FRAMINGHAM (10/03/2003) - The agribusiness industry hasn't been an IT leader, but it's making up for lost time with an ambitious effort to harness the efficiencies of e-business.
More than 60 leading agricultural companies recently created an integrated database of information about farm-related manufacturers, distributors and products. The new database will be used for tracking agricultural products (including potentially lethal materials) through the supply chain and serve as a building block for efficient e-business industrywide.
The companies involved, including Monsanto Co. in St. Louis and Dow AgroSciences LLC in Indianapolis, are members of Washington-based nonprofit consortium Rapid Inc., which launched the Agriculture Industry Identification System (AGIIS) on Aug. 11. Covansys Corp. in Farmington Hills, Michigan, created the database and will manage it for the consortium, says Rapid Chief Information Officer Rod Conner.
The main benefits to members will be efficiencies in generating orders and sales reports, as well as the ability to track inventory and be better stewards of products that can have major environmental impacts, Conner says.
Rapid had managed three separate industry databases with the help of three different contractors starting in 1995, and it combined them to form AGIIS. Over three years, AGIIS will cut the cost of managing those databases from US$3.5 million to $1.9 million, estimates Conner. The savings will more than pay for the nearly $1 million development and infrastructure cost of AGIIS, he says.
Reducing costs was a big reason why Rapid's 15-member industry board pushed for the project, Conner says. But the board also wanted to help its members make better use of the data and to develop a central repository that would be useful to non-U.S. businesses.
"Agriculture is not a technology leader, typically, but now that our member companies are seeing the benefits of e-business and related technologies in other divisions of their companies, they are now moving [IT into] agriculture" activities, he says.
One side benefit is that with AGIIS, private businesses should be able to help homeland security officials and others prevent tainted food supplies from ending up on grocery shelves and track products such as fertilizers, which can be used to make bombs, says Brent Kemp, a senior analyst at Southern States Cooperative Inc., a Rapid member in Richmond, Virginia.
"After the Oklahoma City bombing, there was a great security concern about ammonium nitrate, and with AGIIS we can potentially get down to what lot of fertilizer was sold, where it came from, when, who picked it up and who was responsible for it," Kemp says.
"Our dream is that a consumer could look at a can of tomatoes, scan it and know every step in that can's life, from where the tomatoes were grown, to who canned it and potentially how much rain fell that growing season," he adds.
Consolidating Business
Mandates for such information are growing, Kemp points out. Manufacturers are beginning to require it from growers, while buyers in Europe insist on knowing which foods have been genetically altered.
Some companies have already reported that they've been able to eliminate paper-based processes as a result of using AGIIS, says Connor. St. Paul, Minnesota-based Agriliance LLC, the largest agricultural cooperative in the U.S., told Rapid in August that it had processed 16,000 orders with the new Extensible Markup Language capability in AGIIS, taking the standard time for a bulk order of products down from 12 minutes to less than 30 seconds, Conner says. That has enabled Agriliance to move some order entry personnel to other tasks.
Members of Rapid have a "keen interest" in not giving away competitive advantages, Kemp says, but members "in general are agreed that it's in everybody's interest to have a common frame of reference for tracking products and seeing who is shipping and receiving. The data itself doesn't provide a competitive advantage, but how you use it does."
Southern States, a farm supplier with 1,200 dealers and 68,000 customers, hasn't yet seen direct benefits from AGIIS, Kemp says, but it hopes that further enhancements, such as the adoption of Web services technology, will help feed bar-code information directly into warehouse systems.
The next steps for AGIIS include expanding its use to agricultural companies outside the U.S. and to companies in related industries, Conner says.
The main value of AGIIS is that it will be a building block for e-business initiatives in the agriculture industry, says Andrew White, an analyst at Gartner Inc. White says AGIIS shows that agribusiness is moving forward with e-business and supply chain technology, placing the sector behind the electronics industry but ahead of the apparel industry.
"The real purpose of this kind of project is not for one company to do better than any other but for the industry as a whole to take a big chunk of cost out of it," White says. The biggest benefit of AGIIS will be a reduction in transaction costs by making the data understandable to all users, he says.
That's the advantage of having a standard product directory. "When I say a black pen, the question is always whether it's a pen that has black ink or one with a black casing. Now any number of companies can have a standard way of answering that," White says.