For Batlow, bad apples never fall far from the supply chain

Any manufacturer knows that a product recall can be an absolute nightmare of paperwork and logistics. At NSW agricultural cooperative Batlow Apples, however, an increasingly capable implementation of Microsoft's Navision enterprise resource planning (ERP) software has provided the confidence that such a recall could be managed relatively easily.

The difference is data -- a beacon of change in what has traditionally been a decidedly low-tech world. Combining the collective apple output of nearly 50 growers spread around the town of Batlow some 450km south-west of Sydney, since 1922 Batlow Apples has long prided itself on its selectivity, producing a range of fruit grades and utilising modern waxing processes to preserve apples for long-term storage.

All told, the cooperative handles more than one million cases of apples every year, most of which are sold via agents through markets in several capital cities.

Because of the company's long supply chain, accountability has become an increasingly critical part of Batlow Apples' strategic planning. Several years ago, Batlow Apples executives realised that this requirement was imposing an increasing burden as they faced the need to track fruit from the orchard to the market. Applications of pesticide, records of pest infestations and observations of apple quality were all laboriously managed using paper records.

"In the past, it was all manual," said financial controller Rodney Priest. "If we ever had a product recall, it was a great flurry of paperwork and gnashing of teeth."

Automating the orchards
To make matters worse, Batlow's administrative systems were heavily fragmented: it had separate financial and production/sales systems, which were poorly integrated. In late 2003, the group sought to provide a single view of its entire business by introducing the Navision application (now renamed Microsoft Dynamics NAV) to its handling processes . Navision certified group Hands-on Systems was brought in to provide implementation, training and strategic assistance.

The ERP platform was installed across the company's operations, with apples labelled by grower as soon as they're brought to Batlow for sorting and shipping. Apple batches are graded by quality and separated according to their appropriate use. Extensive use of barcoding, added to the system in 2006, allows the group to track a box of apples from the orchard right through its extended supply chain and back again, should the need arise.

By tying this information with detailed pesticide records "which participating farmers must keep under the mandatory ChemCert pesticide management process" Batlow can quickly check the entire lifecycle of a particular batch of apples. Not that it needs to: Batlow hasn't had any recalls, but it tests its system regularly and has found it to be far more manageable using the Navision environment.

How do you like them apples?

That's not the only benefit the company has seen since going live with Navision. "We got some immediate impact," said Priest. "We were able to replace a lot of manual work with the ability to automate a lot of the previous processes we were doing. This has allowed us to streamline administration by 50 percent, which in turn allowed us to increase the number of employees in the wholesale and marketing side of the business."

Cyber-growers
Although the automation of Batlow Apples' processes has provided many direct administrative benefits, the best was yet to come. Confident after several years of success with a plain-vanilla Navision implementation, the company began working with Hands-on Systems to add extra functionality.

Late last year, a major improvement went online in the form of a grower communications console -- a Web-based portal that is continually updated with information about particular batches of fruit, their selling price, quality, and so on.

Growers use this self-service portal to trace their apples as they make their way through Batlow Apples' supply chain. They can also request regular SMS, fax or e-mail updates of up-to-date pack-out statistics.

"As we've become more comfortable with Navision, we've sought to look at further enhancements," said Priest. "This is quite a win for us in terms of grower communication. We want our consumers who buy apples to have a consistently good eating experience, which is why we put a fair bit of effort into quality control."

Recent additions to the system have provided equally beneficial by giving the company a better view of the performance of the agents it charges with selling its apples at market. Apples going to the market are shipped to the agents, who negotiate for the best price they can get on any particular day.

In the past, Batlow Apples growers "hundreds of kilometres away, at the other end of the supply chain" had to trust that the apples were being allocated to maximise profits. But those allocations, Priest admits, were done in a less than scientific manner: "the only way we were able to do it before was just gut feel," he said.

By using Navision to track agents' selling prices over time, Batlow Apples has been able to run regular statistical analyses to determine which agents are consistently producing the highest possible prices for Batlow's apples. This allows the group to direct new shipments of high-quality apples to the most effective agents, maximising profits for all members.

It also allows Batlow Apples to become more proactive in its price setting. Although market prices vary tremendously based on changing supply and demand, the Navision system lets Batlow Apples set an indicative price for each batch it sells. If agents' actual prices are significantly lower, flags are raised back in Batlow and staff can follow up with the agent.

Towards a quality future
Batlow Apples' investment in Navision has significantly improved the way its entire supply chain functions, providing visibility from one end to another. This has made it a fundamental part of everyday life at the organisation.

"You essentially build up your truck loading consignment from your barcoding information," Priest said. "We have around 45 people in our packing and cool stores who rely on the information outputs that Navision provides. These determine the workflows, which lots are next to be packed, which bins have to be taken out of the store, and on which trucks. It all originates from Navision."

In the near future, the company will take additional steps to improve this for example, by mounting wirelessly connected PDAs onto forklifts at its loading facilities. This will allow picking orders to be viewed and changed in real time, rather than relying on printed Navision reports as is currently done.

"In this industry, the challenge is always being able to maximise the amount of dollars the growers in Batlow get for their fruit," said Priest. "To be able to have consistent and traceable quality helps us get a premium for our growers compared to many other horticultural suppliers. It's a win-win situation all around."