Agriculture Reference
In-Depth Information
“I think this would be a huge mistake,” starts Cindy, the sales manager. “We have been
aggressively expanding our supplier base. Look at how I've expanded the number of farm
input supply fi rms we sell through in the past four years. It is the competition among the
dealers that is leading to our growth. Besides, my job is to sell. Others are supposed to serv-
ice accounts.”
Ben replies, “I understand that, but Farmco has $500 million in sales. They account for
35 percent of our sales and 20 percent of our 420 dealers. They are among our most impor-
tant customers.”
“I'm also skeptical”, adds Ernie. “We are a company living with proprietary technology.
Your idea seems to imply that we share our R&D with our customers. How do I know that
our ideas won't end up in the hands of our competitors?”
Abe says, “That is an important question, Ernie. But we're looking at our relationship
with Farmco as a partner. Don't we have to trust our partners?”
Dee from IT then offers, “I'm sure that we could eventually get there. However, most of
our efforts are focusing on upgrading existing computer systems. I'm sure that Farmco and
our competition won't move for at least two years.”
Abe responds, “I think you may be wrong. According to Farmco people, they have made
upgrading their information technology a priority for the next fi scal year.”
Abe and Ben then turn to Fred who has remained silent throughout the meeting. Fred
frowns and says, “I don't know how I can improve service while cutting inventory levels.
Our forecasting ability has already diminished because of the number of products we now
offer and markets we serve. Remember that we just built two new distribution centers. And
don't forget that we plan to expand to 1,000 dealers in the next two years. I guess I'm with
the others. This is not a good fi t for BioAg.”
Ben answers, “Fred, are you suggesting that our distribution capabilities drive the future
direction of the fi rm? I'd also like your appraisal of Farmco's pilot study. They said they
would share the results with us. How did they do it?”
After the meeting Abe and Ben are silent for a few moments. Ben says, “This seemed like
such a good idea at the ACPA meeting.” Abe replies, “Yeah, and I overheard that Farmco
plans to move forward with our competitors if we aren't interested. Can we wait?” They
decide to reconvene their team and consider the following questions.
Questions
1.
What are the potential risk and benefi ts to BioAg in pursuing the supply chain manage-
ment initiative with Farmco?
2.
Farmco cites three main factors in moving toward supply chain management. Which
factor will be easiest to achieve in this case? Which factor will be the greatest obstacle?
Does a successful supply chain relationship require all three factors?
3.
Assume that BioAg and Farmco move forward with their supply chain initiative. How
might this effect BioAg's relationship with its other farm input supply fi rms?
Note
1
This case originally published as Frank Dooley and Jay Akridge, “Supply Chain Management:
A Case Study of Issues for BioAg,”
International Food and Agribusiness Management Review
,
1(3): 435-441, 1998. It may be useful to review BioAg—
part I
in
Chapter 14
before working on
this case.
