A Risk Worth Taking

June 15, 2006 - 11:05

Big growers face big risks every day. For
some companies, relying on contract growers
is one of those risks not worth taking —
not so for Masterpiece Flower Co. For the
Byron Center, Mich.-headquartered company, using
contract growers is an integral part of business.

“The risk can be huge!” said Masterpiece President
Tim Stiles. There are “millions of dollars down the
line that are not in your direct control. But it is a risk
worth taking when you do it right,” he added.

The Masterpiece Concept

Masterpiece Flower Co. was created several
years ago to manage distribution for its sister company,
Henry Mast Greenhouses, a big grower also
based in Byron Center. Today, Masterpiece ships
millions of plants from 15 growers to about 15 different
states in the Midwest.

Masterpiece Flower Co. does not actually grow any
plants. It is a distribution company that buys, sells,
ships and merchandises cut flowers, bedding plants,
perennials and blooming
potted plants to the big
boxes and independents.
Masterpiece has formed
the relationships with
buyers, Masterpiece
owns the expensive
trucks and Masterpiece
employs all the merchandisers,
allowing the
growers to focus on what
they do best — growing.

Masterpiece also
serves as a warehouse
for grocery store chain
Meijer and receives
other floral products for
the company. Product is
shipped to Masterpiece
from growing operations.
Masterpiece evaluates
the product for
quality; if accepted,
signs off on the shipment
on Meijer’s behalf;
and enters it into a
Meijer computer terminal
in the warehouse. Stiles said the relationship is so
close, many of these suppliers now think of
Masterpiece as Meijer’s agent.

As the relationship has progressed with Meijer,
Stiles said the retailer has asked his company to
take on more responsibility. “Our discussions with
Meijer are very open,” Stiles commented. “We talk
about where they want to go and where we can
play a role. Meijer really
lets us in on the
operational side so we
can help them. If we
help them, we help ourselves,”
Stiles added.

The Contract Business

According to Stiles,
about 50 percent of
Masterpiece’s product is
grown by Henry Mast
Greenhouses, while about
15 contract growers in the
Michigan area grow the
other 50 percent. He said
Master-piece has been
using contractor growers
for eight years. Most contractors
are in the 100,000-
400,000 sq.ft. range, but
the company has growers
as small as 17,000 sq.ft.

Stiles is not anxious
about having half of his
plants in another grower’s
greenhouse. “Sure, we put a great deal of faith in that
person,” 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 of
selection when we pick growers,” Stiles added.
“Right behind that is their ability to deliver on a
timely basis because service is a big part of what differentiates
us from others.”

Controlling The Risk

Proper planning helps reduce risks when choosing
a contractor. When Masterpiece signs up a new
contract grower, there is usually a year-long vetting
process to make sure the potential contractor meets
the company’s standards. And when the contractor
is given an order, Masterpiece representatives are
heavily involved during the first year.

“It always comes back to picking players who
have a history of being precise,” Stiles explained.
“The growers that are good and precise in their
scheduling, ability to hold a crop, and ability to
monitor and manage a crop are the ones we use.”

Most of the contract growers used are monocrop
growers. By having the grower produce only one or
two crops they become experts on that crop and production
becomes very formulaic. Masterpiece feels
more comfortable about getting a good crop, and the
contractors can be more profitable.

Helping Everyone Succeed

To minimize risk and ensure success for
Masterpiece and the contract growers, Stiles and his
team have developed a systematic approach to working
with outside growers. “We write spec sheets that
lay out all of the details — the pot, the barcode, the
varieties, the colors — and ask everyone involved,
‘OK, do we agree on this?’” Stiles said. Then a commitment
form is signed by both organizations.

Because of the history with Henry Mast
Greenhouses, management at Masterpiece understands
what contract growers are dealing with every
day. “We really try to work with growers because we
live in their world, too,” Stiles said. The proximity to
Henry Mast Greenhouses also allows Masterpiece to
set criteria for what it will and will not accept. “All of
our standards for Masterpiece originate [at Henry Mast
Greenhouses],” explained Stiles, “and we try to apply
those standards to the other growers. We consult our
management partners, Shawn Koepnick and Leroy
Devries, at Henry Mast Greenhouses when we develop
the crop spec sheets we provide our contract growers.”

To help enforce these standards, Masterpiece has
developed a report card for its growers to provide
feedback on how they perform each year. “We have
a real candid conversation and some friendly banter,
but there is also some pretty pointed criticism,”
Stiles said. He explained growers are rated on
aspects like overall product quality, level of communication,
invoice accuracy, and delivery and
schedule accuracy. This report has become a real
source of pride for the contractors, Stiles said.

Masterpiece Flower Co. also has a field inspector,
Michael Hughes, who was a grower for Henry Mast
Greenhouses for 12 years. He knows what it takes to
be successful, but he doesn’t micromanage the growers.
“The growers manage their own production with
their skills and staff, we just set the standards they
have to hit,” Stiles said. The field inspector works
with the contractors every day, keeping his finger on
the pulse of their production, schedules and projected
volume and reporting back to Masterpiece.

Risk And Reward

Another risk Masterpiece is willing to take is how
it uses pay by scan. Masterpiece takes ownership of
product at its dock, then ships that product out for
sale under pay by scan. Stiles said Masterpiece has
been using pay by scan for about six years. In some
instances, he admitted, the company has paid for
more product than it has sold.

“We take 100 percent of the risk,” said Masterpiece
sales manager Ron Mercer. “That is why our standards
have to be held very high when the product
passes through the warehouse, and our growers are
aware of that!”

“If we wanted to put our growers in the situation
where they are sharing the risk, we would clearly
have to pay them more for their product,” Mercer
explained. “I think we have a healthy balance where
[the growers] are pleased with what we pay them
with the understanding that they have to produce
high quality while we take on the risk.”

According to Stiles, the scan-based system has
benefits too. It provides the company with detailed
information about the sales velocity and quantity of
product at each store every day. He said it also
requires the company to load its trailers differently,
customizing replenishment so that the right product
is shipped to the correct store at the right time.

It’s all about risk and reward, whether you manage
acres of greenhouses or warehouses. Masterpiece
has not made their company easier to run by splitting
up production and distribution, but what it has
done is make a more efficient system that allows both
halves to focus on what each does best, and the
model seems to be working: It allocates risk where it
can best be handled and shares an equal portion of
reward with everyone.

About The Author

Tim Hodson is managing editor of GPN. He can be
reached at thodson@sgcmail.com or (847) 391-1019.

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