Analysis of FreshTec Activity - Case Study Example

? FreshTec FreshTec Question One The key external factors affecting the fresh produce industry were annual wastes after harvest, which failed to deliver vegetables and fruits that were good-tasting and truly ripe, further posing challenges in food safety. The overall effect was a reduction in productivity and efficiency in the global market for fresh produce, resulting in losses of up to 25 percent to the industry, and up to 50 percent for those in developing countries (FAO, 1989). These losses were brought about by several factors. First, there was the naturally occurring aging and decaying process of fruits and vegetables, known as senescence. Senescence involved transpiration and respiration, processes that went on in the fresh produce even after being detached from the mother-plant. Secondly, the kind of packaging used for delivery and storage did nothing to extend the life of harvested produce or effectively alleviate senescence. Instead, the packaging necessitated quicker, and costlier, options of delivery from the farms to the consumers, and all the agents that fall in-between. Thirdly, the produce was prone to physical injury, temperature injury and disease. The physical injury was mostly caused by shipping produce in splintered or damaged crates and boxes, or the way the shipping was handled. Such injuries presented bacteria with entry points, resulting in diseases. Most modern packinghouses invested in the use of washing and spraying fungicides before shipping to reduce chances of disease, but had no great impact on how long the produce could stay after harvesting. Temperature injury was caused by extreme temperatures both during storage and shipping, soon rendering produce unsuitable for the market. Given all these external factors, FreshTec was not well positioned to be much more successful in the industry than other players, because they would all use the same processes and players involved. FreshTec saw a single solution to all the factors degrading the quality of produce in all its processes and stages before finally reaching the consumer; packaging. The right type of packaging could increase the life of produce. The retailers and warehouse operators would be able to keep more stocks for longer without having to throw them away as waste when they went bad (USDA, 2010). The farmers, marketers, brokers and distributors would choose cheaper delivery and shipping methods that, although take longer, keep produce fresh, retain moisture contents and keep produce tasting sweet. This aspect would also enable consumers to have off-season produce that has been stored from the last harvest, because the packaging and storage enables them to last longer. SmartPac, developed by FreshTec, offered customized modified atmosphere packaging (MAP) for any variety of produce. This enabled them to climb an edge above all previous technique. The packaging exchanged heat from the box, allowing sealed contents to be cooled while using a naturally oxidizing sanitation system to sterilize and clean produce during transit. In this way, FreshTec could ensure produce reached the consumer while still fresh, undamaged and naturally sweet. This also eliminates the need of having to harvest farm products before they are optimally ripe. Fresh produce had to be harvested just before ripening in order to allow for senescence during transportation to distant destinations, tempering with natural taste. Question Two FreshTec may use several options to approach the issue of industry adoption of their new packaging. The first would be to justify the cost of the new packaging, which averaged at an extra $1 to $1.5 in comparison to standard packaging. All this was in view that the new packaging was being launched into a tradition-bound and conservative industry. However, if the produce could still be delivered cheaply for longer periods and reach new markets that were previously inaccessible while still fresh, the pricing burden can easily be shared between the retailers and consumers. With the United States offering only five percent of the market available worldwide, FreshTec can explore underdeveloped market opportunities out of the United States. By globalizing, they may reach emerging markets made up of growing populations in countries whose economies are growing. Secondly, by targeting a market segment that does not regard fresh produce as a luxury, SmartPac can readily be accepted despite the extra cost. Luxury products are difficult to sell, unless under very special circumstances and to a special market segment. FreshTec can take advantage of the market that can afford and appreciates good-tasting, fresh and nutritious produce. To this end, a survey was conducted and 87 percent of consumers confirmed freshness as being a factor in their choice of fruits and vegetables (Cook, 2010). Emphasizing on the ability to deliver fresh products that are in short supply due to the season but demanded by occasions such as weddings, graduations, anniversaries and holidays may also open up new markets for