Application Management Case Study

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Anderson Hay & Grain Cultivates Efficiency

Industry Focus

Leading exporter of hay and straw products for animal feed

Size

300 employees; harvests and ships some 20,000 containers of feed each year

Networking Solution

Application management and managed hosting of Oracle E-Business Suite

Business Value

Enables small corporate IT team to focus on core business; high level of security provides peace of mind

About Our Customer

Established by its family founders more than half a century ago, Anderson Hay & Grain has become the leading U.S. exporter of animal forage. Its reputation for product quality has made Anderson Hay the preferred supplier for farmers in Japan and Korea, horse tracks in Hong Kong and horse lovers in the Middle East. Anderson Hay has more than 300 employees, with more than 400 employed seasonally. Its full service staff is headquartered in Ellensburg, Wash., with another facility in Aurora, Oregon. Two additional harvesting companies sit within the corporate structure: Anderson Agri in Washington and Gerald Phelan LLC in Oregon. These three entities have defined import/export standards that mutually benefit both domestic and international agricultural industries. Anderson ships an average of 55 containers of forage every day.

Situation

Anderson’s competitive advantage starts with product quality and strong links with hay producers, shippers and customers. Its global supply chain is remarkably complex, influenced by fuel costs, weather, milk prices, shipping patterns, global exchange rates and more. To deal with these variables and control its huge volume of business, Anderson required a robust information technology solution. Its home-grown information system proved cumbersome. The company needed a powerful and secure enterprise information system that could be managed by a small staff without distracting from its core business.

Solution

Anderson Hay selected the Oracle E-Business Suite for its comprehensive capabilities and ease of integration, and chose an outsource vendor to manage the solution. Yet it soon became clear that this vendor viewed the nation’s largest exporter of animal forage as small potatoes. Costs escalated with every service request and local support was moved to miles and time zones away. Anderson Hay switched to AT&T to manage its Oracle applications. AT&T’s professionalism and robust security protocols provide reassurance that this business-critical enterprise system will be available when needed. A responsive account team provides all the support needed for Anderson Hay’s two-person IT team to carry out their responsibilities.

A great idea gets Anderson Hay and Grain growing

Every thriving business begins with a great idea. For Ron Anderson, co-founder of Anderson Hay and Grain, the vision was clear: turn the local business of producing animal feed into a global enterprise.

Pacific Northwest farmers produce some of the finest Timothy and alfalfa hay and grass straw in the world. Ports in Portland, Tacoma and Seattle offer ready access to Pacific Rim nations like Japan, where farmers produce high-quality dairy and meat products (like famous Kobe beef) but have little space to grow forage. As Anderson surveyed the opportunity in the mid 1970s, the question was how to bring product and customer together across the Pacific.

High-value imports like televisions and clothing would arrive at U.S. ports protected in steel containers the size of truck trailers. But because imports exceeded exports, many containers left port empty.

Where others saw a waste of money, Anderson saw opportunity. Shippers were paying to ship the containers back across the Pacific, empty or not. Though a relatively low-value product like animal feed would not normally justify the cost of container transport, shippers were happy to ship containers filled with Anderson hay at rates the farmers in Japan could afford. 

“They wanted to get these shipping containers back over to manufacturing countries in Malaysia, China, Japan and Korea so they could import more goods to the United States,” said Nathan Mirro, IT Manager for Anderson Hay. “They felt they could offer us cheap rates and that our products would provide good ballast.”

A business built on quality

By filling the empty containers, Anderson Hay provided a new revenue stream for shippers. The high-quality hay also helped Japanese farmers optimize their use of space. “Dairy cattlemen and the Kobe beef industry use some prime real estate,” said Mirro. “They can have two, three, four or more cattle on an acre, import the feed and maximize their return on that little bit of property.”

Japanese consumers are famous for demanding quality. The farmers who serve them demand the same, and their cows are equally particular. Meeting these expectations provided an additional advantage for Anderson Hay.

“We really pride ourselves on being able to deliver a consistent high quality forage product throughout the year,” Mirro said. “With dairy cattle, that’s extremely important. A dairy farmer will see a decrease in milk production even on a daily basis if the quality of the feed that the cow is receiving changes.”

From its start with dairy farmers, Anderson Hay has expanded to the Japanese beef industry and to other Asian markets: Korea, Taiwan, China, Vietnam, Malaysia, and Singapore. Anderson serves venues like the Hong Kong Jockey Club, where high protein Timothy hay from Washington’s Columbia basin is the preferred diet for equine athletes. Wealthy horse lovers in the Middle East use forage products supplied by Anderson Hay, and the company was the supplier to the Olympic equestrian competitions in Athens and Beijing.

With prestigious customers like this, it’s no surprise that Anderson Hay tracks the production process from seed onward. Growing and harvest conditions, the use of fertilizers, pesticides and herbicides and the presence of weeds or pests all could affect the ability to sell fodder to choosy global customers.

