Growmark Leans Into The Perfect Storm For Distribution Changes
In the middle of its busiest time as an input distributor, Growmark also had to bob and weave to the challenges of the COVID-19 pandemic. Then, in the fall, Growmark announced the acquisition of Southern States’ wholesale agronomy and energy assets.
Growmark’s leaders leaned into the trifecta of factors which made for this perfect storm, and the result is a complete strategic change in structure for their distribution.
At the beginning of 2020, Growmark had hub and spoke model for its dry cargo distribution with a majority of focus on its midwestern footprint.
“What kept me up at night was any disruption to our primary distribution hub in northwestern Illinois,” says Rod Wells, Chief Supply Chain Officer at Growmark. “In the spring with COVID-19, we realized we had a lot of eggs in one basket. So, it clearly pointed our eye toward the need to broaden our distribution network.”
In the short-term, Growmark identified FS member cooperatives to set up as ship to locations as a Plan B. And they implemented best practices per the CDC to keep their on-site teams healthy.
Simultaneously, the company started planning for its longer term future, and how they could establish a more resilient and customer-focused supply chain network.
“We started to think through how to de-risk the inventory at any one spot and maintain the ability to execute over a broad geography,” Wells says. “We needed to get away from the hub and spoke model. Moving towards a regionalized structure reduces execution risk and allows us to be closer to the end user customer.”
As of September, Growmark was also preparing to gain its new footprint with the Southern States wholesale business acquisition. Wells says the timing was ideal in that the leadership could use the wider geographic reach to help implement the strategy.
The company had an existing facility in York, Penn., and with the Southern States transaction added a warehouse and distribution center in Farmville, NC. This summer they entered into a new lease for a facility in Lyons, New York. And after identifying the need for a facility to serve Kentucky, southern Ohio and Tennessee, a location was leased in Lebanon, Ken., to add to the reach of their facility in Akron, Ohio. Another facility will be added in north-central Iowa for spring 2022.
“We look to how we can position ourselves to be within a three-hour drive time of our customer,” Wells says.
Added together, by the spring of 2022, Growmark will have doubled its network while reducing the risk at its previous main hub in Alpha, Illinois.
“What I think is impressive of what we’ve built here is this will drive cost and risk out of our system while expanding the geographic footprint we serve,” Wells says. “Just because we have a warehouse doesn’t mean we have to fill it. We have to be disciplined in the way we procure our inventory so we don’t have obsolete or excess inventory while maximizing turns at our facilities. It’s definitely a challenge”
One recent example that highlighted the need to invest in being nimble was the mid-season decision on the three dicamba products in 2020.
“When that decision came out in early June, we were in the midst of post-spraying,” says Jeff Bunting Crop Protection Division Manager with Growmark. “A lot of those three products were already at the retail location, and our members were quick to pivot to another option.”
Bunting says a lot of decisions were made based on changing information, but with 14 days left in the spray season, the team did what they felt was necessary to navigate those crucial remaining days.
As a takeaway from that situation, Bunting shares it’s helped the team be even more aware of inventories and the changing dynamics of the crop protection industry in-season.
