Building a strong supply chain

20:22, Apr 10 2014
Robert Auton_standard
Robert Auton

When the organic berry business started going bananas for Oob Organics, the company's managing director Robert Auton realised his business was only as good as his supply chain.

Sales had been climbing steadily since the company first began producing fresh and frozen blueberries and strawberries and a range of ice creams in 2003, but last year demand for his organic range in Australia climbed exponentially.

New Zealand growers simply couldn't grow enough berries to keep up with demand, and Auton looked for suppliers offshore.He found an organic certified grower in Chile to supplement his local supply of berries, but putting your trusted product in the hands of someone 9,600 kilometres away tested his confidence, patience and businesses sustainability.

"A major issue for us is business continuity when supplying our stock to supermarkets," Auston says.

"The problem with fruit, though, is that you grow it, and you can't manufacture it so forecasting for us is key.

"It's hard to predict the growth that we've seen, especially last year in the Australian market."


While the quality of berries grown overseas can be managed to an extent by organic certification, other factors in the supply chain were out of his control.

A port strike in Santiago in January this year meant that shipments of stock were delayed.Thankfully Auton hadn't put all his berries in one basket. He relied heavily on his New Zealand growers to make up numbers for his products.

"We've learned we need to get that supply chain working 12 months of the year, and we need to look at North American suppliers to fill the gap before the end of the year when we start producing locally again," he says.Relationships with his suppliers have been key to Oob's success.

He regularly visits his Chilean farmer, not only to ensure quality but to make sure the grower doesn't break their deal and supply to another company  instead of him. It's very much a two-way arrangement. When Chile ran into problems with its exports to the US - residue was discovered on grapes and the States shut down all organic exports from Chile - Auton helped out his grower during the crisis.

"They called me and asked 'can you take more of the berries from us?' and I said 'sure'.

"It's also a community thing. We helped rebuild their local church that was destroyed in the earthquake in 2010."You stay on top of your relationships by getting on a plane every year," he adds.

While Auton is able to talk directly to his Chilean farmer, traceability is an issue for Cryermalt, a company which supplies malt to New Zealand breweries.The wholesaler is essentially the "middle man" in the malt import line and is currently not able to provide its brewery clients with information about the precise paddock their malt comes from.

"We buy from reputable businesses that stand by their product because our reputation is based on their reputation, but we can't hide behind the curtain of being in the middle," director Clare Cryer says.

"Although we offer quality control at the moment we don't supply traceability, but a small competitor of ours possibly can."Going forward, we know that our customers are going to want that because we can see that has happened in the wine industry, so it's an area we are looking at."

Keeping on top of changes in the global market is critical. A recent takeover bid from US conglomerate Archer Daniels Midland (ADM) for Australia's GrainCorp was curbed late in the piece by the Abbot government, and the fallout has shaken up the malt industry.

 Industry whispers suggest the attempted takeover was less about ADM attaining malt assets and more about purchasing GrainCorp's portside silos in Australia and controlling port access. While it's business as usual for Cryermalt and it doesn't affect the company directly, Cryer says it's important to keep up with news in your business area.

"There is absolutely value in keeping your ear to the ground. You have to be aware of the global market.

 "That doesn't mean you don't use a supplier based on a rumour, but you need to be able to pick up the phone.

"You might find out that someone suddenly might not supply you and [you] don't know why, but it's because in a head office somewhere, someone has made an agreement and you're not part of it. That can happen a lot with multinationals."

But to be able to go to sleep at night, you need to realise there will be failures in your supply chain from time to time, Cryer says.

"We had a warehouse that went into liquidation and it was a nightmare for us. But a failure like that shouldn't knock you out. If that knocks you out you weren't robust and you hadn't planned properly."

Baiju Lal, general manager of New Zealand tool distributer Fox & Gunn, imports tools from around the world. He warns that China's growing domestic market could see New Zealanders relying on Chinese suppliers in a pickle.

"Anyone who has their eggs only in China is in a bit of trouble," he says.

 "I've had one Chinese supplier that used to have 70 per cent of their business in export and 30 per cent in imports - three years down the track and that figure is the complexly the reverse. Suddenly we aren't as important."