As the owner or manager of a wholesale greenhouse or nursery, you have extensive knowledge about horticulture. There is no questioning that from seed to retail ready, your products are handled with the greatest care and attention to detail. That same attention to detail should be applied to how you are tracking that lengthy production process. Most growers can’t provide their customers with updated availability and justify it because their inventory is constantly changing. This common problem with inventory management throughout the production process can be resolved.
“When growers compare what they do to what manufacturing companies do, growers come to realize that in many ways, they are manufacturers.”
Source- GreenHouse Management Magazine
Growers need to think of themselves as manufacturers; plants go through a manufacturing process (think cultivation and growth) before being sold. Before we dive into the greenhouse and nursery perspective, let's review how one industry, automotive manufacturers, manage their constantly changing inventory.
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The Just-In-Time Model
The automobile industry has many of the same business processes as the greenhouse and nursery industries. Toyota is considered an innovator in the car manufacturing industry because they have invested heavily in their production process. At any given time, they need to know how many vehicles are in productions, how many have been ordered, and how many are ready for purchase. Through technology, Toyota has been able to reduce cost and adopt the just-in-time model.
“Just-in-time means that, in a flow process, the right parts needed in assembly reach the assembly line at the time they are needed. A company establishing this flow throughout can approach zero inventory.“
Source- Implementing Process Innovation — The Case of the Toyota Production System- by René Haak
In a highly competitive industry, investing in production management gave Toyota an edge over their competitors. The technology they implemented allows Toyota to know precisely how many parts are required at any given time for every step of production. So they only carry the inventory needed reducing overhead and waste. They can achieve this in their manufacturing process through ERP (enterprise resource planning) technology. The ERP system integrates data from their parts suppliers and customers orders providing all the necessary data to streamline the production and business process.
Although a vehicle manufacturing process may seem to be completely different from the production process of greenhouse or nursery inventory, there are a lot of parallels to pay attention to. Like automobiles, plants have to be ‘assembled’ over time, the inventory is often ordered by dealers in advance, and if the stock is not sold within a short period, the value diminishes significantly. So although one is grown and the other is built, the process of tracking production and inventory is similar.
A Streamlined Nursery and Greenhouse Production Progress
Now it's time to review the process in which a wholesale nursery or greenhouse tracks their production process. All businesses differ in the way they are managed, so this will be a look at what is widely considered standard practice within the greater industry.
Most growers have complete inventory visibility over how much inventory they have in production. Since most tracking begins at planting, if you plant 100 seeds you might expect to have 100 plants available for sale. Seasonal bookings are usually tracked accurately so out of those 100 plants 40 of them have been sold in pre-booking. Unfortunately, this is usually where the process breaks down and most growers begin to lose visibility of their inventory. So out of the 60 remaining plants, 10 may have been lost to disease and 30 have not reached their retail-ready state, so only 20 are available for sale. For most growers, maintaining inventory levels requires a manual counting plants and updating an availability list, weekly at best. Item by item, you update your inventory levels to reflect production and sales, however, this system means you and your customers are always working with outdated numbers.
This is where a grower can learn from a manufacturer like Toyota. Investing in an ERP system that accurately tracks inventory from production to shipment benefit businesses in the long run. Counting and monitoring plant growth will always be a part of the production process, but that doesn't mean there is no room for technology. An ERP system can track every stage of production and sale eliminating any guesswork from the process. Plant growth can be managed through updating inventory statuses in the ERP system. Through proper production and sales processes, a nursery or greenhouse can streamline their production process and properly forecast for the following year.
Providing your customers with update-to-date inventories is possible with integrated inventory management system and online ordering. With a little innovation, a streamlined inventory management and production process can help carry your business forward.