Pack-to-Order concept means packing and supplying produce, majorly fruits, customized to the requirement of the retailer, from the farm source itself. It is best suited for fruits such as Grapes, Oranges, Pomegranates, Kinnow, Apple, Thai Guavas, etc. It is a complete farm-to-retail model without any major investment in the backend infrastructure and entails no manpower for the retailer. In this model, only the customer order quantity is harvested, which helps to reduce wastage and carry forward the stock at multiple levels of the fruits and vegetables (F&V) value chain. Also, the store gets real farm fresh stock.
Pack-to-Order has become more relevant today to the modern retailer for the many advantages it brings, including savings in costs, time, labour, and resources in bringing the produce from the farms to the market. It reduces wastage, improves product quality and shelf life, thereby resulting in repeated buying from the customer. In the model, temporary packaging centres are created in the middle of the major growing belts. Immediately after the harvest, the fruits are packed into punnets, which are again repacked in carton trays, and customized to a retailer’s order with relevant stickers and barcodes if required. The packs are then transported in a reefer van directly to the retailer across major cities in India. Earlier, Pack-to-Order was applied only for exports.
The ill effects of multiple handling and crate management in conventional retailing
Today, every major distribution centre of big time modern retailers handles an average volume of 80 to 150 tonnes per day of fruits. During promotions, the volume is far higher. In such a situation, getting the produce from a vendor, re-packing, labeling and supplying becomes difficult as it is a time-bound activity. Today, produce is mostly brought from the market or the farms in crates, packed and repacked at the vendor’s place, company warehouse and at the store level. Multiple vendors are involved due to the bulkiness of the order, often resulting in damage due to multiple handling. Also, the delay in reaching the retailer brings down its shelf life and quality.
Besides, there is wastage and the loss has to be recovered. This is done by increasing the product price for the consumer. Thus, the product quality goes down but its price rises. Similarly, every retailer holds only so much inventory of crate. During transaction, the crates of vendors and retailers get exchanged, mixed up, with either party losing their crates. Shifting the stock from the vendor crates to company crates and allocation of multiple tonnes of produce for taking into store is a Herculean task and very time consuming. In a season, every vendor loses 300-400 crates, costing them more than a lakh of rupees.
Pack-to-Order solves many problems
In the Pack-to-Order model, as the produce is sourced and packed at the farm gate level, there is no weight loss for the farmer, resulting in a higher realization for him. Otherwise, in an open market, he loses money from the moisture-related and transit damage weight loss, in agent commission, transportation costs, etc. If 1,000 kg fruits are sold, a farmer, on average, loses 50-80 kg. In this model, the product goes into primary packaging of 500 gm or 250 gm. It is then packed into a carton box or tray, which has a predefined standard weight. The distribution center can directly receive and allocate to the store the stock after completing the quality-checking formalities. This saves a lot of time and energy and reduces the handling damage of fruits. Here, there are no issues of multiple handling or transit damage. The freshness of the product is maintained with an efficient cold chain. If the transportation is done overnight, ambient temperature can be maintained. If it takes more than 18 hours of transit, reefer trucks can be used, thus enhancing the product shelf life and quality, and giving more value to the customer.
In conventional crate packaging, the box is 25 percent overstuffed with fruits, often resulting in pressure-related damage of upto 30 percent of the produce. The produce, which is damaged, will now have to be sold at a 50 percent reduced price at the retail level. On average, the fruits and vegetables section at a retailer experiences wastage of 8-12 percent. In extreme cases, this could go up to 18 percent, especially for seasonal fruits. Even the most efficient retailer faces 5-6 percent wastage today.
By adopting the Pack-to-Order model, the wastage could be restricted to 2 percent for that particular SKU. So, if we increase more SKUs into the Pack-to-Order model, there could be a major reduction on wastage. There would be more operational costs involved but it balances out with zero or less wastage, good product quality and better shelf life, improved service level to the retailer and, at the end, a smile on the face of the customer.
In foreign countries, the Pack-to-Order concept is very popular but in India only very few have given importance to it. The concept has not taken shape yet due to factors such as scattered farms with limited landholding, cultural and infrastructural reasons.
The Pack-to-Order model can be adopted and implemented immediately and could be scaled up in a phase-by-phase manner. The only condition is that the retailer needs to actively partner with the vendor to do the proper planning, well before the season begins, and orders in advance about the customization in quantity vis-à-vis pricing that he would require. This will enable the vendor to plan things backward, choose the right location, farms, farmers, labourers, packing material and transportation required for the delivery. Once a proper pattern is set, the vendor will be able to help even for an order at the eleventh hour from the retailer. It will be difficult for the model to evolve if the retailer does not take an active interest in the partnership.
To sum up, successful adoption of the Pack-to-Order model will increase sales and margins for a retailer, provide better value and realization to the farmer, give a consistent quality of fruits to customers and, above all, support the social cause of limiting the wastage of food.