Synopsis

Fresh Mushrooms: Outward Logistic Study

For

WeiKFiELD Foods Pvt. Limited, Fresh Mushroom Division, Bakori, Pune.

By

Yogesh Kamat, MITCOM

&

Bhagwat Kalurkar, MITCOM

Guide

Mrs. Ajeeta Shivdasani

Marketing Manager, FMD, WeikFiELD.

May-June, 2010

Index

No.

Title

Page No.

1 2 3 4 5 6 7 8

Introduction Importance and Significance Rationale Objective Hypothesis Research Methodology Other Improvement Opportunities SWOT Analysis

3 4 5 7 8 9 11 12

Introduction:
Weikfield Products was established in 1956. It operates with two plants located at Pune in Maharashtra and Baddi in Himachal Pradesh which operate at 70% capacity utilisation. The company earns 74% of its revenue from the domestic market. Some of its domestic clients include Reliance Fresh, Birla Retail, Spencers and Foodworld. Its international clients are Dollar Tree Inc, Cencosood and Erboristi Lendi among others. The products are exported to American, European, Asian (including Middle East) and African countries. While there are several mushroom farms in the country, most of whom find it tough to make the project a success, Weikfield operates from a position of strength, thanks to its integrated facilities, which spans right from compost making to spawn developing to processing. The 40,000 sq. ft. facility built on a 32-acre plot has seven computer controlled compost making tunnels and 48 air-conditioned mushroom growing rooms, where temperature, humidity, levels of oxygen and carbon dioxide are constantly monitored and controlled. In the domestic market, the company has tied up with restaurants and pizza houses and makes use of its existing distribution and dealer network it has for its earlier products. It sells its products under the Weikfield First Choice brand. Outside the country, it has tied up with food chains and suppliers including Liberty Gold, Miller & Smith, Safeway, Little Caesar, etc. Mushrooms fall into category of Fungi and are normally found in pastures, meadows and woodland. They also defer in colours varying from white, brown, red, brown to shiny pastel colours. They all resemble in their appearance but vary in shapes and sizes. The edible variety is normally used along with other vegetable or meat. When fresh they taste good. They are high in protein contents and are easier to cook as no cleaning and peeling is necessary. However they have very low approximately 3 to 5 days - shelf life period between their harvesting and consumption - unless preserved under controlled refrigerated condition. Hence it is essential that post harvesting they are cleanedfrozencannedpacked and stored in controlled conditions of temperature and humidity.
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Importance and Significance:

Logistics is the one important function in business today. No marketing, manufacturing or project execution can succeed without logistics support. For companies, 10 per cent to 35 per cent of gross sales are logistics cost, depending on business, geography and weight/value ratio. Logistics refers to a process that is associated with flow of information, goods and services offered to suppliers and customers from the point of origin to the point of destination. It is the complete process that starts from raw materials to the final disposal or sale of the finished goods. Logistics analysis has been viewed as an important element in the corporate strategy of many organizations. An effective and efficient logistics system is created to meet the requirements of the customers for timely responsiveness, quality and creating value for products and services. Considering a possibility of pre-consumption storage of 2-3 days at end consumers, it is essential that the manufacturers / cultivators take utmost care in preserving the quality and freshness of their Produce before they reach the end consumers through the logistic & distribution network. "We are trying to grow the domestic market," says Mr. Malhotra. "Canning involves 40 per cent reduction in weight (due to blanching). This loss can be avoided if we are able to sell fresh mushrooms locally." The Indian market offers tremendous latent potential, with average consumption as low as 0.4 lbs. per head per year, as against 4 lbs. per head per head in the US, or 15 lbs. per head per year in South East Asian countries. It hence become imperative that the logistics involved in the supply of Fresh Mushrooms from the point of production / cultivation to the end retailer or customer is such that it ensures optimum quality of product.

Rationale:
After harvesting at each stage the mushrooms are dry cleaned off the soil and packed in three varieties of standard packing. The three standard types of packing are: o Regular 200 gms each o Punnet 200 gms each Regulars 10 kg (50 packs) Punnets 8 kg (40 packs) o Bulk 1.00 kg each. Material is shipped & transported to various destinations as detailed below: Pune: o Daily supply 1.50 MT / day o Types of packing all three o Transportation By road o Delivery frequency Every hour after 0930am o Vehicle used Distributor owned LCV Mumbai: o Daily supply o Types of packing o Transportation o Delivery frequency o Vehicle used

1.70 MT / day all three By road Shipping at 11.00 pm. Company owned LCV.

Ahmedabad, Calcutta, Bangalore & Chennai: o Daily supply Ahmedabad 150 kgs / day Calcutta 200 kgs / day Bangalore 600 kgs / day Chennai 400 kgs / day o Types of packing Regular & Punnet o Transportation By road to Pune airport & Air o Delivery frequency Two hours before flight o Vehicle used Company owned LCV.
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 Past observations have revealed inefficiency in the logistics system for Fresh Mushrooms. Distributors and retailers have complained, at times, regarding the timing and quality of the mushrooms which have been delivered. WeiKFiELD has maintained an image of a consistent high quality and quantity producer of Fresh Mushrooms. However, there has been disparity in the quality produced and quality delivered. This project was hence overtaken to find the possible improvement opportunities, if any, in the current logistics system.

