Commodity Procurement Overview

Biwer’s experience in dealing with a wide range of commodities; including vegetables, fruit, seeds, grains, livestock and dairy gives us exposure to a diverse set of operational and business requirements.

The implementation of our Commodity Procurement System is often tied to a certain level of business process re-engineering with the incorporation of best practices. Drawn from our wide range of client operations, we look to share these best practices with our customers, so long as they are not proprietary.

With the configurable nature of the Commodity Procurement System ( CPS), most of the business process re-engineering is managed by simple configurations of the application rather than needing to “hard code” changes into the base application. These configurations within CPS allow clients to react appropriately to their needs while keeping all their information and proprietary processes protected.

Innovative pricing methods, new incentive structures, and changing regulatory and reporting requirements can all be easily configured in CPS by our clients staff.

Biwer has identified trends and best practices for commodity procurement which include:

  1. Put the work in up front to increase project success.
    1. Define and identify business needs and processes – An important exercise in implementing strategic and operational best practices is the early documentation and mapping of the business needs and requirements of the company.
    2. Know what requirements are in the “must have” and what are in the “nice to have” category.
    3. Address and fix issues – Once the scope of the project and requirements are defined, business process re-engineering and best practices should be employed.
    4. Invest in standardization across the organization – systems, processes, business rules, etc.
  2. Implement projects in manageable pieces – Projects need to be broken down into logical segments or milestones. This way, each success can build on the previous success and can be delivered and managed without losing control of a more massive undertaking.
    For example, clients choose to implement the transactional and grower accounting workflow (high impact / high value) before looking at kicking off a project to implement sophisticated source transaction projects such as handhelds for field visits. This way, the source transactions will have a place to reside in the grower accounting system and can be more useful in creating reports and bringing value.
  3. Moves toward supplier / producer self service environments – This initiative is supported by providing such things as a secure options for growers to update records, certifications, commodity condition and can be extended to areas such as online grower contracting with validation steps.
  4. Improved communication between processor and suppliers – Better, more timely information means that growers can modify their growing or harvest practices on the farm to supply only product the processor desires. This includes real time or close to real time access to delivery, sample and quality information.
  5. Produce and procure only what sells – The trend in the past was to buy what the grower supplied and then look for ways to market that product. These days, processors must have a clear understanding what the market is asking for and how to incent the growers to provide those products at the quality desired. Processors must be able to quickly create and adapt new grower contracts and quality premiums out of the commodity procurement system to meet these demands.
  6. Buying better – Processors must provide a close to real-time, accurate feedback to suppliers. This information helps the growers and harvesters do a better job in the field, a gives the processor knowledge of growers that are supplying the best product.
  7. Dashboards, management web pages – The trend is for organizations to make it easier for customers to do business with their company. An example would be to provide a customer with a dashboard view into pertinent information on the supply chain, perhaps into quality and testing on each load or allow them to see what fields are dedicated to providing them with product.
  8. Transparency and traceability to information – Both customers and governments are demanding more information on the commodity; its origin, how it was raised, etc. The more information that can be captured and reported on each transaction, the greater value the commodity has in the marketplace. This has impact on recalls, compliance and mandatory reporting
  9. “What if” analysis – The trend is to provide simple to use web based tools to show things like financial impact for when there are changes in quality. This could include examples such as; providing a calculation tool to represent how changes in farming practices would impact quality, grading and yield, and ultimately the grower check amount.
  10. Benchmarking – The trend is to provide growers with detailed benchmarking comparisons with similar groups for performance comparisons. For these benchmarks to be meaningful, a number of attributes must be captured during the contracting, growing and crop delivery process to be reported against. Functionality which greatly improves the impact to the grower includes graphing as well as simple, summary-level views of grower information.
  11. Load scheduling – Through various strategies, processors are looking to incorporate streamlined and efficient methods of receiving crop loads. For most processors, it is more than simply managing the loads once they arrive at the plant. It is vital to actively manage when the crop will be harvested, and these efforts must start at the time seed is delivered and contracts are established.
  12. Staying nimble – Large organizations must find ways they can quickly respond to changes in the marketplace. Slow reactions to new contract or pricing methods can be punishing and severely limit available crop supply to the organization. Flexible software must be able to quickly model new pricing methods and be able to run “what if” tests of these approaches before going to market.
  13. Separation of duties / audit trails – Fraud and audit controls must be in place to limit exposure and risk for the organization. Security is usually based on a user’s role and there must be a separation of duties.
  14. Streamlining of processes – Technology must support a streamlined, automated process for previous steps that had been cumbersome and manual. Validation of information is critical within software applications to help prevent or reduce errors. This streamlining can include tasks for both the operational and financial departments.