Archive for 'Thoughtpieces'

My Milk Was Off This Morning

lgmaking_tea_milk_1000_0056One of the more frustrating occurrences in one’s morning…the milk is off! Not good at all when one only notices it after one has poured said milk into one’s tea. A glance at the label and the mood does not get any better. The milk should have lasted for another three days at least. Granted, it is summer – at least in New Zealand – but hey, my fridge works, I drove straight home with my shopping a couple of days ago, the car is air conditioned and the store is five minutes down the road. Where is the problem then?

Let’s start with where the problem most certainly will not be found….at the source. There is nothing wrong with my milk when it leaves the cow. Farmers have a reasonably good handle on making sure it does not go off on the farm, the milk tankers collect like clockwork and the processors tend to get that bit right as well, i.e.; processing the stuff coming out of the cow in a timely and temperature controlled fashion into plastic bottles with various lid colours ready for distribution in chilled trucks. Sooo – if my milk goes off despite the processor having his cool chain under control, the milk sitting in the retailer’s fridge when I bought it and yours truly being able to look myself in the eye with a clear conscience re personal fridge discipline at home….what does that leave us with?

Well, my money is on the retail rear store area being the culprit. Or more precisely…the amount of time it takes for the milk to get from the store delivery dock into the rear store chilled area. All the other steps are dedicated…cow gives milk, farmer stores milk, tanker driver collects milk, factory processes milk, truckie delivers milk,  THEN  BIG BLACK HOLE, retail assistant restocks milk fridge, customer selects milk and takes milk and all other purchases home.

The BIG BLACK HOLE  in my mind is that I have seen several variations to the theme over the years when it comes to milk being delivered to the store. These are, in no particular order,

  • delivery driver leaves milk on rear dock and buggers off
  • delivery driver attempts to raise store receiving staff and when he fails in that endeavour, leaves milk on rear dock and buggers off
  • receiving staff see milk sitting on rear dock but don’t register that milk and sun don’t go together, so the milk stays put
  • receiving staff see milk, but have other priorities, with milk shifting being not being high on that list
  • receiving staff drag milk out of sun into the rear store proper but not straight away into the chilled area.

There are bound to be other scenarios as well but the ones I have listed here  serve the purpose of illustrating a critical aspect of supply chain management when it comes to fresh food, whether we are talking about milk, peaches or bagged salad. The sad truth is that effective  supply chain management is generally consistently achievable when the focus is on individual products or a group of products with similar characteristics and therefore needs. When products with different characteristics and needs appear at a critical supply chain node at the same time, a high degree of personal initiative, the ability to prioritise without waiting to be told and the capability to understand the ’cause and effect’ concept become crucial.

Do supermarkets really train their rear store receiving staff to work consistently to these principles? I think not.

The Role of Government

Coat of Arms

2014 is election year in New Zealand. These events come around too often for my liking here anyway – every three years. The first year is wasted deciding who is going to govern with whom as under the MMP system it is highly unlikely that one party is able to govern alone. Understanding where the dirt the prospective coalition partners’ ‘sensitive’ areas also takes time. In the second year  election policies get rammed guided through Parliament and the third year is spent scheming planning re-election for another term. Surely there must be a better system.

This year’s campaign got kicked off early. Prime Minister John Key and his campaign manager Barack Obama met on a golf course in Hawaii, as one does, to set the scene. Go figure. Because the electoral system sucks is not as balanced as it ought to be given the diversity of the nation,we end up in a real mess every thirty years or so. The last major occurrence came after the 1984 election which saw Rob Muldoon evicted defeated and David Lange elected. Our foreign exchange reserves were so low that the country just about went bankrupt.  And then the restructuring started… The acronym SMP got replaced with a new one; SOE.  The civil service was slimmed down, Roger Douglas was in full flight changing the tax regime and Fay Richwhite made enough dough earned sufficiently from the sale of NZ Rail to the State Railway of Wisconsin, to afford comfortable retirement in Switzerland and on Great Mercury Island.

