Five Hot Topics in Produce Distribution Software

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The fresh produce industry has long been a gut-driven business. This is especially true in multigenerational companies where senior staff’s years of experience and sixth sense often correctly predict a money-making (or losing) market. But times are changing.

“A lot of us in the industry, especially those who have learned the business from fathers and uncles, have our own biases, or seemingly strange predictions, about why certain things will happen,” says Matthew Park, chief executive officer of C and J Brothers, a wholesale produce distributor in the Hunts Point Market, Bronx, NY. “It could be as simple as truck rates going up around Valentine’s Day because more flowers are coming out of Florida.”

“Now that we’re in 2024, being able to put data behind these hunches is something that allows me to make better data-driven decisions,” he says. “That’s where ERP (Enterprise Resource Planning) software like Silo comes in.”

The Silo Park is speaking of is Silo Technologies’ Perishable Inventory Management System. It’s the ERP system for the San Francisco, CA-headquartered leading provider of technology for the food supply chain.

Briefly, companies use ERP software to integrate and manage day-to-day business activities, such as accounting, procurement, supply chain management, inventory, order management, logistics, and risk management and compliance. A complete ERP suite also includes enterprise performance management, software that helps plan, budget, predict, and report on an organization’s financial results.

“A good example was last holiday season, Christmas and New Year’s, in terms of how much FOB markets changed and how much product was short,” says Park. “It was easy for many buyers to say, ’let’s cut back, let’s be conservative, let’s see what happens.’ But the numbers we got from running the Silo ERP reports told us to do the opposite. They showed that our retail customers were continuing to buy aggressively, right through the first two weeks of January. The slowdown didn’t start until after Week Three. We could foresee a major slowdown with some commodities moving almost 50% slower than earlier in January. We reacted quickly, cut back and it saved a lot of grief.”

NOT NEW CONCEPT

ERP systems are not new. They are firmly rooted in industries like finance, healthcare, and manufacturing and production, as well as nonperishable supply chains and logistics. By the end of 2024, 1.4 million companies will spend $183 billion on ERP systems, or 5% of overall information technology (IT) spending, according to The Complete 2024 ERP Market Share Forecast, by HGInsights, in Santa Barbara, CA.

More fresh produce companies are either adding to or upgrading their ERP systems. A big driver is the requirement for extensive record-keeping for fresh produce traceability, as called for in the Food Safety Modernization Act (FSMA). This level of traceability means pen and paper and simple online accounting programs will no longer do the trick.

“The fresh produce industry is one of the most vital sectors in the world, but also one of the most volatile,” says Patrick McCullough, chief executive office of Produce Pay Inc., a Los Angeles, CA-based company that announced in February it raised $38 million to improve predictability and transparency across the global fresh produce supply chain.

“Any number of factors, including unpredictable weather, markets, pests, disease, and supply chain disruptions from labor issues, pandemics, and civil unrest — often multiple occurring simultaneously — result in an unpredictable, highly fragmented, speculative and wasteful supply chain.”

What are produce companies, especially wholesalers, distributors, and even retailers, looking for in an ERP system? Here are five considerations:

1. MAN & MACHINE FRIENDLY

When deciding to move to a new ERP system, it’s important to ensure the software is tailored to both younger and older generation employees, says C and J Brothers’ Park. “Since Silo is modular, when we did a complete system changeover, the older sales guys were able to stay in the sales system, learn the system quickly and continue to sell and sell more than before. I consider that a success.”

While Silo offers an all-in-one, one-stop solution, some companies prefer freedom of choice and a less disruptive way to invite innovation into their business, according to Lauren Contreras, Silo’s director of product marketing. “Our modular approach to supply chain management efficiency empowers businesses to only bite off as much as they can chew.”

Often this first bite is aimed at reducing a company’s use of pen and paper. Here’s an example:

“When your delivery drivers go out, maybe there are eight to 10 routes a day, they come back with a stack of signed invoices, maybe big multipage invoices,” says Trevor Morris, president and chief executive officer of FreshByte Software, a Houston, TX-based customer service organization specializing in software for wholesale distribution.

