New Pay By Scan Program Reduces Risk for Retailers

BFG Logo

The concept of pay by scan, in which growers ship plants to stores and don’t get paid until they sell, is, to put it mildly, heartily disliked by growers. In this model, growers assume all the risk — trusting that the store will properly take care of and display their perishable product all season. Some operations hire employees themselves to do this to protect their product.

But the unpopular concept has taken a turn for the better in a program offered by BFG Supply Company, one of the largest horticultural suppliers in the U.S. In fact, the program, called Grower Stock-Up, is so well liked among the 24 large growers who participate that not one has ever left it. This summer, BFG tested the concept for the first time with a retailer, Malmborg’s Garden Center and Greenhouse in Rogers, Minn., and is now rolling out the Retail Stock-Up program.

While the Stock-Up program’s chief benefits — making sure inventory is always available when needed and improving cash flow — are of great advantage to growers, they promise to be even more of a boon to independent garden centers.

“We asked ourselves how we could make it easier to do business with us,” says Rob Glockner, president and CEO of BFG. “We asked, ‘How do we make sure our customers have what they need when they need it? How can we make them more efficient? And how can we help them with their cash flow?’”

Glockner points out that traditionally, distributors buy inventory, put it in the warehouse and wait for the customer to call. He and his staff began to question that model and decided to do something different.

“We said, let’s work with these key customers of ours by taking our inventory and putting it on their premises. We own it, and as they use it, we’ll bill them for it. We kind of treat it as an extension of the BFG warehouse,” Glockner says.

How It Works

Currently, the Grower Stock-Up program is primarily for chemicals and fertilizers, although more products are added all the time. BFG’s information technology department designed a web-based computer system that interfaces with a scanner, which is provided to participating growers. Each grower is set up on the system with his own account and login, and he sets minimum and maximum inventory levels of the products he needs.

“We go in and label their shelves with bar code labels, and then as they scan inventory out, it decrements the amount. As soon as it hits a minimum (and it’s all real time), it hits our system and creates a transfer. We transfer more inventory to their location so they can always maintain their stock levels,” Glockner says. “It saves growers a lot of time, because they don’t have to have someone checking the inventory all the time. The whole process is automated. They have what they need when they need it, seven days a week, 24 hours a day. We added features where different people have different logins in the scanner, so you know who took what out.”

An additional benefit is the ability to assign the product to a crop, so a grower can track the quantity of chemicals and fertilizer that are used on that crop, along with the cost and when it was applied. Glockner says then BFG reps can work with growers to adjust their minimum and maximum inventory levels over time to really zero in on what they need so it is always on hand.

A Grower’s View: Efficiency Is The Biggest Benefit

Steve Mulder, co-owner of Grand Flowers in Wayland, Mich., has used the program for nearly four years.

“I love it,” Mulder says. “The main advantage to me is you just don’t run out of chemicals. In the past, I would pre-order everything — you have to make an educated guess and figure out what you might need. But then I’d run out and say, ‘I have three more [greenhouses] to go this week, and I’m out of chemicals and it’s a Friday. This way, I always have them.’”

For Mulder, the efficiency is the biggest benefit. “I never have to send anyone out to get chemicals anymore; they’re just always on hand,” he says. I used to say, ‘I’m going to use this one today,’ and then realize I was out of it. Then you have to apply one that may not be as effective just to get one on. I will always use a chemical, regardless of cost, if it works. If it helps quality, I do it. So I’d say the biggest benefit is that the chemicals are always on hand. The second benefit is that you don’t pay for it until you use it.”

Program Alleviates Risk, Aids Cash Flow

Because BFG owns all the product until it is used, it alleviates the risk of a grower overestimating the quantities needed and being stuck with extra, unused inventory. In addition, the program helps with cash flow, since a large, up-front purchase is not necessary.

“It does help [customers’] cash flow,” Glockner says. “We have 9,000 active customers, so we take our inventory and put it there. They don’t pay for it until they use it. If they’re long on inventory, we’ll pull it out and put it somewhere else so they don’t get stuck with it. But they will have the product when they need it — at night or in the middle of spraying — but they don’t have the risk associated with getting through a season and having a room full of chemicals that’s tying up all their cash. We may put it with another grower who needs it or put it back in our inventory and wait until someone else needs it.”

Glockner says the program makes the most sense if the customer has a certain volume of chemical and fertilizer needs. “If you’re a smaller grower and don’t use much of these products, it doesn’t make sense to set it all up,” he says.

“The program creates a lot of efficiencies throughout the whole supply chain and reduces a lot of redundancy,” Glockner says. “We eliminated all that to help our customers save money and make it easier to do business with us. We have truly become more of a partner.”

“No Downsides”

Mulder, who grows spring annuals and fall mums on 6 covered acres and 5 outdoors, says he can’t think of any disadvantages and would definitely recommend it to other growers. “You might pay a little bit more for some of the chemicals, but for me, I would never go back to the other way,” he says.

