Keeping what works while looking for the next right answer is central to the cooperative model. That balance drives cooperatives to look for new, more efficient ways to do business with an eye to long-term success and value.
That driving force led four cooperatives and a private grain company to work together to build a $30 million grain shuttle facility near Four Lakes, Wash. Then the five entities merged to form HighLine Grain Growers, a cooperative based in central Washington.
It all began in 2013 with a shared vision.
“We exist to provide products and services for the multi-generational farm families we serve,”nsays Paul Katovich, CEO of HighLine Grain Growers and former manager of one of the merged cooperatives.
“Realizing that we were all looking at our business models in the same way allowed us to go down a path we could not have gone down independently — balancing heritage and innovation.”
The need to collaborate, and ultimately merge, became obvious when ever-increasing operating and transportation costs in north-central Washington disrupted traditional trading and logistic decisions for their 55 locations.
“We asked ourselves, ‘How do we meld the old with the new?’” Katovich says.
Beau Duff manages finances for HighLine Grain Growers.
The answer was the Four Lakes shuttle facility. Opening in 2016, it allowed the companies to continue to use the extensive short-line track to bring 60-car scoot trains to the facility several times a week from outlying locations. The facility loads and unloads 110-car shuttle trains from the main line to take advantage of more favorable shuttle rates. Four Lakes handles about 45 shuttle trains every year with just five employees.
More than 25 million bushels of wheat cycle through Four Lakes each year, mostly soft white wheat bound for Portland and then Asia.
HighLine Grain Growers worked with the Washington State Department of Transportation to secure grants for projects to improve safety and efficiency on the 108-mile section of the rail line that feeds Four Lakes.
“To protect our growers’ investment and control freight rates, we decided to make this investment,” says Beau Duff, chief financial officer for HighLine Grain Growers. “We are in this to do the best for our farmer-owners.”
Northern Star Cooperative took the guesswork out of energy deliveries and improved customer service while cutting costs.
Work Smarter, Not Harder
For decades, fuel and propane deliveries from Northern Star Cooperative in Deer River, Minn., were made based on speculation. Drivers estimated how much gas their customers had used and stopped in at farms and businesses to see whether tank fuel levels were low. The upshot was wasted miles, wasted hours, tanks that were filled too soon and plenty of unnecessary paperwork.
The cooperative wanted a more efficient way to handle monitoring and deliveries. In 2004, the Northern Star energy team was one of the first to plug into the CHS Energy Delivery Dialed-in (EDDi) Study. Through EDDi, CHS works with cooperatives to explore opportunities for improved efficiency with their bulk refined fuel and propane businesses.
“The study allowed us to see how we were using our assets and people and highlighted where we could be more productive,” says Northern Star CEO Brad Box.
The study revealed Northern Star drivers were filling propane tanks when they were still 40 percent full — and that was OK with customers, who liked the smaller invoices.
“We had to separate delivery from price,” says Box, “so we instituted contracting programs that allowed our owners to know the price per gallon regardless of when propane or fuel was delivered.”
The co-op also installed tank monitors at commercial accounts and larger operations located farther away from the bulk tank. “Drivers could see whether a delivery was necessary without visiting the tank, and our owners never had to worry about running out of gas,” he says.
Since tapping the power of EDDi, the co-op’s customer base has grown, and it is meeting those increased demands with three fewer drivers. “These changes have created cost savings, which translate into more money back to our owners,” says Box.
“Efficiencies in our delivery process are a win-win for our drivers and our owners. Drivers are able to serve the customers most in need, and customers can rely on tanks being full so they can focus on business.”
Learn more: To explore automated delivery options, contact your cooperative energy distributor.
Working together on agronomy services created a more efficient, more effective offering for three cooperative entities in North Dakota.
They can’t make time stand still, but the Dakota Agronomy Partners (DAP) team has created an organization with the size and scale to share employees and equipment across a 150-mile span of North Dakota. The team helps ensure growers get the seed, fertilizer, other agronomy inputs and expertise they need when they need it.
Dakota Agronomy Partners was initially formed in 1999 and served customers of several north-central North Dakota cooperatives (Border Ag & Energy, Enerbase and CHS SunPrairie), even while those co-ops managed their own agronomy businesses. In September 2018, the partners combined all their agronomy businesses into a $150 million limited liability company (LLC), bringing speed and strength to increasingly demanding agronomy customers.
“Over the course of a year, we determined that to deliver the velocity and volume our customers needed, we had to work together,” says DAP General Manager Dan Sem.
Forming the LLC doubled the DAP employee base and made a big difference in efficiency and purchasing power, says Sem. “This size and scale helps us get suppliers behind us to ensure we can take care of growers.
“Our team is really excited to have gone from one to three 25,000-ton crop nutrient megahub plants in Minot, Bottineau and Bowbells. Last year, farmers in this region put in a crop in 35 to 38 days. It took all those hub plants and everyone firing on eight cylinders to get it done.”
