Change – What we can do to

Edwin Louis Cole

Successful people recognize crisis as a time for change - from lesser to greater, smaller to bigger.

We heard a lot about change throughout the recent presidential election. Including change in personnel, policy, relationships with other countries, the structure of the global financial markets, healthcare, infrastructure, conservation trusts, set-aside programs, and more.  We are living in a time of government bailouts – who can look into the future and tell us what this means for tomorrow and the future generations of Americans?

Agriculture is in the middle of this chaotic change, and being impacted from sources that we could not have foreseen even 24 months ago.  So how does an agribusiness thrive when commodity futures are sitting at 40-60% above their long term average?  When the food vs. fuel debate rages throughout industry events and publications; government offices and into the home of the consumer? When ethanol plant consolidation is looming, while manufacturing inputs are still being developed or in short supply?  When seed allocations are tighter than ever?  When fertilizer prices are skyrocketing?  When the volatile cost of fuel has to be factored into the cost of the product and will drive up consumer costs? When credit is tight?  With no easy answers for any of us, the focus has to be on change – and what we can do to survive and thrive in these changing times.

So where do you start?  You start by reviewing your mission statement.  Embracing what your organization stands for and remembering who you are servicing and why you are in business.  Then you step back and evaluate your organization and where your organization fits in your industry.  You are looking at all of the business back office areas:  finance, sales/marketing and general business; and your operational areas: retail; energy; warehouse; milling/manufacturing; agronomy; seed; grain etc.  You evaluate your competitors’ strengths and weaknesses; you review your suppliers and partners and list out what is working really well; you remember last years’ harvest – how smooth was it? How did last years’ audit go? You look into your business operations to make certain that your business operations are helping you realize your organization’s mission statement. 

Let us share some examples of how E-Markets customers embraced change and the results:
An ethanol manufacturer receives corn by barge. When the barge comes in to dock and unload, the load information is read by a scanner and the information is sent to the home office.  The packing list is matched to the purchase order, the line items are compared, exceptions are kicked out as an alert to a member of the finance team, the load is received into inventory, inventory valuation is updated, the materials are available to the manufacturing process, and the payables voucher is created.  From initial scan to the inventory being available to manufacturing, the process takes 5 seconds – all without human intervention.  Prior to implementing this electronic business process, it took hours to process the load, receive the inventory and make the commodity available to the manufacturing process.  The Ethanol manufacturing plant is using industry standard AgXML data exchange formats for this two-way data transfer and the results of this automation are:  decreased plant downtime; increased inventory turn; faster payables turn; more accurate financials; and a positive impact on the bottom line.

Another customer had a financial system but employed spreadsheets and work arounds to accommodate their core agribusiness.  Starting by identifying the key business process in their organization to automate, they chose the order to cash process.  After implementing an E-Markets developed operational solution which integrated to their financials, the customer could track real time orders, contract balances, prepayments and load information.  The real time information gave them visibility into all aspects of their business and resulted in more timely response to their customer service inquiries.  With these automated processes, the customer was able to decrease labor costs during their busy season, achieve 100% ROI on the integrated solution at the end of the first season and increase customer satisfaction and retention.

By implementing automated order solutions, seed companies have discovered the supply, management and allocations tools provided have assisted them with decreasing back orders by as much as 15% and reducing their returns by 25%. These results were achieved by utilizing the order tools that allowed their sales team to sell from a live inventory position.  Sales teams are able to immediately deal with availability / substitution issues vs. dealing with them later in the season when fewer inventory options exist.  The results: less in season backorders and substitution, less returns and higher customer satisfaction.  One customer decreased their returns by 20% in the first three years using E-Markets’ automated order system.  Another seed company cut their returns by 27% in the first two years using our ordering solution.  In addition they learned from analyzing the data that they had 33% of their orders in some state of insufficient quantity or back order status.  In the past, many of these orders were lost due to the sales team’s inability to tell customers what to expect. By using the on-line order solution, the customer knew immediately whether they could expect to get the Hybrid they wanted. The customer tracked the order process and found they had retained over $700,000 worth of orders in three days that in the past would have been put on Backorder and most likely eventually lost. 

