Using Distribution Hubs
Several innovative growers across the country are serving as distribution hubs to maintain quality and control transportation costs.
December 16, 2009
Producing a quality plant is just the first step. Finding an efficient and cost-effective way to get that quality plant from the greenhouse to the customer is something else entirely. A number of growers have responded by using distribution hubs to control delivery costs, get plants to their final destination in better shape, and in some cases, open doors to new opportunities and markets.
Delivering New Relationships
EuroAmerican Propagators' efforts to refine its shipping schedules will most likely lead to improved deliveries for its propagation facility, as well as a number of fellow propagators in Southern California this spring. Rich Ouellet, EuroAmerican's director of marketing and sales, says the Euro Transportation Team, led by manager Kenny Soles, spent a great deal of time over the last several months sorting through delivery records and building a historical picture of its last five years of orders. EuroAmerican used the information to develop a new shipping schedule that would allow it to make more cost-effective deliveries to different regions of the United States, with trucks as close to full as possible.
An added step was needed to help the new system reach its full potential, however. EuroAmerican reached out to other Southern California propagators that might be willing to combine deliveries and help them reach that "fullest trucks possible" threshold on some loads. They found a number of takers.
This season, the company is hoping to serve as a delivery hub for several area propagators including Plug Connection, First Step Greenhouses, Paul Ecke Ranch, Ball Tagawa Growers, Greenheart Farms and Pacific Plug & Liner.
Ouellet says EuroAmerican will handle all logistics to guarantee order fulfillment throughout the entire process, going out to these partner propagators and collecting the plant material in its trucks, consolidating orders at the EuroAmerican facility, and shipping them from there.
While the company has worked with some of these growers on an ad hoc basis in the past, the process will be more formal going forward. Ouellet says EuroAmerican is investing in better trucks and planning to use tandem drivers to get orders delivered as quickly as possible, which will also improve quality.
"We used to do much more subcontracting with places like California Overnight or FedEx, but by adding the extra volume, we can do more on our own trucks. It's more cost effective and we can control our quality much better," he says.
Modernizing An Old Model
These delivery hubs don't have to be new partnerships. Sometimes, old partners can find benefits in a new approach.
The Kalamazoo Valley Plant Growers Cooperative is one example. This group of Michigan growers has been collectively marketing annuals for four decades. Two years ago, however, the co-op essentially shut down its flower sales division and formed an LLC named Kalamazoo Flower Group. In this new structure, Kalamazoo Flower Group buys plant material wholesale from the co-op's grower members and then sells it to retail customers. All members share in the success of the LLC.
To facilitate buying and selling all that plant material, Kalamazoo Flower Group invested in a 40,000-square-foot distribution center. "The majority of the plants we need to fill orders are brought to one location. Our crew is there compiling trailer loads and organizing them into larger orders for our customers," says General Manager Chad Underwood.
The new organization offers a number of ways to increase business. First, it provides the ability to grow by taking more product to market by increasing production with member growers, and bringing in new growers as needed.
Next, because Kalamazoo Flower Group is a buyer and seller of plants, it can expand its offerings beyond the annuals its members typically grow - perennials and shrubs, for example. "We can essentially buy from anyone interested in working with us," Underwood says.
Finally, it offers the opportunity for less traditional ideas. "Right now the focus is on our core, which is live plants, but I think it could extend to some other categories," Underwood says. There's no reason to think that in the off time of year we couldn't use our facility and our trucking logistics knowledge to distribute other items or even work as a freight consolidator for growers in the Midwest. It could become a secondary revenue source used to offset overhead with the aim of helping keep our prices low."
Existing Partners, New Opportunities
Lucas Greenhouses in Monroeville, N.J., is a more traditional operation than the Kalamazoo Flower Group. Still, owner George Lucas says he has found that serving as a distribution hub for a few of his fellow growers allows him to deliver better quality plants and come up with shipping savings that benefit everyone.
Lucas does quite a bit of production for other growers, and backhauling their plants following his deliveries to them helps fill his empty trucks. That cuts transportation costs for Lucas Greenhouses, and provides a cost-effective shipping option for those growers.
Lucas has a longstanding relationship with Gro'n Sell, for example. He does some growing for them and, because Gro' n Sell doesn't have trucks of its own, Lucas helps it ship plug liners, rooted cutting liners, and perennials. The arrangement helps both companies fill orders in areas they might not normally be able to afford to send a truck efficiently. Lucas has a similar arrangement with Pleasant View Gardens in New Hampshire, and works with Peace Tree Farm in Pennsylvania to help deliver some of its product as well.
The company now has material from other growers in approximately 20 percent of its shipments. In addition to the savings, Lucas says these arrangements help him maintain the high quality of the plants until they reach their final destination. By combining product from multiple locations he is able to get more orders on trucks and out of FedEx boxes.
"We stress trying to get product on a truck," Lucas says. "You know when the delivery's going to happen. It's refrigerated or heated from my door to the door of the customer because all of my trucks have reefer/heaters on them, so the quality of the plant is so much better too."
The arrangement is a win-win for both the growers and their customers, Lucas says. "That's my philosophy for everything we do. Offering this makes us better partners."