Firstly, a background study has been conducted from which the basic understanding of the topics is explained. Within this section, the physical distribution of cold chain products is described, including the current technologies used, which have shown the requirements that are in place to operate within this industry. Followed by this is transportation. Different types of vehicles are researched, with an example given of a kind of more sustainable vehicle used by large companies, which indicates the type of research that had to be done to optimize this part of the supply chain. Finally, the storage possibilities of perishable products have been researched, showing the options currently available in an urban environment.
Secondly, an estimation was made of the production within the urban farm. The prediction is necessary as all steps are directly influenced by the number of products needed to be handled. To create an accurate estimation, the maximum yield of the urban farm given the total space available was first calculated. Nonetheless, it’s not realistic to think that the urban farm will have a 100 % successful yield. Therefore, three phases of the company were mentioned: The introduction, growth, and maturity phases. The company will have a more successful yield phase after phase. All in all, those realistic predictions were created to enable us to carry out the rest of the report.
Thirdly, storage has many possibilities, but also requirements, when dealing with cold chain products. Investments can be made to handle storage on-sight (with reefer container or construction of a cold storage room), while an outsourced storage possibility has a lower financial requirement. There are a lot of these warehouses in Breda which the farm could outsource to. Both cases are explored, with their pros and cons. However, the Urban Living Lab Breda will have to make the final decision towards the storage of the yields by taking into account several factors (Cost, flexibility, focus on the core business or not…).
Next, followed by storage, is physical distribution. Within this section, a closer look is taken at different modes of transportation such as bicycles, vans or trucks. Each of these modes has advantages and disadvantages compared to creating a solution for the farm. Sustainability and cost of transportation are the most critical factors here, as these are what the urban farm represents. Later in this section, control systems and KPIs are also discussed to ensure further improvement of transportation.
Next up is the operational plan. This section explores the requirements of the farm to operate. It is starting with requirements for transportation, such as temperature control. This section is followed by characteristics of the farm required for optimal growth of the crops. Packaging, which includes different options with their features. And finally the costs of equipment and the workforce. These subsections explore the specifics that need to be known to produce, handle, and transport the goods for the urban farm.
Finally, the financial requirement of the project is discussed. This section focuses on the different phases that were discussed earlier in the report. A step-by-step plan is created which explains what kind of investments and costs can be expected with varying amounts of production. Within these phases, different options are given, which lead to additional cost structures. An example of this is the use of storage. Space can either be rented, bought, or an alternative solution such as reefer containers can be used. The difference between these options lies in the initial capital investment, which in phase 1 would be approximately 130.000 euros when leasing and renting equipment while increasing to around 212.000 euros when purchasing.
As a crucial component of starting a business, market analysis has been done. Firstly, described statistics presented low level of vegetable consumption in the Netherlands. Next, market positioning including marketing mix was prepared. Following the marketing mix, the possible distribution location has been listed. The marketing aspects have been closed up with Millennials and Gen-Z generation as an initial target group for Urban Farm in first year. Investigation on logistical aspects resulted in various possible options of modalities, packaging, storage, and push-pull strategy.
All research were concluded in a distribution plan where three phases (entry, expansion, stability) have been introduced. The first phase including timeframe of 0-12 months described the awareness stage where the distribution will be driven with a push strategy. Moreover, to break through the competitors and reach the customers, Millennials and Gen Z would be targeted as a potential promotion recipient. In aspects of distribution, approaching the small area with bikes & mopeds was advised. Besides, for the first stage of distribution an indirect or B2B approach was recommended.
In the second phase between 12 and 24 months of business’ existence there was a focus on expansion. At this stage it was advised to reach out the wider community of customers around Breda and distribute the vegetables to a larger variety of neighbourhoods. Moreover, a combination of delivery bikes, mopeds, and Light Duty Trucks were proposed.
The third timeframe of 24+ months assumed that Urban Farm will be already well-known around Breda which resulted in a conclusion that Urban Farm could start delivering the goods to cities around Breda distributing goods with Medium Distribution Vehicles.
In the end, the investment calculations were summed up to around €32.060 for the lower stream of supply chain that will possibly be required to start the business.