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E–commerce in supply and demand chains Case studies & how-to’s A report for the Rural Industries Research and Development Corporation by Graeme Forsythe & Associates Pty Ltd August 04 RIRDC Publication No 04/106 RIRDC Project No GFA-1A

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© 2004 Rural Industries Research and Development Corporation. All rights reserved. ISBN 1 74151 015 5 ISSN 1440-6845 E-commerce in supply and demand chains – Case studies & how to’s Publication No. 04/106 Project No. GFA-1A The views expressed and the conclusions reached in this publication are those of the author and not necessarily those of persons consulted. RIRDC shall not be responsible in any way whatsoever to any person who relies in whole or in part on the contents of this report. This publication is copyright. However, RIRDC encourages wide dissemination of its research, providing the Corporation is clearly acknowledged. For any other enquiries concerning reproduction, contact the Publications Manager on phone 02 6272 3186. Researcher Contact Details Graeme Forsythe Graeme Forsythe & Associates Pty Ltd 28 Auld Avenue Eastwood NSW 2122 Phone: (02) 9874 1009 Fax: (02) 9874 8343 Email: [email protected]

In submitting this report, the researcher has agreed to RIRDC publishing this material in its edited form. RIRDC Contact Details Rural Industries Research and Development Corporation Level 1, AMA House 42 Macquarie Street BARTON ACT 2600 PO Box 4776 KINGSTON ACT 2604 Phone: 02 6272 4819 Fax: 02 6272 5877 Email: [email protected]. Website: http://www.rirdc.gov.au Published in August 04 Printed by Union Offset Printing

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Foreword RIRDC has previously commissioned two major projects in e-commerce – E-commerce in Rural Areas – Case Studies (Papandrea and Wade, 2000) and the Rural and Regional Guide to e-Commerce (Parker and Papandrea, 2002). Both included case studies that straddled the full spectrum of e-commerce – from simple sales sites, to marketplaces, portals and to a lesser extent demand and supply chains. RIRDC has commissioned this study into the application of electronic business in demand and supply chains to add to the collective pool of knowledge and experience, and to provide guidance to chains that are looking to utilise this technology. Six case studies are featured. Issues addressed include the business need that was the motivation for the electronic business initiative, the requirements of the users, the technology solution that was deployed and the principles followed in the implementation. An important objective of the study was to identify the issues and challenges faced by the operators and users of electronic business systems. A number of common themes emerge from the case studies that can be used as a practical checklist and guide for prospective implementations. This project was funded from RIRDC Core Funds that are provided by the Federal Government. This report is an addition to RIRDC’s diverse range of over 1000 research publications and forms part of our Human Capital, Communications, Information Systems R&D program, which aims to enhance human capital and facilitate innovation in rural industries and communities. Most of our publications are available for viewing, downloading or purchasing online through our website:

• Downloads at www.rirdc.gov.au/fullreports/Index.htm • Purchases at www.rirdc.gov.au/eshop

Simon Hearn Managing Director Rural Industries Research and Development Corporation

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Acknowledgements The assistance and cooperation of the operators and users of the electronic business initiatives that agreed to participate as case studies, and the service providers involved, is acknowledged. We are particularly grateful to the following organizations and people:

- National Agricultural Data Co-operative Limited – Mike Stephens, Phill Hatty, Donald Carter, Warren Blyth and Tony Gill

- Australian Banana Growers’ Council Inc – Tony Heidrich and John Loydell - Australian Winegrape Industry Quality Accreditation Committee Inc – Max Tolson - Freshport Pty Ltd; personnel from Australian wine companies including Southcorp Limited

and BRL Hardy Limited; and participating wine grape growers in Victoria and South Australia

- Netco Co-operative Limited – Mike Chaseling - Ausfresh Produce Pty Ltd – Don Lyon; Redbridge Holdings (UK) – Bridget Ennals; and

participating table grape growers in Mildura. The involvement and input of our research associates involved in this project – Tom Dighton (Deptcombe Pty Ltd) and Peter Flottmann (Synecon Pty Ltd), and Dr Roslyn Prinsley, General Manager, Research (Rural Industries Research and Development Corporation), is also acknowledged. Caveat and qualifications The report has been compiled from research and interviews conducted by Graeme Forsythe & Associates Pty Ltd (GFA). GFA has a direct involvement in five of the case studies. The conclusions and interpretations are those of GFA and do not necessarily reflect the views of the case study participants, nor of RIRDC who commissioned the research. The electronic business initiatives studied are at different levels of maturity. Some are at an early stage of development and involved in pilot deployments. Others are at the stage of commercial rollout both with the participating organisations and with other chains (including much more comprehensive formats than outlined in the case studies). Each initiative is dynamic. Changes occur frequently. Nothing stands still in the world of business and each initiative will typically evolve under its own identity or under some other pathway. The status of each case study is current as at February 2003. Of particular importance are the challenges that confront electronic business implementation. Although much of the evidence is anecdotal and based on experience, a number of themes repeat through the case studies. The common themes that emerge can be used as a practical checklist and guide for prospective implementations and are included in Section 3. In presenting the case studies, GFA has endeavoured to maintain a responsible balance between information that can reasonably be published and that which needs to remain commercial in confidence

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Contents Foreword ............................................................................................................................................... iii Acknowledgements............................................................................................................................... iv

Caveat and qualifications ................................................................................................................... iv Executive Summary ............................................................................................................................ vii 1. Introduction ....................................................................................................................................... 1

Background to project ......................................................................................................................... 1 Objectives and outcomes..................................................................................................................... 2 Relevance and benefits ........................................................................................................................ 3 Differences between electronic business and e-commerce ................................................................. 4

2. The Case Studies................................................................................................................................ 5 Case studies – selection criteria........................................................................................................... 7 Data collection and analysis methodology .......................................................................................... 7

3. Critical Success Criteria ................................................................................................................... 9 4. National Agricultural Data Co-operative – Cropping, Grazing & Dairying ............................ 14

Summary ........................................................................................................................................... 14 Key messages .................................................................................................................................... 14 Sector profile ..................................................................................................................................... 15 The electronic business initiative ...................................................................................................... 16 Further information ........................................................................................................................... 22 NADC screens................................................................................................................................... 23

5. Excel-erate Benchmarking – Bananas........................................................................................... 25 Summary ........................................................................................................................................... 25 Key messages .................................................................................................................................... 25 Sector profile ..................................................................................................................................... 26 The electronic business initiative ...................................................................................................... 27 Example of Excel-erate prototype form ............................................................................................ 35

6. ChemCheck – Winegrapes ............................................................................................................. 36 Summary ........................................................................................................................................... 36 Key messages .................................................................................................................................... 36 Sector profile ..................................................................................................................................... 37 The electronic business initiative ...................................................................................................... 38 Further information ........................................................................................................................... 46 ChemCheck screens .......................................................................................................................... 47

7. Freshport – Viticulture & Horticulture ........................................................................................ 49 Summary ........................................................................................................................................... 49 Key messages .................................................................................................................................... 49 Sector profile ..................................................................................................................................... 50 The electronic business initiative ...................................................................................................... 51 Further information ........................................................................................................................... 59 Grower Profile Data .......................................................................................................................... 60 Freshport screens – Profile Setup...................................................................................................... 62 Freshport screens – Spray applications ............................................................................................. 63

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8. NETCO Co-operative – Grains & Pulses ...................................................................................... 66 Summary ........................................................................................................................................... 66 Key messages .................................................................................................................................... 66 Netco profile...................................................................................................................................... 67 The electronic business initiative ...................................................................................................... 70 Further information ........................................................................................................................... 77

9. Ausfresh Produce – Table Grapes ................................................................................................. 78 Summary ........................................................................................................................................... 78 Key messages .................................................................................................................................... 78 Chain profile...................................................................................................................................... 79 The electronic business initiative ...................................................................................................... 80 Further information ........................................................................................................................... 84 Redbridge grape quality checking screens ........................................................................................ 85 Eurepgap documentation screens ...................................................................................................... 86

10. Conclusions .................................................................................................................................... 88 11. References ...................................................................................................................................... 92

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Executive Summary This project was commissioned by RIRDC with two main overall objectives – to learn about the application of electronic business in agribusiness supply and demand chains using case studies of commercial systems, and to develop guidelines to help prospective implementations do so successfully. It follows on from the E-Commerce in Rural Areas – Case Studies project undertaken in late 2000, and complements the Rural and Regional Guide to e-Commerce published by RIRDC in May 2002. The case studies cover horticulture, cropping and grazing agribusiness industries and a range of demand chain processes (including chemical and fertilizer applications, quality management, benchmarking and transaction processing). The implementations are very dynamic and at different stages of maturity. Some are still at an early stage of development reflecting the challenge of getting a diverse group of users going. Others are involved in an active pilot process allowing prototype systems to be fine-tuned before commercial implementation, or they have matured to the stage of commercial rollout and beyond. Commentary (sections 5-9) is provided for each case study on the business need that drove the initiative, the requirements of the users, the electronic business solution deployed and the principles followed in the implementation. An important part of the process of compiling critical success criteria (covered in section 3) was to live the experience, and to share the frustrations, challenges and successes. It was important to identify the issues and challenges faced by the operators and users of the systems which often related more to change management, than to the technology used. This has important implications for technology transfer. 18 critical success criteria for electronic business implementations were identified:

CRITICAL SUCCESS CRITERIA FOR ELECTRONIC BUSINESS

IMPLEMENTATIONS

1 Is there a business need that drives the electronic business system implementation?

2 Is the chain or a key business within it the driver of the initiative; or is the driver an application service provider?

3 Is the chain and the businesses within it committed to transparent processes?

4 Is there a commitment to use the electronic business system by members of the demand or supply chain?

5 Are there incentives and value propositions to encourage chain members to use the electronic business system (i.e. increased revenue, reduced costs or greater efficiency)?

6 Is there a mechanism to allow chain members without computers and Internet access to be involved?

7 Is electronic business the means to an end or the end itself?

8 Does the implementation involve a customised solution appropriate to the business needs of the chain?

9 Can you “value up” the collected information (i.e. flag non-conformity to standards) to make better chain management and business decisions?

10 Does the implementation use appropriate technology that is not over-engineered and recognises Internet infrastructure limitations in regional Australia?

11 Does the implementation use flexible technology so that it can be easily updated with continually evolving and changing requirements?

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12 Is the system secure?

13 Does the system support permission and trust relationships to facilitate information exchange between members of the chain?

14 Is the electronic business system simple, will it be developed progressively and does it concentrate initially on the “low hanging fruit”?

15 Is the cost of usage of the system low relative to the value offered?

16 Has the target user been correctly identified?

17 Is there recognition that adoption involves a change management process particularly when users are typical small and medium enterprises?

18 Is training, support and facilitation available specific to the electronic business system and the group using it?

Although much of the evidence we report is anecdotal and based on our experience with the implementations, the critical success criteria reflect common themes that recur through the case studies (covered in more detail in Section 3). Generic promotion of electronic business and associated extension activities will at best achieve awareness. It is very unlikely to result in adoption. Adoption will only occur when the user commits time and effort, rolls up their sleeves, has a go and gets their hands dirty – with a specific electronic business system built around a commercial need. Technology transfer planners should recognise this. Without the chain or a business further up the chain (than yours) mandating use of the system, adoption will always be difficult unless the value proposition delivers significant and obvious incentives to use the system (i.e. increased revenue, reduced costs or greater efficiency) and the user makes the commitment to have a go. There is little difference in this to electronic business services like online banking – why do we use those systems? We use them because they save us time and money; we don’t have to travel to the bank, we don’t have to find a car park and we don’t have to wait in the queue inside the bank; we can use the system when it suits us and not just during bank opening hours (it is more convenient); we can get instant access to our account information; and so on. Even then, if the incentives and commitment are in place, the typical profile of a small and medium sized agribusiness user is that they are busily tied up just doing the work processes they have always done to keep their business ticking over. It is not difficult to guess what keeps getting put in the “to do” basket. Finding time to try a new way of doing a business process (i.e. an electronic way), when the business struggles to do what it has to in the way it always has, is always a popular excuse. The adoption of electronic business is ultimately about change management. It requires planning, training and support facilitation – specific to the chain and to the electronic business system; and certainly not promotion or extension of a generic nature.