FreshTec and SmartPac. For example, a consumer may be in need of fresh flowers at a time when demand is a challenge to producers. Flowers stored in SmartPac packages have longer storage periods while retaining freshness, hence can be sold during seasons of low supply. FreshTec can also launch SmartPac into the market by starting with varieties of vegetables and fruits that generally have higher demand. Having been tested during the trial period, and usually picked already ripe, such varieties will have shorter learning and acceptance curves among the consumers. For example, they can embark on a marketing campaign that emphasizes their produce was picked when already ripe, unlike the conventional methods that picked unripe produce from the farms to compensate for senescence during transportation. Therefore, health conscious consumers will have the benefit of produce with vitamin retention and optimum acid-to-sugar ratio on top of being juicy and having a good texture. FreshTec can also gain the confidence of consumers through the assurance that, with the technology used in SmartPac, gas was released from oxidizers placed in sachets to cover and protect the produce (Cook, 2010). However, with the use of the sachets, the oxidizers never have direct contact with the produce, hence no chance of contamination. Traders can also support the adoption of SmartPac by the market by using it themselves in order to realize benefits and savings in transportation. The use of SmartPac will also afford the traders more flexibility in logistical options since more time can be allocated to the whole transport process and still reach consumers while the produce is still fresh. This aspect can also be supported by environmental activists because the transport options that can be used will greatly reduce the carbon footprint (USDA, 2010). Question Three FreshTec can target several categories of customers, serving different roles. Retailers are the best target. This is because they will be able to order more quantities in a single shipment without the fear of the supplies going bad before being sold out. This is unlike before, when they used costly and frequent shipment in order to keep up with regular demand of fresh produce (Cook, 2010). With SmartPac, they will be able to keep stocks for longer, and also be safe from unforeseen circumstances, such as in the event that demands unexpectedly diminished. On the other hand, a retailer may have a chain of stores spread across several states, and needs fresh produce to reach them regularly. Such a retailer is an ideal agent to introduce SmartPac to their supply chain operators. FreshTec can then take the responsibility to educate the users, distributors, packers and farmers within the supply chain on the benefits they would reap from SmartPac. With transport being a key cost factor among the supply chain operators, a good strategy FreshTec can use on the supply chain is to demonstrate how much they would save in terms of transport costs. Although produce packed in SmartPac will be more costly to buy and distribute in comparison to those packed in standard material, transport costs will ultimately be cut down by the ability to deliver more in less frequent trips. Another target group would be food service provides. Hotels, restaurants and fast-food stores, for example, will be able to keep their own bulk supplies of fresh produce for longer than they would under conventional refrigeration methods and still serve their customers with quality products. Just like the retailers, they will see a reduction in their dealings with the supply chain operators. They can, therefore, also save on costly and frequent deliveries by keeping supplies to cover longer periods. By teaming up with brokers, FreshTec can buy more produce from the growers and store it in warehouses. Although this might initially imply more costs, the brokers can directly buy fresh produce from FreshTec throughout the year in whatever season, who would have bought in bulk from growers. FreshTec can take advantage of brokers who cannot afford their own warehouse facilities and assure them of their ability to provide them with constant supplies of produce throughout the year in all seasons. This will serve two interests. Not only will the business between FreshTec and the brokers be constant, but the brokers will also be able to ease the supply gaps created by off-season produce. This in turn means the brokers will always have supplies for their customers and market for FreshTec. References Cook, R. (2010). Growing fresh produce use in foodservice: Challenges, opportunities, strategies. Retrieved from http://www.postharvest.ecdavis.edu/datastorefiles/234- 1156.pdf Food and Agricultural Organization (FAO). (1989). Prevention of post-harvest food losses: Fruits, vegetables and root crops. Retrieved from http://www.fao.org/t0073e/Too73Eoo.htm/ United States Department of Agriculture (USDA). (2010). The world fresh fruit market. Retrieved from http://www.fas.usda.gov.htp/hort_circular/2006/02- 06/world%20fesh%20fruit%20market%202004.pdf Read More