solidation of the European retail sector along with weak prices, partly caused by a persistently cold and dark spring, have led to disappointing results for fruit and vegetable suppliers in 2013. The Greenery's net turnover reflects this, having fallen from 1.4 billion Euro in 2012 to 1.3 billion in 2013.The year concluded with a moderate net loss in its regular business operations of 2 million Euro. Following a thorough reorientation process, The Greenery opted to pursue a cost-price leadership strategy in late 2013 in an effort to turn the tide. This strategy, focusing on retail, is aimed at enabling the company to maintain its market leading position in the fresh produce market and achieve structural profit growth for its cooperative members. Reorganising the business structure and processes is an essential part of executing this strategy optimally. In 2013, a gross provision of 23 million Euro was allocated to this restructuring, which included a reorganisation with the loss of around 350 jobs. Along with the operating result, the financial year closed with a net loss of 21 million Euro.
Centralisation and modification of organisational structure
Further consolidation is expected in the European retail sector in the coming years. This will go hand in hand with pressure on fresh produce companies to achieve efficiency in their product flows and to limit overheads. In response, the Greenery’s 2014-2018 strategy is to focus on centralised management of its product flows with more efficient use of its logistical network and a functional, commercial organisational structure with fewer staff.
From 2014, this will include making more and better use of qualified grower sites to supply customers directly. This decision will lead to lower supply chain costs, and it also responds to retailer demand for buying ‘from the source’. Thanks to our close cooperation with members of the Coöperatie Coforta, The Greenery is able to maintain a guaranteed constant supply of quality products 'straight from the garden'. New working methods will be introduced into the logistical process in order to deliver under the ‘first time right’ principle for these activities. At the same time, the number of distribution centres will be reduced to three DCs over a period of three years.
The Greenery is now working under a commercial structure in which there is a clear division between the Retail and Trade business units, and the Sourcing unit. The company’s commercial activities are focused emphatically on European retail, with the Netherlands, Germany and the United Kingdom being focus markets. The Greenery offers its customers a complete year-round range of fresh products, with guaranteed food safety, at a competitive price. Thanks to the three pillars of the supply chain model – quality sourcing, excellent logistics and knowledge of consumers and their buying behaviour – The Greenery is able to guarantee its customers a sustainable, reliable and efficient chain.
All of our efforts within the new strategic framework are designed to achieve profit growth for The Greenery, benefiting the Coöperatie Coforta. The company will continue to invest in turnover growth and innovation.
Status of organisational restructuring
The process of employee redundancies, started in January 2014, is proceeding as scheduled. By mid-March the restructuring of the Barendrecht Retail DC and Bleiswijk Trade DC had been successfully completed. On average, 4% more volume is now being directly shipped from qualified grower sites. This volume is expected to increase because auction buyers can now also have their products shipped directly from the source. This will enable us to further reduce transport movements and reduce the space needed in the DCs.
In early April, our SAP system was modified to suit the new organisational structure. This has led to a significant extension of the scheduling horizon for our Supply Chain Management staff and is helping the company to reduce the cost of losses in supply management. These costs have now been cut by 30%.
Within the vegetable fruits product group, a strategic multi-year sales plan was recently presented. The details of this plan are currently being finalised in cooperation with the individual growers. The Greenery sets great store by a shared vision of the future in which growers and the company work together within product groups to optimise the marketing of products and services.
In line with the company strategy, the shares in Van Dijk Foods Belgium were sold to Group A. De Witte in March 2014. The DC in Maasland and the share of the property in Barendrecht were sold in the first quarter of 2014.
Confidence
The Supervisory Board, The Greenery’s Works Council and the Coöperatie Coforta Members Council have approved the strategy and expressed confidence in its delivery. Theo Ammerlaan, chair of the Coöperatie Coforta, said of the company’s decision: “A cost-price leadership strategy, focused on retail, will help The Greenery to improve its performance. Centralising the business and standardising its processes will enable The Greenery to supply the best products at a competitive price. This will ensure that we maintain a focus on optimising the value of our fruit and vegetable products. We are confident that this strategy will steer The Greenery and the members of Coöperatie Coforta towards a healthy future.”
