Customer Solution Case Study
/ / Land O’Lakes Links Customers with Suppliers, Completing Project in Only Seven Months
Overview
Country or Region: United States
Industry: Wholesale and Distribution
Customer Profile
Land O’Lakes, a Minnesota-based national food and agricultural cooperative with more than 6,000 producers and 1,300 cooperatives in its membership, had net earnings of U.S.$84 million in 2003.
Business Situation
With the consolidation of the pork production market, Land O’Lakes needed to expand its business with large pork producers by seeking a solution to both aid producers and extend its own market share.
Solution
To streamline feed production and distribution, the cooperative put in place a solution based on Microsoft® Business Solutions–Great Plains® and Feed Mill Manager software from Feed Management Systems.
Benefits
n Implemented solution in only seven months
n Increased efficiency for producers
n Ensured compliance with food safety rules
n Helped ensure optimal feed nutrition / “This is a solution we can expand upon. In spite of the complex number of variables, it’s easy to set up and modify. And because it’s based on Microsoft technology, our customers have confidence in it.”
Greg Gniffke, Director of the Integrated Service Bureau, for the Swine Division, Land O’Lakes
Known for its dairy products, Land O’Lakes, a food and agricultural cooperative listed in the Fortune 500, also sells feed to the pork industry. To increase its business with large pork producers, Land O’Lakes sought to create an integrated feed management system for these customers, linking them to suppliers affiliated with Land O’Lakes. With the help of Feed Management Systems, Land O’Lakes set up a solution based on Microsoft® Business Solutions–Great Plains® software in only seven months. Now, Land O’Lakes customers can get a consistent nutritional feed mix—which is critical to food safety—and track exactly what each pig eats throughout its life. The solution simplifies ordering and billing for producers, thereby lowering their costs, while helping Land O’Lakes increase its business.
Situation
Food and agricultural cooperative Land O’Lakes, a Fortune 500 company, is headquartered in Arden Hills, Minnesota. Land O’Lakes is owned by—and serves—more than 5,000 members and 1,200 community cooperatives. With a name recognized mostly for dairy products, Land O’Lakes is also one of the top feed manufacturers in the United States, marketing feed for dairy, beef, poultry, and swine producers. In 2003, the cooperative’s net income reached U.S.$83.5 million.
As the pork production market has consolidated over the past few years—50 large producers now control 50 percent of the pork market—and the number of small producers has declined, Land O’Lakes executives sought to increase the cooperative’s presence among large producers with more than 15,000 breeding sows. Land O’Lakes executives believed that identifying the needs of these customers and meeting them would help the cooperative capture more business.
“It’s a complicated market to serve,” says Greg Gniffke, Director of the Integrated Service Bureau for the Swine Division at Land O’Lakes. “Large pork producers have some unique requirements.” Land O’Lakes identified several key needs of these prospective customers, including ensuring optimal feed nutrition across a wide geographic area, meeting standards for food safety, and streamlining the order, delivery, and billing processes.
The first requirement—ensuring optimal feed nutrition across a wide geographic area—arises because pork producers buy their feed from locally owned feed mills, also called toll mills. If a large producer has to provide food to contract pork growers in several states, it may do business with as many as 25 different toll mills. Producers want to maintain the best nutritional mix for their pigs at the most competitive cost. But not all ingredients are necessarily available at every mill, and even when they are available, they can fluctuate drastically in price. For example, soybean meal, a common feed ingredient, has ranged from $180 a ton to $320 a ton in a 14-month period.
In addition, a pig can have 12 different diets over its life cycle, and diets can change weekly. Most pork producers want to know the pricing for the diets of all their pigs on Thursday of each week, so that if new formulas are required, they can be in place on Monday.
Pork producers are also concerned with food safety. “Food safety today is linked to feed safety,” says Gniffke. “Producers need a way to track exactly what each pig ate at every stage of its life.”
To expand its market share among the large pork producers, Land O’Lakes decided to:
n Create an integrated feed system linking its customers—the large pork producers—and the suppliers—the toll mills—with Land O’Lakes to deliver nutritional feed at a cost-effective price no matter where the pigs are raised.
n Provide producers with an audit trail tracing what each animal eats every week.
n Give producers visibility into the feed system to make ordering easier, while simplifying accounting and invoicing, and ensuring the security of sensitive pricing data.
Because no other feed company offered a solution like the one Land O’Lakes envisioned, the cooperative also wanted to implement the solution quickly to gain a competitive advantage.
Solution
Land O’Lakes worked with Feed Management Systems (FMS)—a Microsoft® Certified Business Solutions Partner. FMS is an application software company that provides a complete information management solution for the commercial feed industry. FMS
set up a software solution to meet the needs the company had identified. Land O’Lakes planned to offer the solution through its new Integrated Service Bureau, its network of toll mills and large pork producers.
FMS was a logical choice as a partner for developing a solution. Land O’Lakes already uses other FMS software, and the software company’s Brill Formulation program for calculating feed nutrition and costs is an industry standard. More than 4,000 feed-industry users rely on FMS products, representing a significant percentage of the worldwide commercial feed industry. So when Gniffke reviewed Feed Mill Manager from FMS, a product based on Microsoft® Business Solutions–Great Plains® version 7.5 enterprise resource planning (ERP) software, he believed it would deliver the solution that Land O’Lakes was seeking.
Initial conversations between FMS and Land O’Lakes took place in March 2003, and in June 2003, Land O’Lakes first licensed the Corporate Feed Mill Manager software. In November 2003, with development continuing, Land O’Lakes deployed the feed management system in two test environments—first at its own internal model feed mills and then to its own swine production unit of 30,000 sows.
