Oracle Application Management Case Study

Anderson Hay & Grain Extends its Oracle Application to its Roots (Cont'd)

About Anderson Hay & Grain

Anderson Hay & Grain Facts

Business Needs

Support a complex global commodities enterprise with ‘field-to-forage’ data

Networking Solution

Oracle E-Business Suite hosted and managed by AT&T extended to tablet devices with mobile application for in-field data capture

Business Value

Boosts speed and accuracy of inventory supply and purchasing process; enables small IT team to focus on core business initiatives

Industry Focus

Leading exporter of hay and straw products for animal

Size

Harvests and exports some 22,000 containers of feed each year

Established by its family founders more than a half a century ago, Anderson Hay & Grain Co., Inc. has become the leading U.S. exporter of animal forage, shipping 70 to 100 containers for forage daily. Its reputation for the highest quality products has made Anderson the preferred supplier for dairy’s in Japan and Korea, horse tracks in Hong Kong, and horse lovers in the Middle East. Anderson has more than 300 employees, with more than 500 employed during its seasonal peak. Its staff is headquartered in Ellensburg, Washington, with other facilities in Aurora, Oregon and Wilmington, California. Its buyers are located across the western United States. Together they have defined import/export standards that benefit both domestic and international agricultural industries.

Situation

Anderson’s global supply chain is remarkably complex, influenced by global exchange rates, energy costs, weather, commodity prices, shipping patterns and more. To help manage the supply chain, Anderson uses the Oracle® E-Business Suite, hosted and managed by AT&T. As the company expanded its reach into the Southwest, leaders saw that by enabling buyers, wherever they might be, to bypass paper contracts and enter contract and product data directly into the Oracle database, they could help reduce errors, help speed up cycle time and better accommodate their regional expansion.

Solution

Anderson Hay worked with AT&T to extend its use of its Oracle application to the very roots of its business, equipping purchasing agents with networked tablet devices they use to enter and upload contract details negotiated with farmers. Actsoft® from AT&T, a mobility application running on those tablets, enables contract data and digital signatures to be entered on site—sometimes literally ‘in the field’—and then input into the Oracle enterprise resource system almost instantly. Now contracts are executed more quickly and purchasing activity is more precise with fewer errors made in the process.

A Great Idea Gets Growing

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

I don’t have to sweat the small stuff because they are sweating it for me.”

- Nathan Mirro, IT Director, Anderson Hay & Grain

Western farmers grow some of the finest Timothy and alfalfa hay and grass straw in the world. Ports in Portland, Tacoma, Seattle, and Long Beach offer ready access to Pacific Rim nations like Japan, where farmers produce high-quality dairy and meat products (like famous Kobe beef) but lack space to grow forage. The question was how to bring product and customer together across the Pacific.

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

Where others saw a waste of money, Anderson saw opportunity. Shippers were paying to return the containers, 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’s forage products at rates the farmers in Japan could afford.

“Shipping companies 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 Director for Anderson. “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 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 three, four or even 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 has expanded to the Japanese beef industry and to other Asian markets: Korea, Taiwan, China, Vietnam, Malaysia, and Singapore. The company 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 Anderson hay, and Anderson supplied Olympic equestrian competitions in Athens and Beijing.

With prestigious customers like this, it’s no surprise that Anderson 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 the lifecycle of the raw forage, from field to customer,” Mirro explained. “We track the chemical application, the growing practices, how much are they watering, and that way we can ensure—as much as we can control it— that there is consistency in the nutrients and no harmful chemicals that are being introduced in the food chain.”

Challenge of the Markets

Today Anderson Hay & Grain exports 22,000 containers of feed each year. From its start in Washington and Oregon, the company has recently expanded into the Southwest, procuring alfalfa from growers in California, Utah, Arizona, and New Mexico for shipment through the Port of L.A. and Long Beach, in California, a port which will account for half of the volume Anderson ships this year. The company is one of the nation’s top container shippers and the largest privately owned shipper of containerized hay in the world.

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

“We have had people come in and say ‘Hay company? How complex 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.”

In this business, good relationships with growers, shipping firms and international livestock producers are key. Those relationships are founded on quality products, purchased from the grower at a fair price and delivered on schedule to the international livestock producer. To manage the many variables, it’s critical to have solid, current data available.

Utilizing IT Services to Support a Global Business

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

“The complexity of the business was outpacing the software that we had built in house,” Mirro said. “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.” Anderson also moved to a new IT support model. The Oracle suite would be managed not by the Anderson IT team, but by an outsourcing company. “We wanted to focus on what do 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.

