 |
|
|
|
 |
|
|
|
|
| August 2005 |
|
| A new style of logistics, where everyone wins; from the grower, distributor, and to the retailer |
|
 |
|
| This article features the development of the system and the essential points of the marketing strategy, from the early difficulties through to the success in the present. |
|
 |
| What is so special about this system? |
|
 |
|
|
The IFCO Container System is in essence a returnable container rental system for the distribution of fruit and vegetables. Traditionally cardboard boxes played a major role in the transport of produce; until today with the introduction of a plastic container and a new system of logistics - the returnable rented container system.
In recent years, the farming industry has been plagued with various problems such as shortage in labor, the disposal of used packaging containers and the need to reduce distribution costs. Such factors have forced a review of packaging materials. Among fruits and vegetables retailers, the introduction of the Container and Packaging Recycling Law has resulted in the widespread introduction of the returnable container and a consequent reduction in garbage.
As shown in the flow diagram, IFCO JAPAN INC. (IFCO JAPAN) established a deposit system that ensures a smooth distribution of rental containers. A grower rents a container and pays a 250 yen deposit, the 250 yen is paid back to the grower at the time of shipping by the retailer; this system places no extra financial burden on the grower. IFCO refunds the deposit to the retailer upon the return of the used containers. The company collects and washes the containers and returns them into the rental system. |
|
 |
|
|
| How did the system start? |
|
|
|
|
The IFCO Container has a distinguished history; it was first developed by the German company Schoeller (IFCO Systems N.V.), and began life in 1964 through the company's technical association with the Mitsubishi group, when yellow plastic beer crates for the Kirin Brewery Company were introduced into Japan. At that time, the crates were molded by Meiji Rubber & Chemical, using Mitsubishi Kasei's polyethylene and Mitsubishi Petrochemical's polypropylene. Mitsubishi Corporation was responsible for the sales and marketing of what was considered to be an unprecedented major project. Later in 1993, Schoeller started the IFCO Systems in Europe and the idea was then picked up by MITSUBISHI CHEMICAL MKV, who realized the importance of establishing a recycling-oriented society in Japan. In 1995, Schoeller and the three Mitsubishi companies established IFCO JAPAN under joint management with the following investment ratio - MITSUBISHI CHEMICAL MKV: 40%, Schoeller: 33.3%, MITSUBISHI SHOJI PLASTICS: 18% and Meiji Rubber & Chemical: 8.7%. Today the polypropylene for the containers is provided by Japan Polypropylene.
 |
 |
IFCO container with secure locking
With a single touch, anybody can easily assemble and fold the container, enabling the streamlining of work. |
|
|
|
|
|
|
| What are the benefits of using the system? |
|
|
|
|
|
 |
|
|
 |
|
|
 |
|
|
Photos show containers being used by farmers. With a priority on quality and freshness, the containers have won a good reputation for air-permeability and precooling ability from farmers. |
|
[Benefits for the grower]
| (1) |
Freshness and quality is preserved.
The containers have a precooling effect, with high air circulation helping to preserve the freshness and quality of the produce. |
| (2) |
Farm work is streamlined.
The container is easily assembled with one-touch, and having no lid, more time is saved, and being lightweight and foldable, little space is needed for storage. The containers, unlike cardboard, are highly resistant to rain and enable work under wet weather conditions.
|
[Benefits for the distributor]
| (1) |
Easy handling
Lightweight and standardized base size |
| (2) |
Space-saving
An assembled container folds to about one-fifth its size, resulting in substantial space saving. They can also be easily classified. |
| (3) |
Easy checking of contents
The sides are reticulated. |
[Benefits for the retailer]
| (1) |
Preservation of freshness and quality |
| (2) |
Zero packaging waste |
| (3) |
Contents can be displayed in store without removal from containers. |
| (4) |
In combination with an IFCO dolly - a transportation device developed for IFCO - stocking time is significantly reduced by as much as 20 seconds per case. |
As mentioned above, compared with the conventional cardboard box, returnable containers have many advantages. Even when compared with regularly purchased and owned containers, rental containers give significant benefits. This system where one can rent as much as needed at anytime enables participants to minimize stock and frees them from the hassle of retrieving and cleaning the containers, as IFCO JAPAN is responsible for the collection and cleaning - hygiene is a key feature and IFCO JAPAN is fully equipped with washing facilities.
