Dishin' On Distribution
Joe Farinacci, managing director of the Integrated Horticultural Alliance, explains how his organization is providing more value in the supply chain to growers.
December 2, 2009
Nearly two years ago, leading horticultural distributors BFG Supply Co., BWI Companies and Griffin Greenhouse and Nursery Supplies formed an independent organization called the Integrated Horticultural Alliance (IHA). The organization was formed to remove redundancies and inefficiencies that drive up input costs.
We recently caught up with Joe Farinacci, managing director of the Integrated Horticultural Alliance, who provided an update on IHA’s progress and how the organization is providing more value in the supply chain to growers.
Q: How has IHA improved the efficiency of the supply chain since its inception early last year?
A: Since coming to IHA, I have read and heard many comments regarding the lack of standardization within the horticultural industry. We all know, especially the grower, you need to develop standard procedures to be successful.
Last year was a volatile year in terms of prices for horticultural products, specifically for plastics and products that contained polymers. The dramatic increase in the cost of oil resulted in price increases almost weekly. Due to the breadth of SKUs IHA member distributors sell, the cost and time involved in updating their pricing was a tremendous burden.
IHA has developed a process where price and product updates from our key and strategic partners can be “uploaded” into IHA member distributors’ business software almost instantly. This not only saves time and money but allows personnel to focus on serving the customer rather than spending time on data entry.
The sharing of best practices is an inherent facet in reducing cost within the supply chain. While the IHA member distributors are alike in many ways, they each excel in specific areas. BFG has developed technology for managing purchase orders that provides transparency through real-time communication between the manufacturer, distributor and the customer. Griffin Greenhouse has created GGS Pro, which provides unmatched grower education. And BWI has taken logistics and supply-chain management to a new level with its robust warehouse management, bar coding and “scan-in/scan-out” initiative. We can standardize practices by sharing these examples with each other.
Q: We understand IHA hosted the Strategic Partner Summit and non-competing manufacturers were invited for a roundtable discussion. Can you tell us about the summit?
A: Our July 2009 summit was unique in that it was the first time we asked seven non-competing manufacturers to join IHA members. The open dialogue focused on the 2009 season, industry changes and trends, and what is being done to prepare for 2010.
A key discussion point was how IHA member distributors and the manufacturers can improve the way they communicate – specifically regarding on-hand inventory in IHA member warehouses and product sales history.
As a result of the discussion, IHA has created a sales history trend report. This is a standard format to communicate on-hand inventory and sales history to the seven manufacturers on a monthly basis. Together, the IHA members and the manufacturers can use this information to forecast future needs.
Before the summit, IHA completed a round of surveys of our key and strategic partners. These surveys were designed to evaluate the process of doing business between IHA member distributors and our key and strategic partners. We chose three departments in the distributors’ operations: accounts payable, purchasing and sales, as well as the three departments they work with at our partners. Each of these departments was sent a survey to complete. The goal of the surveys was to identify the areas that are causing issues or problems. Once identified, many of the issues or problems have been easy to resolve, some as simple as just asking to e-mail invoices rather than fax them.
While the above are not examples of IHA working directly with growers, the grower will ultimately benefit. Improving the way we process price and product change will provide the grower with up-to-date cost, product information and improved service. Sharing our best practices will create a standard format so the grower receives consistent updates on orders, valuable education and product when they need it most. Finally, by working closely with our manufacturers and providing inventory and sales data, we can fill the pipeline to prevent out of stocks and delayed shipments.
Q: IHA recently surveyed growers about their distribution wants and needs. What did the survey reveal?
A: One question the survey covered was: What do you look for in a horticultural distributor? Here are the results:
1. 89.64 percent of growers surveyed placed a “high value” on the accuracy of a shipment/delivery.
2. 87.65 percent of growers surveyed placed a “high value” on the timeliness of a shipment/delivery.
3. 83.27 percent of growers surveyed placed a “high value” on the availability of product.
4. 93.62 percent and 96.81 percent of growers surveyed respectively placed a “high value” or “moderate value” on product training and technical support.
The results of this survey tell IHA where we need to focus our efforts.
Q: IHA is no longer a part of the North American Horticultural Supply Association (NAHSA). Can you tell us about the decision to back out of NAHSA and if there are philosophical differences in approach?
A: In business today, everyone is aware extra time is a limited resource. Rather than split time between two organizations, IHA member distributors decided the manufacturers and growers would be better served by focusing on IHA.
Q: Is there anything else newsworthy going on with IHA?
A: IHA kicked off its education initiative before the 2009 MANTS show. The education initiative is an in-depth training program for the horticultural specialist and horticultural manager. Its mission is to strengthen the horticultural specialists’ and horticulture managers’ overall knowledge of the industry. Currently, 15 key personnel from each IHA member distributor are participating in the two-year program. When participants complete the program, they will be trained to work with growers in a variety of areas.