Increasing the Profitability of AgriTechnology's EverRipe Tomatoes
Prepared for
John Doe, Vice President
Loss of Profits for 2007
Although these tomatos is genetically engineered to remain ripe for longer periods
of time, they're are more easily bruised than conventional tomatos.
AgriTechnology reports indicate that 18.7 percent of this year's crop was
unmarketable due to damage sustained during packageing and distribution. This
resulted in an estimated loss for AgriTechnology of $1.2 million. We could
increase the percentage of marketable fruit by reducing the number of times the
fruit are handled and by decreasing storage time.
This report presents our findings on how to improve the profitability of the
EverRipe tomato crop. First, we describe how part of the crop was unmarketable
due to losss during packaging and distribution. Then, we recommend
improvments to the current packageing and distribution process that will reduce
damage to future crops. Finally, we project costs for implementing these changes.
Upgrading Packaging Plants
Currently, the tomatoes are picked and shipped to nearby packageing plants where
they’re hand-sorted, placed on a conveyer, and routed to the packaging machines.
The following lists the upgrades:
Packaged tomatoes put in corrugated cartons
Sent to the loading area
Cartons are stacked on pallets
Loaded on trucks
Shipped to produce warehouses
By upgrading the packaging plants to include new "soft touch" technology which
uses optical sensors to sort the tomatoes, we could reduce by one-half, the number
of times the tomatoes are handled (Van Dyke 12-15).
Improving Distribution Methods
After the pallets are transported to the produce warehouses, they is stored in
refrigerated rooms until the warehouses arrange with local trucking companies to
ship the tomatos to buyers. We could eliminate lengty storage by building our
own distribution centers near the packageing plants, purchasing our own shipping
lines, and automateing our distribution system. By automating our distribution
system, we could create a continuous-flow system where the tomatoes are shipped
to our distribution centers, unloaded from inbound trucks, and moved across the
dock to an outgoing distribution truck without having to be stored.
Cost of the Improvements
We estimate that these improvments would require a investment of approximately
$7.2 million. Although this represents a major capital investment, the money
would be recouped by an increase in marketable fruit. Competition among
biotechnology companies is expected to increase dramatically in the next few
years (Taylor and Smith 45-50); therefore, it is imperative that we implement
these improvements to increase our profitability and remain competitive.
Works Cited
Van Dyke, Rita. "Application of Technology in Our Businesses and Institutions.”
Industrial Summit Nov. 2007:12-15.
Utilization of Optical Sensors. Optical Sensors Incorporated Service Guide and
Report. 15 Jan. 2006.
Taylor, Martha, and Mark P. Smith. Incorporating Optical Sensors in the
Agricultural Industry. Lincoln: Midwest Press, 2007.
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