using epc to cut costs at nz's largest kiwifruit packhouse

New Zealand

Using EPC to cut costs at NZ’s largest kiwifruit packhouse

Dr Peter StevensChief Executive, GS1 NZ

First, a Word About T i lNew Zealand Terminology…

kiwis kiwiskiwiskiwis kiwiskiwiskiwifruit

© 2009 GS1 New Zealand 2

ContentsNew Zealand

Contents

Introduction

Eastpack’s Supply Chain

Solution Overview

Project Timelinej

Results After 1st Season


Where (and with whom) it all t t dNew Zealand started …


New Zealand’s Bay of PlentyNew Zealand

New Zealand s Bay of Plenty

80% of New Zealand’s 80% o e ea a d skiwifruit production


EastPack LimitedNew Zealand

EastPack Limited

Established in 1983 in EdgecumbeEstablished in 1983 in Edgecumbe

1983: packed 60,000 trays2008: packed 15.7m trays

12% of industry GREEN trays12% of industry GREEN trays24% of industry GOLD trays

42 coolstores at 3 sites


Te Puke site:New Zealand

• purpose built• < 7 years old

k 8 t f hi h 5 t• packs 8m trays, of which 5m trays are GOLD


New Zealand

Edgecumbe site:Edgecumbe site:

• 3.5m trays ofGREEN and GOLD


New Zealand

Opotiki site:Opotiki site:

• 3.5m trays of GREEN and GOLD


ContentsNew Zealand

Contents

Introduction


Solution Overview

Project Timelinej



Eastpack Supply Chain (simplified)New Zealand

Eastpack Supply Chain (simplified)

$1b+


EastPack’s ResponsibilitiesNew Zealand

EastPack s Responsibilities

To deliver in full on time in spec (DIFOTIS)To deliver in full on time in spec (DIFOTIS)• Checkpoint at the wharf• Replicated at coolstore door

DIFOTIS Penalties are severe • NZ$ 400 / pallet main season• NZ$ 500 / pallet kiwistart season• Total cost 2007: NZ$ 280k

Penalties for not loading ‘kiwistart’ product by the end of Week 24


Bonus System as wellNew Zealand

Bonus System as well

If EastPack can be flexible to fill late order there is the ability to earnIf EastPack can be flexible to fill late order there is the ability to earn up to NZ$ 200 / pallet


Issues with meeting ordersNew Zealand

Issues with meeting orders

Orders are comm nicated 10 da s in ad anceOrders are communicated 10 days in advance

O d h d t 2 d b f lOrders are changed up to 2 days before close load date• change in market requirement• change in market requirement• vessel arrival dates change• fresh fruit deteriorates fasterfresh fruit deteriorates faster

than expected


Issues with meeting ordersNew Zealand

Issues with meeting orders

6,600 different SKU’s• often pallets need reworking to meet

orders

Short loading windowS o t oad g do• GOLD = 20 weeks• GREEN = 40 weeks

The bottleneck was finding pallets in the coolstorethe coolstore


Large Seasonal WorkforceNew Zealand

Large Seasonal Workforce

1,300 seasonal staff employed, p y

31 different nationalities

Relatively short picking season, 83 daysdays.

Packing main pack & ControlledPacking main pack & Controlled Atmosphere product: 140 days.


Solution needed…New Zealand

Solution needed…

To quickly find product in the coolstores

A system that requires no human intervention.


ContentsNew Zealand

Contents

Introduction


Solution Overview

Project Timelinej



Solution OverviewNew Zealand

Solution Overview


Solution: EPC-enabled Pallet C dNew Zealand Cards


Solution: EPC-enabled F kliftNew Zealand Forklifts


Solution: LocationNew Zealand

Solution: Location


Solution: Putting It All T thNew Zealand Together


ContentsNew Zealand

Contents

Introduction


Solution Overview

Project Timelinej



Project OverviewNew Zealand

Project OverviewInitial Meeting:

• 18th Jan 2007• General information about the benefits of RFID, EPC

Scoping to RFP (Request for Proposal):• March May 2007• March - May 2007

Proof of Concept to Pilot:• July to October 2007y

Full Roll-Out• December 2007 to April 2008

T t 100% f ll t t k d b t t f (20th M h• Target: 100% of pallets tracked by start of season (20th March 2008)

• 42 coolstore @ 3 sites, ±30 forklifts, 12,000 SkyMarkers, etc…


ContentsNew Zealand

Contents

Introduction


Solution Overview

Project Timelinej



ResultsNew Zealand

Results

2007 2008

DIFOTIS penalties $280k $90k

‘Kiwistart’ penalties $250k Nil

Coolstore managers ‘burnt out’

1 Nil

Forklifts 24 16Forklifts 24 16

Gold Fruit Loss 8% 4%

V l (T ) 1 8 2 ( 10%)Volume (Trays) 1.8m 2m (+10%)

*Investment: USD300,000. ROI= 1 season


Coolstore Map: Pallet L tiNew Zealand Locations


Coolstore Map: Forklift L tiNew Zealand Locations


Underway now…New Zealand

Underway now…

1. Further mining the data2. We are out of our 24 months ‘non-compete’

clause3 T ti E t k’ tit & i l d k3. Targeting Eastpack’s competitors & single-desk

exporter (Zespri)


New Zealand


OverallNew Zealand

Overall

We have taken the chaos out of the coolstoreWe have taken the chaos out of the coolstore

Staff feel like they are part of a winning team againStaff feel like they are part of a winning team again.

We met the KPI’s and capex requirements of Eastpack’s board.

E t k i d h h ld lEastpack increased shareholder value.


The Team That Pulled It Off…New Zealand

The Team That Pulled It Off…


New Zealand


using epc to cut costs at nz's largest kiwifruit packhouse

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