Adoption of innovation in the fresh produce business: how can we speed up the process?
“Why do we continue to find some varieties in the market with low taste when tastier ones are available?” “Why is packaging in the market still available that does not protect effectively the fruit, when more effective packaging is technologically available?”
In general, why are the best technology and processes not adopted at a higher rate, when the benefit to the business and the consumer is obvious?. This question has probably crossed the mind of many managers and professionals active in the fresh produce sector.
The diffusion of innovation is a topic present in business schools in the last years due to its relevance to economic development. It is a discipline that involves aspects of business administration, sociology and economics. We will explore some of this aspects below.
The company as a system: human and economic factors
We should not forget that technological improvements occur in the context of a business, where the economic objectives are the main reason for the existence of the enterprise. We can consider each fruit and vegetable business as a production and delivery system.
A system, according to W. E. Deming, founder of modern quality management, is defined as “a series of functions or activities inside an organization that work together towards the objective of that organization”.
Therefore management of the business requires knowledge of the interrelation between processes. The job of the manager is to optimize the whole system not just its parts. We find the paradox that optimizing the individual parts does not mean optimizing the total system.
One example: the procurement departments have in general a target of purchasing material at the lowest cost possible. However if that packaging does not protect the fruit or vegetable, the cost of claims and complaints will rise, and an unknown number of customers will leave, impacting the bottom line of the whole company. The savings in packaging may be offset by the reduced sales or the damage to the brand.
Another example: the introduction of a new variety by the production department, without coordination with the sales department, may result in a production peak at a different time of the year than the existing varieties. The sales team is caught by surprise and unable to sell the whole volume, delays occur and fruit quality suffers. Growers and clients complain.
Paradoxically, the most technologically advanced solution is not always the best for a fruit and vegetable business, seen as a whole system. The best solution is the most adapted to the system, easiest to implement, with the lowest total cost, (this includes purchasing cost and operating cost) and with the lowest level of defects.
As cost, we should consider not only the financial cost but also the effort, time and human resource expended in the implementation and operation of the innovation.
For example: to improve the final shelf life to the consumer, What it the best alternative? Investing in a breeding program to generate better varieties? Or a new packaging design that preserves better shelf life? A new logistics system that shortens harvest-to-cool times and delivery times? More cooling capacity? Or a combination of several?
Improvements in human processes in the organization are often more relevant than technological improvements. A healthy working environment with clear goals, good working conditions, on-time, accurate training, and appropriate tools, all these save time and avoid mistakes in the fresh produce enterprise.
As an example, mistakes in inventory management of fresh produce cause distribution delays and loss of shelf life in the cooler. A good inventory management does not require breakthrough technology, but can contribute more to the preservation of produce quality than an additional technological improvement.
A skilled, motivated sales team, with clear goals and active in the market, that is well aligned with the procurement department, and is aware of the situation in the production areas, can do more for the good quality of the fruit at arrival than a new variety or a new packaging technology.
Good production planning in the field before the season starts, and frequent updates during the season, allow the organization to avoid production peaks and facilitate the job of the sales team in coordination with retail.
Going back to the initial question, how can the adoption of innovation be accelerated? Here are some generic recommendations. These would need to be adapted to the specifics of each fresh produce company.
- study the whole system: from genetics, production and packing to transport and distribution
- define well the final objective of the firm and find the technologically easiest and most cost-effective solutions
- find several technological alternatives to reach the same objective and choose the easiest from the implementation and financial standpoint
- study the financial aspects of the investment: is this technology economically viable?
- consider the implications of the new technology in the human organizational environment: which are the consequences of the change for the employees? Will their job be easier or harder? Does it save time and effort? Study possible resistances to change and make an implementation plan
- analyze which other parts of the total chain need to change at the same time for the implementation to be successful. e.g. changes in packaging need to be discussed and agreed upstream with production and downstream with retail
Copyright 2011 Dr. Manuel Madrid
Editor, Fruitprofits - firstname.lastname@example.org
Fruitprofits is a consulting business specialized in the subjects of innovation, technology, new products and higher productivity for the fresh produce sector worldwide