Nothing says time is of the essence like fresh cut flowers. The floral industry has been a leader in supply chain innovations out of necessity due to the very short profit margin window of live goods. As other industries adjust to the new 24-hour standard, the floral industry has other concerns to address. The floral industry is more global than ever before with 64 % of US revenue coming from international sales. Global competition, small business consolidation and new direct-to-consumer services have all made an impact on the floral industry. According to the PMA (Produce Marketing Association), floral sourcing in the next 3 to 5 years will change drastically.
“Retail consolidation and grower consolidation, as well as vertical integration, have opened up opportunities for buyers to purchase farm-direct to reduce cost and time in the supply chain.”
Reducing the number of the levels in the supply chain is often the first response from retailers when looking to increase margins and immediately affects distributors. Now that doesn’t mean there is no room for distributors in the future, but it means their role needs to evolve by offering more value to retailer and growers. Value can be added through various methods utilizing technology, which has contributed to the changing state of the industry.
FTD’s Continued Success Through Technology
For over a century FTD has been an innovator from the start. It started as a flower delivery company sending floral orders through telegram and now is commonly considered a leader in the floral industry, mainly due to its early adoption of technology. FTDand other online floral corporations, like TeleFlora, have had a considerable impact on the floral industry because of their foresight into where the industry needed to go.. So why is the FTD model so successful? Read on.
FTD manages a large network of retail florists and a direct-to-consumer service. The business model sells floral arrangements, collecting up-front payment and sends the order to a local florist’s POS system for fulfillment. This seamless process relies on technology for the entire transaction. FTD first adopted POS technology into their business model in 1979 and has continued to improve their business process through technology for decades. Despite the profit FTD takes off-the-top of all orders, the company has helped keep local florists successful through its mutually beneficial service that has worked for a century.
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The lesson to learn from FTD is that through foresight and early adoption, they not only solidified their future success, but also kept their partners and florists around the world in the black. As a facilitator of business, FTD makes all transactions in the supply chain seamless through technology, providing significant value to its stakeholders.
The Future of Floral Distribution
There is definitely some concern around the vertical integration of the supply chain and what that means for distributors in all industries. Distribution companies in other industries have been facing a slow decline in sales and if nothing changes, floral distributors could suffer the same fate.
This PMA report indicates that:
“For 2015, about 70% of floral product on average was centrally distributed, compared to 48% in 2003.”
At its core, a floral distributor like all distribution companies is a supply chain facilitator. The roles of the distributor is to meet the needs of the retailer and the grower. If those needs change so does the distribution business. Co-operation between retailers and suppliers have become a must, to eliminate any unnecessary waste and overhead. A floral distributor can facilitate a better ordering process for all parties through data integration and collection. Technology solutions can reduce friction on all sides and increase profitability. A modern solution like LinkGreen’s supply chain solution could be just the answer to these problems. A large retail company would rather stay with their distributor that offers them a seamless ordering solution rather than manage all their growers and foot the bill for starting their own in-house central distribution.
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Staying connected to what all stakeholders need and providing them with innovative and convenient solutions is just another way to stay ahead of competitors.Take a page out of FTD’s book and be a leader in mutually beneficial services for stakeholders through technology.