Packer Shipper December 1994 Article – Let Your Keyboard Do The Walking

On the subject of quarterly reports, one fresh-cut processor recently commented, "Can you imagine operating your business for three months without knowing whether you made a profit or a loss?"

It's a scary thought, but how many processors still rely on quarterly reports to tell them how their business fared?

Do you have your finger on the pulse of your own operation or are you working in the dark? Do you know your costs on that shipment of stir fry mix being loaded onto the truck? Did you price it high enough for a profit, yet not so high that you won't get the next sale?

If you can't answer those questions today, then tomorrow, after it's too late, you may realize you lost money.

"Wait a minute," you say. "How can I know my profit margin even before product goes out the door?"

The answer is computer technology. With the right software, you can enter the cost of each ingredient in the blend and compare it to yield in pounds of usable product at the end of the processing line. You can give the stir fry "recipe" to the computer and, figuring in labor costs and other expenses involved in processing, packaging and shipping your product to the customer, you can have an up-to-the-minute report on that load. In fact, the computer will even give an array of prices, depending on the margin you want on a given sale.

"You can never have enough information, if it's relevant," says Charles Shafae` of Shafae` and Associates, a computer software firm located in Half Moon Bay, California. "And in this age of information, the computer can give us so much information that can help us run our businesses more effectively. It's pretty commonplace to have your accounts receivable and accounts payable on computer. Your sales person makes a sale and writes the invoice by hand, agrees on a price and extends it by hand. Then the sales invoice goes to the office and somebody inputs that information into the computer.

Well, that's old information. To me, using a computer means that at any particular time I should be able to go to any terminal on the network and pull up the information now. If I want to know where I will be using all the carrots I have sitting in inventory, I should be able to get a report that tells me. I should be able to pull a report for today to see what my expected sales for an item will be. Then I could look and see how much of that I have in inventory. And if I'm short, I can get some more."

Computers provide answers; it's just a matter of asking the right questions, according to Shafae`. He has developed a program tailored to specific information needs of fresh-cut processors.

Called dProduce Man/Fresh Cut, the software is especially useful in helping processors track their costs and price their products more accurately.

More Time To Manage

"Everything becomes automatic," Shafae` explains. "Now you have more time to look at your business and manage, rather than running around seeing where a load of broccoli went. You know exactly where you're going."

For complex mixes, the program will enter an unlimited number of ingredients. Knowing the yield and cost for each ingredient and the recipe for the mix in the bag of finished product, the computer will tell you what each bag cost you and enable you to price it accurately.

"You don't have to punch in the costs for each item," Shafae` says. "We pick it up from the invoice that was entered into your system when it was received. All you have to do is tell me the yield, because the quality of one batch might be different than for another batch. Once you put the yield in, I know your costs, I know the recipe. I give you all the reports and calculate your sales ahead of time. We give you nine different price levels at the percentages you want."

A few of the features of dProduce Man/Fresh Cut include: detailed labor and materials requirement projected for the next six periods (user defines length of periods);
inventory tracking, tracking usage and yield of both stock and non-stock items, including labor and outside services; inventory and sales history for up to 26 months; complex mix formula with unlimited number of items; mass cost/price changes on any group of inventory items by flat dollar amount or percentage of current; listing of multiple inventory suppliers for each item; and scrollable display windows. Reports include: daily recap report; gross requirement report; net requirement report;
where-used report; average pounds per hour per worker; average sale price; yield per item; usage; inventory reports by lot, by customer, by supplier and by quantity.

No Dated Data

Current information is critical to making informed decisions and Shafae` says computers can provide processors with up-to-date, useful information at a moment's notice.
"It's no longer good enough to get reports after the fact," Shafae` reasons. "That's the old style of management. The idea used to be that we would get the information and use it to adjust for the next period. Now you can have current information and instead of running around without knowing what you're doing, you can manage your business. You can manage your costs. We're trying to make it a little more scientific by providing more information."

Science is behind the other products Shafae` has available for processors, too. A major grocery store in California recently stopped accepting paper invoices for baked goods, according to Shafae`. He believes it's only a matter of time until produce deliveries will be treated the same way. To aid in the process, he offers a hand-held unit that enables a driver to enter items and prices and then hook up to the customer's computer to download the invoice directly into the firm's system.

In the area of electronic order taking, Shafae` also offers a system for ordering that enables a processor to take orders from a customer without requiring the customer to have computer capabilities. Using a touch tone phone, the customer can enter his produce orders into the processor's system 24 hours a day.