The feed truck pulls up to an on-farm feed bin and begins unloading only to discover that it’s the wrong bin or the wrong farm or the wrong feed. A mistake like that can be costly for both the livestock producer and the mill, but whose fault was it?
Often the mix-up can be traced back to an error in how the order was entered into the feed mill’s system.
“You can’t ever change a mistake in an order that a customer made, but you can reduce errors that the mill makes,” said Duey Yliniemi, vice president of development and product strategy with Feed Management Systems, a Minnesota firm that develops software solutions for feed mills.
Possibility for error
Although feed mills have automated many of the manufacturing systems, order taking is still largely a manual process. The customer calls in and a clerk takes the order.
While integrated companies have largely gone to automated systems, in many commercial mills the order is jotted down on a piece of paper to be entered later. Sloppy handwriting can mean the wrong feed or the wrong location is entered. Orders that are set aside to be entered later can be lost or forgotten so that a rush order doesn’t get put in the queue to be made in time.
Some mills have one software system for entering orders, another for mill operations and still another for transportation, and forcing clerks to rekey the information multiple times.
According to John Conboy, manufacturing portfolio manager at FMS, mills could save approximately 50 cents per ton of feed by automating their order systems. Those savings come from reduced labor, increased efficiency and fewer errors.
However, many mills fear automation will mean losing contact with customers. “Feed mills don’t want to lose that interaction with customers, they want to talk with customers on the phone,” Yliniemi said. “Agriculture is a relationship business.”
Not surprisingly, Yliniemi believes automation can actually improve customer relations. Say a customer calls in and wants the same feed he got last time. With a manual system, the clerk writes down the order and then looks the last order up only to discover it is a medicated feed with a specific withdrawal time. The clerk then either calls the customer back to verify that’s what he really wants or sends the order through to the mill, running the risk of delivering the wrong feed.
“What does it cost you to not meet an on-time and in-full delivery in terms of customer relationship?” he asked.
Positive aspects of automation
But if the mill has a software system that allows a clerk to quickly locate the customer’s account, it’s easy to verify that the customer really wants the same medicated feed that was delivered last time and that delivery should be made to the same location. And while the customer is on the phone, the clerk can update the customer about their grain bank balance or talk about contracting new ingredients.
“You can talk about the kind of services that provide value to the customer, the things that may be forgotten when taking an order,” Yliniemi said.
A feed order system can also be designed to capture either bin weight or bin level on the farm and relay that information to the mill so that an order can be generated automatically. Combine that with information about what group of livestock are being fed and what stage of the feeding plan the group is at, and the mill can begin to predict orders—avoiding the Saturday “I’m out of feed” call.
The ultimate step in automation is allowing customers to directly enter their own orders using a website, but mills have been reluctant to offer that service.
“People tell us they’d like for customers to enter their own orders, but that self-service piece still offers risk to the mill if there’s an error,” said Lori Harner. Harner worked for Microsoft for many years before joining FMS as senior marketing manager three years ago.
Cost is another consideration. A system can cost $75,000 to $200,000 depending on the number of users, sites and features.
“Automating feed ordering is the cream of the systems,” said Cam McCollough, a software services and support technician with Easy Automation Inc., another Minnesota-based feed automation company.
“Feed mills can see how automating mill operations and batching will allow improved efficiency. But making an investment into automated feed ordering doesn’t have as visible of a pay off. If the margins aren’t there, it’s easy to say, “Let them keep calling in their orders like they’ve always done,” McCollough added.
Another issue is that mill managers don’t want to be forced to become IT specialists.
If an automated feed ordering system means buying new servers or retraining staff, mill managers aren’t interested. Many saw the cloud as a way to get around those objections. Cloud computing lets companies use files and applications over the internet.
On paper, it sounds like a good idea, but it hasn’t taken off like some expected. Harner thinks it will eventually, as mills realize they can deploy a system faster and reduce their total cost of ownership. As mills consolidate and are forced to consolidate different software systems, the cloud may offer a way to centralize the systems into one.
The cloud may also be the answer to developing web portals that allow customers to directly enter orders, opening the way for more business-to-business e-commerce.
Mobile is the future
Feed is not the only industry that has been slow to adopt business-to-business e-commerce. “Business-to-business commerce is a hard market to penetrate,” Harner said. “Consumer e-commerce has taken off, but the b-to-b section just seems to be slower.”
Smart phones may provide the impetus for change that the cloud didn’t. “It’s something they are already using and familiar with, so they don’t have to be retrained to use it.”
While livestock producers may not care if they can go to a desktop computer and order feed online, they may appreciate the ability to place a feed order from their smart phone at 10 p.m. when they check a bin and realize they forgot to place a feed order earlier that day. Mobile apps that allow a feed mill to send customers reminders that it’s time to order feed again or alerts that the feed they just ordered has a withdrawal time could be useful.
Apps could also send out weekly nutritional advice or product updates.
Automating order systems can also help make updating ingredient prices quicker and easier. Mills can lose quite a bit of money if they update prices weekly and the price of corn jumped 25 or 50 cents during that time.
John Conboy has seen mills reduce the time it takes to update prices from eight man hours to one hour. Alerts can also be built in to warn a mill when it has fallen below a set margin. Systems can also track feed and commodities to comply with food and feed safety requirements.
“Companies really need to start changing before they are forced to,” Conboy said. “The speed and complexity of the feed business is changing much more quickly, and so is the speed at which companies need to adapt to stay ahead.”