1. Saloni Doshi Associate Denver, CO INFORMATION TECHNOLOGY: CHOOSING THE RIGHT SYSTEMS FOR YOUR FOOD ENTERPRISE FSC Webinar September 24, 2014

2. Objectives Lay foundations to help food businesses: 1.Assess their technology needs 2.Structure a search for technology solution(s) 3.Evaluate and select the right technology solution(s) for their needs What we’re not doing today: Evaluating specific software systems Troubleshooting specific challenges Discussing how to best work with software provider 2

3. My background Strategy consultant Food hub feasibility and business planning Technology development strategy Technology selection for startups and Fortune 500 companies Food entrepreneur, evaluator and user of tech systems Researcher of food systems tech landscape 3

4. My background What I’m not: Technology entrepreneur Developer Food hub operator or grower 4

5. Software trajectory 5 In-house Outsourced Strategic Tactical Different solutions for different needs – QuickBooks, QB inventory module, Salesforce, Wordpress, etc Single system that addresses majority of needs across business – purchasing, inventory, invoicing, logistics, ecommerce. May have QB separately. “Manual” solutions, often using Microsoft Office or Google applications In-house system designed to meet unique model. Addresses many needs across business – purchasing, inventory, invoicing, logistics, ecommerce.

6. Technology philosophy Technology should enable your business strategy – it is not the solution Investments in technology are best made after strategic and operational foundations of a business are stable Technology should generally be adapted to meet a business’s processes needs Don’t waste time reinventing the wheel 6

7. Selection considerations 7 Functionality needs Ease of use Pricing structure Total cost of ownership Platform and architecture Open source versus closed Data ownership Integration Deployment approach Security and data protection Responsiveness, flexibility Return on investment

8. Technology search process NEEDS ASSESSMENT, ROI MODEL BUILD PIPELINE AND RESEARCH EVALUATE AND SELECT Functional Req’s Other requirements Identify potential software solutions Assess features through meetings, demos Consider in-house development Free trial period Gather feedback from team Evaluate ROI ASSEMBLE TEAM Identify expertise needed Select individualsEstablish roles 2 3 Build process flow 1

9. Every food business is different 9 Aggregator and distributor Processor Broker CSA Restaurant Online store 1

10. Build process flow - framework 10 Business overview Describe your vision and mission, and core operations and revenue streams. List functions Supply / demand planning Supplier communication Sales and marketing Purchasing Receiving and inventory management Processing and packing Order fulfillment Logistics Accounting Food safety Define process How is the function executed? Who is involved in each step? How is information gathered, used and shared in each step? Current technology What technology solutions are currently being used to track, use and share data? What “non tech” solutions are being used? Who are the users of these solutions? 1

11. Process flow example 11 Food Hub In-season updates Price list Purchase order Sales order Product / invoiceOrder fulfillment Delivery / invoice Buyers Growers / Vendors Identify buyer demands, grower capacity, gaps. Weekly updates on availability Inventory Full item list, by “on order”, “committed”, “in stock”, “backorder”. Inventory Full item list, by “on order”, “committed”, “in stock”, “backorder”. Based on inventory, JIT, forecasted sales, grower supply Receive / pick-up product, verify and sync into inventory Pick lists  pack / check and load orders. Food safety and Recall Record temps, track inputs to manage recalls. Maintain all organics certification records. Accounting / Reporting Maintain revenue, COGS, SG&A, A/R, A/P, payroll. Report on financials, sales, inventory, ops, etc. CRM Track pipeline, communication, targets Payment & Reconcile Routing, record issues, confirm receipt Avail product, price. Based on grower supply, inventory Preseason crop planning 1

12. Build requirements list 12 FunctionProcessCurrent techIdeal statePrioritization How is the function executed? Who is involved in each step? How is information gathered, used and shared in each step? What technology solutions are currently being used to track, use and share data? What “non tech” solutions are being used? Who are the users of these solutions? -In an ideal world, how would this step be automated? -How would technology make it more efficient and effective? -Who would be the primary data inputters and users? -How would this solution benefit the business? -How high priority is tech for this step? What is the “trigger” to make this high priority? -What is the minimum now? Business overview Describe your vision and mission, core operations and revenue streams. 1

13. Features and functionality 13 TRANSACTIONAL Supplier management Customer management Web exchange Purchasing Receiving and QA Processing Inventory management Order fulfillment, picking Distribution OVERARCHING Financial management Reporting Food safety, traceability Marketing and branding Business development Pre-season crop planning Systems integration 2

14. Software categories 14 2 CategoryDescriptionExamples Traditional ERP ERP stands for Enterprise Resource Planning. These are business management software that collects, stores and interprets data across many activities (planning, inventory, processing, marketing, shipping, etc). Provides an integrated view of core internal business processes. ACCTivate Blue Ocean Systems Edible Software Exact MAX Famous Software FoodConnex NetSuite Plex Produce Pro SAGE Silver Creek Web- exchange Systems designed for small to mid-sized food hubs, food brokers, and food aggregator/distributors. They uniquely offer supplier management, online exchange and content management, and customer ordering functionality. Delivery Biz Pro Local Food Marketplace Local Orbit Online Marketplace Ecommerce platform. Website where growers / hubs can post product and buyers can make purchase. Unlike web exchange systems, there is one single online marketplace for transactions, branded by the technology provider. FarmLogix Foodem iGrowerTrade Local Dirt

15. Software categories 15 2 CategoryDescriptionExamples CSA / group buying Platform to fulfill unique needs of CSAs and CSA food hubs. Systems allow CSA members to manage subscriptions, and synchs member info with order fulfillment / picking and delivery systems. CSA Ware Whole Share Delivery Biz Pro Farm Systems Systems to support farm planning and management, such as crop planning, supplies management, cost tracking, etc. Ag Squared Farm Logs Sure Harvest Function Specific Systems that specialize in specific functionality (accounting, traceability, human resources, CRM, etc). Most are industry agnostic. ADP FoodLink HarvestMark iTradeNetwork QuickBooks Salesforce.com Custom Solutions This can include hiring a developer to build your system or outsourcing development to a contractor. Some options are open source. Food Network Software Microsoft GP FileMaker Pro Avity Apache OFBiz

16. Return on investment evaluation 16 TOTAL COST OF OWNERSHIP -Acquisition price -Ongoing price Perpetual license SaaS subscription Percent of sale -Other costs: Staff time, hardware Cost and pricing implications -Ability to pay -Impact on cash – early on, long term -Implications for other investments INCREASE IN INCOME -Supply growth -Revenue growth -Reduce or redirect labor -Minimize data issues -Meet regulatory and customer req’s Common method for evaluating technology decisions is to assess the cost/ benefit of each option through a return on investment (ROI) calculation. Increase in income / total cost of solution 3

17. Kathy Nyquist Principal Chicago, IL (773) 245-3570 newventureadvisors.net Saloni Doshi A ssociate Denver, CO (732) 895-2360