Modern businesses supplying agriculture need the tools to make great decisions that directly improve their bottom line.
Farming is a volatile, unpredictable sector, which means the supply chain has to be ultra-efficient, dynamic and slick. It must always look for a better way.
Across the globe, most forward-thinking businesses with an agricultural customer base keep a keen eye on solutions that will make them as streamlined as possible.
Some don’t see the bigger picture. And it’s those businesses that risk being left behind.
Companies that have opted to transact electronically with their suppliers and customers have been able to transform order-to-cash processes.
A variety of scales
These straightforward yet highly innovative new tools are available to every agricultural business – not just a select few.
Electronic Data Interchange (EDI) enables 100% system-to-system exchange of transactional documents.
Every vital piece of documentation, from contracts and orders to movement notifications and goods receipts, invoices and remittances is entirely automated, completely removing the need for any manual processes.
Even order confirmations, amendments and cancellations are delivered seamlessly and instantly from the customer to the supplier and back again.
Customer and supplier communication is standardised and errors are reduced.
Eradicating the need for staff to be involved in non-value-added tasks frees up teams to focus on the business’s customers and service objectives.
And the benefits of the technology are not only accessible to multinationals. Regional, national and local suppliers to the agriculture trade can deal efficiently and effectively with big customers, using an online portal to automatically receive orders and update clients on their status.
Customers who prefer to continue to email, fax and scan documents have seen optical character recognition (OCR) technology automatically recognise and enter data without manual re-keying. The process enables companies to handle high volumes of documents efficiently and deal with a whole spectrum of partners, without being limited by the technical capacities.
The principle of system-to-system exchange is also applicable beyond transactional message types. Inventory management can also be improved through real-time analysis. Decisions over the quantity of product to be manufactured can be made based on accurate data on existing stock levels. Seasonal peaks and troughs in demand can be better managed, minimising the amount of stock written off.
Historically, manually placing orders with suppliers and invoicing has been cumbersome, labour intensive and prone to errors.
Inefficiencies and inaccuracies are frequently the result of an overcomplicated process. Paper-based orders are often scanned, faxed or emailed to suppliers, confirmed by phone, re-keyed by suppliers and then dispatched with no customer notification.
Valuable staff time then has to be spent unpicking errors and rectifying mistakes – and customers have no confidence that their orders have been placed and shipped.
Manual processes are also a barrier to growth. As the variety and volume of transactions increases, companies can struggle to deal with multiple communication channels using a complex legacy mix of customer relationship management tools, spreadsheets and paper-based records.
But technology is revolutionising the industry. Modern solutions allow companies to complete 100% of transactions electronically.
Data only needs to be entered once, errors can be dramatically reduced and productivity can be improved.
At its most basic, the technology transfers data from one computer system to another by standardising the message formatting without the need for manual intervention.
At its most sophisticated, it opens a world of opportunities for its users; small-scale suppliers can increase their customer reach, while global companies can integrate with thousands of international suppliers seamlessly, effortlessly and accurately.
Why transact electronically?
- Replace manual order entry processes to reduce errors
- Save time validating and processing orders
- Use technology to meet demand spikes and process orders quickly
- Provide customers with reliable order, delivery and invoice status information
- Improve the quality and accuracy of customer service
EDI was born out of necessity. It was not designed specifically for agriculture but was a solution for a problem that exists in every large supply chain around the world.
Retailers need a single platform to enable integration with large numbers of suppliers, allowing them to place regular orders quickly and pay for them while maintaining full order status visibility.
Paper-based ordering was – and still is – widespread in the agricultural supply chain and often requires teams of people to facilitate it. Required quantities of products from suppliers and manufacturers can be misunderstood or incorrectly calculated.
Problems can be exacerbated on invoices and payments, which take even more time to correct.
“The amount of errors introduced to orders placed through manual processes can be huge,” said Matt Earle of F4F, part of Proagrica.
“Errors in processed orders can lead to the wrong product or quantity being shipped, or it being sent to the wrong address. This creates dissatisfied customers and incurs costs to resolve to the supplier, who then has to raise debit or credit rebates to resolve them.”
