By Prophet Managing Director Mark Peachey
Any fresh produce principal will be asking themselves whether the current stream of technologies that claim they will cause major disruption to any business, really threaten current business practice in the fresh produce supply chain – the most recent of which is blockchain.
While blockchain does offer substantial opportunities for disruption, this technology and its effects are really in their infancy (a decade away). They are of limited value in very basic traceability initiatives, which do very little more than gather traceability information into a central database, in a way that makes little use of blockchain technology itself. If blockchain successfully creates day to day use of digital money (like bitcoin) this is probably the main affect where the technology was the real factor, but that will not disrupt the industry as it will be available to all players.
Over the next 5–7 years, the most important disruption facing fresh produce will come from automation, smart algorithms and artificial intelligence.
This disruption will be evolutionary and easily understood by fresh produce business principals without any need for coordination through the supply chain and amongst a watershed of many players – which makes it achievable as a business strategy for any fresh produce company alone.
In order to get to automation and artificial intelligence – fresh produce companies need to implement the right ERP – one capable of a successful deep implementation, and focussed on controlling and reporting the inventory and so on, all tasks in the fresh produce business process through an integrated set of ERP applications in one real time multi user database.
The majority of fresh produce companies in the US do not have ERP’s that deliver deep implementations focussed on inventory control – and achieving this would deliver substantial cost reductions through granular control and profitability reporting. While this has not been a key focus for many decades where margins were more generous - the increasing pressure on margins makes this a core requirement now.
Any such ERP has to deal with what is different and unique about managing fresh produce – the need for granular, pallet by pallet, consignment by consignment, inventory control for all aspects of data processing and reporting.
Big branded ERPs do not have the right foundation for fresh produce – they do not have a core file structure that is consignment based, inventory centric to pallet level, and they do not focus on activity based costing and accurate, rapid consignment and sales order profitability foundation. Instead they offer average, or standard cost models, and a budgeted to actual variance analysis which is poorly suited to fresh produce where the variances (the noise) is the majority of what has to be managed.
Big branded ERP, and consultants who have worked with big branded ERP, often use misleading descriptions of their systems to let prospective customers believe they have the experience and software to work in fresh produce – this should be investigated carefully and real world references should be insisted upon to seek out the validity and accuracy of these claims. Often neither the big branded ERP companies, nor the consultants who recommend them, really understand what makes a difference to fresh produce – despite thinking that they do. They lack the real experience to be able to offer such systems or advice. The many failed big branded ERP implementations that have taken place provide all the evidence needed for this.
Even those dedicated fresh produce ERPs - who have provided workable systems for fresh produce - do not have the right technology, experience or business model to provide the right foundation for true deep implementations, and the automation and artificial intelligence opportunities, that this can bring.
Prophet is one fresh produce focussed ERP that does have the technology, approach to software design, business model and extensive user base and long experience throughout the fresh produce supply chain to provide the right ERP. It has a robust foundation for - and already provides - a platform for automation and smart software that can provide real competitive advantage to fresh produce companies now. Prophet can also be the right partner in the journey to evolve through automation, whilst remain competitive to survive and prosper in the face of future disruption.
Any meaningful exploitation of blockchain technology in the next decade, within the fresh produce supply chain, will depend upon managing the more complex transactions per consignment through all of the processes. This includes consignment mixing, such as packing and processing, and accounting for the quantity, weight and value, through these transactions accurately. So, successful blockchain in fresh produce will depend on the very deep implementations that underpin any automation and artificial intelligence advances.
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