It is an unlikely connection—a partnership between the California Cut Flower Commission (CCFC) and the Daniel J. Epstein Department of Industrial and Systems Engineering at USC Viterbi. Bring in the fundamental engineering concept of optimization, however, and it all makes perfect sense.
The CCFC faces a serious economic challenge. Within the past 20 years, market share of flowers grown in California has fallen from 64 percent to anywhere from 20 to 25 percent. This loss is primarily due to increased competition from South American growers who enjoy a competitive advantage resulting from a cross-docking and distribution facility in Miami. This single consolidation point allows South American growers to negotiate favorable trucking delivery rates based on their volume.
Maged Dessouky: Flower Powere
A CCFC task force came to Maged Dessouky, James Moore and Alejandro Toriello, three transportation system specialists and asked: Can you develop a specific plan to consolidate transportation and distribution of California flowers to compete more effectively with the South Americans?
“Currently, growers ship product individually to customers, and this is not efficient from a transportation perspective,” said Dessouky. “We are developing a consolidation plan where CCFC members would send their product to a consolidation point in Southern California, and we’re looking at sites in Ventura County. The flowers would be shipped from the consolidation point only in full truckloads, thus taking advantage of economies of scale.”
“We are confident that there will be savings through consolidation,” said Dessouky. “The question is: how much?”
Additionally, Dessouky said shipping consolidation will help to improve the quality of cut flowers—the single site will provide consistent refrigeration in trucks that will deliver flowers to retailers.
Moore is looking at the economic issues from a slightly different perspective. He is examining how reductions in the cost of flowers through transportation efficiency will have an impact on gains in market share.
For Dessouky, the CCFC project is indicative of transportation optimization challenges he and his team have worked on for organizations ranging from UPS to public transit authorities. But this is the first time he has worked with a specific industry on a specific commercial product.
The Viterbi team will make its initial recommendations to the CCFC in May 2011, sometime around Mother's Day, and follow up with a finalized plan by the end of summer.
