Wake up and Smell the Roses: Valentine’s Day Loves Supply Chain Supremacy
Just in case you haven’t walked around the local pharmacy recently, Valentine’s Day is right upon us. There have been cards and heart shaped gifts in my local stores since before the Christmas decorations were taken down.
I plan to give flowers for Valentine’s Day, along with 75 percent of men, according to a survey conducted by Luth Research. In fact, Valentine’s Day (along with Mother’s Day) is the biggest holidays for giving flowers in what is estimated to be an industry of over $100 billion worldwide!! Approximately 190 million roses (the majority red) will be sold and delivered within a three-day time period.
So how exactly do our roses get to our loved ones on the big day? The cold-chain logistics of transporting short shelf life products such as flowers across a global network from farm (up to 90 percent the Valentine roses sold in the U.S. are from Colombia and Ecuador) to a happy spouse or significant other is not easy and requires a lot of planning, collaboration and execution. This includes humidity-controlled shipping containers and refrigerated cooling facilities throughout the temperature controlled supply chain to minimize delays, and ensure the freshness. Flowers have a shelf life of about 10 days. A day lost in the supply chain is 10 percent lost in shelf life, which costs the wholesaler big bucks not to mention an unsatisfied customer at home as their Valentine dream droops before them!
Flowers are just one of the vital ingredients to a successful Valentine’s Day. In fact, according to a study by Statisticsbrain.com the 3 most commonly given gifts are cards (52.1 percent), candy (47.5 percent), and flowers (34.3 percent).
Card makers are literally in love with Valentine’s Day, and around 145 million Valentine cards will be sent in the US in 2014 (second only to Christmas as the largest seasonal card-sending occasion). But how do they ensure on-shelf availability across the hundreds of thousands of outlets spread across the globe? In an article titled Pushing the Supply Chain Envelope at Hallmark with Data-Driven Capacity Planning, it is explained how “Hallmark has more than 3,200 SAP ERP users and over 370 SAP APO users helping the company plan and provide supply solutions through procured and produced products to meet demand requirements.”
Candies and chocolates have long been a Valentine’s Day tradition. In fact, Valentine’s Day is fourth on the list for the holiday with the most candy sales (behind Halloween, Easter and Christmas). But it wasn’t until the late 1800s that Richard Cadbury invented the first Valentine’s Day candy box. Boy did it take off! In 2013, more than 36 million heart-shaped boxes of chocolate will be sold for Valentine’s Day, according to the National Confectioners Association.
SAP customers manufacture an estimated 70 percent of the world’s chocolates (check out the SAP Fast Facts Video). But the modern chocolate supply chain is a very global affair.
It all starts with the cocoa which is predominantly grown in equatorial countries with Ghana and Ivory Coast responsible for 50 percent of the global supply. The risk of this global supply was highlighted a year or two ago when a sudden halt in supply of cocoa beans from the world’s largest supplier in the Ivory Coast drove prices to a 32-year high. To establish resiliency against supply shocks such as the cocoa-bean shortage, companies have started to combine risk-management strategies with a balanced supply network, a multi-tier understanding of their inventory positioning, and visibility and responsiveness to re-plan against supply disruptions.
Another rising challenge to this global supply is the spotlight around sustainability of the supply in West Africa and the prevalence of child labor, trafficking and forced labor. That doesn’t paint the “hearts and roses” valentine image. Over the past years we are seeing a number of chocolate companies around the world sourcing Fair Trade Certified cocoa. Fair Trade certification ensures that farmers receive a fair price, allows farmers to invest in techniques that bring out the flavors of the region, and strictly prohibits slave and child labor.
So, making your loved one happy with a timely and thoughtful gift, may seem simple but let’s send out a big hug and kiss to the supply chains of the world that make it happen.
Happy Valentine’s Day!
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