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1. Introduction Background to project This project was commissioned by RIRDC with two main overall objectives – to learn about the application of electronic business in agribusiness supply and demand chains using case studies of commercial systems, and to develop guidelines to help prospective implementations do so successfully. It follows on from the E-Commerce in Rural Areas – Case Studies project undertaken in late 2000 by Franco Papandrea and Margo Wade1; and complements the Rural and Regional Guide to e-Commerce published by RIRDC in May 2002. The Papandrea and Wade report was prepared during the so-called “Internet bubble”. At that time, anything Internet was “hot”. The e-commerce environment was relatively new but very dynamic. New initiatives were being conceived routinely – emerging from both from within demand and supply chain businesses and from third party technology providers (sometimes described as “application service providers”). Many of the application service providers were seeking opportunities to make their “entrepreneurial fortune” in sectors and chains that they often had little association with or experience in. Electronic marketplaces (to buy and sell products) were common as were “portals”(a central access point for related information and services). Most were “speculative” solutions searching for a commercial need or problem that they could be applied to. Few responded to a real business need. Internet became the end itself, rather than the means to the end. The subsequent Internet “shakeout” in 2000/2001 is now history. We quote Colin Wright2 of Harvey Norman Limited:

- The need for electronic business is neither dying nor in need of rebound. - The dot.com crash simply weeded out the premature and immature models, where

organisations not only failed to identify customers needs but also the needs of the entity itself. - Many organisations have refocussed internally and re-valued their existing customers and

business partners. - Their shift back to fundamentals is driving huge demand for sensible electronic business

because it has the potential to take massive cost out of the enterprise and enable partners in both vertical directions.

This project concentrates specifically on the application of electronic business in Australian agribusiness supply and demand chains. The primary interest is SME’s (small and medium businesses). The businesses and chains studied have all started with a business need; and to varying degrees and in various ways have moved down the path of using technology to automate the capture, processing and exchange of fundamental transactional information. The report presents six case studies and identifies the common themes for successful implementation. These can be used as a practical checklist and guide (see Section 3). Only one of the six case studies was operating when the “Internet bubble” burst. Freshport was working with Australian wine companies to pilot an electronic version of their chemical spray diaries. The other case studies were initiated after the dot.com crash and are at different stages of maturity. Some are still at an early stage of development reflecting the challenge of getting a diverse group of users going. Others are involved in an active pilot process allowing prototype systems to be fine-tuned 1 Central to the Papandrea and Wade project was a workshop to demonstrate how Australian rural enterprises have taken advantage of e-commerce opportunities. The case studies selected represented major categories of e-commerce activities in rural areas and ranged from relatively simple applications introduced by small operators to major activities and innovations such as the establishment of online markets for bulk commodities and automation of supply chain management and documentation. 2 Source – E-Hubs Asia: Is e-business dead or on rebound? 16 December 2002.

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before commercial implementation, or they have matured to the stage of commercial rollout and beyond. The general framework used for Ausfresh Produce for example has now been implemented in a much more comprehensive format in other chains that are not covered in this report. Each implementation is very dynamic. Changes can occur frequently. They evolve as an outcome of the changing business needs and particularly as the users become more familiar with the system and start to better understand what they can do. The status of each case study reported is current as at February 2003. The case studies are not a mechanical, scientific or statistically valid assessment conducted independently. In five of the case studies the author’s company has had a direct involvement in the development and implementation of the electronic business system. This was intended as implementation across all members of a demand or supply chain is not always “easy sailing”. It was always our hope that living the experience, and sharing the frustrations, challenges and successes would enhance the findings. A key objective of the report is to identify the issues and challenges faced by the operators and users of electronic business systems, which are often related more to change management, commitment and attitude, than to the technology itself. An important reason for an electronic business strategy in a demand chain is to improve the performance of participating businesses in terms of their efficiency, sustainability and profitability. It is also about encouraging and facilitating interdependency. It is easy to by-pass these opportunities if each business looks inwardly at its operations, concentrates on survival, and perceives electronic business as the more narrowly focussed e-commerce (making a transaction rather than automating transactional processes). Few organisations think of electronic business as a fundamental tool to enable and improve the way they interface and conduct business with other members of their chain. No doubt many of these same attitudes would have applied in the early days of facsimiles, mobile phones, automatic bank tellers, business accounting software etc when first introduced. Yet today each is generally taken for granted and a normal part of our day-to-day life. Electronic business has not yet achieved that same milestone. Case studies of working electronic business applications provide a mechanism for eliminating the fear of not knowing how to make a start, seeding ideas about how electronic business applications might be applied in demand and supply chains, and demonstrating costs and benefits even if in a qualitative and anecdotal way. The conclusions we draw are based on our analysis of the six case studies and we present them as common themes for successful implementation. The themes summarise what we see as necessary pre-requisites for electronic business to be successfully implemented in a demand or supply chain, and the barriers that typically have to be overcome. Objectives and outcomes The following specific objectives were agreed for the project:

- Develop case studies of groups using electronic business demand chain applications. - Develop “how to” guidelines that remove the fear and uncertainty of electronic business. - Determine costs and benefits to the players involved, and “methodology” for farmers to value

the benefits of electronic business. - Identify the “drivers” for electronic business. - Identify the barriers that need to be addressed to facilitate the take-up of electronic business,

and how they have been addressed by farm businesses and agribusiness demand chains. - Develop and implement a technology transfer strategy for electronic business based on the

knowledge gained. The following outcomes were anticipated:

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- Enhance knowledge about electronic business in practice – assessing and broadening the

opportunity based on the experience of users at farm and demand or supply chain level; identifying the costs and benefits; and the triggers for and barriers to adoption.

- Potentially increase the rate of adoption of electronic business by farm businesses and agribusiness demand chains with the resulting economic, business improvement and environmental outcomes.

- Help define a practical technology transfer strategy. Relevance and benefits The landscape is changing in the way agricultural produce is transacted. A number of key trends are influencing and shaping this landscape:

- Globalisation - Consumer awareness and activism - Food science developments - Information and communications technology - Need for profitability at all levels of the chain.

Demand chain management is becoming a new strategic driver. It starts with the customer and ensures that the process of delivering value to the customer is the driver of the chain. In this model, the businesses in the chain will usually have pre-existing relationships, alliances and contracts that set the guidelines for supply and title change. Business relationships that were ad hoc, adversarial and often lacking in trust, and where product supply was pushed up the chain at the consumer, rather than being pulled up the chain in direct response to customer requirements, are being replaced by collaborative relationships and contracted or programmed production arrangements. Produce is grown for the buyer and to their specification; not in anticipation of finding a buyer. The chain is integrated and is itself the basis of competition, rather than the individual businesses within it. Effective demand chain management typically exhibits “through chain transparency”. Transparency leads to trust, builds efficiency and reduces costs through the chain. It normally requires an IT capability and is the catalyst for much chain innovation and electronic business. Real transparency involves the sharing of information, and the opportunity for input, often from many parties. Making the information available in a consistent manner normally requires the capacity to exchange data electronically; hence an electronic business solution. While each business in a chain has a clearly defined role, integrative and collaborative electronic business toolsets that support chain management and information exchange, and the “valuing up” of information, can reduce costs and increase the quality of deliveries to the consumer. It can enhance the paradigm of “efficient customer response” – which is the primary challenge given by the leading supermarket retailers throughout the world to their supplier networks. In summary, successful chains3:

- Share information freely up and down the chain - Focus on value, not price - Respond to demand, and don’t push supply - Replace independence with interdependence - Optimise chain performance, not self-performance.

3 More information about demand and supply chains is available in the CD – Forming and Managing Supply Chains in Agribusiness: Learning from Others (New Industries Development Program of AFFA; Department of Agriculture, Fisheries & Forestry – Australia; National Food Industry Strategy; and The University of Queensland). CD prepared by Associate Professors Ray Collins and Tony Dunne.

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Differences between electronic business and e-commerce This project was not set up to study electronic marketplaces, which we consider to be the application of e-commerce in its most traditional sense. The drivers for demand chain management are in our opinion incompatible with spot trading in marketplaces, be they physical or electronic. The project was about studying and learning from electronic business deployments – where information and communications technology is used to support the capture, consolidation, processing and exchange of information between the businesses in a demand chain. The information that is captured, consolidated, processed and exchanged covers business processes (such as product integrity and safety) that have to be successfully completed to enable title change to take place. The case studies we selected to develop and work with are each responding to the demand chain challenge. To varying degrees each involves the collection and exchange of information between chain partners. In an effort to be simple they generally involve sections of a chain rather than the chain in its entirety, and generally address a subset of business processes (the “low hanging fruit”) rather than trying to be comprehensive end-to-end solutions. The approach taken in one of the case studies (Ausfresh Produce) has now been implemented in a much more comprehensive format with multiple roles in other chains that are not covered in this report.

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2. The Case Studies

Sector Broadacre and irrigation cropping, grazing and dairying

Crop All types

Operator National Agricultural Data Co-operative Limited

Initiative National Agricultural Data Co-operative

1 Farm input service providers including fertiliser and chemical applicators collect application data and make it available to their grower clients through the National Agricultural Data Co-operative.

Scope

2 In turn grower members of NADC can permit other extension service providers and their demand chain members to access their records subject to NADC business rules.

Sector Horticulture

Crop Bananas

Operator Australian Banana Growers’ Council Inc (ABGC)

Initiative Excel-erate Benchmarking

1 Excel-erate is an electronic business system enabling growers to pool information to better understand their business strengths and weaknesses.

Scope

2 Excel-erate provides a framework for continuously benchmarking business activities, and collecting production records that will enable forward supplies to be projected.

Sector Viticulture

Crop Winegrapes

Operator Graeme Forsythe & Associates Pty Ltd (GFA) & Australian Winegrape Industry Quality Accreditation Committee (AWIQAC)

Initiative ChemCheck

1 ChemCheck is a checking service for viticulture chemical use independently verifying growers’ chemical spray diary records with results automatically available to the wine companies the grower is contracted to supply to.

2 ChemCheck is a core element of the industry’s Good Viticulture Practice QA Code.

Scope

3 The ChemCheck system is also a highly relevant planning tool.

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Sector Viticulture + Horticulture

Crop Winegrapes + Stonefruit

Operator Freshport

Initiative Spray Diary, Yield Forecasting & Crop Maturity System

1 This case study covers an early pilot program conducted by Freshport and Australia’s major wine companies.

2 The elements were an electronic spray diary, yield forecasting and crop maturity mapping solution that growers could use and submit to the wine company buying their grapes.

Scope

3 The service has evolved into ChemCheck.

Sector Grain + Pulse

Crop All grain and pulse types

Operator Netco

Initiative Netco Virtual Private Network & Shared Back Office Services

1 This case study covers the establishment by Netco of a virtual private network to support communication and transactions, and a shared back office service support function based on Thede Ward.

Scope

2 Netco is an umbrella co-operative for ten regionally based grain trading and input supply co-operatives.

Sector Horticulture

Crop Table grapes

Operator Ausfresh Produce Pty Ltd

Initiative Australian Table Grapes to Sainsbury’s (UK)

1 This case study covers the development and implementation of an information management underlay allowing the capture, consolidation, processing and exchange of information up and down the chain.

2 Examples include the quality control check reports done by Redbridge on receival, and the records for Eurepgap compliance that Sainsbury’s is requiring of its program suppliers.

Scope

3 The demand chain covers table grape growers in the Murray Valley exporting through Ausfresh Produce under a supply program to Sainsbury’s Supermarkets in the UK. The UK importer is Redbridge Holdings.

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Case studies – selection criteria It was our objective that the case study implementations reflect a diversity of electronic business activity – in agribusiness sector, function, location and skills; and ones that would be of strategic interest and value. Specific criteria that we used to guide us in the selection process were:

- The chain showed strong interest and an ability to participate - The chains had a clear need for an electronic business solution i.e. the chain had an identified

problem or issue that could be resolved through an electronic business solution - The electronic business solution involved a demand or supply chain transactional process - The electronic business solution did not involve implementation of an electronic marketplace - Where the case study involved a pilot group, success in the pilot had the potential to lead to

wider commercial use - The interface involved growers with at least one demand chain partner - The electronic business solution preferably involved data capture and data retrieval at two or

more levels of the chain; and was not just a mechanism to get information such as harvest results back to growers

- The businesses participating in the chain preferably had a range of computer literacy skills - The processes covered by the demand chain involved a high level of remote communications - The case study group was already operating, or had commitment to establish their activity - A relationship was in place with the group to ensure the support was available to complete the

case study (which may include the provision of the electronic business system). One of the case studies, the Australian Banana Growers’ Council Excel-erate benchmarking project, does not directly meet the criteria relating to demand chains in its initial format. However when its potential is fully realised it will. For example, the “primary data” collected could be easily used to generate “secondary data” such as supply forecasts. Benchmarking is also directly relevant to every grower / producer irrespective of sector; and the continuous benchmarking framework being used provides a unique opportunity beyond bananas. This Netco case study provides a somewhat different perspective from the others. It does not concentrate on growers specifically. It demonstrates the influence of Netco and its emerging business model as an enabler of change and as a facilitator for the progressive adoption of electronic business by the ten member co-operatives and their farmer members. Data collection and analysis methodology This project has a very practical basis and that has governed the methodology we have used. There is no science or theoretical constructs to measure performance and identify common success themes. There are no existing standards or benchmarks to measure against. To a large degree, the results and findings are anecdotal and based on a practical assessment. Where appropriate we have collected information through:

- Desk research - Interviews with participants – face to face unstructured, face to face structured, questionnaire

if appropriate - Observations particularly through our management of pilot groups and commercial

implementations - Group discussion.