While the software suite delivered results for Anderson, the initial service provider did not. Mirro looked at all the options, from bringing the work back in house to using a different outsource vendor. Reliability and security were key criteria. “If the Oracle suite should fail,” Mirro said, “it would absolutely shut our business down.”

After interviewing and visiting several competitors, Mirro chose AT&T to host and manage the Oracle E-Business business application software and subsequently implement an enhanced version, of the Oracle Business Intelligence Enterprise Edition, which gives users a ‘dashboard’ view of up-to-the-moment business status. In addition to delivering the security features Anderson requested, AT&T showed it could be trusted in this vital relationship. 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 really need to 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. Now I don’t have to sweat the small stuff because they are sweating it for me.”

Data from the Roots of the Business

Mirro next wanted to extend the functionality to the field and to purchasing. As buyers for Anderson Hay signed contracts with producers across the West, they entered product quality grades, volumes, delivery schedules, prices and dozens of other key details in multi-part paper forms with over fifty fields in all, plus notes. They then sent the agreements to headquarters, where the data was manually entered in the Oracle applications.

Forms could be incomplete, delayed or lost. Some buyers would enter into handshake agreements with the producers, planning to fill out their contract forms at a later time. Errors and oversights would result, and the possibility of damage to Anderson Hay’s image was a serious concern, especially as the company worked to build its reputation among new producers throughout the West.

“Getting that information in was always a challenge during the frenzy of harvest,” Mirro said. “We’re buying in May through September to last us through June or July of the following year. We’re committing a lot of dollars in a very short period of time. It’s a real coordinated dance of commitments, down payments on products, cash turns and the speed of product movement. All that information was on a piece of paper, being sent by courier up to our corporate headquarters for entry into our Oracle system.”

As managers met for Monday status reviews, they had to worry that key data might be missing. “There was always a gap you had to worry about,” Mirro said. “Is there a bunch of business out there that we just don't know about yet?” Overbuying in one area can impact forecasts in another. Information delays could impact purchasing trends that in turn could hamper the forecasting of cash flow and accounts payable processing, ultimately costing millions of dollars.

The company had tried to solve the paper problem before, using laptop computers and virtual private network (VPN) connections to link buyers directly into the Oracle system. “None of those really stuck,” Mirro said. “The people who are really good buyers are very relational people. And typically they're kind of low tech. That was the challenge—how do we take non-technical people, give them a piece of high-end technology and make it so easy to use that there's a high adoption rate?”

Working with the Pioneers

The answer came with the arrival of user-friendly touch screen tablet devices. “Typically apps are written for their ease of use,” Mirro said. “We turned to AT&T, the pioneers of a lot of mobile solutions. Rather than us going out and trying to find the right vendor that will work with AT&T and with Oracle, we asked AT&T to help us find the right solution.” Actsoft coupled with AT&T was the answer.

Anderson Hay utilized Actsoft Advanced Wireless Forms to create an electronic contract designed specifically for use on tablets. “It’s very easy to use. You point, select and choose dropdown options and lists of values,” Mirro said, “so we can step the buyer through the process.”

Now as soon as soon as the buyer completes a contract, the farmer enters an electronic signature and the buyer presses ‘submit,’ the contract moves over the AT&T wireless network to the Actsoft server and then into the Oracle Purchase and Inventory modules hosted by AT&T. Buyers’ trucks are equipped with printers and mobile hot spots so farmers get a printed copy on the spot.

Gone are the delays caused by mail transport, incomplete forms and incorrect data entry. Completing a contract moves so quickly that buyers can enter 30 percent more useful data (such as import requirements), yet still save time. Mirro is tracking other performance indicators and sees the possibilities of increased improvement.

“The delay from a contract being handwritten to being entered averaged 72 hours,” said Mirro. He estimates that once it arrived on site, each paper contract required a 30-minute review to ensure it was complete. Today, that review might take 30 seconds. “Now that it's electronic, we are down to ten minutes end to end, fully validated and imported. Can we take an internal business procurement person who runs the back office and shift their role from data entry into data analyst?” Mirro thinks the answer is yes.

Knowing that some are adverse to new technology, Mirro has set a goal that 80 percent of his 18 buyers will use the tablet contract. The incentive to the buyers is the time saved. Where many buyers would reach a handshake agreement with a vendor, fill out the paperwork from memory later that night and then return for a signature the next day, they now can complete the deal on site.

“The buyer can enter a very long and lengthy contract in five to ten minutes, inputting all the different fields, and get the signature of the vendor right then. It really improves their world.”

Indeed, improvements extend all across the Anderson Hay supply chain: from the growers who win faster confirmation of sales, to the managers matching supply and demand, cost and sales price, and to the shippers and farmers who need the right fodder at the right place, and right on time.

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