The New Frontier of Wholesaling

While produce receivers still depend on old-fashioned values of quality and service, technology drives modern improvements.

S. Katzman Produce has gone from handwritten inventory sheets and sales orders to using computers to enter and track orders.

Throughout the United States and Canada, a quiet revolution is taking place in coolers, docks, accounting departments and inventory as wholesale leaders implement technology to move their business into the next frontier.

“Technology is definitely reshaping the wholesale industry,” says Stefanie Katzman, executive manager at S. Katzman Produce in Bronx, New York. “Over the past 30 years we have seen changes from handwritten inventory sheets and sales orders to everything entered and tracked in the computer.”

Katzman remembers when inventory was listed on a giant spreadsheet with sales hand-noted and subtracted. “Now inventory is entered into the computer as we unload trucks, the available-to-sell quantities change instantly as a sales order is entered, and each day we do a physical count and true-up to the computer,” she says. “With so many more items and many more salesmen, I could not imagine trying to operate by hand now.”

Gabriela D’Arrigo, marketing, and communications director at D’Arrigo Bros. Co. of New York in Bronx, NY, is witnessing an evolution in which the wholesale businesses is adapting to technological changes. “Traceability, logistics, food safety and e-commerce are all changing the way professional buyers and professional sellers operate at the wholesale markets,” she says. “Each individual has more information than they previously did and the efficiency level is much higher than it used to be. However, this process may be moving more slowly or quickly for some wholesalers than for others.”

As the center hub of the supply chain, wholesalers increasingly must harness technology to deal with the growing complexity of business.

“Customers are requiring more and more data from produce suppliers,” says Miriam Wolk, vice president member services, and staff liaison for the Wholesaler-Distributor Board at United Fresh Produce Association in Washington, D.C. “Wholesalers may be dealing with a wide variety of SKUs and product sizes, repacking product, and building orders from multiple growers and shippers. Wholesalers and distributors look to technology to manage this complexity while helping make warehouse operations and order fulfillment more efficient.”

Wholesalers are ideally positioned as middlemen to navigate the rapid technology advances in the industry, according to Emily Kohlhas, director of marketing at John Vena in Philadelphia. “Our growers and shippers focus on what they are good at — growing, sustainability and food safety,” she says. “We communicate with our customers to understand their needs and systems, and translate information from our growers into the language of their choice.”

“Customers are requiring more and more data from produce suppliers. Wholesalers may be dealing with a wide variety of SKUs and product sizes, repacking product, and building orders from multiple growers and shippers.”

— Miriam Wolk, Wholesaler-Distributor Board at United Fresh Produce Association

Technology facilitation is a crucial aspect of business between Procacci Brothers Sales Corp. in Philadelphia, its customers and its growers. “In the real world you need a wholesaler capable of matching your technology, and with the grower relationships to fill supply gaps,” says Mike Maxwell, president. “As retailers look to promote local programs and just-in-time produce fulfillment, they can’t reach their goals without a wholesaler with capabilities such as ours.”

Matt Roy, director of category operations – produce at US Foods in Rosemont, IL explains technology is remaking US Foods’ operations by enabling improvements in productivity, giving people more real-time information and allowing more information sharing across facilities. “Wholesalers will continue to look at and embrace technology advances and will adopt if the ROI (return on investment) makes sense,” he says. “This will continue to vary based off of each person’s business and their long-range plans.”

Start with Clear Objectives

To survive and compete with increasingly tech-savvy competition, companies are advised by industry leaders to create a technology strategy and ensure they have the people and processes to manage it. Craig Mack, director of inventory services at C.H. Robinson in Eden Prairie, MN, and a member of the United Fresh Wholesaler-Distributor Board, recommends companies have a well-thought-out strategy as it specifically relates to their business.

Mack advises companies to truly understand the operation and the value provided to customers. “Are you cross-docking pallets in a consolidation operation, or are you performing high-volume, e-commerce fulfillment?” he asks. “The solutions will vary significantly depending on the operation. Technology solutions must fit the warehouse operation and empower employees to support customers and their business objectives. Deploying technology without having clear objectives and metrics to measure improvement is not an effective strategy.”

“Wholesalers will continue to look at and embrace technology advances and will adopt if the ROI (return on investment) makes sense.”

— Matt Roy, US Foods

A big challenge, according to Floyd Avillo, president and chief operating officer at FreshPro in West Caldwell, NJ, is in the speed of technological change. “You need to stay current with what is in the marketplace to avoid being outdated quickly,” he says.

