FARM FRESH WAREHOUSING COSTS CUT BY 'JUST-IN-TIME'

DEENA AMATO-McCOY

NEW ORLEANS -- Farm Fresh, Norfolk, Va., is minimizing costs associated with produce storage by using "just-in-time" supply-chain practices.

By implementing a just-in-time process, produce entering the warehouse for picking is shipped to stores on the same day. This allows Farm Fresh to use 95% of the facility's floor slots for picking produce without having to use overhead racking for storage.

"Our stores order and receive their produce within 24 hours," said Al Garner, vice president of produce for Farm Fresh. "This means we do not store produce in the warehouse; stores order everything for the next delivery day -- including sale items.

"By implementing a just-in-time process, we were able to raise the quality [of our produce], and lower our [operations] costs," said Garner. "Farm Fresh always capitalized on very fresh produce and we wanted to take this to the next level."

Garner spoke at the Just In Time Produce Procurement and Distribution seminar during the Distribution Conference here, sponsored by the Food Marketing Institute, Washington.

By using just-in-time, Farm Fresh is reaping benefits for its warehouse operation. "Farm Fresh eliminates the storage process by receiving the product at the warehouse and going straight to the picking process," he explained.

Just-in-time also eliminates overhead storage and the safety issues associated with overhead racks. "We are doing everything on one level, while using the warehouse as it was intended -- as a multi-use facility," said Garner.

To successfully deliver produce just-in-time, Farm Fresh retrofitted an existing warehouse to accommodate shipping and receiving produce on the same day. The converted warehouse, with 40,000 square feet of space and precise temperature and humidity controls, can accommodate 125 items.

"The depot stays at one temperature and humidity level," Garner noted. "Because we are a small company, we could not invest in creating a three-room, multitemperature facility or do other things we might have liked."

Produce, received directly from growers and produce suppliers, arrives at the distribution center between midnight and 6 a.m., and by 7 a.m. order selection begins. By 10 a.m. the selectors begin shipping produce to the stores and by noon stores begin receiving their produce orders.

"We have to rely on this time line because we do not have the option of picking up fresh produce at a local market if our trucks do not make it to the stores," Garner said.

According to Garner, just-in-time provides the stores with fresher produce and improves store performance.

He added that since product turns with produce are very high, use of just-in-time is building and accelerating Farm Fresh's cash flow. "By providing fresher product, store performance increases because the potential for shrink is a lot less."

Farm Fresh is planning to expand its perishables program by working with the Washington Apple Commission, Wenatchee, Wash., on a category-management project.

"We think category management is extremely important in perishables," he said. "There are things we can learn about consumer demand to maximize our efficiencies and allow us to utilize just-in-time that much more effectively."