Would you bet thousands of bushels of grain on your memory? Are you 100 percent certain that squiggly line on a white board is a one and not a nine or a seven? Do you know off the top of your head where the grain in your bins came from? Are you sure how much more #2 corn you need to fulfill a pending contract?
It’s natural to have a nagging doubt that your current system might let you down. Manual scribbling on a white board or notes on a spreadsheet might be the way you’ve always recorded information about your commodities. But a lot is riding on the information. If it isn’t correct, you could spoil a sought-after blend or delay contract fulfillment. Let’s face it, you need a reliable way to keep track of the quality and quantity of your inventory.
You need to know how much grain you have and what quality it is with weighted average grade factors.
If you don’t know what you have, you can’t market it. You shouldn’t have to estimate what is in your bins. Accurate calculations are a must to help you see what fits the requirements for grain contracts. The president of a Kansas cooperative tells us his staff’s system of erasing and updating a bin board that only a few people could see didn’t allow them to keep a close enough eye on their bins. Lyle Hartz, general manager for Proceres, says grain handlers who accurately capture the attributes of each load and deliver consistent quality earn the reputation of reliability. “That helps ensure ongoing ‘supplier of choice’ business relationships with processors,” he says.
Segregation of Grain
It’s more important than ever to know the quality attributes of grain. End-users are requesting more specific characteristics, whether the grain is ultimately destined for food, feed or fuel. Quality has a direct effect on the bottom line. Inventory management can no longer be “hit or miss.” Your staff must have a solid grasp on quality control. Lyle puts it in perspective: “Having consistent grain quality impacts a processor’s ability to provide consistency of their finished products to help improve customer satisfaction and protect brand identity. Reaching a high level of consistency is directly related to what happens with the binning, blending and storing of the grain.”
Blending, of course, is key for accurately delivering on contract specs. Estimating is not the best way to determine averages, but it’s all some grain businesses can do. The president of that Kansas co-op told us that knowing what’s in each bin is crucial. Segregating allows businesses to keep commodities with valuable traits separate, to command a higher premium, to hold value above the base price and/or use weighted averages to make the margin.
Knowing the attributes of your grain allows you to make solid business decisions much more quickly to take advantage of market conditions. “Having the right kind of information about our elevator inventory lets us deliver what the market wants when it wants it, and can mean additional premiums,” the co-op president says. Putting real-time information into the merchandisers’ hands is critical for getting the most out of market opportunities. Not having a good way to keep track of what is in each bin means averages would have to be estimated. That increases the chance that you might not get the best price if the estimate is too low.
“Knowing grades and other attributes of the elevator’s inventory at any point in time – and having a constant average of the quality of the grain that is in the bins – provides a tremendous benefit for merchandisers to capitalize on market opportunities and make fully informed, quick decisions that can result in additional profit,” Lyle says.
Identity Preservation and Traceability
Since the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the “Bioterrorism Act”) went into effect, any businesses that manufacture, process, pack, transport, distribute, receive, store or import food have to establish and maintain records identifying the source of food, and who is receiving it. It’s a measure aimed at protecting the nation’s food supply, and as such, accuracy is important.
So grain businesses must know – and be able to show – where grain came from, where it went within their facilities and where it shipped, in order to be compliant with the regulations. That may sound like a big job, but Lyle reassures customers: “Managing identity-preserved grain does add complexity to operations, but it doesn’t have to be difficult.”
One big part of maintaining the purity and quality of grain is bin cleaning. Electronic tools can provide a historical view of bin activities – including cleaning – to keep track of when they’ve happened. The processes to maintain consistent traceability of premium-value grain are without a doubt stringent. But software can help with these processes.
As Lyle puts it: “Timely, accurate information is power in the process of managing inventory quality control to boost profitability for your business.”
If you are looking to gain competitive advantage, learn more about how binSight could be your answer.