Companies must also address other pitfalls associated with technology, the first of which is security. “Bringing more devices into the warehouse means more opportunities for intrusion,” says Mack. “Companies need an integrated strategy for both physical and cyber-security to ensure their data and their customer’s data is protected.”

Especially in produce warehousing situations, ruggedness of equipment is a concern. “Any devices brought into the warehouse are going to take a beating,” says Mack. “The equipment must be able to take the knocks and keep moving. Insist on a no-fault repair and replacement plan with quick turnaround and depot-based repair to get those devices repaired and back in service with a minimum of downtime.”

Mack also recommends thinking about device management and overhead, as well as employee buy-in. “Managing IT devices is not a core competency of most warehouse teams,” he says. “Ensure the people and IT processes are in place to effectively deploy, support, repair and replace devices. Also, ensure there is buy-in and commitment from the warehouse teams. Business and operational practices may need to change to support the effort. Ensure everyone understands the benefits of the system and their role in its success.”

Size Doesn’t Matter

While technology is front-and-center in virtually every industry, the question remains as to whether it puts all companies on a level playing field or gives those with greater resources greater power.

“Technology updates are frequent and expensive,” says D’Arrigo. “Larger wholesalers may have more resources, but maintaining those resources is expensive. Smaller wholesalers may be more nimble. It’s a Catch-22 and not necessarily easy to compare who has an advantage.”

“Although technology may not necessarily level the playing field, in the world we live in today it has to merit a lot of attention and consideration. Companies can’t survive if they do not evolve with it.”

— Stefanie Katzman, S. Katzman Produce

Bob Corey, chief executive at Corey Brothers in Charleston, WV, asserts smaller wholesalers may be at a disadvantage versus multi-million dollar companies with respect to response time. “Smaller distributors may not be able to comply fast enough to hold their business,” he says. “However, the smaller wholesaler may have an advantage in providing fresher product with more personal service and more frequent delivery, which is the heart of the business.”

Depending upon the size of the company, S. Katzman Produce’s Katzman suggests new tech may need to be phased in based on priority. “While most of the time technology will save time and money in the future, or promote safety for the consumer, the upfront costs can be a lot for some companies to bear,” she says. “Although technology may not necessarily level the playing field, in the world we live in today it has to merit a lot of attention and consideration. Companies can’t survive if they do not evolve with it.”

Finding technology resources may be challenging since wholesalers tend to operate on slim margins, but according to Kohlhas, it’s also imperative. “Wholesalers who don’t make technology investments may soon find themselves unable to compete,” she says. “Continual investment in technology is increasingly a cost of doing business in produce at all levels of the supply chain.”

Dave Donat, president of Produce Pro in Woodridge, IL, and a member of the United Fresh-Wholesaler-Distributor Board, recommends wholesalers consider any investment in technology as just that — an investment. “It should not be thought of as an expense,” he says. “In turn, it should have a reasonable ROI. You don’t have to be a large company to reap the benefits of decisions to invest in technology.”

In fact, industry experts point out how technology actually helps level the playing field for smaller wholesalers. “Anything where efficiencies are gained, gives opportunity for the ‘little guy’,” says Donat. “If a job that used to take significant manpower can now be handled via computer, then the big guys are no longer the sole companies capable of doing that job.”

Procacci’s Maxwell agrees technology can help a little guy compete with the biggest guy. “It can help a smaller wholesaler really be effective in the market,” he says. “And, costs are being driven out of the system all the time to make it more affordable.”

Given dramatically decreasing tech prices in recent years, Avillo maintains business size is no longer a barrier to utilizing new technology. “To compete with the large broadline wholesalers today, smaller operators must invest in new technologies — for both productivity and food safety protocols,” he says. “Many local independents that were primarily market buyers before have now hooked up with major grocery wholesalers utilizing new technologies.”

Look at Some Hard Evidence

This subtle revolution is evidenced among several forward-thinking wholesalers around the country — all consistently investing in new technology and upgraded facilities. In February 2017, G. Cefalu & Bro./Capital Seaboard in Jessup, MD, moved to a new facility specially designed by and built for the company. “During the planning phase, which lasted more than a year, we were able to work with the builder and architect to create a building suiting our operations perfectly,” says Ken Lerch, IT director.

Procacci started down the tech road when it entered the foodservice business in the early 1970s. “Foodservice always demanded a higher standard of operation compared to the rest of the business,” says Maxwell. “Even then, buyers were already talking about traceability and technology when we came on board. Our systems were all built on traceability and electronic data. Now, you can’t deal efficiently without being on some type of electronic platform.”

“Many local independents that were primarily market buyers before have now hooked up with major grocery wholesalers utilizing new technologies.”

