In one of the country’s most fragmented industries, Victorian based Yarra Valley Farms has a strong ambition to become not only the largest fruit and vegetable distributor, but also Australia’s most recognised produce and perishables supplier and retailer.
Yarra Valley Farms started life as a side project for managing director Bill Kollatos, who at the time could not distinguish between a zucchini and a cucumber. The company has grown into an organisation now managing six owner-operator franchises and a fleet of over fifteen vehicles throughout Victoria.
Mr Kollatos founded the food service distribution company while completing his Master of Business and Administration (MBA), and applied philosophy and methodology learnt during this time to test his business strategy for the corporation.
“Building a company with systems and processes you have developed from scratch is incredibly rewarding. Through study, research and field testing, I discovered a major gap in a highly fragmented fruit and vegetable distribution industry and hospitality sector – there was no major player personally servicing customer requirements”, said Mr Kollatos.
The company was established in 2001, and today is one of Victoria’s largest suppliers of fresh fruit and vegetables, servicing more than 400 commercial and hospitality clients. It supplies many of the state’s leading restaurants and food chains, bars, cafes, hotels and care facilities.
Innovation and technology in one of our oldest industries
Mr Kollatos believes the combination of advanced in-house transport and logistics processes, growing delivery fleet and the unique franchising model position Yarra Valley Farms to become Australia’s first independent national fruit and vegetable supplier and retailer.
“Yarra Valley Farms’ supply chain model was developed based on our strategic direction with a goal of delivering personalised service to customers from a localised owner operator, yet allowing them to reap the benefits of a larger supplier”, said Mr Kollatos.
The Yarra Valley Farms franchise model was soon implemented across Melbourne, with these frontline owner-operators supported by an established infrastructure with a unique ‘tailored ordering system’ to assist in managing all customer requirements.
“Our customers can specify produce through online, fax and/or telephone capabilities based on elements such as product, size, colour and ripeness, and can receive their order requests within a short space of time by personal delivery from their local owner-operator.
“Due to the inconsistency of perishable goods, we implement rigorous testing systems throughout the distribution process, and embed the tailored ordering system throughout the supply chain, from the farmer to the customer.
“A highly regimented system is imperative to juggle the requirements of having enough stock on hand to fulfil all morning deliveries, and yet ensure there is a minimum level of stock for late or random requests.
“Freshness, consistency and efficiency are key elements for customer satisfaction. We could not fulfil every individual requirement without established systems in buying and packaging at head office, and targeted delivery by our owner-operators”, said Mr Kollatos.
In continuing uncertain times of fluctuating grocery prices due to economic and environmental factors, Mr Kollatos believes Yarra Valley Farms’ customers value the personalised service more than ever.
“We capitalise on the close relationship between Yarra Valley Farm franchisees and customers to communicate product information such as variations in price, quality and availability on a daily basis, via both one-on-one communication and our electronic software”, said Mr Kollatos.
The company’s software, Socrates, was developed internally by Mr Kollatos, who has a background in IT. It is a key vehicle for the continuing distribution success and will also play a major role in broadening Yarra Valley Farms’ progression outside Victoria, and potentially internationally.
“I applied the knowledge and experience gained from working within the IT sector to build Socrates, a program specifically developed for Yarra Valley Farms.
“It was important to ensure Socrates was heavily integrated within all mobile devices, both internally at the warehouse and on the road with all drivers, and therefore we formed a partnership with leading mobile computing company Leopard Systems.
“A product built as a result of this relationship is the first instalment of our ‘Fresh Phone’, a device that enables us to track deliveries and accuracy at a far superior level. The pending instalment of this device will include enhanced technology to assist in procurement, stock control, onroad delivery assurance and order taking.
“Ultimately, our software assists in managing the relationship between produce experts (buyers, farmers, etc) and franchisees, and I strongly believe we are the only company with the capacity to replicate this system across Australia”, said Mr Kollatos.
Growing to retail
Yarra Valley Farms has launched its most significant expansion to date, a retail fruit and vegetable franchise chain that will service Australian consumers directly within a localised area.
The company agrees with a recent AC Nielson poll that confirmed consumers were looking to eat healthier diets, and acknowledged people want localised speciality stores that focus on high level customer service.
The company is set to open its inaugural outlet in Geelong within the Westfield complex in April, and has a number of other potential site opportunities that will be further assessed following the success of its first venture into retail.
“Our current distribution franchise model that delivers fresh produce to the hospitality sector has been extended to supply retail franchises. We are also widening our product base within perishables to potentially include milk, eggs, prepared fruit salads, etc.
“To ensure localised franchisees add value to the consumer via personalised service, each retail outlet will be informed daily on price, quality and stock information, which can then be passed directly onto the customer. I believe no other fruit and vegetable outlet can offer this level of service.
“Through this unique strategy, we offer potential retail franchisees a cold logistics sales and marketing distribution system that gives them the opportunity to further create value to end consumers. We have taken the procurement process out of the equation for retailers, allowing us to grant franchises to people who have a keen focus for customer service.
“We can now regularly stock, and/or deliver, the freshest produce of any retail outlet in the country, as our customers will be purchasing fruit and vegetables as early as 24 hours from leaving the farm where it was grown”, said Mr Kollatos.
“We feel our franchising model has revolutionised the produce distribution sector, and we strongly believe it will be well received by consumers through our retail network”, said Mr Kollatos.
The growing success of its distribution model has positioned Yarra Valley farms well to venture interstate and abroad.
The company intends to enter Sydney in 2009, initially offering distribution franchises, with retail opportunities to soon follow. Subsequent to the evaluation of its Sydney branch, it will then look to travel north to Brisbane from 2010.
“We aim to be the largest and most recognised fruit and vegetable distributor and retailer along the eastern seaboard,” Mr Kollatos said.
“Sydney is a huge market for us, and with Brisbane emerging as a boom consumer state, we would be doing ourselves a disservice if we only had intentions for Melbourne.”
Mr Kollatos also believes extending the model internationally is a real possibility with the strength of the company’s established logistics systems and Socrates software, however, he acknowledges growth of that magnitude must take time to develop.
“Success across the east-coast of Australia would allow the company to venture overseas, as we have already had interest from a number of highly regarded people within London’s hospitality industry.
“Conversely, we are aware that hasty growth can often put undue strain on a business. Pressures on software, management processes and culture can occur without the evolution of systems and carefully planned business management. It is a priority for us to remain an ambidextrous organisation, therefore being able to see closely towards the horizon and steer the ship continuously in the right direction.
“We are still a relatively young organisation but we look forward to the multiple opportunities that lie ahead”, said Mr Kollatos.
For more information visit www.yarravalleyfarms.com.au.
*Excerpt from MHD Supply Chain Solutions, May/June 2008 (pp.42-5)