Supply Chain Survivors
Manufacturers and distributors are struggling to find their place in the value chain to help growers and the industry as a whole be more secure and profitable.
June 18, 2008
Solve your customers' problems and you'll solve your own. This is true whether you're a grower-retailer serving homeowners, a wholesale grower supplying independent garden centers, a large growing operation providing products and services to the box stores, or an input or equipment supplier to growers.
To gain manufacturers' and distributors' perspectives, I attended the North American Horticultural Supply Association's (NAHSA) 20th annual meeting in June. The theme was "Thriving In Dynamic Times." While this is primarily a networking event, guest speakers were brought in to help the group focus on the big picture of growing and serving our industry while facing formidable obstacles.
A lot has changed in 20 years and all indicators point to a maturing market: slowing growth in sales and production output, a shrinking number of grower customers and consolidation at all levels. Everyone in our industry has cause for concern. "Without growers, there's no need for any of us," one manufacturer said. "It is our responsibility to help growers find value," said another. The group identified the following as areas to help growers prosper in the future:
Regulatory Pressures: NAHSA has been organizing task forces to help growers comply with or address regulatory issues. One example is working with theAmerican Nursery & Landscape Association (ANLA) on container labeling guidelines to help growers and retailers comply with weights and measures rules. Another is working with the Irrigation Association to help growers defend watering rights in times of drought and comply with runoff issues. Certification programs tied in with best management practices could be another component.
Labor: Depending on where the enforcement dust settles, immigration reform is another issue that could put growers out of business, if they no longer have access to migrant workers. Developing products and technology that reduce a grower's need for labor reduces costs and helps offset labor shortages.
Globalization: While globalization is a direct threat to many manufacturers in plastics and chemicals, it could become an asset. American companies could outsource production overseas, like many industries do. Distributors can develop strategic relationships to bring in lower-cost products to pass savings onto growers. They can provide the same service without the language barriers and time differences.
Sustainability: Many industries are measuring their carbon footprints and how environmentally friendly they are. A movement is underway to add this type of labeling to help consumers make better choices, just like in nutrition labeling. In terms of energy and water consumption, many greenhouse operations would score poorly. Could manufacturers help growers reduce plastic waste by reclaiming the materials? What about helping growers capitalize on interest in organics and locally grown produce? How can we make the green industry as green as it can be? Growers have the desire. They just need to be shown how it can be done cost effectively.
Business Skills: Growers also need better information to make better financial decisions. Could distributors partner with Extension agents and associations to help educate growers on business practices or provide consulting services? If growers can't define costs, how can they reduce them? This is a common problem.
The days of being order takers is over. The manufacturers and distributors who prosper in the future will be the ones who provide the best solutions for growers.