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The following methodology was used:

- The case studies selected were endorsed by RIRDC. - A framework for collection of primary information and data was developed. This covered:

1) What was to be obtained – qualitative and quantitative? 2) Who it would be obtained from eg growers, chain partners, electronic business

service providers? 3) The methods by which it would be obtained eg questionnaire, interview, focus group?

- Case study information and data was collated, analysed and interpreted; referring to users and service providers as necessary

- Electronic business technology transfer strategies, as they would apply to the case studies, were identified and assessed

- Presentation of findings in agreed format and publish - Conducting (or participating in) workshops and demonstrations of electronic business

initiatives as appropriate (within the case study chain and not generic).

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3. Critical Success Criteria Although much of the evidence we report is anecdotal and based on our experience with the implementations, a number of common themes recur through the case studies. We strongly recommend that any demand or supply chain considering implementation of an electronic business system should review these critical success criteria as at least a base checklist. The list should not be considered exhaustive and is not set out in any order of importance.

CRITICAL SUCCESS CRITERIA FOR ELECTRONIC BUSINESS IMPLEMENTATIONS










10 Does the implementation use appropriate technology that is not over-engineered and recognises Internet infrastructure limitations in regional Australia?









Notes



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There should be a clearly identified business need, issue, business improvement opportunity or problem that drives the electronic business implementation and an anticipated return on the investment the chain (or a key business within the chain) will make. If not, what is the purpose of investing in the system (or in “blue sky”)? The electronic business project will most probably be doomed to failure.

The Australian and international landscape is littered with examples of e-commerce and electronic business solutions being developed by third party vendors (typically application service providers promoting electronic marketplaces) without a business need being identified. The problem must look for a solution. The solution should not look for the problem.





A demand or supply chain involves a diverse network of businesses operating at the different vertical levels and potentially multiples of similar businesses at each horizontal level. Unless there is a collective commitment to transparent processes that enable the sharing of information (whilst retaining confidentiality as business rules dictate), and thence the processing and valuing up of information to enable better chain management decisions, the initiative won’t be successful. Securing the commitment of all players is not always going to be easy because of the numbers of businesses involved, the different roles played, the different business processes, the different business cultures, and the different information capture, processing and exchange needs. But it is an important objective otherwise the potential benefits and outcomes that the system can deliver will not be realised eg the valuing up of information such as consolidating data to generate crop forecasts, delivery intentions or non-conformity checks is diminished. There is often a mindset among growers in particular that the information they contribute to a demand or supply chain system transfers to members further up the chain, and that they don’t necessarily see a direct financial return on their costs of involvement if there is a direct charge to them4. Often the information provided is their right to participate and the ticket to do so. Without the chain as an entity, or a business further up the chain (than yours), mandating use of the system, complete adoption will always be challenging unless there are significant and obvious incentives to use the system (i.e. increased revenue, reduced costs or greater efficiency) and the users make the commitment to have a go. Ultimately there is little difference in using a demand or supply chain electronic business system to using an electronic business service such as online banking – why do we use those systems? We use them because they save us time and money; we don’t have to travel to the bank, we don’t have to find a park and we don’t have to wait in the queue inside the bank; we can use the system when it suits us and not just during bank opening hours (it is more convenient); we can get instant access to our account information; and so on. Even then, if the incentives and commitment are in place, the typical profile of a small and medium sized agribusiness user is that they are busily tied up just doing the work processes they have always done to keep their business ticking over. It is not difficult to guess what keeps getting put in the “to do” or “too hard” basket. Finding time to try a new way of doing a business process (i.e. an electronic way), when the business struggles to do what it has to in the way it always has, is always a popular excuse. 4 Freshport’s experience clearly demonstrated this resistance.

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It is unlikely that every chain member will have a computer and / or Internet access. An important challenge is help those members be involved. Various approaches are available including service bureaus or entering data further down the chain through a recipient created mechanism. The adoption of electronic business is ultimately about change management. It requires planning, training and support facilitation – specific to the chain and to the electronic business system; and certainly not promotion or extension of a generic nature. Electronic business is working successfully when the demand chain drivers are working and the chain is transparent i.e. interdependence of the members of the chain (rather than independence) and a willingness to share information (rather than holding on to it).


It is a mistake to assume that electronic business is anything other than a means to an end. It should never be the end itself. It is a tool to capture, consolidate, store, process and exchange data. The outcome any demand chain wants is not an electronic business system per se, but more efficient and profitable business that is enabled through transparent processes and the valuing up of information. Electronic business should not eliminate personal contact. To quote Allen Roberts5, “Technology is very good at communicating facts, but very poor at communicating feelings, and for a relationship to really flourish, there must be the “touch” that comes with personal contact. The width of contact with large numbers of people, facilitated by communication technology, should not be confused for the depth of understanding that comes from personal contact”.



We have previously referenced that every demand or supply chain is differentiated by the numbers of businesses involved, the different roles played, the different business processes, the different business cultures, and the different information capture, processing and exchange needs. Because of these differences we haven’t yet seen two chains with the same requirements. For this reason we don’t believe that so-called “out of the box” solutions are appropriate. “Out of the box” solutions will force the members of the chain make their business processes fit the requirements of the solution, whereas most businesses will always say they want the solution to support the way they want to do business. “Valuing up” the collected information is fundamental. There is little point in collecting information because it is nice to have. The outcomes required should determine what information is collected and how it is processed i.e. consolidated, checked to flag non conformity to standards etc.

10 Does the implementation use appropriate technology that is not over-engineered and

recognises Internet infrastructure limitations in regional Australia?


5 Roberts, A (2001) – Talking About Chains: A Discussion Paper Arising from the Proceedings of the ACS Chain Management Workshop, Brisbane.

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The technology should support the solution rather than drive it. It should be easily implemented and chain members should be able to easily use it. Internet is a key infrastructure resource for electronic business. It is the conduit used to exchange data up and down a chain. Yet the capacity and frailty of the infrastructure through regional Australia continues to be a serious limitation to initiatives structured wholly around continuous Internet connectivity. We believe the infrastructure limitations are so significant that the technologies used and methods for deploying electronic business require careful rethinking. The role of Internet is the conduit for lodging and retrieving data to a secure post office. The size of the data files needs to be minimised and compressed as much as possible. We guard against over engineering and constructing a “10 story building” when a “single story” one will do. The cost of custom software development required for a program or an HTML application can be significant and often not commercially viable. Many of the dot.com crash victims (by and large application service providers) provided their own infrastructure and databases that were quite inappropriate for the volumes of electronic business activity that they handled (or the more likely scenario was that their business projections were far in excess of reality). A characteristic of the NADC, Excel-erate, ChemCheck and Ausfresh systems is that they operate using low cost technology. Each uses a shared web server infrastructure costing less than $400 per year (readily upgradeable at low cost) and Access databases that can also be readily upgraded (at low cost) to the more robust SQL as increased usage dictates6. Key outcomes of the Freshport pilot were that growers often had difficulty with data entry screens that looked different to the paper forms that they were use to; the cost of software development (supporting HTML data capture screens) and maintenance was high particularly in an environment where user needs were forever changing, user requirements varied and different operating systems were being used. It should be easy, quick and cost effective to change the system. The heavy dependency on software developers challenged the need to deploy solutions quickly and not get delivery bogged down in bureaucratic processes. A characteristic of the Ausfresh system was that the data exchanged did not need to be taken into a database at least in the early stages, and a very acceptable method of exchanging information was email (rather than needing a sophisticated web linkage). In our opinion, the real challenge is to be creative in the choice of technology or the mix of technologies used. There are some very easy to use and low cost technologies such as electronic forms, which have emerged in the last 12 months or so and offering many advantages over traditional technologies. These technologies make the screen identical to the format of the paper form; meaning users without computers and Internet can be easily catered for.



Because electronic business systems deal with data that relates to transactions, and is therefore commercially sensitive, they must be secure with an appropriate login capability and encryption if necessary. The system should support permission and trust relationships that reflect the business rules of the chain i.e. who can see what.

6 Ozhosting, who are among a number of businesses providing professional web server hosting facilities in Australia, provides the web server platform.

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Too often, electronic business systems have been designed to deliver functionality far in excess of what is required by the business need. If the business need is identified, defined and prioritised correctly, the solution will be outcome based, address the “low hanging fruit” and will be digestible. The simplest solution will always be the best solution – how often do we hear people say that they only use a small amount of the functionality in Microsoft Office, or they can’t program the video recorder. The system should be simple to use because in every demand or supply chain there will be a wide range of capability and expertise among the members. It is unlikely that every member will have a computer and / or Internet access yet everyone involved must be able to participate which requires creative approaches (refer point 6). Growers in particular need to be comfortable with the data capture screen formats (see above in relation to electronic forms). The system should be easily accessed with the login through a member’s section in a central site and / or through the web sites of members of the chain.


The cost to the chain (either directly or amortised among members) should be low relative to the value created or benefits realised. Growers want low cost solutions particularly if they think the solution offers greater benefits to other members of a chain.


In the Netco case study, the target user is the member co-operatives of the Netco group and not the farmer. Farmers belonging to the member co-operatives don’t necessarily need to be direct users of electronic business to be direct beneficiaries of it – if their co-operative is using electronic business in its operations.



Even if incentives and commitment are in place, the typical profile of a small and medium sized agribusiness user is that they are busily tied up just doing the work processes they have always done. It is not difficult to guess what keeps getting put in the “to do” basket. Finding time to try a new way of doing a business process (i.e. an electronic way), when the business struggles to do what it has to in the way it always has, is always a popular excuse. The adoption of electronic business is about change management. It requires planning, training and support facilitation – specific to the chain and to the electronic business system; and certainly not of a generic nature. Generic promotion of electronic business will at best achieve awareness. It is very unlikely to result in adoption. Technology transfer planners should recognise this.

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4. National Agricultural Data Co-operative – Cropping, Grazing & Dairying

Summary

Sector Broadacre and irrigation cropping, grazing and dairying

Crop All types

Operator National Agricultural Data Co-operative Limited

Initiative National Agricultural Data Co-operative

1 Farm input service providers including fertiliser and chemical applicators collect application data and make it available to their grower clients through the National Agricultural Data Co-operative.

Scope

2 In turn grower members of NADC can permit other extension service providers and their demand chain members to access their records subject to NADC business rules.

1 NADC

2 Fertiliser and chemical applicators (i.e. members of the Australian Fertiliser Services Association (AFSA), the Field Air Group of Companies and Ag Flight)

3 Growers

4 Extension service providers (such as agronomists and / or farm management consultants)

Players

5 Demand chain members

Key messages

NADC is a carefully considered strategic response to the need for easier and accurate methods for capturing, consolidating, processing and exchanging farm business records.

NADC has clearly articulated its requirements and has a well-defined development and deployment strategy.

NADC set out to stage its development, keep the system and technology simple and low cost, and not try to achieve its ultimate vision at the outset.

NADC is limiting the scope of the initial deployment by concentrating on the collection of fertiliser and chemical application data in the prototype system, which is simple, easily demonstrated and immediately relevant to its target group.

Strategy

NADC is using five pilot groups to enable its system to be properly fine-tuned and the value proposition for NADC membership developed.

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Ownership NADC demonstrates the willingness and intent of different roles in the supply chain to collaborate and establish a formal business entity that provides the electronic business infrastructure and the toolsets to enable data to be uploaded, processed and exchanged, and facilitates stakeholder ownership (on behalf of the members) over the collective data.

The NADC electronic business system requirement is to efficiently and cost effectively capture, store and exchange primary data; and subsequently to consolidate and process primary data into secondary data that can be used to achieve improved business, agricultural and environmental outcomes.

The NADC electronic business system initially links the CLASS, GRASS and Rinex business management systems (i.e. the sources of primary data) to the NADC data warehouse and uses export and import functions to transfer data files.

Electronic forms technology is being integrated so that farmers can capture and transfer data covering the applications they do themselves.

Technology

NADC farmer members set access rights to their data through a trust relationship and permissions function.

Sector profile

NADC is not industry or sector specific. It is relevant to all farmers and service providers involved in land and produce management.

Key foundation participants include farmers, farm business consultants, service providers (fertiliser and chemical applicators) and agronomists operating mainly in broadacre and irrigation cropping, grazing and dairy enterprises.

Key Points

The business activities of NADC are concentrated initially in Victoria and Riverina NSW.

