Effingham-Clay : Rethinking Everything
Effingham-Clay FS left no stone unturned in its search for greater efficiency.
October 13, 2008
If you've given consideration to the idea that the traditional approach to retail management is something that is broken and needs to be fixed, you're certainly not alone. But if you are among those who have actually done something dramatic about it, you're in an elite class of managers.
Terry Thomas, area business manager at Effingham-Clay FS in Effingham, IL, along with his management staff, recognized that the existing ag retail business model was not sustainable in the long term. Everywhere he looked, he saw efficiency drain, from fertilizer distribution to personnel management to equipment logistics, and nothing short of an internal business revolution was going to make things better. Management's lofty goal was to tear down every aspect of the business and rebuild it for the way they plan to do business over the next two to three decades.
Looking For Efficiency
"There were absolutely no sacred cows throughout the process," says Thomas. They dug into everything and analyzed it, he says, setting new baseline expectations for efficiency across the board. From equipment to people to a nifty new software program, the cooperative managers now feel that the business is set for the long haul and has established a significant competitive advantage in their service area.
Effingham-Clay FS is a seven-county cooperative in south-central Illinois, serving a traditional row crop customer base. Not surprisingly, it was an early adopter of precision agriculture practices, and has much internal experience in working with mapping and georeferenced fields.
Over the past year, Effingham-Clay followed the evolutionary path of centralizing fertilizer storage — in its case, the plan was to make the Sullivan location serve as the main fertilizer hub for the northern three counties of its trade area. "It was becoming increasingly challenging to get the fertilizer materials from suppliers when we needed it, so establishing more storage became a priority," says Thomas.
This new priority led to a greater discussion about cooperative-wide efficiency, and launched Effingham-Clay into its drive to improve on this front. In the case of fertilizer, there were really divergent priorities — centralizing fertilizer would increase capacity, but at the same time put fertilizer at a greater distance from its most far-flung customers.
Compensating for the distance would require faster mixing and loading at the plant, and improved logistical control from the plant to the field. At the plant, Effingham-Clay worked on increasing blending capacity substantially.
"We replaced three 10-ton blenders with a volumetric blender that can blend 120 tons per hour," says Thomas. "We wanted to be able to fill a tender in five minutes or less." Combined with two, 30-ton overhead bins above the loading platform, the Sullivan-based outlet can load 24 tons on a tender in less than three minutes.
Enter Field Equipment
Another aspect of the company's efficiency analysis related to fertilizer was field equipment. The cooperative studied and earmarked underperforming field equipment to be retired to improve the movement and application of product, "in some cases trading three machines for one," says Thomas.
The third aspect of fertilizer efficiency, logistics management, is the proverbial "elephant in the room" for retailers. Most fertilizer managers are good men in a storm, ably adjusting to the slings and arrows of the busy season. But few have been able to reinvent the way they handle fertilizer to address the ever-increasing seasonal mayhem.
This season, Thomas and his crew at Effingham-Clay decided to try out a new logistics offering from Software Solutions Integrated (SSI). The cooperative was already using SSI's Agvance software to manage the agronomy side of their business, so adding an integrated dispatching tool was an easy decision and a key component to its plan to centralize fertilizer blending.
In the field, Agvance Dispatch provides a system that employs a Web-enabled computer program and GPS-equipped cell phones to provide real-time tracking of tender and equipment operators. And because it ties into the business management software, the system can handle the customer transaction from order to application to billing without a hitch.
Effingham-Clay management has declared the first season a success, but it wasn't as simple as plopping a new software program into place. Dispatch had to be implemented in the context of the company's overall efficiency analysis, which included some significant changes in the sales and logistics staffing.
The sales staff experienced the most significant changes in the cooperative, as management chose to take a completely new tack moving forward. "We eliminated sales territories and opted instead to work toward matching the personalities of our sales people with the personalities of our growers," says Thomas. "We did personality profiles on our sales staff. We also eliminated commissions, and our sales goal is structured so that everyone on the team must perform well to succeed."
Then, implementing the dispatch program itself presented challenges to the sales staff. Salespeople who were used to being able to personally influence the dispatcher now had to trust an automated program to keep the work in order.
"Transparency of information was an important idea in developing and adopting the logistics program," says Thomas. "The field sales people need to understand how the program works, and how to access the information, and be able to trust that orders will be filled. They also need to realize that the program allows them to better communicate the status of orders with customers."
When the sales staff sells a plan for a grower and enters the order into Agvance, the fields are set and ready to go. Once it is time for an order to be filled, the salesperson changes the order status to "ready" so that it appears in the dispatch grid. Its location can then be viewed on the map, giving the dispatcher a view of everything that's needed to set up the day's work without reentering data.
Inside The System
With the new dispatch system, each applicator carries an Internet-ready phone with a data plan. The dispatcher at the home base is able to communicate wirelessly from computer to cell phone with a complete schedule, up to the minute schedule changes, and turn-by-turn navigation from site to site. The system monitors the driver's location and activity, allowing the dispatcher to track tenders and applicators and make real-time decisions about how and where to move materials across the service area. The software also collects route data and records it for later analysis, allowing the dispatcher to unearth inefficiencies and improve logistics management.
The program is designed to work on a large flat panel screen, which displays the location of every cellular device, and therefore every machine, in the field. Numerous details are available about what the operator is doing, including direction headed, speed, and work completed so far. The dispatcher can communicate changes in orders or order priority by sending updates through the dispatch module, directly to the operator.
Making individual equipment operators more efficient is key, but being able to see the bigger picture is also a big benefit. The dispatch program is being used to coordinate logistics for the northern three Effingham-Clay counties, so it is possible to make better decisions for the cooperative organization as a whole that a local outlet couldn't make by itself.
One example Thomas cited this past spring was during the region's bout with rain. As one particular area near one outlet began to dry out enough to get into the field, the central dispatcher was able to coordinate all the available application equipment across all the outlets to descend upon the area and fill orders before the next weather event.
The dispatch module has been a great tool for the cooperative, but in the grand scheme of things is merely frosting on a pretty substantial business reengineering cake. Thomas has no regrets.
"We needed to change to address the needs of agribusiness today — there was a much larger risk by not doing anything," says Thomas. "With the price instability of fertilizer and inputs and the need to work better with our customers, we need to be as efficient as possible."