eConnectivity Helps Retailers Reduce Seed Shrink and Serve Farmers Better

Exchanging corn hybrids and soybean varieties to accommodate farmers’ replanting needs is nearly a rite of passage for retailers each spring. In most years, Randy Fry says that his company, Ceres Solutions LLP, sees about 8% of its Indiana-based customers’ fields get replanted.

But this year wasn’t like most years for Ceres. Instead, rain and more rain caused its replant percentage to skyrocket to higher than 30%, which is more than four times the norm.

Fortunately, that’s where the cooperative’s replanting bad news begins and ends. Thanks to the electronic management system that Ceres uses for its seed business, Fry says what could have been a logistics nightmare for the cooperative turned into a success story instead.

“We have live inventory now and know what’s gone out the door, what’s on order and what’s in the warehouse,” says Fry, the data process and information systems manager for Ceres. “When this replant situation hit, we knew we had the corn because we had the tools to figure it out.”

That’s not true for everyone. Retailers and manufacturers often struggle to know what seed is available to farmers during the hectic spring replanting process. The reason for this is simple: as new seed is being moved to the field, returned seed is simultaneously being picked up.

“We heard some retailers were having to tell their farmers, ‘Here’s what we have; take it or leave it.’ But with this system, we were able to get the right seed at the right time to our growers,” Fry notes.

Electronic Commerce At Work. What Ceres has adopted over the course of the past four years is a barcoding system that provides the cooperative with a number of practical functionalities. For instance, Ceres can now electronically load pricing information from manufacturers, process orders and invoices and track seed products from the time of purchase through the time of delivery to the farmer. The cooperative uses only four distribution points, or hubs, out of its 25 Indiana locations to gain efficiencies and simplify the tracking process.

“When we load a bag of seed, we can pull up the farmer’s order, shoot that barcode and verify we’re sending him the right product at the right price,” Fry says.

That level of accuracy is important to both parties. For one, it showcases the retailer’s commitment to customer service, reinforcing Ceres’ relationships with its farmer-customers. Such accuracy also consistently adds to the retailer’s bottom line, both in reduced manpower needs and in dollars and cents. That’s most evident in how the cooperative has been able to reduce annual shrink by 2%; in some years, the savings is even more. That benefit alone has improved Ceres’ margins by more than $5 per unit on corn and $2 per unit on soybeans.

“We have seen a return on investment as high as 50-to-1 annually, just in shrink,” Fry says. “It only takes about 10 to 12 bags of seed corn lost in a year to pay for the technology,” he adds.

Tools Of The Trade. To transition to the electronic barcoding system, Ceres purchased hardware and software and tapped into an AgGateway directory called AGIIS (Ag Industry Identification System), to interface with manufacturers. Through AGIIS, Ceres can access all the codes that identify specific products sold by participating manufacturers.

Fry estimates that retailers can expect to make an investment of about $3,000 annually, per location, to use the electronic barcoding system. That includes the annual fee to use AgGateway’s AGIIS directory.

As for the setup costs in hardware and software, retailers will need to invest in handheld scanners and laptop computers. Fry says these can cost as much as or as little as a retailer wants to invest in them—anywhere from a few hundred dollars to several thousand. He adds that getting set up with the technology and running the system is not a difficult undertaking.

“The best analogy I can think of is the transition we had when the industry went from using typewriters to word processing,” Fry notes.

Karen Firle agrees. Like with most new endeavors, she says there is a learning curve with using new technology. “But there’s no way I’d want to go back to handwriting everything. We’re much more accurate and efficient now,” says Firle, the agronomy accounting manager for United Farmers Cooperative (UFC), based in Winthrop, Minn.

Prior to barcoding, like many retailers, Ceres used a combination of handwritten documents and Excel spreadsheets to manage its seed business. That meant there was no accurate way to know what kind of seed or exact number of units were in the warehouse at any given point. Ceres’ accounting program couldn’t help sort out that information, either, because at the time it didn’t account for the seed until an invoice was issued late in the season.

“Now, everything is integrated, and our accuracy has gone way up as a result,” Fry says.

Making The Switch. So, why don’t more retailers jump on board with what the ag industry commonly refers to as eConnectivity? Fry gives several reasons that he says other retailers have shared with him.

For one thing, manufacturers have to be committed to using it, and not all of them are. Some, including Monsanto, Mycogen and WinField, are proponents and have made the investment in resources, both in  money and manpower, to work with retailers via a barcoding system. 

Then, there’s what Fry calls the pain factor, as in retailers have to experience some level of pain to make the switch to managing everything electronically. “You’ve got to have issues with either your inventory, profitability or employees, or you have to have a desire to make your business better to do this,” he says.

Along with those reasons, Daren Coppock, president and CEO for the Agricultural Retailers Association (ARA), adds that some retailers still aren’t aware of eConnectivity and its benefits, or they may have chosen to develop their own proprietary programs as alternatives.

“Some retailers may also be reluctant because of concerns about keeping their proprietary customer data secure, and they need to be reassured that their information is protected,” he says.

Coppock adds that the ARA plans to include a session on the topic of eConnectivity at its 2017 annual conference this fall.

Still, other retailers don’t want to make the commitment in time and resources required to implement an electronic-based system. “You have to have the buy-in from management to champion this—like the opportunity I’ve had here at Ceres,” Fry says.

However, he adds that the payback in efficiency, accuracy and the need for less manpower generates a great return on investment for technology adopters. “If your people aren’t having to sit at a desk and handle paperwork, they can be out front working with customers,” Fry says.

A Good Starting Point. UFC’s Firle says barcoding seed products is probably the most logical and easiest starting point for retailers interested in adopting eConnectivity for their businesses. “It’s how we got started because there are so many different products and traits in the industry, and the chance of making a mistake recording seed information by hand is fairly high,” she says.

Although UFC currently uses the system only with its seed business, Firle believes that it’s only a matter of time before the cooperative will be able to use it with crop protection manufacturers as well.

Fry agrees. He says Ceres started off working with only one seed manufacturer, and even then, the cooperative saw financial gains and business efficiencies.

“The message I want to send retailers is take the first step and adopt this technology,” he says. “It will pay you to get started.”