Cropping, grazing and dairy farms; agribusiness service providers NADC is an agricultural data management service relevant to all farmers and service providers involved in land and produce management. It is not a sector specific initiative. The foundation businesses involved in NADC are initially concentrating on broadacre and irrigation cropping, grazing and dairying enterprises in Victoria and Riverina, and the “application” of fertilisers and chemicals to both the land and produce associated with those enterprises. The potential user (member) base for NADC are livestock, cropping and dairy farming enterprises7, the member businesses in the Australian Fertiliser Services Association (AFSA)8, and the aerial applicator and ground chemical applicator businesses operating throughout Australia. The businesses involved NADC is a “grass root” and self-help initiative of a group of farmers, farm business consultants, service providers (fertiliser and chemical applicators) and agronomists (in Victoria and Riverina). The key groups involved (apart from the individual farmers and agronomists) have been:

- Farm business consultants – Mike Stephens & Associates Pty Ltd (Ballarat) and Peppin Business Planners (Deniliquin).

- Service providers – Member businesses of Australian Fertiliser Services Association (AFSA), the Field Air Group of Companies (Field Air) and AG Flight.

7 Source – Australian Bureau of Statistics: Establishments Undertaking Agricultural Activity at 30/6/2000. Estimate 105,000 farms. 8 Source – AFSA web site; www.afsa.net.au. 217 businesses.

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- Information technology – Farm Facts Australia Pty Ltd. NADC did not suddenly emerge as a good idea. For the last two years the people and businesses behind NADC have been in discussion, researching and planning. The different groups have collaborated and cooperated to help achieve better outcomes in food safety and environmental / land management for the farm businesses and service providers involved. NADC is currently registered as a Victorian co-operative9. It is unique in its structure and objectives because:

- It deals in data rather than physical produce. - Its members include farmers, farm business consultants and farm service providers (rather

than from a single common role). - Its customers are its members who join because they want to use the services of NADC. - It demonstrates the willingness and intent of different roles in the chain to collaborate and

support each other in the process of capturing, consolidating, processing and exchanging data. The electronic business initiative The business need

NADC is a carefully considered strategic response to the need for easier and accurate methods for capturing, consolidating, processing and exchanging farm business records.

Key Points

NADC demonstrates the willingness and intent of different roles in the supply chain to collaborate and establish a formal business entity that provides the electronic business infrastructure and the toolsets to enable data to be uploaded, processed and exchanged, and facilitates stakeholder ownership (on behalf of the members) over the collective data.

A number of environmental, social, economic and commercial issues and problems were behind the formation of NADC:

- Increasing consumer interest in the path that produce travels from soil to plate. Increasingly consumers want a full understanding of the treatments given to the produce they buy and the land it grows on.

- The commercial requirements in the demand chain for basic quality assurance so that food safety can be demonstrated and guaranteed in an environment of increasing government regulation and a more litigious society. The people involved in making food (the demand chains) need accurate, transparent and accountable systems to record (among other things) the chemical and fertiliser history along the journey, and have requirements for the timely exchange of this data.

- New commercial requirements in the demand chain that extend into environmental management, worker welfare, and ethical business practices i.e. more effectively demonstrating and guaranteeing that the practices used to grow and produce food lead to environmental and resource base improvements, and that the work practices used are safe and responsible.

- Business improvement requirements i.e. helping farmers make farm management decisions that allow them to optimise production, adhere to government regulations and meet consumer expectations.

9 NADC is securing registration in other states.

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NADC note that these drivers require Australian farmers and land managers to keep accurate records of their land and produce management activities (capturing primary data), to interpret and value-add the data (consolidating and processing primary data into secondary data) and to apply the data and interpretations to achieve business and environmental improvement. In their view, many, if not most, farmers are not adequately equipped to achieve this outcome and without an efficient data management infrastructure, they do not have the basic wherewithal to start the improvement process:

- The time taken and the amount of bookwork involved in record keeping is a major challenge for many farmers and land managers.

- The overwhelming majority do not have an easy and accurate method for capturing, consolidating, processing and exchanging farm business records10. Many can do parts but it is not integrated and not available to professional service providers and advisors (such as farm management consultants and agronomists).

Having members own the collective data (yet protecting the security of individual members data) is seen to have significant commercial value as the pool of data and membership grows. The requirements

NADC has clearly articulated its requirements and has a well-defined development and deployment strategy.

The NADC electronic business system requirement is to efficiently and cost effectively capture, store and exchange primary data; and subsequently to consolidate and process primary data into secondary data that can be used to achieve improved business, agricultural and environmental outcomes.

Key Points

NADC set out to stage its development, keep the system and technology simple and low cost, and not try to achieve its ultimate vision at the outset.

To help farmers meet the requirements of their customers and government, NADC needed to be able to demonstrate and deliver a system that captured, consolidated, processed and exchanged information relating to the treatments used on crops and pastures where the resulting produce is destined for human consumption. The NADC requirement was to apply new data collection and data management technology and approaches in a prototype system that could be easily demonstrated and piloted. The system was to have the following characteristics:

- Capture as much application data as possible at source i.e. directly from the operating and management systems used by ground and aerial fertiliser and chemical applicators.

- Provide a complementary mechanism for farmers to easily capture primary data for the applications they do themselves, initially using electronic forms11 and at a later stage through data files imported from other farm recording software systems12.

- Provide a web based “post office” and “data warehouse13” to consolidate, store and exchange primary data – to farm management consultants, agronomists and environmental management system consultants used by farmers; their demand chains (i.e. the buyers of their produce);

10 Many farmers struggle with record keeping systems – from software programs to paper. Traditionally systems are difficult to use. There is enormous duplication in effort, particularly when the same (or similar data) must be supplied to multiples of users. There is generally no scope to “pool” data and use it data intelligently to flag exceptions and practices that may become issues further down the demand or supply chain. 11 The electronic forms proposed allow the identical equivalent of a paper form that farmers are use to filling out to be displayed and filled on the screen with inbuilt verification functions and data capture tools such as customized drop lists. 12 It is also envisaged that farmers will be able to import data files from NADC into their farm recording software systems. 13 The databank is the same as a data repository from which members can access primary data and secondary data in the form of reports using appropriate search criteria; the value adding of data uses the primary data held in the data repository.

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and to make it easier for farmers to satisfy the increasing requirements for regulatory compliance.

- Later on, NADC to also have the capability (through a “data university”) to process, interpret and value add the primary data into secondary data that can be used to achieve improved business, agricultural and environmental outcomes i.e. analyse data to flag exceptions for non-compliance, benchmark.

- A limited number of business management systems used by applicators were to be included in the initial NADC deployment (CLASS, GRASS and Rinex14) – i.e. NADC is “keeping it simple” and not trying to achieve its ultimate vision from the outset. Ultimately, the NADC infrastructure has to support the wider range of systems used by applicators.

- The scope of the initial deployment was to be limited to the collection of fertiliser and chemical application data only. The boundaries for the range of data collected can be as wide or narrow as NADC membership chooses.

- Ultimately import and export data files to and from farm activity recording software systems. NADC also wanted to stage the development of the system, always keep the system and technology simple and not over-engineer the infrastructure required in providing the system. The users

AFSA members – for the initial pilot deployment the participating businesses are:

- Larahum Bulk Handling Co, Horsham - Wheelhouse Fertilisers, Bridgewater - Jenkins Fertilisers & Limes, Wodonga - Field Air and AG Flight – aerial service providers in Victoria and Southern NSW

Farmers who are clients of the participating AFSA members, Field Air and AG Flight will form five pilot groups. Participating farmers will determine the farm management consultants, agronomists and environmental management system consultants, and demand chain businesses having access to their data. Agronomists employed by companies such as IK Caldwell and Elders, and NSW Agriculture, have expressed strong interest in participating. 14 CLASS – Client Application Spraying (Spreading) System (for aerial applicators) and GRASS – Ground Application Spraying (Spreading) System (for ground applicators) are business management systems supplied by MAP Computer Systems (MAP). Rinex Technology (Rinex) supplies global positioning and associated data logging technology used by ground applicators in their rigs.

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The technology solution

The NADC electronic business system initially links the CLASS, GRASS and Rinex business management systems (i.e. the sources of primary data) to the NADC data warehouse and uses export and import functions to transfer data files.

Electronic forms technology is being integrated so that farmers can capture and transfer data covering the applications they do themselves.

Key Points

NADC farmer members set access rights to their data through a trust relationship and permissions function.

The electronic business technology solution for NADC is simple and creative, and designed with regard to the NADC requirements outlined earlier. It is illustrated in summary format below.

NADC Services etc

NA

DC

Mem

ber

Lo

gin

E-Forms Archive

Data Warehouse

Reports &

Queries

Trust relationships and permissions set by the NADC Member identify which parties can access data and reports. Members select search criteria and

“filters”.

Unr

estr

icte

d A

cces

s

Res

tric

ted

NADC Web Site NADC Member

Information CLASS Data File Upload GRASS Data File Upload Rinex Data File Upload Electronic Forms Upload

Gen

era

l P

ub

lic

NA

DC

Ad

min

Lo

gin

NADC Member Register

CLASS & GRASS

Rinex E-Forms

NADC Members (login required)

NADC Members (login required)

“Data University”

Data storage & reports.

Data export functions in CLASS, GRASS & Rinex create a data file that

is uploaded into the NADC data warehouse by the applicator. E-forms are automatically transferred to the NADC data warehouse and E-Forms

archive.

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The key features include:

- Use of a secure web platform (www.nadc.net.au) built using Active Server Page technology and hosted on a shared Windows NT server through Ozhosting (www.ozhosting.com) in Melbourne.

- The data warehouse is an Access database (to be upgraded to SQL when usage warrants). - The electronic forms platform from GFA (www.gfassociates.com.au) and Formatta

Corporation15 (www.formatta.com). - Primary data capture is done offline – either through the applicator’s business management

system (CLASS, GRASS and Rinex), or using electronic forms. Internet use is limited to “post office” functions.

The system incorporates purpose built functions that cover:

- Uploading application data to NADC from CLASS, GRASS and Rinex. CLASS is used by over 50% of aerial applicator businesses. A data export function was developed and incorporated in CLASS and a data import function developed and incorporated in NADC.

- The CLASS system was too complex and expensive for many ground applicator businesses. MAP developed a scaled down version (GRASS) to suit ground applicators. The data export and import functionality described for CLASS applies to GRASS.

- Uploading application data to NADC from Rinex GPS data loggers used by some AFSA members in their ground rigs. Rinex are developing a data export function and a data import function in NADC is to be built using the same function as with CLASS.

- The electronic forms platform. A “Send” button on the electronic form transfers it instantly to the forms archive being incorporated in NADC and automatically reads the data on the form into the NADC data warehouse.

- A trust relationship and permissions function enabling NADC members to set access rights to their data held in the NADC data warehouse (i.e. they may allow their advisors and demand chains to access it through a secure login process using a range of search filters).

- Specifications for the “data university” that consolidates the data from the NADC membership and processes it into secondary or value added data, are being developed.

Implementation principles

NADC is limiting the scope of the initial deployment by concentrating on the collection of fertiliser and chemical application data in the prototype system, which is simple, easily demonstrated and immediately relevant to its target group.

Key Points

NADC is using five pilot groups to enable its system to be properly fine-tuned and the value proposition for NADC membership developed.

NADC is using five pilot groups to enable its technology to be tested and fine-tuned, and the value proposition for NADC membership to be developed. The groups are associated with each of the participating AFSA members and aerial service providers. The groups will become reference and demonstration groups for the progressive rollout of the NADC offering. Two training workshops have been conducted for participants followed up by office visits. The demonstration value of the prototype system has been proven many times over and the critical role of participants in fine-tuning the system confirmed.

One of the major challenges facing NADC is how to make it easy for the ground applicator businesses to implement GRASS which is the source for the primary data required by NADC. Ground applicators 15 Formatta supply Server, Designer & Filler technology for electronic forms. This technology is explained in more detail in the Excelerate and ChemCheck case studies.

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currently use a variety of systems from paper to spreadsheets and are typical of busy small businesses that are always short on resources and time. Their first priority is to supply their services to their customers (the farmers). The implementation of new business management systems usually takes second place. NADC and its technology providers are well aware of the challenge for electronic business implementation with many failed attempts particularly in the e-marketplace arena. There are a number of drivers that the proponents of NADC have identified to make their initiative successful. These include:

- Responding to known business needs and is not a “blue sky” or a “nice to have” offering. - Members having a stake in the pie being part owners of the co-operative business (delivering

commitment). - Distributing the service through key industry service providers (i.e. the applicator businesses). - Recognizing that electronic business is only the means to the end. - Being aware that Internet infrastructure limitations means rethinking how electronic business

is deployed (i.e. using Internet only as a “post office”). - Being aware of the importance of training and support. - Keeping the cost low or relative to the value offered (the pricing for the NADC services is to

be finalised). - Using a simple and creative technology solution with infrastructure that is not over-

engineered. - Limiting the scope of the initial deployment by concentrating on the collection of fertiliser

and chemical application data only in a prototype system that is simple and easily demonstrated.

- Using five pilot groups to enable the technology to be properly fine-tuned and the value proposition for NADC membership developed.