|
|
|
| How was the system introduced to Japan? |
|
|
|
|
|
 |
Scenes from the mass merchandiser: the size conforms to ISO standards and the containers can be displayed in store and reduce stocking time. |
|
 |
|
|
 |
|
When the rental scheme based on subletting was launched, Japanese growers had no experience of such a novel idea and it was met with near unanimous rejection. Unlike Germany, where the scheme had been brought in with the government legislation of the deposit refund system, thus ensuring a successful introduction, concepts such as subletting and deposit refund were still new to Japan. Consequently, it was decided to focus on the retailers, especially mass merchandisers, instead of the growers. Such benefits as zero-garbage and improved efficiency in stocking with the IFCO dolly were naturally more appealing to this end of the distribution chain and their use gradually expanded from those mass merchandisers who were conscious of environmental and sanitary issues. With the cooperation from the mass merchandisers, surveys of operation time at the stores and distribution centers were conducted and these yielded invaluable data and helped in sales promotion. As the present distribution industry is a buyer's market, gaining the understanding and support of the mass merchandisers, the holder of the highest deciding power, was vital to the success of the project. Surveys undertaken on the farms, monitoring from the time of harvesting in the field through to packing and shipping, gave positive data and demonstrated improvements in efficiency and time saving. Secure in the strength of their diligently gained data and accumulated know-how, IFCO JAPAN's sales team hit the road with the aim of visiting every link in the fresh produce distribution chain - farmers, markets, distributors and mass merchandisers - and winning their support through presentations and meetings; a classic example of the IFCO JAPAN's hardworking style of sales promotion. |
|
|
|
|
| Present market trend and issues for the future |
|
|
|
|
Five key points must be mentioned:
| (1) |
The introduction to two major companies with national chains: the Aeon group and Ito Yokado, currently the two leaders in the mass merchandiser industry, both companies along with other national chains, have fully grasped the potential and benefits of the system and are now wholeheartedly promoting IFCO Container System. |
| (2) |
Development of a specific container for bananas: resulting in major reductions in distribution costs and now used for transporting from the Philippines and other exporting countries. |
| (3) |
Development of an IFCO rack: dramatically reducing damage to strawberries during shipping and extending their shelf life; Tochigi and Fukuoka prefectures at the top of the list of major strawberry growing areas have greatly expanded the use of the IFCO rack, leading to a revolution in the distribution of strawberries. |
| (4) |
Development of an IFCO dolly |
| (5) |
Throughout the whole of the fruit and vegetable farming industry, understanding of the importance and usefulness of the returnable container system has grown along with its adoption among large brand producing centers, which previously had been resistant to its introduction, for instance, in 2003, JA Tsumagoi Village, a brand producing center of summer and autumn cabbage, adopted IFCO Container System. It is now 10 years since its foundation, and IFCO JAPAN reached an annual rental total of 37 million cases last year from 400,000 cases in the first year. The target for the fiscal year 2005 is 46 million cases - a growth of over 100 times in 11 years. However, the annual total of distribution cases for fruit and vegetables is estimated to be 2 billion and IFCO Container System's share is only a little over 2%; there is certainly plenty of room for growth. |
As always, the future issues are to further simplify the container management system, lower the rental fee and reduce distribution costs. Furthermore, the Ministry of Agriculture, Forestry and Fisheries, realizing that environmental issues are becoming increasingly serious, has started to recognize the importance of the returnable container system; a rental fee subsidy was introduced for growers in 2002. In such a climate, IFCO JAPAN will make a strive toward a target goal of an annual rental of 200 million cases - a 10% share of fruit and vegetable distribution containers. |
|
IFCO JAPAN INC.
1-29-6 Hamamatsu-cho, Minato-ku, Tokyo 105-0013
TEL: [+81] (0)3-5401-7431 |
|
|
|
|
|
|
