The System i Is the Top Banana for Fruit Producers
August 14, 2006 Mary Lou Roberts
As we are biting into a pear, munching on cherry cheesecake, or pouring apple juice for the kids, most of us do not wonder how that fruit gets from the fields where it is grown–in California, Florida, Argentina, or Chile–to our dining room tables. And how many of us have ever stopped to ponder how, on those rare occasions when there’s a product recall because of a bad apple in the barrel, how anyone can possibly identify where the banana that wound up in that banana crème pie came from? In many instances, the technology that powers the companies that grow, package, and distribute the produce we eat is an AS/400, an iSeries, or an i5.
As is the case with several other industries, the OS/400 platform originally gained its foothold in this industry because of software vendors who, early on, developed packages to serve this niche. And those software vendors are still chugging along today, improving their products for an increasing complex market.
One such application software vendor with knowledge of the fruit business is TechKnowledge Associates. Bryan Bernard founded the company in 1982 and has always offered its software on the IBM midrange platform, first on the System/34, then on the System/36 and System/38. In 1989, he purchased an AS/400 B30 and has been running on the OS/400 platform ever since. His primary market target has always been fresh fruit and vegetable row crop growers, distributors, and packers for the fresh product market in California, where his company is based.
About 100 companies use AgKnowledge, the company’s flagship product, which incorporates a suite of modules to support the “agribusiness” marketplace. However, Bernard points out that many of his customers share boxes. “In this industry, it’s not uncommon for one company to be a partner with other companies, and, to save money, instead of each one investing individually in a system, they share.”
Except for the financial modules, which tend to be quite similar to other financial systems, the other components of the AgKnowledge system, Bernard says, are set up quite differently from what you might expect to see in wholesale distribution–for example, auto parts, where companies maintain inventories and products have long shelf lives. “We are dealing with a perishable product,” he points out. “It’s very important for our customers to know how old their product is, where is it, how many days (or sometimes hours) old it is, and when and where it’s been shipped.” And, while there have always been many “trace and recall” requirements imposed by the government, since September 11, these requirements have increased.
“Customers have to be able to track that particular strawberry, onion, or avocado all the way from the field it came out of to the kitchen table in America that it ends up on. They have to be able to account for the entire chain,” Bernard says. This is nothing new. Even before the threat of terrorism, there were issues involved with pesticides, for example. “If someone got sick on a bunch of spinach, you have to be able to go all the way back to the guy who grew it here in California, even though you might have bought it in a grocery store on the East Coast. September 11 only made these requirements tighter and more important.”
Bernard believes that what seems to be true for software selection in most other small- to medium-size businesses is also true of agriculture: The platform decision is driven by the software decision. However, there are companies, he says, that shy away from the iSeries and System i5, simply because they don’t know anything about this platform. “Everyone knows Windows, but a lot of them don’t know the iSeries. And, until recently, when IBM came out with the Express boxes, Windows was much cheaper. The Windows-based software vendors cater more to the really small companies. We cater more to the mid-market–bigger than the small ones, but not as big as companies like Dole or Del Monte.”
But TechKnowledge has its eye on those small Windows-based users, a market currently serviced by companies like Famous Software. Bernard reports that he is looking at getting into the software service business model, offering growers a Web-based solution on the iSeries, without the need for them to put up any money to buy a server. In fact, the company already has people running beta tests on the subscription product, and Bernard expects to make the offering more widely available in the fourth quarter of this year. He strongly believes in the value of the OS/400 platform for companies in this market, which means getting them away from all those Windows viruses and offering them a system that never goes down. “Our customers tend not to have any IT staff at all. They need something that they can put in the closet and just change the tape every morning. The iSeries is perfect for that,” he explains.
In most other industries, company employees get Thanksgiving and Christmas off, Bernard notes. “But our customers rarely get that. They are 24×7, 365 days a year. The world doesn’t stop eating just because it’s a holiday.” Indeed, we almost certainly eat more on holidays, so it may well be an iSeries or i5 that keeps those fruits and vegetables moving to your neighborhood grocery store.
Another iSeries vendor servicing the agribusiness community is Kirkey Products Group based in Longwood, Florida (near Orlando), which focuses on the supply side of the chain servicing the growers (all across the U.S. as well as from as far away as Puerto Rico, Chile, and South Africa), packers, shippers, and brokers.