“We actually have what's called a Safe Feed initiative that tracks, from field to customer, the lifecycles of the raw forage,” Mirro explained.  “We track the chemical application, the growing practices, how much are they watering, and that way we can ensure that there is—as much as we can control it—consistency in the nutrients and no harmful chemicals that are being introduced in the food chain.” 

Challenge of the markets

Thirty-five years after Ron Anderson first tapped global markets, his son, CEO Mark Anderson, continues to grow this business. Under his lead, Anderson Hay & Grain has grown substantially over the last 20 years and now annually exports 20,000 containers of feed: Alfalfa and Timothy hay from Washington and grass straw, a byproduct of the seed-growing business, from Oregon’s Willamette Valley. Empty containers are trucked to storage facilities, where they are filled and returned to Northwest ports, loaded aboard ships and dispatched across the globe. In many years, Anderson Hay is one of the nation’s top container shippers and the largest shipper of containerized hay in the world.

While the business model might seem simple, Anderson Hay’s business is remarkably complex. Containers must be received each day, loaded with the right product, then shipped and tracked to their destinations. The quality of each shipment must be monitored from planting through delivery. Then there are the vagaries of global business: rising and falling fuel costs, varying market demand, fluctuating exchange rates, and the list goes on.

“We have had people come in and say, ‘Hay company? How complicated can that be?’” Mirro said. “We are very complex when it comes to a logistics model and to matching the quality of product with the customer’s needs.”

Seeking software to support a global business

Anderson Hay’s expanding business made demands on its information infrastructure that the system could not meet. Change was needed, and Anderson Hay chose Oracle E-Business Suite.

“The complexity of the business was outpacing the software that we had built in house,” Mirro said. “We have a number of people who are trying to determine if we are on time for meeting ship line cutoffs, what to do if a route is closed and so on. That is really why we turned to Oracle, because it was flexible enough that we wouldn’t have to do massive customizations to get what we wanted. It’s a very scalable product.”

Anderson Hay chose both a new software suite and a new IT support model. The Oracle suite would be managed not by the Anderson Hay IT team, but by an outsourcing company. “We wanted to focus on what we do well: growing and acquiring the right forage for our customers, ensuring that it's manufactured to their specs and delivered on time throughout the year,” Mirro said. “We decided that managing the Oracle system would not be in the best interest of the company. There is a specific skill set that's tough to acquire in our region and we would have to put a very large dollar investment into technology, systems and infrastructure.”

The Oracle E-Business Suite helped give Anderson Hay a significant advantage. Mirro said competitors can’t match Anderson Hay’s ability to report, within minutes, the history and content of all forage material under its Safe Feed initiative. Sales people can see real-time tracking data and statistics, dashboards and more. “Everything that we do in the company is run out of Oracle, with the exception of payroll,” he said. It uses multiple modules of the software including order management, shipping, advanced pricing, quality and costing. “We are fully leveraged into the software and it's absolutely critical that it's up and running,” Mirro added.

A minnow in the ocean

While the software suite was delivering for Anderson Hay, the relationship with the service provider was not. “We never really felt that they were a partner in our business,” Mirro said. “We felt like we were a minnow in the ocean, compared to all the other customers that they were hosting.” When Anderson Hay wanted to add a software module, the vendor tacked on a premium that tripled Anderson Hay’s hosting cost. And when their account contact left nearby Portland, Ore., she was replaced by a representative in Chile.

Mirro looked at all the options, from bringing software management back in house to continuing with the outsourced model, using a different vendor.  Reliability and security were key criteria. If the Oracle suite should fail, Mirro said, “It would absolutely shut our business down.”

Early in the decision process the Anderson Hay’s team visited the data facilities of each top competitor. At one, visitors were given barcode badges before entering the “secure” data floor. As Mirro’s group entered, another group waiting in the lobby followed them onto the data floor, sans badges. “Here we had right in front of us this blatant violation of security practices,” Mirro said.

‘I like your answer’

A very different experience helped move AT&T to the forefront. “We went to AT&T’s Annapolis data center and were given an overview of all the systems and levels of security they have put in place,” he said. “When I asked to go into the server room my request was denied,” said Mirro. “I was told that only 15 people in the world have a key to that door and I wasn’t one of them. “I said, ‘I like your answer.’”

In addition to delivering the security he demanded, AT&T showed it could be trusted in this vital relationship “There is just an ease in doing business,” Mirro said. “Having the right people is always a key to success. I think AT&T has almost cornered the market in the quality of the employees they hire and the quality they produce in everything they do, from simple communication to managing major upgrades.” With an IT team numbering just two people, Mirro depends heavily on his AT&T support team.

“I don’t have time to chase issue after issue,” he said. “I need to really know that when I have communicated a problem I am understood and that they are going to follow up. We can then focus on our core business, which is selling hay and straw products.

“Oracle is big, but we want it to be treated as small in our business,” he continued. “AT&T has made it a small thing. It's a big responsibility but now I don’t have to sweat the small stuff because they are sweating it for me.”

Voice of the Customer