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The Flower Logistics & Wholesale Division purchases flowers and other
plants that respond to the requests of customers from any node in the logistics
line, including producers, agricultural cooperatives (JA), wholesale markets
and intermediate wholesales. It then sells them, principally to florists and
flower departments of funeral companies.
The uniqueness of our flower wholesale operation lies in our commitment to
seeking economies of scale. For instance, we use information for purchasing
flowers to respond flexibly to the constant changes in flower markets, without
being shackled by conventional upstream-downstream distribution channels. And
we also purchase in low-mix high-volume lots.
(1) In Japan, flowers have conventionally been distributed in an intra-regional
vertical structure, in which more than 170 flower wholesale markets across the
country form separate regional clusters with the intermediate wholesalers that
are closely linked with them. This framework has many flaws, such as cost
duplication and a loss of selling opportunities because of the lack of
information exchange between different regions. To take full advantage of our
nationwide network, our Logistics & Wholesale Division adopts a system
under which each staff member is responsible for specific items instead of
specific markets. The personnel compare data from wholesale markets throughout
the country and study the needs of customers so that the most suitable products
can be delivered to any customer anywhere in the country at the right time.
This is part of our commitment to establishing nationwide horizontal
distribution.
(2) In this event, orders from customers are sorted by each item. We place
combined orders for a quantity that includes both the amount ordered by
customers and the large volume to be used within the Company. Capitalizing on
the resulting economies of scale in price negotiations, we strive to provide
products at prices that satisfy our customers.
(3) One of our challenges is to swiftly respond to customers' demand for
perishable flowers. We share stock data, market information and local
information on production areas online with our offices based all over the
country to respond to inquiries from customers by phone or by fax on a
real-time basis. In addition, we compile information on shipments from flower
producing regions across the country into separate special sale lists for
different items that are available to customer by fax or via the Internet.
Our procurement and sales method is characterized in particular by our
pre-shipment transactions. Normally, products harvested from farms are gathered
at collection points before they are shipped to wholesale markets. We regard
the interval of several hours between collection and shipment as a selling
opportunity for producers. We offer a service to undertake consignment sales of
the volume desired by producers at a price agreed with them.
This service benefits producers in three ways:
(1) They can directly participate in the pricing process without leaving the
prices of their products to auction results in wholesale markets.
(2) Their selling risk is attenuated as products are shipped to buyers after
the prices are fixed.
(3) They can take the initiative in pricing by controlling the supply volume,
with the price set depending on the demand-and-supply balance at wholesale
markets.
This service also gives the Company the benefit of directly delivering high
quality fresh products purchased from producers to customers without taking
inventory risks.
In the future, we will collect production information from around the nation at
different stages of the production process and build a database to improve the
accuracy of our data. This will enable us to sell flower products before
harvest and so enjoy new sales opportunities. Meanwhile, we will work to ensure
a steady supply of products and price stability. |
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