- Growing the business organically within its capacity and resources. Pricing Use of the NADC system will be available to paid up members and the cost of using the system is expected to be incorporated in the membership fee. Current status The current status of NADC is:

- The NADC entity has been established and the foundation membership is in place. - The five pilot groups are in place and involved in the pilot process. - Applicators using CLASS are uploading data to NADC for access by farmers and the other

parties they have authorised to have access to their data. - The GRASS system is currently being deployed to the AFSA participants to enable the pilot

process for those groups to recommence (these participants initially used CLASS and an outcome of the pilot process was to develop the scaled down version that is GRASS).

- The electronic forms system has been specified and built for integration with the NADC data warehouse.

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Further information

Phill Hatty Director / Secretary National Agricultural Data Co-operative Ltd 96 Harbour Road, Yendon VIC 3352 Phone: 61 3 5874 3363 Mobile: 0418 669 964 Fax: 61 3 5874 3364 Email: [email protected] Web: www.nadc.net.au

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NADC screens (examples only)

Screen 1 NADC Home Page (www.nadc.net.au).

Screen 2 Member Login

Screen 3 Farmer Member Services Menu

Screen 4 Farmer Member Data Warehouse Search

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Screen 5 Farmer Member Report Summary Screen

Screen 6 Farmer Member Report Full Data Screen

Screen 7 Applicator Member Services Menu

Screen 8 Applicator Member Data File Upload Function

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5. Excel-erate Benchmarking – Bananas

Summary

Sector Horticulture

Crop Bananas

Operator Australian Banana Growers’ Council Inc (ABGC)

Initiative Excel-erate Benchmarking

1 Excel-erate is an electronic business system enabling growers to pool information to better understand their business strengths and weaknesses.

Scope

2 Excel-erate provides a framework for continuously benchmarking business activities, and collecting production records that will enable forward supplies to be projected.

1 ABGC

2 Growers

3 Extension service providers (such as agronomists and / or farm management consultants)

Players


Key messages

Excel-erate responds to a strategic need to increase the quality of industry intelligence available to growers to enable them to make more informed business decisions.

The incentive for growers to participate is continuous and on-going access to benchmark reports.

ABGC has clearly articulated its requirements and has a well-defined development and deployment strategy.

Excel-erate should be available to all Australian banana growers (i.e. it is inclusive and not exclusive) irrespective of whether they have a computer and / or Internet access.

ABGC is introducing Excel-erate with a limited number of performance indicators that do not require large amounts of primary data to be collected i.e. they are “keeping it simple”.

Strategy

Growers in the initial Excel-erate pilot group have a critical role in defining and finessing the system through a prototyping and piloting program.

Ownership Excel-erate is owned and distributed by a key industry stakeholder (ABGC) and not by a technology provider through an “application service provider” model.

Technology Excel-erate should be owned and distributed by ABGC and not by the technology provider through an “application service provider” model.

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The Excel-erate system requirement is to efficiently and cost effectively capture, consolidate and process primary data into benchmark and comparative analysis data that growers can use to make more informed business decisions.

Excel-erate should be simple to use and introduced with a limited number of performance indicators that do not require large amounts of primary data to be collected.

The Excel-erate electronic business system technology has been selected after analysis of the business need and is built around an electronic forms platform accessible through the web. Data capture screens have the look and feel of paper forms. This technology is low cost and very flexible allowing changes to be implemented easily.

Technology (cont)

Data entry can be done offline. Internet is only used as a “post office” to download blank forms, upload filled input forms and access benchmark reports.

Sector profile

A large proportion of growers operating in the industry are small scale in terms of area and production.

A large proportion of growers have limited education.

A majority of growers own a computer, use it in their business and have Internet access.

Key Points

There is a record of growers being willing to make changes to their operations.

Banana industry Bananas are grown along the coasts of Queensland and northern New South Wales, in Kununurra and Carnarvon in Western Australia, and Darwin in the Northern Territory. There are over 2,000 growers with about half in New South Wales. Production approximates 250,000 tonnes from over 14,000 hectares with a gross value exceeding $350 million. The larger proportion of the industry supplies fresh fruit to the central markets and supermarket chains. Exports are negligible if any. The domestic market faces regular seasonal cycles of overproduction creating pressure to sell product quickly at reduced prices. This in turn creates a very reactionary production and marketing environment that puts pressure on profit margins. However there are signs of change as many producers, squeezed by falling returns and rising costs, explore alternative marketing options and other products based around the banana. The increased pressure on margins and profitability, means those growers with a clear knowledge of their production volumes, costs, gross margins and breakeven points gained through benchmarking and crop forecasting projections, are likely to operate ahead of their peers. Banana growers In 2001, ABGC undertook a comprehensive survey of growers16 to profile the industry, its needs and requirements. It also aimed to provide a picture of the people that make up the industry, their education, their ethnicity, and their impressions of the information and services provided to them. 16 Australian Banana Industry Survey 2001 – report by John Loydell.

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The survey provides important profile data, which ABGC has had to consider in developing its electronic business strategy:

- 81% of growers surveyed have plantations with an area less than 20 hectares (54% less than 6 hectares and 23% less that 2 hectares).

- Almost half are dependent on banana production as their primary source of income (46% obtained more than 70% of their household income from bananas).

- Management teams are predominately two person, being husband and wife enterprises. - 66% of growers were aged 40-59 years with a healthy 18% in the 30-39 year bracket. - 53% have between 11 and 30 years experience in the industry. - 14% indicated that English was not their first language. - Only 41% have achieved a formal education beyond year 10 (26% to year 12 and 15% to

tertiary levels). 12% left school at the primary level and 45% at year 10. 2% did not respond. - 63% owned a fax (expected to increase to 75% by 2003); 67% owned a computer (80%

expected by 2003); 57% used the computer in their business (65% expected by 2003); and 50% had Internet access (63% expected by 2003).

- Whilst anecdotally there is an image of producers being conservative and slow to change, the survey indicated that 49% had implemented three or more changes into their operations in the last two years, with a strong focus on quality issues. This would seem to indicate that growers are sensitive to the issues that affect their operations and are listening to the signals coming from the market.

The electronic business initiative The business need

Excel-erate responds to a strategic need to increase the quality of industry intelligence available to growers to enable them to make more informed business decisions.

Key Points

The incentive for growers to participate is continuous and on-going access to benchmark reports.

The industry’s Strategic and R & D Plan (developed through a comprehensive consultative process with growers and other stakeholders) has identified a strategic need to increase the quality of industry intelligence available to growers to enable them to make more informed business decisions. To make this happen the industry has established a National Benchmarking Project. ABGC has the responsibility to deliver outcomes under this project and developed the Excel-erate branding after a comprehensive consultative process with growers. AGCC’s ability to deliver outcomes under benchmarking programs has been severely limited by the lack of infrastructure available to it for data capture and processing. Growers also wanted a different approach with Excel-erate to an earlier benchmarking study that ABGC commissioned. The approach to data collection and the program outputs from that study was not well accepted by growers, particularly the smaller growers. This earlier study covered the 1995/96 – 1997/98 period. It involved only 41 growers deemed to be representative of the industry. Like many other benchmarking or comparative analysis programs used across agriculture, that analysis presented a single point of time “snapshot” of industry performance. It was oriented to “whole of farm” financial performance, rather than the operational processes and activities that a grower can actively influence and change, and easily relate to. The return of results to participating growers after data collection (farms spread from Kununurra to Coffs Harbour), manual data entry and posting back meant that information was received well after the period of study. Growers who were not included in the study (some 2,200 plus) were not able to access the final report until 1999 and very few did.

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It is important for ABGC to ensure the Excel-erate project addresses the perceived limitations of the earlier benchmarking study; and particularly to provide a framework that is inclusive rather than exclusive, and which provides continuous and on-going access to benchmark reports. The table below illustrates how the Excel-erate system differs from the earlier benchmarking study commissioned by ABGC:

Excel-erate Benchmarking Previous Benchmarking Study

Continuous benchmarking Single point of time snapshot

Current, immediate Old before released

Simple short report Complex long report

Activity / operational KPI’s Whole of farm financial KPI’s

Designed by growers Designed by consultant

Data submitted by grower Data collected by consultant

Ability to compare to other growers and performance targets with ranking available

Inability to compare to other growers and performance targets

The measures ABGC will use to evaluate Excel-erate will relate to the numbers of growers participating and the perceived value of the benchmarks in facilitating a continuous business improvement process i.e. supporting a management framework based on a simple ‘plan / do / check / act’ cycle that underpins continual improvement. To evaluate Excel-erate:

- ABGC have set ambitious grower participation targets for the first two years. - ABGC recognise that the Excel-erate initiative will “sink or swim” on the quality of the

benchmark data it can deliver to participating growers and the quality of the aggregated information that the industry can generate form the program.

- The anticipated benefits include continuous business improvement, better product outturn, reduced costs / increased profits, better records meeting QA / EMS requirements and better business planning.

The requirements

ABGC has clearly articulated its requirements and has a well-defined development and deployment strategy.

Excel-erate should be owned and distributed by ABGC and not by the technology provider through an “application service provider” model.

The Excel-erate system requirement is to efficiently and cost effectively capture, consolidate and process primary data into benchmark and comparative analysis data that growers can use to make more informed business decisions.

Excel-erate should be available to all Australian banana growers (i.e. it is inclusive and not exclusive) irrespective of whether they have a computer and / or Internet access.

Key Points

Excel-erate should be simple to use and introduced with a limited number of performance indicators that do not require large amounts of primary data to be collected.

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The Excel-erate system requirement is to efficiently and cost effectively capture, consolidate and process primary data into benchmark and comparative analysis data that growers can use to make more informed business decisions. The specific requirements that ABGC identified for Excel-erate system were that it should:

- Collect and process benchmarking data initially, with the possible extension to crop / supply forecasting data.

- Be available to all Australian banana growers (i.e. it is inclusive and not exclusive) irrespective of whether they have a computer and / or Internet access.

- Provide a continuous and repeatable benchmarking process to create a “moving picture” of grower and industry efficiency month by month; not as a one-off reporting system every number of years.

- Provide growers with a “snapshot” of their business performance against peers and targets, against their own past performance, and against agreed regional, national or international standards; using simple benchmarks or key performance indicators (KPI’s).

- Provide growers with a ranking. - Provide a platform for continuous business improvement – at both the grower and industry

levels. - Be simple, efficient and cost effective even for the small grower. - The automated system should retain a paper based “feel”. - Not require continuous Internet connectivity i.e. growers can enter data offline. - Be secure so that no grower can see the data and results of other growers except in an

aggregated form. - Be flexible so that additional benchmarks or KPI’s can be easily added.

The initial benchmarks or KPI’s that all parties agreed to for the pilot were:

Outputs Benchmarks Unit

Production Bunches covered / variety Bunches cut / variety Cartons packed / variety / size Cartons packed / variety / size Cartons packed / variety / size

/ hectare / hectare / hectare / hectare, / bunches cut / hectare, / plant

Operations - Production Fertiliser cost Lime cost Chemicals cost – weeds Chemicals cost – soil / roots Chemicals cost – bunch Chemicals cost – leaf Labour cost Fuel cost Total operations cost

/ hectare, carton packed / hectare, carton packed / hectare, carton packed / hectare, carton packed / hectare, carton packed / hectare, carton packed / hectare, carton packed / hectare, carton packed / hectare, carton packed

Operations - Packing Packing cost Transport cost Wastage Total packing cost

/ hectare, carton packed / hectare, carton packed / hectare, carton packed / hectare, carton packed

Marketing Gross return / variety / size / hectare, carton packed

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The users The users are Australian banana growers and the industry as a whole where aggregated data will be a strategic resource. There is interest in Excel-erate from other horticultural industries. The technology solution

The Excel-erate electronic business system technology has been selected after analysis of the business need and is built around an electronic forms platform accessible through the web. Data capture screens have the look and feel of paper forms. This technology is low cost and very flexible allowing changes to be implemented easily.

Key Points

Data entry can be done offline. Internet is only used as a “post office” to download blank forms, upload filled input forms and access benchmark reports.

The electronic business technology solution for Excel-erate is illustrated17 next page. ABGC has contracted Graeme Forsythe & Associates (GFA) to develop the Excel-erate system and infrastructure. ABGC owns the Excel-erate brand and will distribute it as an ABGC service18 to banana growers. The technology has been selected after analysis of the business need and consideration of the profile data of growers. The key features include:

- Use of an electronic forms platform from GFA (www.gfassociates.com.au) and Formatta Corporation19 (www.formatta.com). The Formatta Filler, which is free to growers and other users and very small in download file size (less than 1Mb), must be installed on all computers accessing Excel-erate. Formatta Designer is used to build forms, and the Formatta Server is a series of application programming interfaces that enable the data to be automatically read from the form into the database, and the form to be automatically filled with known profile data.

- Access will be through the ABGC web site (www.abgc.org.au). - Use of an Access database hosted on a Windows NT server (to be upgraded to SQL when

usage warrants). - Offline data capture. Internet use is limited to “post office” functions.

