July 2019 | Ahead of What’s Next |^ Progressive Grocer |^31
Insight
The author is Executive Director,
Greeneries Agro Pvt Ltd., one of the
largest sourcing partner and end-
to-end service provider to all major
modern retailers for their fresh
fruits and vegetables requirement.the volume is far higher. In such a situation, getting
the produce from a vendor, re-packing, labeling
and supplying becomes diffi cult as it is a time-
bound activity. Today, produce is mostly brought
from the market or the farms in crates, packed and
repacked at the vendor’s place, company warehouse
and at the store level. Multiple vendors are involved
due to the bulkiness of the order, often resulting
in damage due to multiple handling. Also, the
delay in reaching the retailer brings down its shelf
life and quality.
Besides, there is wastage and the loss has to be
recovered. Th is is done by increasing the product
price for the consumer. Th us, the product quality
goes down but its price rises.
Similarly, every retailer holds only so much
inventory of crate. During transaction, the crates
of vendors and retailers get exchanged, mixed up,
with either parties losing their crates. Shifting the
stock from the vendor crates to company crates
and allocation of multiple tonnes of produce for
taking into store is a Herculean task and very time
consuming. In a season, every vendor loses 300-400
crates, costing them more than a lakh of rupees.
Pack-to-Order solves many problems
In the Pack-to-Order model, as the produce is
sourced and packed at the farm gate level, there is
no weight loss for the farmer, resulting in a higher
realization for him. Otherwise, in an open market,
he loses money from the moisture-related and
transit damage weight loss, in agent commission,
transportation costs, etc. If 1,000 kg fruits are sold,
a farmer, on average, loses 50-80 kg.
In this model, the product goes into primary pack-
aging of 500 gm or 250 gm. It is then packed into a
carton box or tray, which has a predefi ned standard
weight. Th e distribution center can directly receive
and allocate to the store the stock after completing
the quality-checking formalities. Th is saves a lot of
time and energy and reduces the handling damage of
fruits. Here, there are no issues of multiple handling
or transit damage. Th e freshness of the product is
maintained with an effi cient cold chain. If the trans-
portation is done overnight, ambient temperature
can be maintained. If it takes more than 18 hours of
transit, reefer trucks can be used, thus enhancing the
product shelf life and quality, and giving more value
to the customer.
In conventional crate packaging, the box is 25%
overstuff ed with fruits, often resulting in pressure-
related damage of upto 30% of the produce. Th e
produce, which is damaged, will now have to be
sold at a 50% reduced price at the retail level.
On average, the Fruits & Vegetables section at
a retailer experiences wastage of 8-12%. In extreme
cases, this could go up to 18%, especially for
seasonal fruits. Even the most effi cient retailer faces
5-6% wastage today.
By adopting the Pack-to-Order model, the
wastage could be restricted to 2% for that particular
SKU. So, if we increase more SKUs into the Pack-
to-Order model, there could be a major reduction
on wastage. Th ere would be more operational
costs involved but it balances out with zero or less
wastage., good product quality and better shelf life,
improved service level to the retailer and, at the end,
a smile on the face of the customer.
In foreign countries, the Pack-to-Order concept
is very popular but in India only very few have given
importance to it. Th e concept has not taken shape
yet due to factors such as scattered farms with limited
landholding, cultural and infrastructural reasons.
Th e Pack-to-Order model can be adopted and
implemented immediately and could be scaled up in
a phase-by-phase manner. Th e only condition is that
the retailer needs to actively partner with the vendor
to do the proper planning, well before the season
begins, and orders in advance about the customization
in quantity vis-à-vis pricing that he would require.
Th is will enable the vendor to plan things backward,
choose the right location, farms, farmers, labourers,
packing material and transportation required for the
delivery. Once a proper pattern is set, the vendor will
be able to help even for an order at the eleventh hour
from the retailer. It will be diffi cult for the model to
evolve if the retailer does not take an active interest in
the partnership.
To sum up, successful adoption of the Pack-
to-Order model will increase sales and margins
for a retailer, provide better value and realization
to the farmer, give a consistent quality of fruits to
customers and, above all, support the social cause of
limiting the wastage of food. PGIn the Pack-to-
Order model,
as the produce
is sourced
and packed at
the farm gate
level, there is
no weight loss
for the farmer,
resulting
in a higher
realization for
him.