Local Supply Chains and Retail Business

As technology, consumers and times change so does the food industry. Food has always been sourced, sold and traded locally so I have a hard time saying that there is a local “trend” or “movement” that we are seeing. In my opinion, the grocery industry spent the last few decades investing in technology and making the global supply chain more effective, today the supply chain is simply correcting its self to balance out the number of products people buy from global vs. local suppliers. This correctional period is swinging the pendulum back from focusing mostly on the global supply chain and highlighting the need to make the local supply chain more effective. Why are people buying local? Well, there are a number of reasons and preferences vary from person to person. Some of the main ones that I hear most often through my research are:

• Fresh – Many people feel that local foods taste fresher and better because they were not held in a warehouse, refrigerated truck or spent much time in transit from farm to store.
• Healthy – Consumers find local foods contain less artificial ingredients and most are organically produced meaning they are free of chemicals such as pesticides and preservatives.
• Sustainable – Local foods may produce less pollution through fewer miles traveled and natural resources are conserved through producing only what is needed.
• Local Economics – Buying local food supports farmers and merchants keeping jobs in the area. More of a dollar is kept in the local economy and can be reinvested in local economic development.
• Safe – Buying locally provides consumers the opportunity to understand where the product has come from, who made it and how it was made.  That means there is an incentive for a producer to maintain a strong reputation for producing high quality foods. 

As such, it is critical for retailers that see the benefits of sourcing locally to be at the forefront of this issue and cater to more consumers demands. Retail stores, restaurants, and tourism businesses can make a significant impact on the change in consumer’s buying attitudes. Larger businesses can help change the perception of those who agree buying local is beneficial.

Many consumers complain buying local products are:

• Expensive – Many consumers believe there is a premium charge added to locally produced products. In some cases I will agree, however, economies of scale are the cause for the higher price for local products. Margins for local food are generally razor thin and the reason grocery stores can sell similar products at a lower cost is because of the massive volume they sell. Local suppliers sell lower volumes and have to make up for the low margins by charging a higher price.
• Inconvenient – Consumers generally have to go to a specialty store to find locally produced foods. Those with busy schedules do not have the time to make multiple stops and favor the “supermarket” so they can find everything they need in one store. Also, seasonal products cannot be sourced year round making it difficult to find in the “off season” and sometimes during the peak season when demand is high consumers will find products out of stock. 

It is no surprise that many retail stores have not fully committed to supporting their local producer. Retail businesses either fail to realize the differences between a global supply chain and local supply chain or they are hoping that this “trend” or “movement” will pass and they will avoid having to make changes to their current supply chain. The local supply chain is not less complex or easier to manage than the global supply chain simply because the distance between the purchaser and supplier is shorter. There are challenges to both types of supply chains and each has different obstacles to overcome that are not insignificant.

Business-to-Business (B2B) E-Commerce Solutions

Business-to-Business (B2B) E-Commerce Solutions:
E-commerce has taken over a large segment of the way companies do business today. Generally when you hear about e-commerce a person thinks it is simply taking orders online, such as Amazon. However, more companies are leveraging the online market channel to market and sell online to other businesses. This type of e-commerce is known as Business-to-Business e-commerce. A successful B2B e-commerce strategy can reduce overhead and operational costs, increase sales and strengthen relationships with retail partners. Localvore will help you sell directly to other businesses or through distributors/ resellers. Our e-commerce solution will enable you to drive revenue more efficiently through your B2B online channel.

Localvore as an e-commerce strategy:
With Localvore we put you in the driver seat to steer your own B2B strategy. You know your business the best and we enable you to be successful, you are able to automate the purchasing and invoicing process and set your own pricing specials and promotions. Our features offers you the necessary tools to make your B2B e-commerce strategy multifaceted moving beyond simple online order. Our messaging and social media features take it to a whole new level with personalized selling to multiple tiers of customers and strategic partners.

B2B e-commerce has become much more than a basic online marketplace and impersonal online transactions are the center of the experience. Localvore is centered on helping the supplier connect to more buyers. This supplier-centric transformation is driven by today’s best practices in effective supply chain management. Effective supply chain management requires trust, collaboration, transparency and strong relationships with business partners. Sellers want to provide a retail-like online experience that offers product recommendations, and tailored promotions. Buyers expect the best price and products of the highest quality.

