can use RFID for temperature monitoring so you know exactly how much shelf life is left on products,” Mr. Fleming says.

Link to Source

Another outcome of this conference is that the industry has started talking about “supply chain visibility”. The importance of the supply chain

is not obvious in every industry. But there are efficiencies to be achieved by looking and learning from other industries and how they are handling their supply chains. And for those who are in the flower business, here’s a video analysis about the same. Its an old video but nevertheless a gem of a video.

 

This article is an attempt to give you an insight to an industry many of us wouldn’t have given much though to (unless of course your livelihood depended on it). I hope to highlight the benefits an industry can accrue just by paying attention to best practices across the board. Do email me suggestions of other industries you would like to learn about.