Improving the Order Process

The AgOrder^SM input management tool is designed to integrate with the dealer's business

Like many dealership managers, Paul Eckhoff knows his company's business processes must adapt to the changing market to stay competitive.

Eckhoff believes the Internet is a primary cause of this change, and it's a tool dealers have available to them. From this perspective, the chief operating officer of Iowa's Crestland Cooperative sees both opportunities and threats.

"My concern with some of the sites out there is with the broker-type sites," he says. "I see them as direct competitors to our business. At the same time, we don't want to work with a company who will expect us to hand over our entire customer base. It's important that we maintain our own identity."

To compete, Eckhoff is establishing an Internet presence for the Creston-based cooperative that will enable it to build and strengthen customer relationships. And they are using this new technology to open new opportunities to build more service revenues.

"I don't have a problem with price transparency. The vast majority of what we will be doing will be on a one-on-one basis, and we'll have to unbundle products and services if we expect to continue to sell products.

"We’re starting to unbundle here. The first thing we will have to do is to define the costs in several areas of the business and apply a price to the service we provide."

Getting Started
While Crestland is looking at the potential to build its service business by unbundling the cost of its products from the service it provides, the cooperative also is exploring opportunities by staking its own claim on the Internet.

Among the components on its site, Crestland will offer its own e-commerce capability to enable customers to order crop inputs, fuel oil and feed 24 hours a day, seven days a week.

To incorporate this capability into the current site, Crestland had two options:

They could develop the e-commerce component on their own, or they could work with a company that provides the service. They needed a company who would help them meet their goal of not surrendering their customer database and still allow it to maintain its own Internet presence.

Crestland chose the latter option, and in July 2000 it entered into an agreement with Ames, Iowa-based E-Markets to participate in the company's AgOrderSM pilot project. "AgOrder got us into the business in a low-cost fashion, and at a level of activity that allows us to shift directly into it. We looked at several options, and we’re excited about the options AgOrder offered us."

Maintain Your Identity
Eckhoff says a determining factor in choosing the AgOrder system was it complemented the current Crestland site.

“The fact that the system plugs directly into a dealership's existing Web site is an important factor in the AgOrder system,” says David Abbott, chief executive officer for E-Markets.

“Because AgOrder is a tool designed to integrate into the dealer's business, a farmer placing an order may never know they are using a system powered by E-Markets®. Only the dealer needs to know.

"AgOrder is directed at the ag retailer," Abbott says. "We believe the information and the relationship with the customer are owned by the ag retailer. That's the most important thing to keep in mind.

“We're not interested in eliminating the dealer or going around them. Our tools help dealers strengthen the relationships they already have with their customers."

E-Markets believes dealerships need to use the Internet to place emphasis on the value they offer their customers.

"Dealers need to maintain and market the individual relationship they have with their customers," says Scott Cavey, the chief operating officer at E-Markets.

"It is important for dealerships to maintain their own identity on the Internet versus just being another online catalog listing. Having your Internet identity allows you to communicate what you have to offer with your customers in terms they understand and relate to."

Cavey says if dealers don't have their own Internet identity, they aren't able to tell customers what's included in their product price. He says many producers who have purchased ag inputs on the Internet have found out the hard way that simply having the lowest price doesn't mean they got the best deal.

Because AgOrder lets the dealership maintain and build its own identity, the customers see only the products, services and prices for that dealership. And, the dealer can clearly show what he offers or includes in his price.

"Price isn't the only factor involved in a producer's purchasing decision,” Cavey says. “It's important customers understand whether the price includes things like agronomy recommendations, guarantees, delivery, application, bundling discounts and a number of services that dealers offer.

“Having your identity helps you control the relationship with your customers." Cavey feels when dealers have their own identity on the Internet, it allows them to have more control over their customer relationships. This results in more marketing power with customers and a stronger relationship with suppliers.

Streamlining Processes
While AgOrder is designed to improve the efficiency of the ordering process, it also improves many other management activities at the dealer level.

Cavey says dealers must look at what has happened in the consumer retail industry when retailers and suppliers leveraged and shared information.

"When information is collected from customers at the time of sale, everybody benefits. Having information that has been collected in a digital format means it can be analyzed quickly and passed along as part of the negotiating process.”

The more a dealer knows about his customers, the more power he has in negotiating. Using that information can help improve products and services, as well as ensure improved efficiencies for everyone.

"Since AgOrder is embedded in the business processes of each dealer who uses it, the information is the dealer's and he has instantaneous access to it,” Abbott says. “This allows him to see customers’ orders, offer incentives, bundle products, manage inventory level as well as reduce paperwork."

By integrating AgOrder into his business, the dealer can share selected information with suppliers to improve ordering efficiency and inventory management.

For example, the dealer can let the supplier know product inventory is low and more product needs to be shipped. If the product is not available, the supplier can alert the dealer, who can in turn adjust his customer ordering process.

The catalyst for AgOrder is another Web-based program E-Markets developed with a seed supplier.

E-Markets worked with Croplan Genetics to develop the SOAR21 program, and dealerships have successfully used the program since 1998.

The program makes the dealership the critical link in the chain to get seed from the supplier to the farmer. If a dealer wants to order seed for a customer, the system instantaneously tells the dealer if the product is available or not.

Midland Cooperative of Danville, Ind., was attracted to the AgOrder system because of its ability to integrate with SOAR21 and other supplier programs. Although the cooperative is early in the pilot project with E-Markets, Paul Burch, the co-op's controller, sees opportunity to build relationships with customers.

"It's possible we can be more efficient with our order-taking process, and we can presumably save time by using the system. We can cut down on the phone time to write down orders and the phone traffic. Our customers have access 24/7 to order from Midland."

A Proven Track Record
Dale Vos of Iowa's SCE Cooperative in Sully can speak on the efficiency of the SOAR21 program from personal experience. Currently in his third season of working with the system, Vos is a believer that sharing information with the supplier is a great benefit.

"We can better manage inventory issues," he says. "Before, we had to make two entries in our accounting system every time we placed an order. Now we have one."

Beyond the ordering system, Vos feels the tracking ability is a great value. There have been times when he is visiting with a customer about a certain variety, and he can check the product’s availability, and instantly know if it is available.

"There are a couple of reasons I would recommend dealers use it. It's a live, real-time system. On almost every occasion, we know what's available right away. Also, there's a comfort level, and that's probably a bigger reason.

"Another reason is you can place an order, and you'll never have any paper. You don't have to fax a paper, and you don't have to follow up with a phone call. With SOAR 21, you know right away that the order was placed and received."

While Vos has a high comfort level with computers and technology, he does not consider himself a technical wizard. He says learning to use the system took less than 10 minutes, and time should not be an issue.

However, time and financial issues seem to be reasons many dealers give for not wanting to get involved in Internet technology. The Internet is here to stay, and at some level dealers must evaluate how to use it.

Abbott says dealerships can get involved without being overwhelmed by the technology. The Internet won't replace the dealer. AgOrder can help the dealer take advantage of the Internet to build efficiencies in their business processes. It's just important to get started before the technology passes them by.