Don Walborn, Kirkey’s vice president of sales and technical services, recalls that the company originally built its applications on the System/36 using software that was a spin-off of a cooperative in Florida. It then migrated to the OS/400 platform as part of the original AS/400 “Silverlake” launch back in 1988. Today, Kirkey software generally runs on low-end i5 520s, and is the sole turnkey to any of the partners in the supply chain. However, Walborn says that the majority of the company’s customers are packing houses and sales organizations since a standalone OS/400-based system can often be too costly for the smaller growers.
He describes his target customer not in terms of the dollar volume of the business but in terms of the number of cartons per year that they move. “A company that moves 2 million cartons or more per year is a good prospect for us. That gives us an idea of how many customers they have and how many invoices they generate.” Why not total dollar volume? The answer is simple: 50,000 cartons of apples are not going to cost nearly as much as 50,000 of kiwi fruit, and 20,000 cases of oranges will hold more product than 20,000 cases of grapefruit. It’s the product shipping volume, not the cost of the product, that establishes the customer’s need for more sophisticated automation.
Because Kirkey’s initial focus was cooperatives, much of its original emphasis was on the ability to trace product back to its original source so that funds could be disbursed properly. This can be a fairly sophisticated exercise in accounting and traceability, since the various members of a cooperative produce a variety of fruit that is put into common pools (which can vary widely, depending on the product). When the product is then sold, the contributors to the pool all benefit, but the accounting has to be able to track contribution and calculate proper disbursement of funds.
Walborn agrees with TechKnowledge’s Bernard that traceability has gotten more complex in the post-September 11 world, with the need to account for the precise origin of each batch of product as well as the need to trace forward–identifying where everything else in that batch of product has gone.
Other challenges are facing the world of agribusiness as well, says Walborn, putting growers and distributors under intense pressure to utilize technology to comply with external requirements just to maintain their current customers, even though there is no immediate value to them. One such requirement is RFID. “The growers, packers, and sales organizations are being told they have to implement RFID just to keep the customers they have,” Walborn says. “When this is fully deployed, there will be a big benefit for everyone, but right now, the benefits are all on the demand side. The cost just for the RFID tags, at 30 cents per carton for 2 million cartons, can be a lot of money.”
This is yet another reason that Walborn believes that the System i is the perfect platform for these companies. Because of the specialty needs of this industry, Kirkey can form alliances with a lot of other vendors who specialize in areas like RFID. Kirkey is currently partnering with Stratum Global and EDI, and is working as a business partner with LANSA on application modernization. “The iSeries offers scalability and room to grow to start combining these applications on a single platform. They don’t have to keep adding to a growing farm of servers. In the end, the total cost of ownership will be lower. They are going to see the true benefit of server consolidation and simplicity, with less staff. That will all translate into savings.”
Rick Luther, director of MIS at Cherry Central Cooperative and North Bay Produce, located in Traverse City, Michigan (the “Cherry Capital of the World”), is a Kirkey user and a staunch, long-time advocate for the iSeries.
Cherry Central operates marketing cooperatives for growers of cherries (of course), apples, blueberries, and other fruit in Michigan, New York, Wisconsin, Utah, and Washington, selling to the retail, food service, and ingredient markets. The company also owns Dunkley International, a machinery manufacturer that specializes in fruit processing equipment, and Oceana Foods, a fruit drying facility. Cherry Central’s main business is processing and packaging cherries and other fruit in 30-pound containers for sale to other manufacturers such as Sara Lee (also a big OS/400 shop), processing fruit-like apples into apple sauce and apple juice for sale to grocery store chains, selling the product, arranging transportation from the processing facility, interfacing with the customers, and doing all of the invoicing and accounts receivable.
Between 1979 and 1992, says Luther, Cherry Central migrated from the System/32 to the System/34 to the System/36. In 1992, the company moved to the AS/400. In September of 2005, they installed an i5 model 20 that they are running today under V5R3 with an IT staff of three: Luther, who manages the IT environment and does some programming; one programmer; and one “PC guy.” The company has several Intel servers running Microsoft Windows for Internet access and e-mail.
Luther claims that he has always been “an iSeries midrange bigot,” and he shows no signs of changing his mind any time in the near future. “The biggest thing I worry about,” he says, “is reliability–except that with the iSeries, I don’t worry about it. We are a 24×7 business with communication ties to processing facilities and sales organization in Utah and Michigan to Miami and South America. The consequences are huge if you’re in the middle of putting pallet tags on cartons and the system goes down. With the iSeries, we have 100 percent up time. I can’t remember the last time the system went down.”