He keeps the scanner gun in his office; right now he and his assistant grower are the only ones that can scan in products. Employees write down what they use for the day in a book in his office and Mulder scans them in at the end of the day.

“Once a month, a BFG rep visits to double check everything because sometimes you forget to scan,” Mulder says. “He’ll reinventory everything just to make sure all the numbers are correct, and if we missed anything, it’s added to our invoice.”

Mulder says every year a few more items are added to the program.
“I can purchase Anderson injector parts, which is nice. Before, I’d have to order and wait a few days, but now I’ve got them in the program,” he says. “Also, I get my EC test kits. I don’t use their masks, but you can also buy spray masks, filters, hoses and water breakers.”

Mulder points out that it’s still possible to take advantage of sales and early-order discounts. “Sometimes there are programs where you get special deals, for example when Syngenta does their big push for early chemical orders. Anything like that I’ll buy ahead of time, so I still get the cheaper price on that,” Mulder says. “So that’s already in my inventory. I still scan it out, but I don’t pay for it. If I run low, they’ll just send new in. You don’t pay for it until it gets into BFG’s inventory.”

Glockner says the Grower Stock-Up program is entering its fourth year and most of the largest growers in the midwest are participating.

“We have 24 growers right now and will probably double that in the next year or two,” he says. “And on the retail side we’ll probably do more than that because it’s even more applicable.”

New Opportunity For Retailers Helps Level The Playing Field

Glockner says he believes the Retail Stock-Up program is a first for independent garden centers. While the grower program focuses primarily on chemicals and fertilizers, the retail program includes any hard goods you would find in a garden center. Instead of the scanner system used in the grower program, the retail program is tied to the garden center’s POS system, so inventory is scanned out as the customer purchases it, making manual scanning unnecessary.

“I don’t think they’ve ever had a program like this before, especially on the hard goods side. Big boxes do it, but it’s our inventory sitting on the shelf until they scan it out. It’s a great opportunity for them, allowing them to keep inventory on the shelf all the way through the season. This way, if you get near the end of the season and you’re wondering if you should hold off on buying more inventory, you don’t have to worry about getting stuck with it,” Glockner says.

“Because we have 12 branches and all the volume we do and all the customers we have, we’re not typically going to get stuck with that inventory. We’ll pull it out as the season winds down and reduce their inventory with their permission, working with them and finding a new home for it. This is where we can truly add value as a distributor.
“What we’re finding is that they’re saying, ‘It’s too good to be true. What’s the catch?’ There is no catch.”

Glockner says the way it works is simple. “You or I could set up an independent garden center. BFG would fill our shelves, and as we scan it out and the customer pays us for it, we turn around and pay BFG. It’s a great cash-flow model. And you don’t have to do inventory every weekend,” he says.

BFG tested the Retail Stock-Up at a new store Malmborg’s was setting up. “We worked together and tweaked the system,” Glockner says. “And now they’re taking it to their other locations because they liked it so much. As a result of seeing how well it worked and making sure we could deliver on it, which we did at Malmborg’s, we’re now comfortable rolling it out to other independent garden centers, and that’s what we’re in the process of doing.”

According to Glockner, four or five garden centers are signed up currently and BFG is in conversation with an additional 15 to 20 retailers.

“This is brand-new business for us,” Glockner says. “We never did lawn and garden. When we bought Wetsel [in 2011], we took that product line and are moving it west. For us, it’s great with the incremental sales. For our customers, it’s great because it adds a lot of value — ease of use, having inventory when they need it, saving labor of counting inventory and it’s a great cash flow model.”

Mobile App Allows Ordering On The Fly

The two Stock-Up programs are part of BFG’s overall strategy called Virtual Purchasing Assistant. The third part of that strategy is a mobile app for the iPhone and Android that provides the ability to place an order on the fly. Customers do not need to be enrolled in either Stock-Up program to participate.

In short, the user scans the barcode of the product they need and an image and description of the product pops up along with customer-specific pricing. The user enters the number of units and the order is shipped from BFG on their next delivery day. It’s also searchable by keyword, phrase or item number.

“Anybody can download the app, and it allows you to reorder any of the 12,000 items we stock right on the floor,” Glockner says. “You can place the order while it’s top-of-mind. Keep adding to the cart all day and then you hit the button at the end to place the order. It also reduces the chance of error because you’re scanning the bar code of the exact product and we send confirmation.”                                                                           GG

Leave a Reply

2 comments on “New Pay By Scan Program Reduces Risk for Retailers

Latest Stories
Laura Drotleff

December 6, 2016

Are You Driving Young Growers Away? [Opinion]

In a time when the industry is facing a critical shortage of both labor and skilled, educated growers, it's important that grower operations don't unwittingly turn candidates off to a career at their business or in the industry in general. Take a closer look at your hiring practices to ensure you are being inclusive and not breaking any laws.