Let’s stick with SMP.  Have you looked it up yet?  Yes, there is that dirty word….subsidies…and successive New Zealand governments have done their darndest to ensure that our producers were lily white at all times since the mid eighties to ensure we were competing on a ‘user pays’ basis on world markets. Pity that many of our trading partners did not follow suit straight away…and in some cases not for thirty years….

The New Zealand Herald recently ran an article entitled “Reform in wind for farmers”. The topic of discussion was the farm subsidy system Japanese micro farmers have enjoyed until now. I hasten to add that the NZ Herald did, of course, not research and write that article itself – the story had been run by Bloomberg in mid December. It is certainly an interesting read. How about this for starters?

“Takashi Nakajima earns $120,000 a year growing lettuces, employs Chinese labourers to harvest them and has four months off in winter to indulge his passion for speed skating. He’s the result of a protected farming system that Japanese prime minister Shinzo Abe is about to dismantle.”

Naturally, Nakajima is fuming less than impressed.

“I don’t trust the Government at all. They want to streamline Japan’s farming business. Small farmers won’t be able to survive and the community will die.”

When the New Zealand Government removed SMP payments in the mid eighties, they killed off discontinued the MAF Advisory Service for good measure. This service was staffed by very skilled horticulturists and applied scientists who formed the link between the universities and research institutes and growers, to ensure that new advances in science found their practical application. The service was free. Ever since then, ‘user pays’ rules.  How many small farmers do we have left?  We are down to about 120 potato growers, for example, compared to several hundred a decade ago. Not sure about lettuce growers. And our rural communities? Those who have survived sure do not have an easy time.

The article is one of the better ones I have read, as it not only looks at the situation today, but also takes a historic perspective, citing land reforms instituted by Douglas MacArthur after World War II, when he broke up the Japanese feudal landlord based system where land ownership was the privilege of few and most farmers were tenants on the land they farmed. I guess that is where the American concept of bringing US style democracy to conquered nations originates and someone now needs to clean up the mess. And not stopping there, this piece of excellent journalism then touches on retailers taking charge of their upstream supply chain by purchasing farms, academics uttering stern warnings about cheap imports from abroad, food self-sufficiency in terms of calories ratios, crop substitution and the definition freshness.

The second to last ‘word’ belongs to lettuce grower Nakajima…

“Our lettuce is good and when it comes to freshness, foreign products won’t be able to match us. But I sometimes wonder whether people see the difference.”

Well spoken for a lettuce grower and part-time speed skater and welcome to the “what constitutes freshness?” debate.

So – what is the role of Government – in New Zealand, in Japan or elsewhere? And what should Government’s relationship with the agricultural sector be?

Bloomberg is quoting Japanese Prime Minister Abe as saying , “Agriculture is the most difficult sector to reform”. How much reform is needed though? Are farmers business people? They sure are and if they are not, they need to become so quick smartly. But surely food production ought to maintain a link with the place where the people live, even if some of our food can be easily exported or imported these days. And equally as surely, food production and land are inextricably intertwined.

Even greenhouses and factory farms do not float on air!

TURDUCKEN ANYONE?

Turducken Source: wikipedia

Turducken
Source: wikipedia

December, 25th, 2013

This is a Christmas story of a different kind. As you read on, you may well think that I have lost the plot altogether, you may wonder where the Christmas connection  takes us, but rest assured there is a Christmas aspect to this story, one that reaches beyond the Christmas Day we are celebrating today in 2013. I watched the news last night and in addition to the guts and glory coverage that television news is all about these days there was a human interest story related to Christmas that that caught my attention. The central theme of the news item was a unique Christmas roast that few people had heard of, that was in increasing demand and had its origins in the Middle Ages.  The roast is called a Turducken, which is a chicken, complete with stuffing, stuffed into a duck and the duck then stuffed into a turkey. The news item featured a Farro Fresh Market and one of its founders was being interviewed about the Turducken phenomenon. A fascinating food story, told in an innovative fresh food retail environment. What a fantastic marketing opportunity.

Cut. Change of Scenery.

