It is an unlikely connection – a partnership between the California Cut Flower Commission and the Department of Industrial and Systems Engineering at the USC Viterbi School of Engineering. Bring in the fundamental engineering concept of optimization, however, and it all makes perfect sense.
The commission faces a serious economic challenge. Within the past 20 years, market share of flowers grown in California has fallen from 64 percent to anywhere between 20 to 25 percent. The loss is due primarily to increased competition from South American growers, who enjoy a competitive advantage resulting from a cross-docking and distribution facility in Miami, a single consolidation point that allows South American growers to negotiate favorable trucking delivery rates based on their volume.
A task force approached USC Viterbi’s Maged Dessouky, James Moore and Alejandro Toriello, three transportation system specialists, and asked them to devise a plan that would consolidate transportation and distribution of California flowers to enable them to compete more effectively with the South American growers.
“Currently, growers ship product individually to customers, and this is not efficient from a transportation perspective,” Dessouky said. “We are developing a consolidation plan where [commission] 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.”
He added: “We are confident that there will be savings through consolidation. The question is ‘how much?’ ”
Dessouky also 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.
In addition, 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.
The project is indicative of transportation optimization challenges Dessouky and his team have worked on in the past for organizations such as UPS and for public transit authorities. But this is the first time he has worked with a specific industry on a specific commercial product.
The USC Viterbi team will make its initial recommendations to the commission in May and will follow up with a finalized plan by the end of the summer.