ZIFFPAGE TITLESeeing Green in SaladsBy Baselinemag | Posted 2006-07-13 Print
Fernando Aguirre explains the importance of accurate forecasting in a business with perishable products and the banana producer's hopes for radio frequency ID.
Seeing Green in Salads
So, why are packaged salad greens a desirable category for Chiquita?
Well, because number one, it helps us diversify the company from being highly focused on one productbananasto one that now is a company for which bananas are 40% of sales, and prepackaged salads are 25%. [Other fruit products make up the remaining 35%.] We also needed to diversify geographically. We had a lot of our profitability based outside the United States. [About 70% of Chiquita's banana sales are outside the U.S., whereas all of Fresh Express's sales were in the U.S.] Third, this gives us a tremendous opportunity to leverage a lot of the infrastructure that we haverefrigerated trucks, delivery systems.
And it also gives us an opportunity to learn. Fresh Express has a value-added model [selling packaged salads at higher margins than heads of lettuce] that hopefully we can apply to our lower-margin business model.
How will you do that?
For example, we are using some packaging technologies to provide single-serve bananas to customers, very specifically to convenience stores. They can carry bananas, sell them at a premium price compared with a grocery store. For them, it makes more money; for us, it makes more money. It allows us to have bananas available in many more points of purchase, and the consumer is willing to pay a premium for the right ripening level.
Won't launching new products make forecasting more complicated?
Well, I think growing the company will make forecasting more complicated. So, I think the quick answer is yes. That's why I think I.T. is a key part of the decision-making. They're at the table. Our CIO, Waheed Zaman, sits at the table of the executive committee. I believe it's an important aspect of the way we manage the business.
Is Chiquita deploying RFID [radio frequency identification] for inventory tracking?
We are testing, and we are developing with some of our customer partners, that technology to see how we can apply it to our products, starting with bananas. But this really raises the issue of what is constantly a challenge for any companyto decide whether you want to be an early adopter or whether you want to become a fast follower. Yes, we are working on RFID. I believe we're going to be ready. I believe we'll be able to use it as a competitive advantage. But we're taking it one step at a time.
Do you have a time line for RFID deployment?
I think it will be a matter of months. I would prefer to not disclose specifically when.
How will RFID give you a competitive advantage?
I think it will help us some in forecasting. It will help us know what the inventory levels look like at the customers. It will help us know whether or not our products are moving faster than competitive products. I think it will help us by perhaps trying and testing ways we can sell bananas in different parts of a store.
What information technology do you use personally?
I use a lot of reportsmostly in [Microsoft] Excel. I look at a lot of spreadsheets. I have a BlackBerry and a laptop for when I'm traveling. I actually receive all my e-mails and respond to them personally. I get between 50 and 250 messages a day, and typically I'm caught up with them every day. There may be a few where I'm waiting for information from others. But I'm as fast as any typist you've seen.
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