The Microsoft Great Plains–based integrated solution that FMS developed for Land O’Lakes incorporates the following:
n Corporate Feed Mill Manager software, which Land O’Lakes runs at its corporate headquarters
n Feed Mill Manager, the software used by the participating toll mills
n Brill Formulation software, which calculates the nutritional mix and costs for specific diets
n A third-party Web application for producers to use in ordering feed
n Microsoft SQL ServerTM 2000, which stores the formula—or diet—database for each group of animals receiving the feed
n Integrated third-party financial software for automated invoicing
n Software modules provided with Microsoft Great Plains for purchase ordering processing, sales order processing, and inventory management
“Feed Mill Manager was a good choice for Land O’Lakes,” says Joel Dekkers, Director of North American Sales for Feed Management Systems. “Because it’s based on Microsoft Great Plains, it easily supports the integration of the complementary applications and the customizations that Land O’Lakes needed—and it could be set up quickly.”
Another important concern for Land O’Lakes was ensuring the security of proprietary data stored in the system, such as pricing information; Feed Mill Manager fulfilled that need, too. “By using the security built into Microsoft Great Plains and SQL Server 2000, Land O’Lakes can protect both its information and that of its customers,” says Dekkers. Customers never directly access Land O’Lakes servers; instead, they send information by File Transfer Protocol (FTP) to an FTP site at Land O’Lakes, where the information is uploaded to the feed management system.
After completing development in January 2004, Land O’Lakes brought 30 feed mills onto the feed management system. Now, toll mills enter ingredient availability and prices into the system on Thursday; the Brill Formulation software calculates the cost of each diet; the data is analyzed by a PhD nutritionist—at either Land O’Lakes or the producer’s facility; and pork producers then view the data and place an order. The system sends the order to the toll mills, which then produce the feed and deliver it to the locations where the pigs are raised—with new diets in place by Monday morning. The feed management system can also automatically generate invoices.
Benefits
The implementation of the Microsoft Great Plains–based solution has delivered advantages to Land O’Lakes customers, toll mills, and the cooperative itself by providing an integrated feed management solution that allows for the quick transfer of reliable data.
Advantages to Producers and Toll Mills
For large pork producers participating in the Integrated Service Bureau, the software provides a comprehensive solution that the producers would have found almost impossible to develop on their own. The Microsoft Great Plains–based solution:
n Ensures that producers get the best nutritional mix each week at a competitive cost.
n Provides an audit trail.
n Offers transparency into the feed supply chain—producers can view toll mill information and easily place orders.
n Protects producers’ proprietary information—participants cannot view other companies’ data or the cooperative’s own data.
n Simplifies accounting and invoicing with automatic invoice generation and communication with the third-party financial software, thereby reducing administrative time and costs.
As a result of the Feed Mill Manager solution, producers expect to see considerable savings. “The large pork producers won’t even consider going to a solution like this unless they can see a minimum of a two-to-one return on their investment,” says Gniffke. “We believe they will achieve that return.”
Producers are also freed from the time-consuming tasks and expense of setting up their own systems. “The solution lets producers focus on their businesses, while the Integrated Service Bureau manages the technology and accounting,” says Dekkers.
The simplification of billing has provided an advantage to the toll mills as well. They also expect to see increased efficiency and savings from their participation in the Integrated Service Bureau.
Advantages to Land O’Lakes
Land O’Lakes set up the Microsoft Great Plains–based solution in only seven months. The quick time-to-market helped Land O’Lakes become a market leader in creating a comprehensive feed management system. The solution has also helped Land O’Lakes build close relationships with both the pork producers and the toll mills, which it expects will eventually result in even more business.
By using the Microsoft Great Plains–based solution, Land O’Lakes created a common solution for all the participants in the Integrated Service Bureau. “If we had to deal with 20 different systems, we couldn’t have achieved this level of integration or ease of use,” says Gniffke. “But because the solution is Microsoft-based, our customers and toll mills find it fits readily into their existing computing environment, as we do.”
For example, by using the SmartList feature in Microsoft Great Plains, data—for example, weekly pricing information—can be exported into a Microsoft Office Excel 2002 spreadsheet that can be sent to a customer or used for individual analyses without compromising the security of the feed management system.
Also, because the Microsoft Great Plains–based solution makes it easy to integrate third-party applications, Land O’Lakes not only easily incorporated the third-party Web application and a company’s financial software into the solution, but it also gained the tools to extend the feed management system’s capabilities in the future.
As the solution continues to roll out, Gniffke projects that the feed management system at Land O’Lakes eventually will be expanded to other areas, such as the poultry industry. “This is a solution we can expand upon,” says Gniffke. “In spite of the complex number of variables, it’s easy to set up and modify. And because it’s based on Microsoft technology, our customers have confidence in it.”
Microsoft Business Solutions
Microsoft Business Solutions offer integrated business applications and services that allow small and midsize organizations and divisions of large enterprises to connect employees, customers, and suppliers for improved efficiency. The financial management, customer relationship management, supply chain management, and analytics applications work with other Microsoft software, including the Microsoft Office System and the Microsoft Windows® operating system, to streamline processes across an entire organization. This gives businesses insight to respond rapidly, plan strategically, and execute quickly. Microsoft Business Solutions are delivered through a worldwide network of channel partners that provide specialized services and local support tailored to a company’s needs.
For more information about Microsoft Business Solutions, go to:
www.microsoft.com/businesssolutions