Objective:
This project study has been undertaken to understand the present logistic process followed at WeikFiELD Fresh Mushroom Division at Bakori, Pune and identify opportunities for improvements, if any. The process includes the activities from Post harvesting till the produce reach the distributors or retail outlets involving delivery of products However for the sake of complete understand the study has been extended to the cultivation, production, internal warehousing & handling process cycles before harvesting.

Hypothesis:
Based on the observations of the Logistics system, a few improvement opportunities came to knowledge. The interaction with the retailers and Distributors in the Pune market, suggested a shift in the deliver timing of the Fresh Mushroom in order to avoid losing a customer base. This factor was hence adopted for setting a hypothesis and further studies. Null Hupothesis: Ho Shift in the Delivery timing of Fresh Mushroom, from afternoon to morning, is not well accepted by Retailers and fails to assist them in enhancing sales. Alternate Hypothesis: HA Shift in the Delivery timing of Fresh Mushroom, from afternoon to morning, is well accepted by Retailers and assist them in enhancing sales.

Research Methodology:
1. Interview Personal interaction with the concerned personnel from the Distributors and retailers organization give considerable and valuable inputs regarding problems faced, probable solutions and also the feedback post-implementation of corrective interaction. 2. Observation Observation of the entire logistics system, the loop-holes and strong points were singled out. The loop-holes need to be plugged and hence give the improvement opportunities. The strong points also need to stress on as they show the factors on which the organization needs to continue delivering. Observation also includes the actual responses in the sales at the retailers end. Customer satisfaction or the lack of it, can be observed due to availability of the product in the shelf. 3. Pilot Study Direct delivery to Dorabjees & Shivaji Market on behalf of Pune distributor. With permission of WF marketing staff, during 3rd week of May 10, we gave the packing requirement for the period of 23rd through 29th May to our harvesting and packing staff at Bakori farms with instructions that the packed material is required at 0800 in the morning. Normally this activity starts daily at around 0900 a.m. The workforce at our farms cooperated and handed over the material to us at 0830 a.m. It was a mix of material of cold storage and fresh stock. We delivered the same to Dorabjees and Shivaji market in our personal vehicle on these days at 0930 immediately on opening of the shops. With the exception of 27th May, the satisfaction on other days was beyond their expectations. This was evident from their responses for more materials. However the material stock was not made available for these out lets indicating lost opportunity
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On 27th May the stock offered was from cold storage & of inferior quality. It needs to be seen whether it was spoiled in storage.
Date 23/05 24/05 26/05 27/05 28/05 29/05 Freshness Punnet 1 Fresh 1 Stock 2 Fresh 1 Fresh 1 Stock 2 Stock 2 Fresh 2 Fresh Regular 1 Fresh 1 Fresh 1 Fresh 1 Stock 1 Fresh 1 Fresh Time of Delivery 09.30 09.20 09.30 09.25 09.30 10.00 Feed Back Positive Positive Positive Negative Positive Positive

4. Questionnaire As the final step in the study, a questionnaire would be designed which would indicate the retailers and cutromers view regarding desired availability timings of the product. The questionnaire would provide the necessary data regarding probable rise in the sales / or the absence of it. All the above methods would be able to provide the data which can help arrive at a conclusive decision regarding delivery time of Fresh Mushroom to the Pune Market.

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Other Improvement Opportunities:

WF must maintain the lead as consistent quantity producer and take initiative to increase the market share by improving Brand image in other area like improved packing and convenient delivery schedule. Awareness Training to cleaning workforce. Improvement in quality of Poly bags and Punnet trays. o Adhesive quality. o Plastic sheet gauge thickness. Cardboard boxes to be at least 5 ply. Transportation in refrigerated vans. Vans to have independent engine to run A/C unit while the vehicle is waiting for unloading. Harvesting & Packing work force are ladies and hence packing starts late in the morning to their domestic convenience. This activity be done early in the morning to through men or done previous day evening so that delivery to Pune distributors can be made before 0900 a.m. daily. Fixed the location for stamping on poly bags, so that user does not have to search for this information. Avoid stamping ink leaking inside on to the mushrooms. Post harvesting packing place be also with controlled ambience. Movement frequency through the warehouse (cold room) door be reduced by batch transfer of material inside room or provide Air curtain at the door to maintain temperature inside cold room. Transportation of material in Returnable Plastic Crates to facilitate multi stacking and still avoid transit damage. Loading above drivers cabins must be prohibited.

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SWOT Analysis
Strengths Brand Image Large production capacity Established cultivation process Production of high quality mushrooms Well established dealer network Sound Financial base Weaknesses

Supply short of Demand Ineffecient packing and transportation systems Lack of focus on premium product i.e. Punnet mushrooms.
Opportunities Unutilized plant capacity to meet growing market demand Automation in grading and packaging facilities Enhanced quality of packaging material Unfulfilled export market Threats Inefficient logistics and packaging process may take away the business to competition. Unless improved, Punnet product may lose its Brand premium and related margins. Aggressive competition may take away the business through improved and attractive packaging.

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