— Floyd Avillo, FreshPro

Since then, Procacci has continued to look for and invest in innovative technology. The company went through its most recent technology update in late August 2017. “We’re always looking to see how we can improve, work out the kinks and make our operation run more efficiently,” says Maxwell.

At D’Arrigo Bros. of New York, the company has integrated GPS tracking via logistics recorders, custom inventory management systems, temperature alerts and remote climate control systems. “All these technological tools have helped companies such as ours become significantly more efficient,” says D’Arrigo. “The more control over variables in the perishable product world, the better off your service will be.”

FreshPro has spent decades incorporating technology into its operation. “Everything we do from the time product lands at our dock through transit on our fleet utilizes some form of new technology,” says Avillo. “From handheld scanners for use in the warehouse and labor management to refrigeration monitoring, truck cube utilization, routing and arrival times, to online inventory control — all is needed today to track product and be as productive as possible.”

A known innovator, Vena emphasizes employing the latest technology to support its unique products and marketing strategies. “Our ripening rooms are driven by software accessible to our team of ripeners on their cell phones, so they keep an eye on avocados, mangos and plantains 24/7,” says Kohlhas. “New machinery in our packing facility is rapidly increasing our efficiency and the range of packaging we are able to accommodate for our private label clients. Additionally, we continually invest in our online presence and e-mail communications — areas where our customers find a great deal of value in upgraded services.”

Corey Brothers has been a “pioneer company” with Produce Pro since 1991 and places prominence on computerized refrigeration and monitoring, necessary for food safety compliance. “We strive to keep pace with upgrades as needed,” says Corey. “As upgrades in labeling and traceability come about, Produce Pro has been, and is, there to accommodate us.”

Strengthen the Cold Chain

For centuries, the produce industry has obsessed over the cold chain and now tech innovation allows wholesalers some of the most significant improvements since perhaps the advent of refrigeration.

“Technology has given us tremendous advancement in improving the cold chain,” says Avillo. “The amount of surprises in the cold chain have been eliminated as our facilities are basically online; any issues are reported immediately to our engineering department.”

“The more control over variables in the perishable product world, the better off your service will be.”

— Gabriela D’Arrigo, D’Arrigo Bros. of New York

Corey Brothers reports significant product benefits with its state-of-the-art refrigeration investment. “The variance in our coolers outside of defrost cycles is less than one degree and we’ve noticed improved freshness and shelf-life,” says Corey. “This has been highly beneficial and we’ve seen considerably less shrink for us as well as our customers.”

According to Sam Hak, owner and president of Arc-En-Ciel Produce in Toronto, Ontario, Canada, cold chain advancement essentially begins at the vendor shipping point. “Products are loaded on temperature controlled trailers monitored regularly by the transport company,” he says. “For verification, a temperature recorder is placed in the trailer. In the event of a dispute, the refrigeration unit can be downloaded if required.”

Arc-En-Ciel’s own warehouse operates with 13 coolers and a refrigerated packaging room. “This enables us to store a number of products at any desired temperature,” says Hak. “All products have lot identification assigned at the time of receiving. Each product is stored in coolers set at the required product temperature. Daily temperature logs are recorded and all product is handled in a ‘First In, First Out’ manner to maintain freshness. Coolers are checked for temperature calibration daily.”

S. Katzman recently renovated its cold chain capabilities at the New York wholesale market. “The enhancements to equipment such as refrigerated walls and doors and condenser units has made tremendous improvements in maintaining the cold chain,” says Katzman. “We installed temperature monitoring systems in all refrigerators and in all our delivery trucks. These send out alerts if the temperature goes outside specified ranges. Using technology such as product temp pulpers (thermometers inserted into the produce), product is checked for temperature upon arrival and before loading deliveries, and as part of our food safety protocol, all refrigerated areas are checked using temp guns several times a day.”

G. Cefalu’s new building includes a state-of-the-art refrigeration system programmed, controlled and monitored by a computer and specialized software. “The software continuously monitors and logs all of the temperature zones in our building, imports those daily logs into a database and automatically emails reports daily to our supervisors for review,” says Lerch.

If a temperature goes out of range at any point for any reason, G. Cefalu’s supervisors are alerted with an automatic email from the system. “They can then investigate and address the issue promptly,” says Lerch. “We also request all our shippers include temperature monitors on their trucks to log the temperatures inside the trailer. The logs are then downloaded into our systems and reviewed by our receiving team. Between these two systems, our managers keep a watchful eye on temperatures to ensure our customers receive product that has maintained its temperature throughout the distribution process.”