Read More

December 6, 2016

America In Bloom Moves Forward With New Management Comp…

Effective Jan. 1, 2017, management of America In Bloom will transition from AmericanHort to Second Wind Management, which is owned by long-time AIB Executive Director Laura Kunkle.

Read More
bailey-nurseries-team-feature

December 5, 2016

How Bailey Nurseries Has Found Solutions To The Labor S…

A changing seasonal workforce led this Minnesota-based company to explore new labor sources through the H-2A program and refugee organizations, and it’s working out for the better.

Read More
mycoapply-from-mycorrhizal-applications-feature

December 5, 2016

New Growing Media Advancements Giving Growers More Opti…

With innovative, sustainable growing media components, growers will be able to improve plant health, achieve consistency among crops, save money, and reduce inputs, while saving space on storage.

Read More

December 5, 2016

Benary’s Jennifer Calhoun: How We Can Make Plants…

I see one main issue facing our industry in getting more people to buy plants — we assume that the way we used to sell plants is the way millennials will want to buy them. Nothing could be further from the truth. We sell plants in small packs that you plant in a hole in your garden, with a generic label that says “blooms all season.” Millennials don’t have gardens, so they want a plant they can put on their fourth floor apartment balcony, or better yet on a shelf in their living room near a window.  We give them too little information to help them be successful under those circumstances. But what we don’t realize is that if the plant dies, they feel personally responsible for killing another living thing which is so painful that they would prefer not to take the chance a second time. If we sold […]

Read More

December 5, 2016

A Visual Guide To Garden Retail Merchandising

Antje Verstl, a German visual merchandiser who has worked with many high level garden retailers in Europe, has a lot of practical, and inspirational advice on how to transform your plant yard into an exciting place to shop. Take a look at this gallery, and enjoy a visual guide from Verstl. Her book, “Eagle & Frog!,” is now available for purchase by an American market through her website.

Read More
mikaela-hermstedt-penn-state-university

December 4, 2016

Shinoda Foundation Names Penn State Horticulture Major …

Mikaela Hermstedt, a 21-year-old senior from Lincoln, DE, plans to pursue a career in commercial greenhouse production of flowering plants.

Read More
all-america-selections-new-website-home-page

December 3, 2016

New Mobile Responsive Website From All-America Selectio…

All-America Selections has launched a newly redesigned and revamped mobile-responsive website that includes a more attractive design, enhanced search tools, and easier and simpler navigation.

Read More
Sea Breeze Catharanthus combo

December 2, 2016

Four Mixed Container Trends To Watch

Mixed containers are still one of the best-selling SKUs at retail. Pay attention to these four trends that are making their mark on multi-liner mixes and combination containers.

Read More
kelly-norris

December 2, 2016

Kelly Norris: How The “Me Too” Philosophy Affects Plant…

When you’re selling the exact same thing as everyone else, it’s unrealistic to expect customers to buy only from you.

Read More
mcconkey-plastic-shelves-feature

December 1, 2016

How Color Point Is Stopping Cart Theft With Plastic She…

Plastic shelving on carts acts as a deterrent to theft, and employees enjoy the benefits of being able to handle the racks without difficulty or injuries.

Read More
oasis-water-valve-feature

November 30, 2016

How You Can Water Plants Based On Basket Weight

The Oasis from Control Dekk is designed to reduce water use by giving baskets the exact amount of water they need.

Read More

November 29, 2016

How Changes In Plant Patent Law Could Affect Your Varie…

There is an ongoing discussion happening among plant genetics companies about the current laws and ethics of plant breeding, and what the future holds for the improved lawful protection of genetics.

Read More
foxglove-aphid

November 29, 2016

How Greenhouse Growers Can Manage The Foxglove Aphid

Recent research is shedding new light on the foxglove aphid. Understanding host plants, identification, and biology will help growers deal with this pest.

Read More
endless-summer

November 29, 2016

Endless Summer Hydrangeas Will Soon Feature New Identit…

Bailey Nurseries, which first introduced the reblooming hydrangea a decade ago, says the new identity will feature a more contemporary look to appeal to current and future gardeners.

Read More
Trays move on an overhead conveyor to the end of the production line, where workers carefully pack the cleaned, sized, graded, counted and sorted Calla tubers

November 29, 2016

Texas Judge Halts Overtime Rule; Here’s What It Means F…

According to Craig Regelbrugge at AmericanHort, the injunction against the overtime rule is welcome news for horticulture.

Read More

November 29, 2016

How The Industry Is Ensuring Consumer Success With Plan…

Greenhouse Grower RETAILING reached out to growers and suppliers for their ideas on how to attract and keep new plant customers. Here's what they had to say about ensuring gardening success.

Read More

November 29, 2016

Heroes To Hives Seeks Veterans For Beekeeping Training

Michigan State University is bringing together two great causes of our times — supporting vets and boosting pollinators — in its new program aimed at teaching professional beekeeping to former soldiers.

Read More
[gravityform id="35" title="false" description="false"]