Again, where do you start?  At E-Markets we believe every organization needs to create an Executive Strategy which includes a business overview, business process documentation and a technology strategy.  These areas need to encompass your entire business ecosystem – we are talking about everything from your suppliers to your auditor; your customer to your lenders; your community and your employees.  We do not expect you, as an executive in your organization, to actually do all of this work, but we do expect you to create the environment for this work to be done.

Getting Started with Your Executive Strategy

The E-Markets Executive Strategy includes a business overview, business process documentation and a technology strategy. The Chief Executive of the organization is responsible for requesting the compilation of this information and leading the organization in a direction that is responsible to the mission statement and owners.

The Business Overview contains information on your organization. This section can be a snapshot or a full-motion picture length overview of your organization.  Information included in this section is factual and includes an overview of your organizational structure, list of directors/board members, your mission statement, a list of all locations with address (physical and mailing); main telephone number, facsimile number, key employees names with extension and email address noted; total number of employees, a way to identify the assets tied to this location, business units; number of customers.  Key metrics kept by the organization (safety, order fulfillment ratio, write offs etc). Some organizations include historical revenue numbers and a statement on the business climate in this section as well.  This information probably exists today – it just needs to be pulled together into a single document.  Having this information in one place allows you to modify it as market conditions or your business environment change.  It is a current written history of your organization.

The Business Process documentation needs to be completed by the managers overseeing the critical business areas of your organization.  Order to cash; procure to payment; month/quarter/year-end financial close;  are areas each organization should define in this document.  If your organization has not been through this documentation process, it is a lot of work but very enlightening.  Having this information in writing, allows your management team to look at the organization objectively and identify areas that are over/under staffed; may be doing duplicate work or may have a light load.

Create visuals of what you learn – you will be mapping out the business processes that your organization uses today.  Are they efficient and effective?  Do they break down when one person is out of the office?  Do you have processes where information is being entered into a computer system not once, but two, three or four times?  Do you think the information is correct every time it is entered?  How long does is take one of the office personnel to correct an error for a customer?  How happy is that customer going through this process?  Have you ever oversold a crop input at high season because you “thought” you had the product in the warehouse only to find out that you were out of inventory?  Have you ever accepted a return and gave the customer the wrong credit amount because your inventory valuation was not accurate?  Once you understand your current business processes, you look for areas where improvement is possible, where you see a large amount of duplicate work, or where it impacts your relationships with your customers and suppliers and ultimately impacts your bottom line.

The Technology Strategy is a document that must start with the Chief Executive of the organization then used as the blueprint for implementation by others.  The questions you need to explore include:  With whom do we communicate and how often?  Are we missing opportunities to provide information to our customers/suppliers/auditors/lenders that is timely and accurate? Could we decrease overall expenses by implementing electronic communications? Are we able to answer our customer service requests quickly and accurately?  Are our customers satisfied with our timeliness?  With the information we provide?  Would we be more competitive in the marketplace if we could see into our suppliers systems?  What would we offer them in return?  Has the business lost suppliers/customers/employees due to the technology (or lack of) we use?  Are our salesmen equipped with enough information when they are with a customer to answer his questions?  Is it easy for our customers/suppliers to do business with us? Knowing that technology is an investment, are we investing wisely?  Are we investing enough, too little or too much?  What is the return on investment we are realizing?

Together these documents provide a guide to move your business forward.  By creating an Executive Strategy, you have identified your critical business processes; areas where your organization needs to improve; areas where your organization excels; personnel that may have skills better utilized in another position; your current business climate and ecosystem; the information demands from suppliers/customers/lenders/employees and more.  You have identified where your current technology solutions meet your business requirements and where they are weak.

Evaluating your organization and your business ecosystem is work, but will drive conversation and exploration into what you can do to survive and thrive in these changing times.  Can automation help you retain customers, decrease returns, increase revenue and realize cost savings similar to what it has done for our customers?

For a sample Executive Strategy document or for more information on how our customers achieved these outstanding results while meeting the changing face of agribusiness, please contact E-Markets at sales@e-markets.com and we will provide more information to you.

Contact details:
Marti Kirsch, Director of Marketing
T: 515-965-9314, E: sales@e-markets.com or Marti.Kirsch@E-Markets.com
www.e-markets.com