17 Illustrative only. For example there is a single member login function used by members to access functions for data uploading, data and report retrieval, and accessing general member information. 18 This ensures that an industry stakeholder owns and distributes the service and not a third party technology provider through an “application service provider” model. 19 Formatta supply Server, Designer & Filler technology for electronic forms. This technology is explained in more detail in the Excelerate and ChemCheck case studies.

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ABGC is introducing Excel-erate with a limited number of performance indicators that do not require large amounts of primary data to be collected i.e. they are “keeping it simple”.

Key Points

Growers in the initial Excel-erate pilot group have a critical role in defining and finessing the system through a prototyping and piloting program.

For the Excel-erate benchmarking system, ABGC is adhering to the following principles for the pilot stage:

- Keep the Excel-erate system simple. - Concentrate at the outset on a small number of performance indicators, highly relevant to the

core business operations, processes and activities of growers i.e. keep it simple. - Drive the program by grower needs and involve the participating growers in the development

of the system to build their sense of “ownership” and commitment. - Start with a small reference group of growers to make sure that the Excel-erate system works

well, is practical and has an easy to use and understandable format. (Importantly the growers participating at this level have volunteered to participate because they want to be in the program, not because they feel they have to be in it. The group is predominately rank and file growers and not so-called “industry leaders”).

- Build prototype data input forms (Profile forms and Benchmarking Activity forms) and output reports (Benchmark Reports).

- Continuously fine-tune the Excel-erate system based on grower feedback. For the rollout of the Excel-erate system, ABGC is following these principles:

- Provide training to participating growers where required.

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- Provide a simple and clearly documented “starter pack” for new participants. - Integrate the program with ABGC’s best practice group strategy for extended rollout to the

wider spectrum of growers. ABGC plan that the initial reference group of growers will become the building block to take the service to the broader industry.

When the project was in the initial planning stages, a number of potential risks were discussed and strategies to mitigate the risks were developed and built in to the project methodology. The risks identified included:

- Growers not understanding the benchmarking model. - Growers not providing accurate input information. - Growers resisting information sharing. - Growers perceiving that information generated out of the benchmarking process could be

used against them, or find its way into the wrong hands because the system was not secure. - Large growers seeing the program as a threat and working against it or not being interested in

supporting it. - The pilot stage being unable to demonstrate sufficient incentives to encourage grower

participation. - The electronic business technology being difficult and costly to use.

To mitigate risks, the following strategies were identified:

- Running Excel-erate as a pilot program and addressing the resolution of these issues with the active involvement of the participating growers.

- Ensuring the pilot group is made up of growers who want to participate because they want to be in the program, not because they feel they have to be in it. The group is predominately rank and file growers and not so-called “industry leaders” obliged by their position in industry to be involved.

- Adopting a carefully planned deployment strategy involving prototyping the forms for demonstration and training purposes.

- Actively training growers. - Providing simple user documentation.

In implementing Excel-erate, growers will follow the steps below20:

Step 1 – Registration

- Growers will register with ABGC as Excel-erate users. - ABGC will allocate each grower a username and password and provide instructions for using

Excel-erate.

Step 2 – Computer set up

- Growers will download and install Formatta Filler, and set up working folders for holding forms on their computer.

- Blank forms (pre-filled with profile data) are downloaded from for filling in offline; or they can be opened and filled whilst connected to Internet. (When filled, the grower clicks a Send button that automatically and instantly transfers the filled form to the server and the data in the form is read into the database21).

20 The steps involved in the initial “manual” system are illustrated in the grower instructions at the end of this case study. 21 This is an instant process if connected to Internet. If not, an Internet connection is instigated.

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- For growers without a local computer and / or Internet connection, ABGC will supply identical printed forms that can be filled out and sent back to ABGC for processing.

Step 3 – Create and supply profile data

- The first forms that are filled are the Business and Plantation Profile forms. - Profile forms are filled out once and stored in a secure forms archive (Services Menu) on the

server. - Profile forms are updated only as changes occur. To update, the grower opens the archived

form, makes the changes and submits the edited form back to the server. (Growers operating manual systems would forward an updated form to ABGC for processing).

- When the Profile forms is submitted to Excel-erate, the data in the forms is automatically read into the Excel-erate database. This allows the benchmarking forms to be automatically pre-filled with relevant profile data.

Step 4 – Supply benchmarking activity data

- The Benchmarking Activity forms will comprise: A Production form (Bunches Covered & Cut) – filled out quarterly or monthly. A Marketing form (Consignments & Returns) – filled out quarterly or monthly. An Expenses form (Expenses) – filled out quarterly or monthly. Alternatively, a form combining the Production, Marketing and Expenses elements can be used.

- When filled Benchmarking Activity forms are submitted they are immediately archived (in the same way as the Profile forms) and the data is automatically read off the form into the Excel-erate database. This process updates the relevant back end database tables allowing reports and queries to be generated.

- Archived data input forms are retrievable through the secure forms archive (Services Menu) available to each grower.

- Filled Benchmarking Activity forms can be submitted as frequently as the grower chooses – quarterly, monthly or weekly.

- Data entry is not onerous and does not require a major time commitment on the part of the grower. Many growers are expected to synchronise lodgement of the Benchmarking Activity forms with their lodgement of Business Activity Statements.

Step 5 – Access benchmarking reports

- Benchmark Reports will be available to the grower at pre-determined dates through the year (i.e. there will be cut-off times for submission).

- The web server processes the input data and generates a Benchmark Report back to each grower covering the indicators (KPI’s) being benchmarked.

- Minimising the time lag between data entry and report receival is seen as being very important to maintaining the programs relevance and reliability.

Pricing Decisions about pricing will not be made by ABGC until the pilot stage is completed and commercialisation options considered.

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Current status The current status of the Excel-erate project is:

- The starting point was to define the initial benchmarks or key performance indicators (KPI’s).

- Once the benchmarks or KPI’s were agreed, preliminary specifications were developed for the input forms (Profile and Benchmarking Activity forms) and the output reports (Benchmarking Activity Reports).

- A prototype system has been developed for demonstration to growers. It provides the framework from which the automated system would be built. It has been assessed by a pilot group of growers established as representative of each of the production areas throughout Australia. This group has used the system in its manual form and provided preliminary feedback to enable the system to be more comprehensively specified. Larger groups will be established in each production area based on this initial representation.

- An industry advisory panel has also been established by ABGC to provide advice and guidance to the project.

- Arrangements for the further development of Excel-erate and its rollout to the industry are being discussed by ABGC, Horticulture Australia and GFA.

At this stage, the Excel-erate project has been able to demonstrate that benchmarking is a relevant electronic business application; there is acceptance of the format proposed; and the technology is very usable by growers.

Further information

John Loydell Industry Development Manager Australian Banana Growers’ Council F Block, Brisbane Market, Sherwood Road, Rocklea QLD 4106

PO Box 309, Brisbane Market QLD 4106 Phone: 61 7 3213 2405 Fax: 61 7 3213 2436 Email: [email protected] Web: www.abgc.org.au

Acknowledgements The Excel-erate project will be undertaken by ABGC with the support of Horticulture Australia Limited.

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Example of Excel-erate prototype form

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6. ChemCheck – Winegrapes

Summary

Sector Viticulture

Crop Winegrapes

Operator Graeme Forsythe & Associates Pty Ltd (GFA) & Australian Winegrape Industry Quality Accreditation Committee (AWIQAC)

Initiative ChemCheck

1 ChemCheck is a checking service for viticulture chemical use independently verifying growers’ chemical spray diary records with results automatically available to the wine companies the grower is contracted to supply to.

2 ChemCheck is a core element of the industry’s Good Viticulture Practice QA Code.

Scope

3 The ChemCheck system is also a highly relevant planning tool.

1 Winegrape growers

2 Wineries

Players

3 AWIQAC

Key messages

ChemCheck is a core component of AWIQAC’s Good Viticulture Practice Code and has been developed by GFA in partnership with AWIQAC.

ChemCheck is being distributed by a key industry stakeholder (AWIQAC) and not by a technology provider through an “application service provider” model.

AWIQAC have been able to clearly articulate their requirements and have a well-defined development and deployment strategy.

By using electronic business, GFA & AWIQAC are able to introduce innovative approaches to QA and provide a toolset that also supports business improvement.

The key implementation principle is to keep the system and technology simple and low cost, and intuitive to use.

Growers and winery customers have a critical role in defining and finessing the electronic business system through a prototyping and piloting program.

Growers need incentives to capture and transmit primary data. Information flows need to be “two way” and offer a commercial benefit. Wineries, as the grower’s customer, will be a major influence on AWIQAC achieving its targets for penetration.

Strategy

ChemCheck can be easily adapted for products other than winegrapes.

Technology The ChemCheck electronic business system must efficiently capture data, store data, analyse and check data, and report outcomes.

Technology (cont)

The electronic business technology has been selected after analysis of the business need. In many situations, the technology has been the first consideration and the business need has been the second.

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The electronic business system is built around an electronic forms platform accessible through the web. It makes data input forms on the computer screen look identical to the paper forms that are used in the manual system. This technology is low cost and very flexible allowing changes to be implemented easily.

The electronic business system allows data entry to be done offline. Internet is only used as a “post office” to download blank forms, upload filled forms and access benchmark reports.

Sector profile

The wine industry has been a high growth and high profile industry through the last decade.

There are a large number of businesses operating in the industry including over 6,000 independent winegrape growers supplying mainly the large corporate winemakers.

Key Points

There is increasing QA compliance requirement on growers demanding better record keeping.

Winegrape industry The Australian Wine Industry has seen unprecedented growth over recent years. Over 1.6 million tonnes of winegrapes were crushed in 2002 (by 1,318 wineries) off approximately 150,000 hectares to produce over 1 million litres of wine. The crush was up significantly on the two previous years. Exports in the year to October 2002 totalled 445 million litres and were valued at over $2.1 billion. Key production areas are Lower Murray in SA (30%), North West Victoria (24%), Big Rivers in NSW (23%), Limestone Coast in SA (12%) and Fleurieu in SA (11%). Many wine companies operate their own vineyards, however there is a large number of independent growers (approximately 6,000 Australia wide) supplying the bigger wine companies generally under contractual arrangements. Chemical applications in the winegrape industry occur primarily from September to December each year. Often there is a requirement to spray in January and February if there is a need to control a pest or disease outbreak such as powder mildew. Strategy 2025 In June 1996, the Australian Wine Foundation released Strategy 2025, a statement of the aspirations and goals for the Australian wine industry over the next 30 years. Strategy 2025 addresses Australia's competiveness, market opportunity, resource requirements and government facilitation required to fulfil the industry vision. The Strategy 2025 document notes:

“The relationship between grape grower and winery is undergoing significant change which will be accentuated by future market demand for a substantial lift in fruit flavour intensity and complexity, and for more stable pricing undistorted by cyclical shortage premiums. A higher degree of sourcing from winery owned vineyards particularly for premium bottled products and greater reliance on robust longer-term contractual arrangements will be manifestations of this change. There will be substantially greater differentiation between grapes on the basis of measured quality attributes and this will be reflected in prices.

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New vineyard investment will have to meet best practice parameters on cost efficiency, quality specification and on location. Dryland regions are likely to increase their share from 53% to 60% of total vineyard area although major plantings are planned for inland irrigated areas as well. More intensive viticultural management will be required in inland areas to meet quality specifications. Central NSW, central Victoria and the South East of SA are the most attractive locations for new plantings in terms of water availability, climate, scale cost efficiency, and proximity to existing wine infrastructure. Environmental management will also be an important factor in the increase in grape production. The environmental problems associated with increased irrigation can be resolved through Land and Water Management Plans and more effective timing and water scheduling. However, other issues such as spray drift, the qualified use of agricultural chemicals, noise pollution, consumer attitudes to chemical use and occupational health and safety issues will have to be addressed”.

The electronic business initiative The business need

ChemCheck is a core component of AWIQAC’s Good Viticulture Practice Code and has been developed by GFA in partnership with AWIQAC to deliver against that need.

Key Points

ChemCheck can be easily adapted for products other than winegrapes.

AWIQAC22 established a quality assurance (QA) system called Winegrape Care in 1998. Over 800 growers have been trained and 670 were accredited under this Program as at June 2002. AWIQAC acknowledged that this brand was unlikely to increase penetration among the 6,000 winegrape growers – market research indicated it included elements not required by wineries (the customer), was too costly, and was too difficult for smaller growers to implement. A long-term outsourcing contract for the administration and operation of Winegrape Care also meant that AWIQAC had limited scope to “refresh” the brand. In September 2001, AWIQAC convened a workshop of winery and grower representatives to review the QA requirements of the industry. It identified a need to make other options (i.e. beyond Winegrape Care) available because market requirements had changed, and knowledge of how to manage QA systems had improved. A new and simpler set of national standards for winegrape production called Good Viticulture Practice (GVP) was developed. The main point of difference to Winegrape Care is that GVP provides a simple, cheap and more relevant pathway to QA and has the endorsement of wineries. 22 AWIQAC is a not for profit incorporated industry organization formed in 1998 to support QA requirements for the wine grape production sector of the wine industry in Australia. It represents a significant proportion of the wine industry. Wine companies and growers are represented equally on the AWIQAC Committee. Its purpose is to develop and manage national QA systems for wine grape production. It operates with a sub-structure in key winegrape producing regions. BRL Hardy is the only major wine company not represented.