In 1996 I rejoined Progressive Enterprises, then owner of Foodtown, Countdown and Three Guys supermarkets and itself owned by Foodland (FAL) , then  a grocery co-operative in Perth, Western Australia. The management team was given three core objectives by the owners. Firstly, streamline the merchandise and operations departments run separately hitherto, into one effective system; secondly, develop the food retail concept of the future; thirdly, improve operating profits. By 1998, the first objective had been achieved. The category management and buying teams had been combined and the operations management structure had been merged into one. A new meal solution concept had also been established and it was being “road tested” at Foodtown Meadowbank. This concept reduced emphasis on selling ingredients and meal components and focused instead on providing shoppers with complete meal solutions depending upon the time they visited the store. An entire kitchen team inclusive of an executive chef was based at the store. The third objective, improving margins, proved a little more difficult.  Restructuring does take time and costs money.  The fact that the Foodtown and Countdown IT platforms were incompatible and needed to be reconstructed from the ground up did not help either.  Nor was margin growth assisted by the fact that the Countdown merchandise sales management & reporting process was a store by store affair which caused major difficulties in understanding category profitability across the group.

In early 1998 FAL lost patience with its New Zealand division – which they did not understand at the best of times.  To put this statement into perspective…Perth based FAL in the nineties was akin to a bunch Four Square grocers having come together and with Progressive they had a tiger by the tail.  The FAL owners understood the grocery business very well…but grocers are not necessarily known for their innovation and strategic foresight when it comes to fundamentally reinventing themselves. And having paid top dollar for Progressive when they bought the chain from the then Coles Myer a few years earlier, they wanted to see a return on investment.

Source: www.allposters.com/

Source: www.allposters.com

Graeme Kelly, the CEO they had only hired a couple of years early was sent packing and after a short intermezzo by Barry Alty, a Kiwi grocer turned Perth based Aussie, FAL recruited Ted van Arkel, a Kiwi based grocer of Dutch heritage as Alty’s deputy and eventual successor.

Ted was a grocer from way back, Woolworths trained, who knew the grocery business upside down, back to front and left to right.  The Meadowbank innovation was initially parked for review and then quietly abandoned. The stores were refocused on the core grocery business, integration of operating systems was further strengthened and the bottom line started to show the improvements the owners in far away Perth were expecting.

Cut. Change of Scenery.

I am a father of three adult children these days.  Doesn’t time fly. My daughter works for a global market research company in Frankfurt, Germany.  My older son is both a history teacher and New Zealand naval officer (don’t ask…it’s complicated). My younger son has just finished a Bachelor of Design and Visual Arts (Photography) degree at Unitec and will hopefully find his fulfillment as an artist.

Earlier this year he started talking about Unitec wanting to essentially make the entire design faculty redundant. He was concerned about that, both from his perspective as well as from that of the affected staff.  Naturally, once these plans were made known to the lecturers, they were no longer entirely focused on the learning needs of their students. Unitec’s position was that the Faculty and the courses it offered needed to be realigned with the core focus of Unitec as a technical tertiary institution.   Reading between the lines….someone clearly thought that there was too much art going on and that the place needed to concentrate on churning out craftsmen instead of artists.

Staff got their redundancy notices on the day the students opened  their end of year exhibition – where they could have benefited from the support of focused staff.  Instead, the staff involved the students in black armband protests and other forms of “passive resistance”. It was not good to observe what was going on.

I had not fully tuned in when my son started talking about the demise of his Faculty.  Partly because I was busy with other things and partly because I knew that by the time these changes were due to take place in 2014, he would have graduated and be on his way.  So it was not until a couple of weeks ago that I went to the Unitec website to check on the composition of the Unitec Council. Interesting.

Cut. Change of  Scenery

Christmas is the time for reflection. When I reflect about how my shopping behaviour has changed in the last three years, I realise that I spend quite a bit of my time, and more importantly money, at Farro Fresh Markets.  They sell the food I enjoy eating. Their stores offer a mix between grocery retailing and retail theatre that I don’t find in the traditional Countdown, New World or Pak’ n Save outlets.  They sell decent Spanish and French wines for a fraction of the price one has to pay for local Pinot Noir.  Their cheese selection is a shoppers’ magnet. A Farro Fresh Market is not necessarily exactly what the 1996 Progressive team  had envisaged…but Farro is the closest to the retail concept Progressive had in mind back then…and their opportunity came when Progressive consigned anything other than the expert grocery model to the ‘too hard’ basket.

