Viki
Growing Washington, a collective of regional sustainable agricultural producers, faces the challenge of building a regionally-based distribution/delivery infrastructure that is cost and carbon efficient, resource effective, and relationship enhancing. This project seeks to identify possible tradeoffs between increasing efficiency, maximizing use of existing resources, reducing carbon foot print, and building/strengthening relationships and provide a tool for optimizing any or all of these depending on choice and circumstance. The project will use a transaction cost analysis to inform the development of an optimization/simulation tool. The analysis will identify not only costs but also benefits of cooperative distribution. For example, most transaction analyses assume that reducing costs is the primary objective. However, there is also the opportunity to create brand recognition, develop customer loyalty and collect data on product demand in direct producer-to-customer transactions. The project will result in a documented experiment in optimizing Growing Washington’s cooperative distribution system and a prototype web-based tool.¶
Abie
Small Farms/Hobby Farms are a fast growing production segment (ref needed). Small farms (and not-so-small farms) often overlook the logistics costs of bringing food to buyers. We should collect and develop metrics for quantifying this cost (in dollars, time, environmental emissions, and social capital). We should also develop web-based tools to help growers, planners, and buyers use these metrics in decision making. For a simple example, we could make a calculator where a grower can input their address, select a farmers market, and select a type of vehicle, and learn the round-trip cost in dollars of attending this market. As an example of a more complicated simulation/optimization task, Growing Washington could input a collection of farm addresses, a collection of aggregation points and between-point shipping options, and a collection of orders from restaurants/buyers, and learn the logistics costs of making the deliveries. It would be great if these tools were also useful to community members for understanding the logistics costs of hosting a farmers market.¶
Hector
Large farms lower transportation costs by utilizing a single distribution company to pick large amounts of produce on well-timed schedules with specialized large trucks. Produce is then delivered either to storage/distribution/processing centers or directly to retailers. This lowers average delivery costs. Many medium and small farms deliver the produce themselves, in multiple trips, often on demand (as opposed to on a well-timed schedule)with smaller trucks that may not have the equipment necessary to maximize product freshness. They often lack the volumes, equipment, and sometimes the tools and knowhow necessary to maximize their operational efficiency (logistics). Yet small farmers may have an advantage in their ability to invest in social capital. Direct deliveries and recurrent visits give farmers the opportunity to create purchaser loyalty, establish and promote their brand, get direct feedback of important information regarding demand and product attributes.¶
This project aims to propose ways for farmers to increase their operational efficiency. To this end, it needs to establish a baseline of delivery costs for evaluation and comparison. Direct costs readily measurable in dollars include fuel, cost of trucks, distances traveled, storage costs, personnel costs (labor: drivers, delivery manager time) frequency of deliveries and average volumes of produce delivered. Environmental externalities include the pollution caused by the energy used directly in fueling trucks and any storage and indirectly in producing the trucks and storage facilities. Other natural resource costs include the physical materials embodied in the trucks, boxes, roads, etc. We need to draw a line regarding what to include as costs.
As for the investments in social capital, we may be able to document these qualitatively, and we may be able to suggest how they contribute to profitability and community building, but we may also discover that our limited research resources do not allow to look at these in enough detail to be able to make generalizations about them.
Please see attached documents for framework ideas.
Tim
One of the problems facing small regional farmers is transaction costs per unit of food. As the industrial model has shown, size matters to reduce the financial cost per unit, and one of the best ways to reduce the financial costs is to increase the quantity of product moved with each delivery.¶
Growing Washington has begun to operate a decentralized production system – many small farms scattered across a region that together make a larger transaction. This system has an inherent complexity in the fact that product still has to move as small lots off the farm to the aggregation point with associated labor and fuel costs, then potentially move on to one larger truck which moves closer to market and picks up other product for final delivery. Each time product is touched, moved on or off truck, it adds costs to the transaction.
This system should utilize a web-based platform for coordinating sales and logistics. The existing Growing WA store is working well, and we will see how far this system can be scaled up before having to renovate or replace with another system.
The possibility for transaction cost reduction lies within highlighting each component of the distribution leg and it’s associated costs, using new or existing route optimization tools to increase labor and fuel efficiencies, identifying temporary storage hubs (e.g. a FedEx drop off box with climate control, or the Food Depot in Bellingham) where farmers can move their product for pickup, optimizing placement of product in truck so that it has to be touched as few times as possible, increasing the number of cases moving per mile, and (sometimes) by increasing the value of each transaction. This all has to work seamlessly, and with the goal of having it exportable to other producers as a spreadsheet or web-based interface that allows farmers to enter in variables and determine which is the least costly method of delivery, self-delivery or aggregated delivery.
