A Risk Worth Taking
Big growers face big risks every day. Forsome companies, relying on contract growersis one of those risks not worth taking Ñnot so for Masterpiece Flower Co. For theByron Center, Mich.-headquartered company, usingcontract growers is an integral part of business.
“The risk can be huge!” said Masterpiece PresidentTim Stiles. There are “millions of dollars down theline that are not in your direct control. But it is a riskworth taking when you do it right,” he added.
The Masterpiece Concept
Masterpiece Flower Co. was created severalyears ago to manage distribution for its sister company,Henry Mast Greenhouses, a big grower alsobased in Byron Center. Today, Masterpiece shipsmillions of plants from 15 growers to about 15 differentstates in the Midwest.
Masterpiece Flower Co. does not actually grow anyplants. It is a distribution company that buys, sells,ships and merchandises cut flowers, bedding plants,perennials and bloomingpotted plants to the bigboxes and independents.Masterpiece has formedthe relationships withbuyers, Masterpieceowns the expensivetrucks and Masterpieceemploys all the merchandisers,allowing thegrowers to focus on whatthey do best — growing.
Masterpiece alsoserves as a warehousefor grocery store chainMeijer and receivesother floral products forthe company. Product isshipped to Masterpiecefrom growing operations.Masterpiece evaluatesthe product forquality; if accepted,signs off on the shipmenton Meijer’s behalf;and enters it into aMeijer computer terminalin the warehouse. Stiles said the relationship is soclose, many of these suppliers now think ofMasterpiece as Meijer’s agent.
As the relationship has progressed with Meijer,Stiles said the retailer has asked his company totake on more responsibility. “Our discussions withMeijer are very open,” Stiles commented. “We talkabout where they want to go and where we canplay a role. Meijer reallylets us in on theoperational side so wecan help them. If wehelp them, we help ourselves,”Stiles added.
The Contract Business
According to Stiles,about 50 percent ofMasterpiece’s product isgrown by Henry MastGreenhouses, while about15 contract growers in theMichigan area grow theother 50 percent. He saidMaster-piece has beenusing contractor growersfor eight years. Most contractorsare in the 100,000-400,000 sq.ft. range, butthe company has growersas small as 17,000 sq.ft.
Stiles is not anxiousabout having half of hisplants in another grower’sgreenhouse. “Sure, we put a great deal of faith in thatperson,” Stiles said. “What happens if they mess up?Well, if they mess up, then we are hurting; grower.
“Quality is always our number one standard ofselection when we pick growers,” Stiles added.”Right behind that is their ability to deliver on atimely basis because service is a big part of what differentiatesus from others.”
Controlling The Risk
Proper planning helps reduce risks when choosinga contractor. When Masterpiece signs up a newcontract grower, there is usually a year-long vettingprocess to make sure the potential contractor meetsthe company’s standards. And when the contractoris given an order, Masterpiece representatives areheavily involved during the first year.
“It always comes back to picking players whohave a history of being precise,” Stiles explained.”The growers that are good and precise in theirscheduling, ability to hold a crop, and ability tomonitor and manage a crop are the ones we use.”
Most of the contract growers used are monocropgrowers. By having the grower produce only one ortwo crops they become experts on that crop and productionbecomes very formulaic. Masterpiece feelsmore comfortable about getting a good crop, and thecontractors can be more profitable.
Helping Everyone Succeed
To minimize risk and ensure success forMasterpiece and the contract growers, Stiles and histeam have developed a systematic approach to workingwith outside growers. “We write spec sheets thatlay out all of the details — the pot, the barcode, thevarieties, the colors — and ask everyone involved,’OK, do we agree on this?'” Stiles said. Then a commitmentform is signed by both organizations.
Because of the history with Henry MastGreenhouses, management at Masterpiece understandswhat contract growers are dealing with everyday. “We really try to work with growers because welive in their world, too,” Stiles said. The proximity toHenry Mast Greenhouses also allows Masterpiece toset criteria for what it will and will not accept. “All ofour standards for Masterpiece originate [at Henry MastGreenhouses],” explained Stiles, “and we try to applythose standards to the other growers. We consult ourmanagement partners, Shawn Koepnick and LeroyDevries, at Henry Mast Greenhouses when we developthe crop spec sheets we provide our contract growers.”
To help enforce these standards, Masterpiece hasdeveloped a report card for its growers to providefeedback on how they perform each year. “We havea real candid conversation and some friendly banter,but there is also some pretty pointed criticism,”Stiles said. He explained growers are rated onaspects like overall product quality, level of communication,invoice accuracy, and delivery andschedule accuracy. This report has become a realsource of pride for the contractors, Stiles said.
Masterpiece Flower Co. also has a field inspector,Michael Hughes, who was a grower for Henry MastGreenhouses for 12 years. He knows what it takes tobe successful, but he doesn’t micromanage the growers.”The growers manage their own production withtheir skills and staff, we just set the standards theyhave to hit,” Stiles said. The field inspector workswith the contractors every day, keeping his finger onthe pulse of their production, schedules and projectedvolume and reporting back to Masterpiece.
Risk And Reward
Another risk Masterpiece is willing to take is howit uses pay by scan. Masterpiece takes ownership ofproduct at its dock, then ships that product out forsale under pay by scan. Stiles said Masterpiece hasbeen using pay by scan for about six years. In someinstances, he admitted, the company has paid formore product than it has sold.
“We take 100 percent of the risk,” said Masterpiecesales manager Ron Mercer. “That is why our standardshave to be held very high when the productpasses through the warehouse, and our growers areaware of that!”
“If we wanted to put our growers in the situationwhere they are sharing the risk, we would clearlyhave to pay them more for their product,” Mercerexplained. “I think we have a healthy balance where[the growers] are pleased with what we pay themwith the understanding that they have to producehigh quality while we take on the risk.”
According to Stiles, the scan-based system hasbenefits too. It provides the company with detailedinformation about the sales velocity and quantity ofproduct at each store every day. He said it alsorequires the company to load its trailers differently,customizing replenishment so that the right productis shipped to the correct store at the right time.
It’s all about risk and reward, whether you manageacres of greenhouses or warehouses. Masterpiecehas not made their company easier to run by splittingup production and distribution, but what it hasdone is make a more efficient system that allows bothhalves to focus on what each does best, and themodel seems to be working: It allocates risk where itcan best be handled and shares an equal portion ofreward with everyone.