Procacci also monitors the cold chain electronically. “You used to walk from cooler to cooler with thermometers in every room,” says Maxwell. “Now, it’s all electronic. I can pull up one screen and see every single room. We can pull up every truck reefer throughout the country and see what the reefer is running at.”

Improve Warehouse Efficiency

The wholesale challenge of managing inventory opens a significant tech opportunity in warehouse management systems (WMS). C.H. Robinson’s Mack believes any WMS should be flexible and integrate easily with other software and ERP (enterprise resource planning) packages. “The value of the WMS is the information it can provide to the operators and planners,” he says. “If you can’t easily get data into the WMS and get the results back out, it diminishes the value returned.”

With this in mind, C.H. Robinson developed a WMS from the ground up with flexibility and ease of integration built in. “This allows us to adjust to new trends and technologies without being tied down by legacy or proprietary software,” says Mack.

C.H. Robinson’s WMS solution presents task information to users in a clean and simple user interface whereby users are able to quickly and efficiently learn it. “Our warehouse supervisors and managers can spend less time training new employees and instead focus on following clear standard operating procedures and work direction from the WMS,” says Mack. “We’ve also found many employees expect some level of technology use in their job, and thus the absence of a strong technology solution is a turn-off.”

As new demands increase the need for true farm-to-fork traceability of product throughout the supply chain, Donat of Produce Pro points to the value of warehouse management technology. “Electronic inventory management is a proven way to keep such records properly all the while maintaining, and often increasing, efficiencies in operations,” he says.

One example of additional WMS efficiency Mack sees is how having the ability to print barcoded labels with order-specific information has been a game-changer. “Users no longer need to run back to an office to get labels, or carry around pre-printed generic labels,” he says.

G. Cefalu’s new WMS, fully integrated into its ERP system, allows the company to track the lot and the location of any pallet of product within the building. “We know exactly when the goods have been scanned and labeled by receiving, and when and where the product has been put away,” says Lerch. “And, we know when it has been pulled by a selector to be loaded on to a truck for delivery. In case of an incident, we can track the ambient temperatures in the rooms in which the product was stored by referring to our temperature logs in our refrigeration system, as well as traceability of the lot.”

As companies look to increase the ability of their WMS, Mack cautions wholesalers to be sure their current WMS functions adequately for their needs. “Anyone looking to adopt next-generation technology needs to ensure the WMS system meets today’s expectations,” he says. “Adding new technology and device complexity to a WMS that isn’t functioning optimally will not magically improve productivity.”

Go Mobile and‭ ‬“Wear It”

Society has come to expect information to be available everywhere and at all times as so clearly illustrated by the rise of the smartphone — and wholesaling is no exception.

“Information is needed everywhere now,” says Donat. “Luckily, it is accessible as well. Now, anyone can get the information they need wherever they are — while walking the floor of a warehouse or whether on the road when an important decision needs to be made. The entry and consumption of data is changing to be much more just-in-time.”

Technology’s response to this demand is an increase in mobile or wearable devices incorporating logistics functions.

“Wearable computing in industry is not new,” says Mack. “Anyone who has rented a car in the past 15 years knows how wireless receipt printing and barcode scanning has eliminated the wait in line at the car rental lot. The consumer market has really pulled the enterprise market along with it and has driven an amazing acceleration of capabilities over the past five to 10 years.”

“In a tight margin business such as produce, the smallest of clues to spots where advantages can be gained are valuable. Analytical reporting allows a company to quickly analyze many diverse facets of its business in real time…”

— Dave Donat, Produce Pro

Mack notes the availability of a wide range of devices all benefitting from advances in wireless networking (Wi-Fi) and Bluetooth technology. “Examples include hip-mounted label and barcode printers, wireless barcode scanners, arm-mounted computers, ring scanners, voice picking headsets and ruggedized tablets, all of which are commonly used and proven technologies in the warehouse,” he says. “Mobile cell phones and similar devices allow employees to take pictures and access applications over wireless networks with very little IT infrastructure needed.”

Perhaps one of the most liberating tech developments for wholesale is that of ruggedized tablets. “These allow you to put the capabilities of a full desktop PC onto a device a warehouse user can walk around with,” says Mack. “A touchscreen and well-designed user interface allows the user to avoid a mechanical keypad or stylus. You’ve just untethered your supervisors and team-leads from their desks to go out to the floor, get closer to the inventory, understand the operation and manage staff. This is a really powerful change. We see it as the combination of people, processes and technology that leads to the operational improvement — it’s not the tablet alone doing this.”

Wireless printing, scanning, and mobile computers represent valuable solutions, according to Mack. “Large improvements in productivity and accuracy are possible when mobile technologies are combined with a robust WMS and strong operational practices,” he says. “We have seen this proven out in our C.H Robinson-managed warehouses.”

