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company uses more than 10 million pounds of frozen strawberries, 6 million pounds of frozen bananas, and 27 million pounds of fresh oranges every year. While this may sound like a huge quantity of fruit, Jamba Juice competes for the growers attention with many other companies, such as beverage manufacturers who sell fruit-based products and large producers of other products with high fruit content, such as pies and jams. In addition, the same growers who supply fruit for these companies also sell to supermarkets and restaurant industry distributors. Strawberries are a particular challenge in that they are a very popular choice among supermarket shoppers. The supermarket channel also offers the greatest margin for the growers, so it is no wonder that of the 1.4 billion pounds of strawberries produced each year within the State of California, approximately 75 percent are harvested for the fresh market, whereas only 25 percent are frozen for the processed market.11 There is a common perception that a strawberry s size is directly related to its taste and sweetness, with bigger berries considered sweeter and riper. In actuality, a strawberry s flavor is determined by growing conditions (such as weather), stage of ripeness when harvested, and variety. Despite this reality, much of the agricultural research done by grower consortia is focused on breeding fruits that will be appealing to the retail grocery shopper. This means larger strawberries. The same strawberries that are so appealing to the retail grocery shopper cause major headaches at Jamba Juice. They re just too big, explains Anne Kimball, Jamba s director of supply chain management. They are difficult for our blenders to handle, they don t fit in the scoops we use, and the inconsistency in the size results in variability of texture, flavor, and color of our smoothies. Since Jamba Juice does not have the ability to influence the development of these new strawberry varieties, they have turned to their processors for help. Frozen fruit processors are the produce industry s equivalent of contract manufacturers: They wash, sort, and package frozen fruits and then sell them to distributors. Strawberries must be frozen as soon as possible after picking to ensure that the best flavor and appearance are retained. In most cases, the berries are sliced, pureed, or kept whole for freezing. Processors have specialized equipment for these three options. And Jamba needs a fourth form factor berries that are broken up into fairly large chunks but still maintain their fruit identity to the retail customer, who could watch his or her smoothie being created.
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CHAPTER 4 Core Discipline 4: Build the Right Collaborative Model
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I know it sounds simple, says Kimball, but this required a creative process for ensuring that there was a sufficient quantity of frozen berries coming off the processing line that met our growing volume requirements. Jamba s supply chain and R&D organizations worked closely with Cleugh s Frozen Foods, Inc., to develop a proprietary technology to break up the berries prior to freezing in a way that suits the in-store production process. This was not a small investment by Cleugh s, notes Kimball. However, their ability to ensure that we had fruit that could be portioned solidified our existing partnership with this long-term supplier partner. 12 The relationship between Jamba Juice and its strawberry packer is a great example of coordinated collaboration. It s an example that is not at all reliant on the availability or use of sophisticated information systems.
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Trust Your Partners, but Protect Your Interests
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Effective collaboration is based on building relationships and on sharing both information and the benefits gained as the relationship progresses. This means that you can t ask your partners for something without giving them something in return: That something can be price concessions, value-added services, or in most cases, information. If you re willing to set up an infrastructure to automatically send purchase requirements to your suppliers but don t want to provide your sales projections for the next nine months, ask yourself why not. Sharing information requires trust; it may be that you don t have the necessary confidence in your partner. There s a good reason that many companies are skeptical about making highly strategic information available to collaboration partners: Trust is violated all the time! Confidential pricing data make their way into the hands of competitors, engineering specs are copied, or the best supplier terms and conditions are found to be less favorable than those granted to other customers. Take the experience of a leading network equipment company with healthy margins due in no small part to its extremely aggressive supplier management. The company demands the lowest price on its key components and insists that these pricing arrangements be kept confidential. To shield prices from competitors, it buys these key components through a central procurement group, which delivers them to a contract manufacturer. The company had established a close relationship with a major supplier and was confident that it was getting the lowest price on an important electronics component until it acquired a company and found that it had been buying the same component from the same supplier for 10 percent
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