We enable businesses to build better relationships because we help solve the challenges that businesses that engage into B2B e-commerce. We improve online operations, marketing and customer service as well as challenges with processing orders manually, which leads to high customer service costs and increased order processing time.

For more information
To learn more about Localvore, visit:
http://www.econtechsys.com 

To register and become a member of the Localvore community, visit:
https://localvore.econtechsys.com

Slaying the GIANT

If you are not already a small business, imagine what it is like being a small business facing a competitor’s product as a bottom tier brand, so small you literally have no marketing budget. Now, your job is to go out there and take down the giant. Impossible right? Well, as I am learning first hand as a small business myself there is a limit to how much money you can put behind a product. As a services provider and an IT company it is difficult for us to really quantify how much of a discount to advertise to customers. Deep discounts for services or a subscription to our product “Localvore” cannot really be measured by how much profit we will take from a competitor or how much a competitor will cut their price to compete with us. However, for our customers that use Localvore we can measure it. For a local supplier that currently sells meat, produce, or vegetables at 4 or more times the cost of food that is imported from another country or mass produced in the mid-west United States through Localvore it is possible to get products discounted deep enough that one of two things will happen. Either other “imported” products would not be restocked on the shelves of retailers or the “global corporations” would have to put up so much money behind one brand that it would take money away from other brands they support to compete against locals suppliers. Either way it is a win-win for Localvore users. By my estimates as an Economist I believe that early adopters of the Localvore application can reduce prices by at least 30% from their current levels. This can be made possible through the expectations that suppliers will make up for the difference in price through volumes of sales. Alternatively, global corporations could not compete against local suppliers because factoring in the cost of energy, inflation, and diminishing profit margins realized by the retailers they sell to global corporate suppliers could not afford to cut prices by more than 5 to 10%. If you are a supplier out there and your jaw just hit the floor I understand. However, think about it. In this case the giants out there cannot win and you cannot lose. Local suppliers must understand the following lessons: 1. Do not focus on the size of your budget, think about how much leverage you have. 2. Do not try to compete with global corporations on how much you spend on marketing. Do, however, try to compete on pain thresholds. 3. Global corporations have to worry about business decisions across many different products they support. Local suppliers have the ability to focus on one or only a few of their core products. As such, global corporations’ business decisions have far reaching consequences across all brands and supply chain channels. A local supplier with a good product and good discount can threaten even the largest giants putting more than just a small portion of their product line at risk. We at Economic Technology Systems can help you slay the giant and we want to help you. Not because we want to damage global trade, but we want to do a lot of good for our local economies here at home. This is not a strategy for every business but it does give you a reason to look for areas where you might have an advantage. If one giant can be slayed we can achieve sweet victory.

The Simpsons can be related to everything, even Economic Technology Systems

If you grew up in America you probably know about the TV show The Simpsons. If you do not know about them…it is not too late to start watching. So, after you are done reading this post go download a few episodes or watch Fox in the evening around dinnertime. Anyway, I digress…The Simpsons, they can relate to anything, even Economic Technology Systems. It is true and I will use an example from the Treehouse of Horror XX to prove it. The episode is “Don’t Have a Cow Mankind” and in it Krusty's new burger, “Burger Squared,” makes the citizens of Springfield turn into flesh eating zombies. Burger Squared is produced by starting with Grade-A beef, feeding the beef to other cows and then serving the “unholy results” on a seven grain bun. Most everyone in town eats the burgers and turns into zombies, leaving The Simpsons and a few vegetarians like Apu running for their lives. Then, ”28 days later”, the Simpsons are still locked up in their home, and discover that Bart's Krusty Burger immunity is the key to solving the zombie crisis. The episode takes aim at Mad Cow Disease and the movie 28 days later. However, there is more relevance to this episode than that. Did you know that a cow’s natural food source is grass from free range feeding? Today, most large beef companies use feedlots and actually feed cows enormous quantities of corn, protein supplements, antibiotics and other drugs, including growth hormones feedings to fatten them up faster than they would otherwise grow naturally. A cow can be forced to grow to its “butcher weight” which is 1,000 lbs. within 12 to 24 months from birth. That is significantly faster than a grass fed cow which takes 4 to 5 years to reach that weight. While we do not have to worry about becoming flesh eating zombies from consuming cows coming from feedlots, it still has profound consequences on human health. Feedlot beef as we know it today would be impossible if it was not for the routine and continual feeding of antibiotics to these animals. They simply could not survive being fed something that is not natural to their digestive system. As such, this process leads directly and inevitably to the development of antibiotic-resistant bacteria. These are the new “superbugs” that are increasingly rendering our “miracle drugs” ineffective. Additionally, the cattle farms are damaging the Western rangelands under the current system. There is less grassland, increased water pollution from cow “waste”, and fewer sources of water leading to drought conditions. All stemming from the process, in which cattle are mass produced, spend only six months on the range, and the rest of their lives on an overcrowded feedlot. Do yourself and economy a favor and buy from farmers that use sustainable farming practices. If we change our practices now we might not have to worry about becoming flesh eating zombies in the future!

