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New technology will drive out costs

Produce business to benefit from e-commerce, digital tagging EMERGING TECHNOLOGY, in-cluding e-commerce and digital imaging, provides the fruit and vegetable industry a means of reducing costs and improving communication between buyer and seller.

"We can improve efficiencies throughout the entire supply chain," said John Abkes, vice president of electronic commerce, DTN. "We are set up to drive the costs out," he said.

Robert Verloop, vice president of marketing for, said the goal of E-commerce is to get costs out of the delivery system. Verloop and Abkes discussed E-commerce during an emerging technology seminar, part of the recent Texas Produce Association annual conference and Expo at South Padre Island.

"The old adage that we can make it up in volume simply doesn't fly," Verloop said. "At some point, we can't build more stores. Eventually, with that kind of cost, you lose."

Verloop said produce industry retailers often chase the same customers. "We have to change our mindset," he said. "We have to increase sales industry-wide, not just get a bigger share of current customers. That means finding areas of missed opportunity or where we lose money."

E-commerce can help save money, he said. "We've found that 20 percent to 40 percent of purchase orders in the industry contain errors. That means delivering produce costs more money and those costs pass to the consumers."

He said a paperless transaction process, using the Internet to create and manage purchase orders, would reduce errors significantly and speed the process. "Then buyers and sellers can concentrate on buying and selling."

He said the invoice of the future would not be cut until the product is received and accepted. "At that point, all parties know the invoice is accurate. Then, we can use electronic funds transfer for payment. The information flow improves significantly."

Verloop said competing retail chains are cooperating with e-commerce sites to improve efficiency. "Various companies set up a superstructure to allow vendors to exchange data," he said.

Verloop anticipates retailers may have three or four systems installed on computers to help manage produce. "Target marketing will be a key with produce and perishables," he said. "And technology will improve to allow retailers to work with other products, meat and seafood, for instance."

Verloop said improved efficiencies throughout the system could extend shelf life by two days.

"We have to show the value of the technology," he said. "The goal is to increase sales, get more people eating fresh fruit and vegetables."

Abkes said cost savings should accrue first to shippers and from there should be passed down to the producer. "There are savings available in shipping costs with E-commerce," he said.

Abkes said purchase order costs, for instance, drop from $9 each to less than $2 with an E-commerce system.

"But any e-commerce solution should save both buyer and supplier money. Integration of systems is the driving force behind the technology. The more integrated a system becomes, the more the parties save. We're building a bridge between supplier and buyer.

"The process must save time and should be easy to understand," he said.

Abkes cautions retailers and suppliers about adopting technology just because it's the latest gimmick available. "Don't allow technology to dictate business practices," he said. "If technology aids business practices, adopt it."

"And don't use E-commerce with customers you don't know," said Verloop. "Use it to find new customers, but the produce industry is still a relationship business. Try new technology on customers you trust."

Digital imaging also will change the way produce companies do business.

"Tom Page, SuperValue, said inspectors are linked to company headquarters by digital imagery. "Inspectors have digital cameras in the field, so we can see quickly what's happening with produce.

"Digital imagery saves time and money," Page said.

"Digital cameras and videos both play important roles in our business," said Verloop. "Videos give the technology a personal touch."

He said field inspectors or suppliers use videos to show packing processes, field conditions and to identify produce lots.

"We can embed a picture in the order (through the Internet). That provides a historical file which documents what was shipped."

Technology, speakers emphasized, will improve efficiencies throughout the produce delivery system.

"It will help target markets and give producers a better feeling for what to plant and when to plant and harvest," Verloop said.

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