What are the benefits of data standardization across the agricultural supply chain?
The use of data – and thus data standardization – is one of the leading drivers of change in the agriculture industry. Data in the 21st Century is already becoming the world’s most valuable resource, comparable to oil in the 20th Century, according to an article from the Economist. Across the supply chain, more and more agribusinesses are embracing this shift, as the full extent of the benefits granted by greater data connectivity become clear.
One aspect that often gets overlooked is the lack of data standardization. The supply chain generates enormous amounts of data every day. Different data types are created depending on their point of origin and required usage. For example:
- Order data, e.g. the data found on an invoice
- Sales data, e.g. account handling or the sales completed per rep or per region
- Field data, e.g. soil sampling and other data relating to the planting and treatment of crops
Although potentially a dry subject in itself, the effects caused by the lack of data standardization in those areas are very real: Why do orders often get slowed down or hindered by error? Why do the same sets of data have to be entered over and over again into multiple pieces of software? The answer is due to different software suites or ERPs (Enterprise Resource Planning) using their own data formats.
In short, the ability to take data from any source and standardize it – making it work for your business as well as others – is the solution for frictionless trade and optimal efficiency. Although a small change, this can reap big rewards.
- Boosted Internal Processes
Without a way to take multiple sources of transactional data and standardize them into a format that works with an agribusiness’ own unique ERP system, it becomes necessary to rely on manual entry. This requires a significant investment of resources, not to mention the inevitable losses due to human error or oversight.
Even with exceptional planning and diligence, human error is unavoidable. These mistakes, even when minor, quickly add up. For example, one study by the Australian government estimated up to 30% of invoices contain incorrect information. A report published by research company Gartner found that the cost of processing invoices is reduced by anywhere from 70% to 90% when done electronically. A report undertaken by Sterling Commerce in the USA identifies the cost of a paper invoice averages at $30 – if not more. This potentially means saving up to $27 per transaction depending on the size of your business.
An example of this in action: a mid-level US ag retailer adopted automated order processing for their annual 2,050 transactions, usually taken through a combination of telephone, email and postal orders. Previously, most orders took at least 38 minutes to process, and relied on the field sales staff to email the sales administration team before processing. After adopting Proagrica’s fully automated ordering process, these times and other associated costs were greatly reduced, resulting in a substantial increase in revenue. After two years, the total revenue saw an upsurge of 31%.
Using a solution that refines data into a common standard is the key to unlocking these savings. Relying on manual input and other more outdated methods too often results in incurred charges and lost productivity, which would otherwise be easily avoided.
- Stronger customer offering
From a customer perspective, data that has been consolidated into a single data structure is a huge advantage – though few would name it as a key concern and may even be unaware of the difference.
As discussed, manual data entry processes are slow and risk human error. The standard process involves re-keying orders submitted via email into an ERP. For customers reliant on punctual completion of orders, this can result in delays and lost business, especially during peak season. The costs are even higher when viewed over a longer term. Each case of repeated manual entry accumulates to represent what is, in essence, a vast amount of wasted time. This is a resource, one that could be used to drive a better customer experience and foster greater loyalty.
With access to a standardized data set, it’s possible for agribusinesses to offer an efficient, quick, and easy-to-use service for their customers. Rather than acting as mere suppliers, businesses must reposition themselves as invaluable partners, capable of providing an automated order process with live updates and real-time status information.
Standardization of field data will also facilitate greater visibility between ag retailers and their customers, creating benefits for both parties. Growers can receive actionable insight and use it to increase their yields and profitability. Ag retailers can enhance their relationships with customers. Manufacturers’ products perform better as they reach the right fields, at the right time, and are applied in the right way. Greater visibility – as a result of standardization – creates value for each actor in the supply chain.
Whether it’s eliminating the delays and lost profits from manual entry or offering greater value through enhanced visibility, access to a consolidated and usable data set is key to driving greater customer experience and loyalty.
- Interoperability across the supply chain
Currently, the moving of field data between applications and hardware is a sticking point across the supply chain. Data, such as that relating to crop treatments, too often remains inert and unmoving with the grower. Greater interoperability – the capability for different systems and applications to work together without friction – would permit that data to better flow through the supply chain, allowing retailers and manufacturers to offer better recommendations which, in turn, will directly improve yields for the grower.
What’s clear is that there’s a strong desire among farmers for their software solutions and business partners to offer this interoperability. As the number of smart devices in agriculture is set to increase to 75 million by 2020 – over double the number in 2015 – the demand for this functionality will only increase. Connected farms are expected to generate as many as 4.1 million data points every day by 2034, compared to just 190,000 in 2014.
While digital solutions have been widely embraced and implemented into daily practice, each piece of software operates on its own ecosystem. Glen Andrews, Regional Director for Proagrica in Asia Pacific, has summed up how rarely business solutions actually work together to drive value for their users:
“In a lot of cases, users are entering the same data multiple times,” says Glen. “It’s not viable, it’s not efficient. When they change one data attribute, they have to change it in everything. It’s just not functional.”
“In theory, ag tech companies want to support greater interoperability, but in practice I think many businesses wrongly view other services as competitors, when really they are potential partners to deliver a unified service offering that, ultimately, benefits everyone in the supply chain.”
In the past, we have seen a major disconnect between different parties in the supply chain precisely due to this issue. By using a connectivity solution that takes all data and standardizes it for mutual use, it’s possible to improve all aspects of business, from transactions to everyday operations.
The reality is that adopting a universal data format in the agriculture industry is not feasible. Too many different pieces of software and existing systems are in circulation. However, there is another option: an independent provider of data connectivity solutions that seamlessly works to extract and refine your data (and those of your partners) so that it can be used in a way that unlocks greater value for all parties.
Supply chain businesses that are equipped with the right tools and solutions are well positioned to operate more precisely, more productively, and more profitably.