What the heck does Reality TV have to do with Economic Technology Systems?

Anyone who knows me will say I am not a fan of “Reality TV”, however, I have enjoyed Jamie Oliver’s Food Revolution. The host of the hit reality TV show gained popularity with his first TV show called the “The Naked Chef”. His persona has always been that food should be healthy and in order for it to be healthy it must be prepared as close as possible to its raw state. Furthermore, it should not contain any processed ingredients, sugar flavoring, trans fats, or any other harsh chemicals or additives. On his show Food Revolution he exposes the culture of how people view food today. In one episode during his visit to West Virginia he told the staff of workers in a school cafeteria “I’ve been in South Africa, in the townships, and they’re getting better food than your American kids.” From West Virginia to California he encountered the same problem over and over again. People cannot be forced or persuaded to change their habits. For example, he personally accepted all the risk of changing the menu at a fast food restaurant using the same type of food but made with healthier ingredients that cost roughly the same amount to make, however, the owner would not budge and allow him to try the experiment. After days of negotiating the owner caved and allowed Jamie to prove his point, though Jamie’s changes did not stick at the restaurant. The point that I have taken away from Food Revolution is that lets not try to force culture but make it easier for people to choose a healthier option. This is exactly what we at Economic Technology Systems are doing through creating Localvore. Local farms and other produce/food suppliers will be able to gain more visibility with restaurants and grocery stores in their community and supply the retailers with fresh, locally grown products, that the consumers know where it came from and how it was produced. Selling locally grown and made food at large retailers will make buying locally more convenient and hopefully improve the health of people’s lives and the local economy.

What is a Localvore?

A Localvore is a person that participates in the broader sustainability movement in support of their local economy. It is part of the concept of local purchasing and creating a sustainable local economy, characterized by having a preference to buy locally produced goods and services. It may be considered as a geographical concept as well, related to the distance between food producers and consumers. Local food can also be defined in terms of social and supply chain characteristics as we at Economic Technology Systems use the term. In the end, however, people who choose to eat locally grown/produced food can call themselves Localvores.

What is Localvore?

Localvore was created by Economic Technology Systems which is an affordable, high quality, Business to Business (B2B), supply chain management application that enables small businesses to collaborate with large retailers to build a more self-reliant, locally based economy in their geographic area. Localvore helps support the movement towards local purchasing and local economies that not only benefit the producer of goods and consumer but supports socially responsible supply chains. Localvore is a tool that will provide visibility of local suppliers to retailers in their area and help the two businesses establish a connection through Localvore’s “Social Media” features designed for businesses. Additional features that Localvore supports include robust search capabilities based on the type of product the retailer is looking for or by suppliers in the area. Once a retailer found what they are looking for Localvore can create and allow the user to manage online transactions for purchases made through Localvore’s virtual marketplace. Suppliers can also manage their entire inventory online, in addition to their company profile and user’s access. Localvore is built using the latest technology for web application development and is hosted using cost effective cloud computing services to keep our infrastructure costs low so we can pass along our savings to the user.