“Instead of having one to two full-time people sorting, alphabetizing, stapling and filing them away every day, FreshByte enables them to put the invoices on a scanner, it feeds back into the software, digitalizes the invoices, and puts them directly in the customer’s file,” Morris explains. “The idea isn’t for those employees to lose their job, but instead, have them do something more productive like customer service.”

A second slice is receiving orders. A good example is a customer of Consentio, a technological communication platform launched in Spain, with a base now in San Francisco, CA. The customer had five employees taking orders over the phone and entering them into the company’s ERP system.

“For one, you’re typing errors into your ERP system because it’s human nature. Our software enables companies to create an elegant catalog of their produce to offer their retailers, with customized pricing,” says Andy Makeham, managing director of USA, Consentio. “Instead of a phone call, retailers can look at the catalog as they walk around the department and see what they’re short of. The orders flow immediately back to the wholesalers and straight into the ERP system.”

Makeham says it streamlines the process, and only one person is needed to follow up with customers. “The four jobs saved were converted into sales positions with the resulting financial dynamics quite astonishing,” he adds.”

“Our technology also eliminates the need for an EDI feed straight into an ERP system, which is very costly.”

A third piece is inventory control. Bryan Barsness, vice president of sales and marketing of WholesaleWare by GrubMarket, a San Francisco, CA-based, proprietary software-as-a-service platform built for food industry wholesalers, brokers and distributors, says he often speaks with produce companies with loose Standard Operating Procedures (SOPs) when it comes to inventory.

He shares the story of one grower/shipper whose previous system tracked sales and inventory separately. Thus, they had to manually calculate the difference between the ordered volume, both for the day and projected for the next week, current inventory, and projected harvest to see if they could even take the order.

“This led sales to overpromise, because few buyers had the time to wait for a manual calculation, and ultimately several cut orders and frustrated customers,” Barsness says. “The loss and frustration can be avoided by having ERP such as WholesaleWare, which has controls in place, which eliminates the need for manual calculations, drastically reduces errors, and improves visibility for management and efficiency for staff.”

2. ON-THE-GO MOBILITY

Everybody wants their software mobile and in the palm of their hands, says FreshByte’s Morris. “That’s one of the biggest trends in what companies are looking for, and we’re going there as well.”

This doesn’t mean your pricing team is going to do pricing from their cell phone at the beach, adds John Gentle, managing partners of Anovys, LLC, in Birmingham, AL, whose all-in-one ERP software system is called Sprout.

“However, your pricing team may get a call at 5 p.m. from a sales rep because a price is wrong. That’s where the mobile portion comes in — where it’s an error that needs to be fixed immediately because orders go out that evening and the risk is overcharging or undercharging a customer,” Gentle explains. “Mobility is accessing data on demand, in an emergency, when needed.”

“A business owner can be anywhere and have full access to sales, purchasing and executive dashboards. It’s done through mobile apps,” says Morris.

“If you’re using a website on your desktop, you can move your mouse over and it gives you information. The same on a cell phone. If you lightly press the screen, it gives a little bit of information in graphical form as opposed to clicking into it and going further deeper end. When you see the graphical analysis, you have an idea if something is up, down, or flat in milliseconds,” he says.

3. UPGRADES & EXPLORING WHAT’S NEW

Companies today are starting to consider the future of their current ERP, says WholesaleWare by GrubMarket’s Barsness. “Most ERPs in this industry were built in the ’80s or ’90s. This makes their technology almost 30 years old. This industry doesn’t change easily, but with the generational changes happening in many businesses, people are reevaluating how investments in more modern technologies can help their businesses save money.”

Barsness says a study by the Aberdeen Group found businesses saw a 23% reduction in operating costs by moving to a modern ERP. “What other technologies do people use that are 30 years old? Even most farmers have a smartphone these days,” he says.

“What other technologies do people use that are 30 years old? Even most farmers have a smartphone these days.”