Agriculture has the added challenge of being highly seasonal and increasingly volatile. During busy periods, orders need to be fulfilled accurately and swiftly and customers need reliable shipping status information.
A lack of visible, accurate information available in real time can mean manual order entry processing slowing down the supply chain, causing delays and resulting in lost business.
Big agricultural businesses have benefited from using an independent partner to manage their electronic data exchanges and transactions. Companies such as F4F have more than 15 years’ experience in developing solutions and overcoming issues, meaning its customers have confidence in a mature but ever-evolving system.
The global picture
The ability to order and transact electronically has revolutionised the way agriculture’s manufacturers and distributors do business.
While the challenges of effective, efficient ordering are global, manual processes are still commonplace in certain regions of the world. Asia, where labour costs are typically lower but rising, is still predominantly manual, as are Africa and Latin America, where supply chains are more complex than in the developed world.
And despite the majority of the European and American agricultural supply chain having adopted some of the available technology, realising the benefits of a fully connected and integrated chain is still some way off.
Small-scale business case stacks up
Multinationals have the resources and a straightforward business case to improve their efficiency by investing in EDI technology.
But the size of a business manufacturing a product for farmers varies enormously. Businesses at the other end of the scale are not used to having access to cutting edge technology – often finding that the financial case for investment does not stack up.
“One of the first things F4F did was address the issue of small-scale suppliers who have large customers,” Mr Earle said. “These businesses may only receive 100 orders every six months but those orders might be 60% of their business. They needed to integrate with those customers.
“We built a web portal for suppliers to receive orders which they can re-key on to their IT systems, if they had one, and once the product was shipped, it triggers an invoice.
“The supplier can see the value of a transparent, accurate order process, while ensuring a closer relationship to value customers.”
For leading seed producers such as KWS, seasonal demand and supply, plus a very tight window for production and order fulfilment, leaves little room for error.
Growers, processors, distributors and hauliers are all involved in the supply chain and face heavy pressure to meet strict deadlines.
KWS had historically been dependent on phone, fax and email to exchange data with suppliers and customers, causing delays in seeing the availability of processed, treated and bagged seed for sale, as well as introducing inaccuracies through manual data entry.
F4F provided KWS with a solution comprising a combination of EDI and a portal that enables greater connectivity between processors, distributors and the seed breeder, allowing a more efficient data exchange between parties. Data is shared electronically and automatically, offering real-time visibility of the production process and accurate tracking of orders and status.
The ability to track seed batches and logistics has improved accuracy and reduced delays and third party companies are more accountable. KWS says it has increased customer satisfaction through offering more reliable delivery dates.
Connect all your customers
- Increase on-time fulfilment of orders
- Improve efficiencies in transport planning
- Scale your operation and customer base
- Enable stricter governance over the returns process to increase retained sales
- Improved customer service with proactive order and delivery status updates
Now is the time
Volatility has been a permanent fixture in agriculture for many years and is showing no immediate signs of being overcome. Businesses that rely on the industry for their profits need to work smarter to be able to withstand the challenges that lie ahead.
It has never been more important to explore technology that allows companies to meet the demands of their customers while retaining good relationships with suppliers.
Mr Earle says F4F is now working to show more agricultural businesses how they can unlock the full potential of EDI.
“We continue to roll out more integration connections with existing and new customers,” he said.
“In some regions, major customers will be connected to most but not all of their suppliers and we are communicating the benefits to those businesses and helping them to realise the significant benefits EDI can bring them.
“F4F is very active in those regions which are relatively untouched by the potential of this technology. Supply chains in Asia and Latin America are not yet integrated due to a number of factors and we are developing solutions that fit their more complicated supply chains.
“Our focus is also on developing additional functionality for our existing customers. We are only scratching the surface of what’s possible with large-scale EDI integration. We were there at the beginning and our industry knowledge is our biggest strength, so we are looking at what other efficiencies and opportunities we can unlock for our customers.”