What are the big learnings here for me?

  • Horses for courses.
  • Timing is everything.
  • There is a difference between a supermarket and a Design School.
  • The consumers’ food procurement model is changing at a rapid pace.
  • The shopping model I grew up with does not  meet the needs of today’s consumers.
  • Thank God for options, choice and innovation.

The clock will tick over soon. 2013  becomes history and the fledgling 2014 will spread its wings. Let’s hope we can learn from past mistakes and avoid repeating them.

And the practice of stuffing birds within birds and serving them fried or baked at table seems to date  back way beyond the Middle Ages, right down to the Romans and their famous banquets.

 

Give the CERA job to TESCO

copyright Guardian

copyright Guardian

Where is the ‘fine line’ then? The supermarket industry’s Rubicon? Tesco already sells anything from Life Insurance for your pets and travel to distant shores to party services. By the way, you can get your groceries there as well, including fresh produce…. In future though, starting in South London by the looks of things, shoppers will be able to just pop down from their high-rise flat to their local Tesco store on the ground floor…their Tesco flat that is in the apartment building Tesco has built!

The days when supermarkets just focused on selling FMCG products to willing buyers and saw their place in the supply chain as connecting manufacturers and shoppers are long gone and nowhere is that more obvious than in the UK. For the last 20 years, UK supermarkets have been depicted as the bad boys on the block for developing standalone stores and shopping centres at the outskirts of towns and therefore deconstructing High Streets. High Street now becomes a very viable proposition for smaller format food stores run by supermarket chains and, hey…if there is some urban development that can go with it, the much the better.

We have a whole city that needs redeveloping…may be we should sack the Canterbury Earthquake Recovery Authority and invite Tesco to have a go?  Can’t be any worse by the looks of things.

Meantime back here in New Zealand politics, the Labour Party Leader Selection Carousel has started to spin and Shane Jones, the contender least likely to be successful, stated on national television that supermarkets are akin to ‘brown shirts’ and needed regulating. His point being that a duopoly as exists between Countdown and PAK”n SAVE /New World does not provide sufficient competition to keep food prices affordable.

He has a point about duopolies – but only up to a point! We have three limitations in this country which are underlying factors of the duopoly situation that has evolved over the decades – because our food retail industry sure did not start as a duopoly operator.

Firstly, we are a nation with 4.5 million inhabitants which does not give us critical mass in any way, shape or form. Secondly, one-third of New Zealanders are akin to a giant Gannet colony, squeezed together in the Greater Auckland area. This means our lack of critical mass is enhanced further in a negative sense. Thirdly, as a food exporter, our domestic price structure for meat, dairy and fish is linked to what we can achieve for our goods on the global market.

You can’t just regulate that, get real, Jonesy. Your Leader before the one trying to sell snapper in Parliament was bad enough when he wanted to upset the simplest and most effective GST system in the world by making fruit & vegetables GST exempt. The chaos that would have caused is nothing compared to what would happen if you attempted to regulate supermarkets.

All this suggests to me that there is money to be made with an inoculation system for wannabe party leaders which ensures they are administered a healthy dose of economic realism before they wander off and make rash promises in order to be elected.

I wonder whether I could obtain a grant for the necessary research from the Minister of Everything?

The week that was…in Kiwi (Agri)-Politics – Week 35

pants_compressed

New Zealand is being treated to the spectacle of the three stooges candidates for the Labour Party Leadership juggling tripping around the country competing for the votes of party members, with attending Parliamentary question time to demonstrate to their caucus colleagues how they would perform against Prime Minister John Key in the chamber. Each man obviously has their supporters and detractors, and inevitably, they can’t helpful themselves and are wading in to influence the leadership election outcome.  Depending upon whom one listens to then, Shane Jones is therefore being described either as a larrikin with a mini-bar & video channel problem, a healthy male or the shining political light for Tangata Whenua; Grant Robertson’s labels range from graphic descriptors of his sexuality and being an inexperienced ex-diplomat, to gifted debater and consummate caucus unifier; whereas David Cunliffe is simultaneously being referred to as the only hope Labour has got to win the next election and being the soon to be published author of ‘The Dummies’ Guide to Walking On Water.’