– Bryan Barsness, GrubMarket, San Francisco, CA

“It’s no longer a big deal to update software,” says FreshByte’s Morris. “We update our software every two weeks. Our customers have a service plan that’s a flat monthly fee that gives them upgrades and 24/7 live support.”

In January, FreshByte Software released its FreshByte Online, a cloud-based solution, rather than software loaded on a server on a computer. Morris says it provides greater functionality and features to help wholesalers streamline their food distribution processes. Features include flexible units of measure to match when pack sizes change, live inventory and instant alerts, and companies can now be continued as customers, vendors or both. Access is via the internet via a smartphone, tablet or laptop.

In Q2 2024, Silo will release its first version of its Order Management System (OMS).

“This will allow Silo users to invite their customers and vendors into OMS, allowing them to place and receive orders via this system, which will feed directly into the Silo user’s ERP,” says Contreras.

Throughout 2024 and 2025, Silo will double down on freight/TMS (transportation management system) functionality. Today, Silo users can quote and book freight through the platform with only FTL (full truck loads). Soon, Silo will release LTL (less-than-truckload) load consolidation via multiple users and allow users to add their available trucks to the Silo Freight network.

4. FSMA AND TRACEABILITY

Increasing requirements for food safety and traceability are another top topic.

“FSMA is coming in 2026 and some retailers may require it sooner,” says WholesaleWare by GrubMarket’s Barsness. “This means every company with products on the USDA’s list will have to be able to send detailed digital information, from origin to every touch point up to the point they received it and then to whom they sent it. Having the right systems in place can help make meeting these additional requirements from the USDA as easy as possible.”

One feature Anovys’ Sprout looks to provide is the ability for a customer’s customer, like a restaurant, for example, to quickly generate the required FDA report in the case of a recall.

“We are already keeping up with the critical tracking events. Now, it’s fine-tuning to use the FDA’s required language to make sure everyone is referring to the same thing at the same time,” says Gentle. “Large logistics companies are already asking for this data because they must build all their parts by 2026, and that’s not far away.”

5. THE WAVE OF THE FUTURE: AI

The next step is incorporating AI (artificial intelligence) into ERP software, says FreshByte’s Morris.

“For example, if you ordered these five items from us, that means you may want these next five, based on an algorithm. Or, to tell what’s trending based on what people are buying and what’s out there,” explains Morris.

“People have this idea that AI is going to take jobs away. But I think there’s a way to leverage that technology to benefit more than harm, and that’s the key. AI can only do what it’s taught.”

Another segment is automation and AI.

“The future of the next 10 years is all automation,” says Mick Heatherington, vice president of sales in North America for Prophet, a three-decade software provider for the fresh produce and horticultural industries operating in North America, South Africa and the U.K.

“Business automation leads to the fact it’s AI, because you’re trying to trap a lot of the patterns and get your technology to make decisions for you,” explains Heatherington, who is based in Westlake Village, CA. “As such, we can build what we call scripted language into our software. If X&Y happens, we want B to happen. The software decides that B is the answer to X&Y. Then, there might be a derivative to that.”

“Building intelligence into the software allows it to make decisions quickly, and fresh produce is probably the fastest supply chain there is because of its perishable nature.”

This fall, Anovys will launch its AI augmented reality Warehouse Management System. Pullers will wear some type of visual cue device, akin to Oculus VR headsets, but not obstructing eyesight for warehouse safety. Then, like in Top Gun movies where targeting systems for missiles are displayed on a screen, a sensor will target the correct spec of product to pull.

“The potential is making sure the puller doesn’t mistakenly grab an 80-count when it should have been a 70-count russet, and now you have an unhappy customer and second delivery. It also eliminates the need for a checker to double-check the puller’s order,” says Gentle.

AI in supply chain software is the future, however, it won’t take over, predicts C and J’s Park. “It would be difficult to figure out and trace all these weather patterns or replace the human touch of knowing when to push or pull someone, or when to give a favor and when not to.

“There are so many little nuances with what we do in the fresh produce world that I don’t think we can be replaced. But we can be assisted.”