Yet, all the technological development begs the question: who is doing what with the data? Wholesalers report the answer is to use the vast collection of stats for business analysis.

“Big data allows companies to quickly scrutinize many different facets of their business,” says Produce Pro’s Donat. “In a tight margin business such as produce, the smallest of clues to spots where advantages can be gained are valuable. Analytical reporting allows a company to quickly analyze many diverse facets of its business in real time. Time enough to make quick decisions, as opposed to waiting until the end of the month, for example.”

Procacci strongly emphasizes use of the data generated by its technology tools. “Analytics really come into play because we search for trends,” says Maxwell. “Any sort of predictability in this business is huge because the industry is so unpredictable. We operate in real time with our tools, and using the data from that helps us move forward. Technology is a wonderful thing, but you have to use it and keep it updated, or it’s useless.”

Harnessing Technology for Food Safety and Quality Control

Wholesalers exploit technology to help meet the most extensive reform of the U.S. food safety laws in more than 70 years.

As the quest for food safety reaches a summit with the Food Safety Modernization Act (FSMA), wholesalers continue to strive to meet evolving legal and customer requirements.

“In the past several years, food safety has become an important requirement in the produce industry,” says Sam Hak, owner, and president of Arc-En-Ciel Produce in Toronto, Ontario, Canada. “Major retailers are making demands that all vendors must have specific programs in place to continue to supply them. This has forced all suppliers to develop food safety programs suitable to customer needs.”

The decades-long parallel development of food safety requirements and innovative technology has yielded new tools for wholesalers in pursuit of food safety.

“We have seen more tech changes in recent years geared toward food safety and quality control,” says Stefanie Katzman, executive manager at S. Katzman Produce in Bronx, NY. “We use software to manage food safety certifications and audits from our farmers. We are able to react and spread the word faster in recall situations. And, we can also send out food safety information to our customers in a more timely and easy manner.”

At John Vena in Philadelphia, the company’s food safety and quality assurance manager utilizes custom software to enhance its food safety program. “This also supports our step up to SQF Level II certification,” says Emily Kohlhas, director of marketing. “The software enables our sales team to do some robust reporting, which keeps us one step ahead of our clients’ needs.”

While some food safety standards are driven by laws such as FSMA, Dr. Jennifer McEntire, vice president of food safety and technology for United Fresh Produce Association in Washington, D.C., asserts customer requirements will always exceed regulatory requirements. “FDA regulations related to FSMA will never require a specific technology or tool be used, although some vendors seem to imply that. Realistically, for some wholesalers, the FSMA recordkeeping requirements are made much simpler by investing in new technologies.”

McEntire says tool choice is more likely the intersection of customer and legal requirements combined with the abilities offered by technology. “For example, a wholesaler knows refrigeration is an important control that needs to be monitored and knows the Food and Drug Administration (FDA) will review these records,” she says. “So it may be easier to invest in a system that automatically logs temperature and alarms when a limit is exceeded, rather than relying on someone to manually check temperature at a set frequency. Buyers may come to expect data in real time, with rapid access to all kinds of information that can’t be obtained by paper-based systems.”

Recognizing the need for some type of uniformity, Katzman suggests standardization such as GTIN (a globally unique 14-digit number used to identify trade items, products or services) will greatly facilitate food safety. “While there are hundreds of examples of new equipment and software, the biggest help will be getting all suppliers and customers onto one traceability platform,” she says. “Once GTIN labeling becomes a requirement for all, it will streamline everyone’s operations.”

Intricately related to the food safety issue is quality control, and wholesalers combine new technologies to satisfy both needs. For quality control, S. Katzman uses a software and tablet to make full inspections and take pictures in the warehouse. “This information automatically uploads directly into our operating system for our buyers and salesmen to see,” says Katzman. “We also use analytics programs to help us dive deeper into figures.”

Matt Roy, director for category operations, produce at US Foods in Rosemont, IL, reports more players are getting into the inspection software space for quality assurance. “This allows for more information in the hands of our inspectors, real-time information on issues to buyers, faster and more accurate communication on issues to suppliers and more consistency with the inspection process,” he says.

Future plans on the immediate roadmap for G. Cefalu & Bro./Capital Seaboard in Jessup, MD, include food safety and QC apps fully integrated with its ERP system. “This app allows us to record and log electronically each daily task of our food safety team,” says Ken Lerch, IT director. “The QC app will allow us to photograph and record the quality of product in real time as it is received. We are excited about completing these initiatives year-end 2017.”

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