Regardless of whether one does care as a  Labour supporter or does not care about Labour Party politics because one typically votes for another party or not at all; or whether one cares deeply for democracy’s sake but  just wishes they would get on with it and ‘stop the circus’ as Australian opposition leader Tony Abbott put it so aptly yesterday; it is time we actually started to look at the views and policies of the organisation rather than the theatrics of the individuals.

At the recent Horticulture New Zealand conference  in Wellington Labour’s Horticulture spokesperson Damien O’Connor spoke and you can find a copy of his address here.

I want to pick up on three points O’Connor made during his address and these relate to leadership, the type of food producer we want to be, and the Primary Growth Partnership programme.

Leadership is essential in any setting where a group of people or organisations are working towards a common goal. Where leadership is lacking or weak, indecisiveness, poor decision-making and under-optimised outcomes are the order of the day. Leadership does not equate to dictatorship nor is leadership the responsibility of a single organisation or individual, particularly not in Horticulture. We are not the meat industry where the export energy ultimately revolves around bits of dead animal being shipped somehow somewhere, in various degrees of pan & pot readiness over a period of time that is not always mission critical.

Horticulture works to a different agenda where the dynamics of, for example, pip fruit, are not always compatible with those of kiwifruit, potatoes or green leafy vegetables. We therefore need to have a clear understanding where we can optimise our leverage through industry wide leadership and where strong sector leadership is more appropriate.

I don’t think we are there yet.

O’Connor outlined the choices of being a low value high volume anonymous commodity producer with low brand equity or a high value, known exporter with high brand equity. If we were really living in an either/or environment, then the choice would be a non-brainer. But life is not as simple as that. Ultimately, we want to be both. We want to export high value fresh produce known for its health and well-being benefits from a country with a reputation for the highest standards in production, post harvest management and food safety (a bit of remedial work required in this area) – and we want to see as many as possible processed FMCG products developed which are fruit or vegetable based and can be enhanced by our produce as opposed to that of other countries.

The lack of a horticultural presence in the Primary Industry Growth partnership programme is in my view a combination of the programme not being as workable for horticulture as it is for other primary industry sectors and a lack of maturity of our industry.  A couple of years back, The AgriChain Centre was part of a consortium that prepared a bid to establish a Primary Industry Growth partnership programme. Our application failed on two grounds. Firstly, the programme is based on the primary production applicant from the outset partnering with an existing value adding multiplier. The weakness of  that approach is that the opportunity for a commodity producer to make the paradigm shift to brand marketer – because that is ultimately where the value can be unlocked O’Connor is talking about – is blocked from the outset as that territory is already occupied by the proposed FMCG partner who is looking for ingredients not an emerging competitor. Secondly, the ‘partnership’ element of the ‘Primary Growth  Partnership’ model requires the applicant to commit to a 50/50 funding model. Our consortium presented an innovative proposal aimed at assisting growers to build value through moving their focus and activities to the value adding territory of the supply chain. This did not fit the narrow prescriptive criteria against which the MPI appointed panel evaluated proposals. Shortly thereafter the kiwifruit vine disease PSA hit the industry with brute force and the lead up to the 2012 compulsory levy vote meant that internal issues gained greater prominence.

Ultimately O’Connor is right though. Horticulture should not be missing in action in the Primary Growth Partnership model – so watch this space.

I found the overviews of O’Connor’s speech provided in the August editions of Orchardist and Grower not truly reflective of the messages he gave. When we do get politicians along to talk to us at a Conference, we need to engage.   And given New Zealand’s MMP electoral system, we may actually indeed find ourselves back with a Labour led Government next year – assuming that the successful one  of today’s Holy Trinity finds his feet and gets on with creating a robust and meaningful Opposition that provides our 2014 voters with a meaningful choice.  And 2014 is next year by the way!