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In developing GVP, AWIQAC sought to achieve a system that is acceptable to wine customer needs i.e. it:

- Enables a flexible response to wine customer needs - Continually adds value to Australian wines - Highlights and clarifies food safety and quality responsibilities - Is built around a practical, science-based approach to managing those responsibilities along

the supply chain - Is recognised nationally - Is preferred by most wineries and supported by their supplying winegrape growers - Is practical and simple, and cost and time effective - Becomes a core viticulture business tool - Facilitates continuous improvement of both the accredited winegrape grower businesses and

the Code itself - Uses trainers and auditors who are carefully chosen for their strong regional industry

knowledge and credibility. Three core assurances are addressed by GVP:

- Safe use of viticulture chemicals – through the application of HACCP principles and independent checking of grower spray diaries (ChemCheck).

- Traceability – so that wineries can trace product from tank to vineyard section. - Customer (wine company) specifications – so that growers understand winery supply

requirements (i.e. instructions and information from wineries). The logic behind the independent checking of grower spray diaries is that wine companies have not efficiently managed the mass of information in the spray diaries submitted to them typically twice before winegrapes are accepted for delivery. Anecdotal evidence from a major winery indicates an error rate of 30% in the data in spray diaries is the current norm. The types of errors range from minor missing data (eg. spray volume) through to serious error such as having exceeded restrictions on use (eg withholding period), which could indicate a high risk of chemical residues. It is already clear that ChemCheck when adopted by a significant portion of the wine industry will appreciably raise the level of awareness of “good chemical practice”. The outcomes of third party auditor reviews of spray diaries are also questionable, with evidence to suggest that errors are often missed. Whilst developing and rolling out GVP, AWIQAC wanted to ensure that users of the original Winegrape Care system continued to be supported, and should have access to the electronic business toolsets developed to support GVP. Longer term expected benefits from ChemCheck include:

- Reducing the frequency and cost of residue testing. - More effectively satisfying QA audit requirements (local and international standards such as

Eurepgap) and assisting compliance with regulatory authority requirements (such as the NSW Environment Protection Authority)23.

- The demand chain becoming more transparent because customers (authorised wineries) are able to view Spray Diary records including the results of ChemCheck’s validation immediately after the records are entered; and are therefore able to influence grower spray application practices during the vintage. This represents a significant advantage to current practice where analysis of the spray diaries is undertaken just prior to vintage, and probably in some cases, not at all.

23 In NSW the legislation has made the keeping of these records a legal requirement from July 2002.

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Target uptake for ChemCheck in the first year 2003 / 2004 is 300 growers. AWIQAC conservatively estimate that 50% of growers will use the electronic business technology while the remainder will complete paper-based diaries (i.e. using the ChemCheck system manually). AWIQAC will provide a bureau service for manual users. In the second year AWIQAC is seeking to convert a high percentage (75%) of AWIQAC trained growers to the GVP code (including ChemCheck) and to have 75% of growers using the electronic business technology. This represents a customer base 600 growers. Uptake in the wine industry is anticipated to exceed 3,000 grower users (about 50% market penetration) in the long term. Achieving this uptake requires wineries (i.e. the demand chain) to recommend or mandate their growers to get GVP certification and with that, use of ChemCheck; or to use ChemCheck independently. The requirements

By using electronic business, AWIQAC is able to introduce innovative approaches to QA and provide a toolset that also supports business improvement.

The ChemCheck electronic business system must efficiently capture data, store data, analyse and check data, and report outcomes.

Key Points

Growers need incentives to capture and transmit primary data. Information flows need to be “two way” and offer a commercial benefit. Wineries, as the grower’s customer, will be a major influence on AWIQAC achieving its targets for penetration.

AWIQAC specified the following requirements for an electronic business system that checked grower spray diaries:

- Use an automated process to check chemical records (spray diaries) prior to harvest each year.

- Check spray diaries to confirm that:

1) The chemicals used are registered for viticulture24 2) The chemicals are used according to the label rate 3) The correct chemicals for the targets are applied 4) The restrictions (withholding period) for use are observed, and 5) Adequate records are kept.

- Provide the grower with a detailed report including confirmation of recorded chemical use; the risk status of chemical use defined as “Low Risk”, “Possible Risk” or “Insufficient Records” in terms of exceeding the national industry standards25; and corrective information where appropriate.

- Provide an electronic spray diary application form so the grower can submit the spray data electronically and receive an instant check even before using a chemical (i.e. for planning spray applications).

- Maintain and store the chemical use records as submitted by the grower. - Provide reports of chemical use to the grower. - Make the report available to a winery / wineries26 nominated by the grower. - Be simple, efficient and cost effective even for the small grower. - The automated system retains a paper based “feel”.

24 The Australian Wine Research Institute (AWRI) supplies the master chemical list. 25 These relate to maximum residue limits (MRL’s) as defined by the AWRI. 26 Many growers supply winegrapes to more than one winery.

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- Cater for growers without computers and / or Internet access, and not require continuous Internet connectivity i.e. growers can enter data offline. (Growers must be able to submit chemical records for checking by post or fax in much the same way as they are now made available to wineries (using the electronic spray diary application form or their existing formats).

- Be secure so that no grower can see the data and results of other growers other than where it is aggregated.

- Be flexible so that additional features and functions can be added. - Provide a continuous process of random and targeted sampling and testing of winegrapes for

residues to support and build the integrity of the checking process27. The key to the concept is to check the records and link this to more efficient residue testing rather than the more frequent testing without analysis of chemical records which is the current approach.

- A detailed report is provided to the grower when samples are taken, and all users are provided with a summary that does not identify the grower 28.

The users The users are Australian winegrape growers, wineries and AWIQAC as operator of the GVP and Winegrape Care QA systems. The ChemCheck system has potential application to growers and demand chain operators in other viticultural, horticultural and agricultural industries. The technology solution

The electronic business system is built around an electronic forms platform accessible through the web. It makes data input forms on the computer screen look identical to the paper forms that are used in the manual system. This technology is low cost and very flexible allowing changes to be implemented easily.

The electronic business system allows data entry to be done offline. Internet is only used as a “post office” to download blank forms, upload filled forms and access benchmark reports.

Key Points


The electronic business technology solution for ChemCheck is illustrated29 next page. AWIQAC contracted Graeme Forsythe & Associates (GFA) to provide the ChemCheck system and infrastructure. Under commercial arrangements with GFA, AWIQAC will distribute ChemCheck as an AWIQAC service. This ensures that an industry stakeholder administers and distributes the service and not a third party technology provider through an “application service provider” model. The technology has been selected after analysis of the business need. 27 Over time statistical analysis will establish the correct rate of testing for residues. AWIQAC anticipate that the with the automated checking system in place, the rate of testing required will be a small percentage of that which would be otherwise required. By having all records checked thoroughly, the risk of contaminated produce being consumed is greatly reduced. 28 All users have the option to enter and retrieve data electronically, which allows simple yet powerful searching and sorting tools. Growers for example can sort records according to chemical used, section sprayed or date range. 29 Illustrative only. For example there is a single member login function used by members to access functions for data uploading, data and report retrieval, and accessing general member information.

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After completing the Freshport Spray Diary pilot, GFA spent some months searching for electronic business technologies that could be deployed to address the many operational and technical issues that emerged (refer Case Study: Freshport – Australian Wine Industry). Key requirements were that the solution had be:

- Very simple to use - Adaptable because user needs will change frequently – users will add to and /or change the

information they require because market drivers change, and as they become familiar with the use of electronic business technology

- Zero or very low cost for users to deploy (i.e. no license fees) - Able to work on Windows PCs, offline rather than Internet only, with small data file sizes –

because Internet performs so poorly in so many parts of regional Australia - Able to integrate with email as the information carrier - Able to support paper easily (i.e. accommodate growers that don’t have a computer or

Internet access). The technology solution adopted for ChemCheck meets these criteria. ChemCheck is using a secure web platform based around the following development technologies:

- Formatta Server, Designer & Filler - ASP web pages - Access database (moving to SQL when necessary) - Hosting of the application on a Windows NT server. - Offline data capture. Internet use is limited to a “post office”.

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ChemCheckSubscriber Login


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The backbone of the technology is an electronic forms platform from GFA (www.gfassociates.com.au) and Formatta Corporation (www.formatta.com) that integrates with the ChemCheck web site30 (www.chemcheck.com). The Formatta Filler, which is free to growers and other users and very small in download file size (less than 1Mb), must be installed on all computers accessing ChemCheck. Formatta Designer is used to build forms, and the Formatta Server is a series of application programming interfaces that enable the data to be automatically read from the form into the database, and the form to be pre-populated with known profile data and drop lists on forms to be dynamically generated. The ChemCheck solution involves the following processes for growers:


- Growers register with AWIQAC for GVP or Winegrape Care. ChemCheck is offered as a mandatory component of GVP and as an optional module for Winegrape Care.

- AWIQAC allocates each grower a userid and password and gives instructions for using ChemCheck and accessing the ChemCheck system through the AWIQAC web site (www.awiqac.com.au).

- As part of the registration process the grower nominates which winery / wineries can access his or her spray application records.

Step 2 – Computer set up and logging in to ChemCheck

- Growers and wineries download and install Formatta Filler. - Using the allocated userid and password, the grower logs in to ChemCheck through the

AWIQAC site (www.awiqac.com.au). When logged in the grower’s Services Menu displays (see Screen 1 at end of case study).

- Blank forms (pre-filled with profile data) are downloaded from the AWIQAC web site for filling in offline (right click the mouse on the form name in left side column); or they can be opened and filled whilst connected to Internet (left clicking the mouse on the form name). (When filled, the grower clicks a Submit button that automatically and instantly transfers the filled form to the server and the data in the form into the database31).

- For growers without a local computer and / or Internet connection, AWIQAC will supply identical printed forms that can be filled out and sent back to AWIQAC for processing.

Step 3 – Create and supply profile data

- The first forms that are filled are Profile forms - Business Profile and Vineyard Profile. - Profile forms are filled out once and stored in a secure forms archive (Services Menu) on the

ChemCheck server. - Profile forms are updated only as necessary. To update, the grower opens the archived form,

makes the changes and submits the edited form back to the ChemCheck server. (Growers operating manual systems would forward an updated form to AWIQAC for processing).

- When the Profile forms are submitted to ChemCheck, the data in the forms is automatically read into the ChemCheck database. This allows the Spray Diary form to be automatically pre-filled with relevant profile data.

Step 4 – Supply spray application data and checks

- The Spray Application form is filled out for each spray application (see Screen 2 at end of case study).

30 Winegrape growers are encouraged to access ChemCheck through the AWIQAC web site (www.awiqac.com.au). 31 This is an instant process if connected to Internet. If not, an Internet connection is instigated.

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- A number of the checks are done as the spray application data is entered on the form. Wherever a message displays in red type, the ChemCheck system has identified a non-conforming spray application (i.e. at least one of the criteria checked hasn’t satisfied the winery requirements). The remaining checks are done when the data is read into the ChemCheck database and the results of the checks are automatically inserted in the Spray Application form and the grower’s Spray Diary Report (which can be accessed by the grower).

- When filled the Spray Application form is submitted and immediately archived (in the same way as the Profile forms) and the data is automatically read off the form into the ChemCheck database. This process updates the relevant back end database tables allowing checks, reports and queries to be generated.

- When submitted, the data in the Spray Application form is locked. Under the business rules for ChemCheck, can only be amended by the originating grower after downloading or opening the original form from the forms archive in the grower’s Services Menu.

- Filled Spray Application forms can be submitted as frequently as the grower chooses to – preferably after each spray application. Each time the grower simply opens a blank form (pre-filled with profile data), enters spray application data and submits the filled form to the server.

- Data entry is not onerous and does not require a major time commitment on the part of the grower.

Step 5 – Access archived Spray Application forms and Spray Diary Reports

- Spray Diary Reports (for spray applications) are available to the grower at any time and can be selected using search criteria for the start and end date of a period, production sections, treatment products and targets. The web server processes the input data and generates a report back to the grower taking the search criteria into account.

- In the example Spray Diary Report (Screen 3) the date of the application displays in green or red. A green entry means that the application complies with the checks required by wineries. A red entry means that the spray application has not complied with all the checks – the reasons are displayed on the Report, or available by hovering the mouse over the application date.