DAP and Enerbase board member Darren Sletten, Garrison, N.D., says the ability to move employees from near the U.S.–Canada border to the southern reaches of DAP territory means doing more in less time.
“Our weather conditions aren’t always perfect, so when it’s time to go in the spring, farmers go. DAP makes sure that when farmers start turning wheels, they have the products and services they need.”
While the new organization is bigger, that’s not the point, says Sletten. “Everyone at DAP has the same goal: to concentrate on servicing growers. The employees and expertise we can bring to the table help us do that well and do it quickly.”
Certified Energy Specialist Keith Wilbert, left, Co-op Gas and Oil, helps Alvin Hoogland, center, and his sons, Aaron, second from left, Justin, right, and Andy, behind, prevent downtime with the right lubricant choices.
The Hoogland brothers run a custom silage- and hay-chopping business in northwestern Iowa. During the typical four-week harvest window, they run 20 hours a day, serving 15 customers. To get the work done, their equipment must perform well without fail.
When bearings started failing on their choppers after 200 hours of operation, they had to sideline vital equipment and their staff of seven people for up to a day to handle repairs.
“The cost of a machine going down is huge,” says Aaron Hoogland. “It’s not just the repair and lost time, but that could cost us a customer.”
Knowing they had to find a solution, the Hooglands contacted Keith Wilbert, certified energy specialist at Co-Op Gas and Oil in Sioux Center, Iowa. Wilbert suggested they switch to a full synthetic grease. “They wanted to minimize issues and simplify their grease program across multiple pieces of equipment,” he explains. The answer was Cenex® Maxtron® FS, a full synthetic multipurpose grease engineered to provide best-in-class structural stability and protection under extreme pressure and heat conditions.
The brothers made the switch in time for 2018 harvest and had no bearing problems all season. “We’ve been in business for 10 years and this was our first season with no equipment issues,” says Hoogland. “We thought breakdowns were just part of doing business, but now we know the value of using superior lubricants.
“Finding reliable lubricants that work across all our equipment saves us time and takes the guesswork out of maintenance. Using good oils and greases has become a priority for us.”
While just beginning to implement the Lean model, the Myrtle Grove, La. export facility team has already seen dramatic improvements in efficiency.
No more wasted effort. No more wasted time. Imagine what could be accomplished if that kind of efficiency nirvana were reached.
While perfection isn’t possible, striving for a more perfect approach to daily processes is one way to reduce waste and increase value for owners and customers, says Kevin Hall, vice president, transportation, terminals and continuous improvement, CHS Global Grain Marketing. He is leading efforts to help CHS employee teams build continuous improvement into every step of their daily work lives.
The transformation is guided by an operating model based on the Lean philosophy of business operation.
“The Lean model is our playbook,” says Hall. “As a business philosophy, it is transforming our organization by empowering employees to make our supply chain more agile, flexible and responsive. We’re working to make our system better every day for our owners and customers.”
The model is already making a difference at the CHS export facility in Myrtle Grove, La., and will be rolled out to other sites over time.
Myrtle Grove terminal manager Sarah Fakhari, left, with David Grillot, director of terminal operations for CHS.
The Lean philosophy uses a number of concepts that could help improve efficiency in any business, says Hall. Some of those concepts include:
- Connecting independent functions throughout the supply chain and being clear about how each function adds to the big picture.
- Using visual cues to show progress against goals and to trigger action.
- Making decisions based on key data and automating those decisions where possible.
- Creating a learning environment with the goal of making today better than yesterday — and tomorrow better than today.
“It’s really a simple approach, but one that takes enormous effort to establish and succeed with,” says Hall. “We’re already seeing results in grain marketing. For example, we drilled into how we lease railcars and found ways to take 15 hours per week out of the process. Across our organization, that’s 16,000 hours a year that can be used to do other things that add more value.
“We are working from a value model, not a cost model,” he adds, “and focusing on the things our owners and customers care about. Eliminating the ‘but we’ve always done it this way’ mentality and allowing employees to apply common sense and tools that are part of the Lean model means we will have better standardized processes and improved problem-solving. The bottom line will be a better experience and more value for our owners.”
As much as 95 percent of waste comes from these eight areas, according to the Lean model:
- Transportation. Movement of materials or people that does not add value.
- Inventory. Supply beyond the volume needed for smooth flow through the process.
- Motion. Movement of people or resources that does not add value.
- Waiting. Idle time when productivity comes to a halt.
- Overproduction. Making more than required by the next process.
- Overprocessing. Extra effort that creates little or no value.
- Defects. Errors causing rework, incorrect information or poor reports.
- Underutilized talent. Not deploying people to the best of their abilities.
Check out the full C magazine with this article and more.