Discounting Your Profits?

Check their grading equipment. Are moisture meters calibrated properly? Do they have the proper pans for screening foreign material? I bet we haven’t checked those in years?!

Get our merchandising department, our station managers and their superintendents in a room and review how they communicate. Find out if the operations folks know what the discount schedules and grade requirements are for the markets we ship in to. Do we provide outside employees with the contract specs before trains are loaded?

Review with everyone how the operations staff monitors grades during loading. Find out who oversees the grading and of they have the authority to stop loading cars. We have blending tanks – let’s make sure we use them!

Make sure that all trucks are graded before they leave the elevator and that our grades are logged. And the staff has to know it isn’t enough just to grade the trucks — the shipments have to be of acceptable quality to avoid discounts even if we have to unload and start over some times.

Check all the elevators to see who has any wet or damaged corn, which ones have had FM problems, and so on. It may pay us to change who loads for certain markets if we have quality problems.

And while we’re at it, let’s make sure that one person at each facility is responsible for cutting down lost grain. Probably means being more diligent about sweeping around the pits or having a couple of entry-level workers to scoop up spilled grain when we’re loading trains. I’m not sure what all the answers are — that’s your area — but a bushel of beans on the ground costs us 12 bucks!

Let’s send out a reminder to our farm customers about our discount schedules, and offer to work with them if they have quality issues in their farm bins. Perhaps we can head off some problems before they get into our bins.

I think I’ll get our new assistant merchandiser involved in this. He used to be in operations himself and should be an asset for you. Maybe he can also take on some responsibilities to coordinate merchandising and operations. He understands how both sides work and folks like him.

High-priced markets can hurt a grain firm’s bottom line in many ways. Discounts that are a percentage of price — or taken as shrink — and “lost” grain, are especially costly and add up quickly, resulting in eroding profits and customer confidence.

Knowing how your firm “grades out” on controlling quality and minimizing losses, can be a critically important part of your firm’s operations protocol, and makes great sense in these times of high- value grains and a highly volatile marketplace.