The ChemCheck solution involves the following processes for wineries:


- AWIQAC allocates each winery a userid and password and gives instructions for using ChemCheck and accessing the ChemCheck system through the AWIQAC web site (www.awiqac.com.au).

Step 2 – Computer set up and logging in to ChemCheck

- As for growers (above).

Step 3 – Access archived Spray Application forms and Spray Diary Reports

- Spray Diary Reports (for spray applications) are available to the winery at any time for growers who have nominated the winery in their registration with AWIQAC (i.e. granted the winery access to their records). The reports can be selected using a range of search criteria and filters:

1) Production region 2) Grower trading name 3) Date ranges

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4) Chemical Group, Active Ingredient and Treatment Product 5) Target.

- The web server processes the input data and generates a report back to the grower taking the search criteria into account.

- Further functions to support winery use of ChemCheck are being developed32. Implementation principles

The key implementation principle is to keep the system and technology simple and low cost.

Growers and winery customers have a critical role in defining and finessing the electronic business system through a prototyping and piloting program.

Key Points

ChemCheck is being distributed by a key industry stakeholder (AWIQAC) and not by a technology provider through an “application service provider” model.

In implementing the ChemCheck electronic business system, AWIQAC has taken on board the experience of the Freshport pilot with the wine industry (see Freshport case study). This demonstrated that electronic business solutions should satisfy characteristics that include:

- Keeping the system simple. - Making it flexible and adaptable to change. - Involving growers and wineries in the development of the system to build their sense of

“ownership” and commitment (i.e. build prototype data input forms and output reports for growers and wineries to assess and continuously fine-tune based on their feedback).

- Ensuring the deployment cost to growers (i.e. no license fees) is very low unless there is commensurate value added to the grower’s business.

- Utilising low cost and simple to use technology that emulates the look and feel of a paper based system. This also supports growers that do not have a computer and / or Internet access.

- Providing for data to be entered offline or online.

Pricing Growers pay AWIQAC for services associated with GVP. This includes an amount for ChemCheck, which AWIQAC pays to GFA under negotiated commercial arrangements.

Current status AWIQAC has established six groups (either regional grower groups or groups associated with wineries) who are using ChemCheck. The feedback to date confirms that growers find the Formatta forms technology more intuitive than traditional web form applications such as the Freshport Spray Diary. Demonstrations of the technology have been conducted with both large and small wineries. Interest levels are high. The features that allow then to view spray records and the real time feedback given to growers as they enter data have impressed wineries. The following risks have been identified and are being managed through appropriate strategies:

- Growers expect information they provide to be maintained in a stable and secure environment. There is an inherent distrust of information technology especially when it is

32 The ChemCheck system is dynamic and is being continually developed with grower and winery input.

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new or unproven; and a general concern that information provided to systems such as ChemCheck has the potential to be misused or used against them.

- The integrity of the business providing the electronic business system is important in overcoming “trust” issues. Delivering the service through an industry body such as AWIQAC adds independence and credibility.

- Many growers have limited information technology and Internet skills and find using electronic business technology challenging. ChemCheck includes a manual paper based option for growers who feel more comfortable taking this approach, which allows those growers to migrate to the automated solution over time.

- ChemCheck is a compliance service and the cost of providing it must be kept as low as possible.

- It is also clear that growers will training and support during the early stages to get established. ChemCheck has also been installed in other horticultural supply chains and in a wool supply chain. Further information

Max Tolson Graeme Forsythe Executive Officer Graeme Forsythe & Associates Pty Ltd Australian Winegrape Industry Quality Accreditation Committee Inc

28 Auld Avenue, Eastwood NSW 2122

31 Deakin Avenue, Mildura VIC 3500 PO Box 2745, Mildura VIC 3502 Phone: 61 3 5023 0644 Phone: 61 2 9874 1009 Fax: 61 3 5023 1884 Fax: 61 2 9874 8343 Email: [email protected] Email: [email protected] Web: www.awiqac.com.au Web: www.gfassociates.com.au ChemCheck web: www.chemcheck.com

Acknowledgements The New Industries Development Program of AFFA has supported the implementation of ChemCheck in the winegrape industry.

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ChemCheck screens (examples only)

Screen 1 ChemCheck Grower Services Menu (www.awiqac.com.au).

Screen 2 Spray Application Form

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Screen 2 Spray Diary Report

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7. Freshport – Viticulture & Horticulture

Summary

Sector Viticulture + Horticulture

Crop Winegrapes + Stonefruit

Operator Freshport

Initiative Spray Diary, Yield Forecasting & Crop Maturity System

1 This case study covers an early pilot program conducted by Freshport and Australia’s major wine companies.

2 The elements were an electronic spray diary, yield forecasting and crop maturity mapping solution that growers could use and submit to the wine company buying their grapes.

Scope

3 The service has evolved into ChemCheck.

1 Winegrape & stonefruit growers

2 Wineries & packhouses

Players


Key messages

There is a need for better and more efficient communications between wine companies and growers (i.e. up and down the demand chain).

Businesses at the demand end of the chain require greater transparency and more information from suppliers for QA and compliance.

Simple electronic business systems are a logical and efficient way of satisfying commercial pressures for more transparent demand chains where information is exchanged between co-operating businesses.

Freshport was a pilot electronic business implementation. The first objective of the pilot was to prove the potential of an electronic business approach to improve winery / grower communications. The second objective was to identify and understand unforeseen problems with the adoption of electronic business systems.

Strategy

Wine companies sponsored groups of growers to participate.

Freshport offered three electronic business modules for the pilot as an “application service provider” (a spray diary and chemical inventory system; a crop forecasting system; and a maturity forecasting system).

Technology

The Freshport electronic business system was designed to require continuous Internet connectivity with all functions done online and accessible though standard Internet browsers.

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Growers need incentives to capture and transmit this information.

Growers with low levels of computer literacy struggle with traditional computer applications no matter what technology platform is used.

Electronic business solutions have to be very simple to use, adaptable to change, zero or very low cost to deploy (i.e. no license fees), able to work on Windows PCs, offline rather than internet only, integrated with email as the information carrier and able to support paper easily.

For a number of years as there will a significant number of growers who will insist on a paper alternative for data recording.

Electronic business solutions requiring continuous Internet connectivity and significant data entry are unlikely to be sustainable due to the inadequate Internet infrastructure available in many regional areas. Solutions that provide for offline data entry and use Internet as a “post office” to upload and download data are likely to be much more acceptable.

Outcomes

Electronic Forms technology has considerable potential to facilitate the capture, recording and transmission of a wide range of viticulture information. Because of its inherent simplicity and by retaining the look and feel of paper forms, growers should more easily accept electronic forms technology than traditional web forms.

Sector profile

The wine industry has been a high growth and high profile industry through the last decade.

There is a high penetration of computers among the targeted viticulture and horticulture growers.

There are a large number of businesses operating in the industry including over 6,000 independent winegrape growers supplying mainly the large corporate winemakers.

Well over 60% use a computer in their business and use Internet.

Key Points

There is consistency in the results between Murray Valley and Riverland growers and between growers in different horticulture sectors.

The Freshport pilots were the original starting point for the ChemCheck case study covered in this report. Freshport concentrated on the viticulture and horticulture sectors and ran a formal electronic business pilot program with major wine companies through the first half of 2001. Other horticulture growers joined the pilot of their own volition. In planning the electronic business pilot program, Freshport undertook comprehensive research of growers in the Murray Valley and Riverland regions in late 2000 in relation to their use of computers and Internet. Specifically growers were surveyed to determine whether they:

- Had a computer - Used the computer in their business - Used Internet - Had purchased on Internet

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- Intended to buy a computer or upgrade their computer in the subsequent year - Whether they intended to use Internet in the subsequent year.

Summary results are shown in the chart below and the more detailed charts at the end of this case study.

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Grower Profile - Murray Valley & Riverland

Murray Valley Riverland

The results show there is a high usage of computers among the targeted viticulture and horticulture growers. Well over 60% indicated they used the computer in their business and used Internet. There is consistency in the results between Murray Valley and Riverland growers, and between growers in different sectors. These results encouraged Freshport to develop electronic business applications that were totally dependent on Internet technology. Freshport followed the “Internet only” pathway in the pilot program it ran with the wine industry (the subject of this case study). The electronic business initiative The business need

There is a need for better and more efficient communications between wine companies and growers (i.e. up and down the demand chain).

Key Points

Businesses at the demand end of the chain require greater transparency and more information from suppliers for QA and compliance.

The Freshport electronic business pilot program in the wine industry was an outcome of a lengthy consultation and planning process with wine companies including Southcorp, BRL Hardy and Berringer Blass. It was designed to address the communication needs and links between wineries and their contracted growers. Primary communication modes were telephone, paper and “face to face” meetings between winery grower services staff and growers. With the increasing availability and acceptance of electronic business technology, new modes of communication were seen to be a practical option with the potential to radically alter and improve winery / grower communications. Benefits were expected to accrue to both parties. Spray Diaries are one of many pieces of information about grower practices required by wineries. Yield estimates, pest and diseases monitoring, rainfall records, irrigation records, soil moisture measurements, fertilizer usage, local weather conditions, temperature and any other variable factors

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affecting grape quality and yield were identified among the information that wineries would be seeking. Having access to this information gives wineries the capacity for “early warnings” of potential problems and perhaps provides assistance with remedies. Specific electronic business application areas considered for the pilot were:

- Grower contracts - Crop forecasting - Maturity forecasting - Spray diary reporting (and chemical inventory records) - Harvest scheduling - Crush results.

Spray Diary reporting was identified as the priority area. Yield forecasting and maturity forecasting were added during the period of the pilot. Spray Diaries have been paper based and a very manual process. Wineries have relied on growers completing and submitting the paper based diaries twice during the season. These paper-based diaries are printed and distributed to contracted growers by the wineries. Some larger growers supplying different wineries may have to complete separate spray diaries for each. The objectives for the pilot were to:

- Prove the potential of an electronic business approach. - Identify and understand unforeseen problems with its adoption.

Wineries typically receive Spray Diaries twice every vintage. The grower services staff of each winery undertake a visual check to verify the records are complete and the chemicals used comply with wine industry and winery guidelines. Paper based spray diaries (and most other records) have inherent shortcomings:

- They can vary greatly in legibility and completeness. - They can go missing in the post or be delivered late, generating follow up work for grower

services staff. - The checking and reviewing (by grower services staff) is manual and can miss potential

problem areas with chemical usage. - There are thousands of combinations of chemicals, pest and diseases, label rates, harvest dates

etc. making the task of checking the records accurately using manual methods almost impossible.

- These complexities become even greater with export wine, as some countries have their own chemical standards.

- Analysis of chemical usage across a supplier community requires re-processing of the paper records and is too late to influence or change grower practices during a season.

- The cost in time of grower services staff checking and verifying manual spray diaries is considerable especially as much of the checking effort is required at the critical harvest time.

The cost of printing and distributing spray diaries each season is not insignificant. The larger wineries produce small booklets with duplicate stationary and contain the latest chemical usage recommendation from the Australian Wine Research Institute (AWRI). Most wineries file the Spray Diaries that are submitted. Some have tried to analyse grower chemical usage by keying the records into a database program supplied by the Victorian Department of Natural Resources and Environment.

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The requirements

Key Point Freshport offered three electronic business modules for the pilot as an “application service provider” (a spray diary and chemical inventory system; a crop forecasting system; and a maturity forecasting system).

Spray Diary Module The objective was to develop a generic web based Spray Diary system using the printed Spray Diary formats of each wine company. The system was to also be structured to meet the requirements of horticulture growers (and their demand chains), whether they also grew winegrapes or were specialists in other horticulture produce. The system had to provide the grower with screens to capture spray diary data, consolidate it into reports and communicate it to their wine company (or in the case of horticulture, members of their demand chain such as packing sheds, exporters, overseas importers etc). It was intended that the system would also allow growers to demonstrate continuous compliance (i.e. at each spray application) rather than a single point of time (i.e. the audit). Because many growers supplied more than one winery, the wine companies supported Freshport taking a generic approach that would satisfy their collective needs. The electronic business technology was unproven and acceptance by growers was unknown – meaning that each wine company only committed to sponsor a group of growers for the purpose of the pilot. The success or otherwise of the pilot would determine how and whether they would move forward; and whether they would support the Freshport application service provider business model on commercial terms. The electronic business system designed by Freshport required grower to be continuously connected to Internet. Because of the display limitations with Internet browsers (i.e. Internet Explorer and Netscape) the typical single page spray diary had to be split into multiple web forms that didn’t look at all like the paper version. Crop Forecasting Module The objective was to automate the “Crop Forecasting Protocols for Wine Grape Growers” system developed by CSIRO Plant Industry and Agriculture Victoria under a Grape and Wine Research & Development Corporation project; and take on board the experience of the Victorian and Murray Valley Wine Grape Growers’ Council who promoted the use of the system among growers over the previous two seasons. The yield forecasting method requires counting, weighing and recording bunches or berries at three different stages throughout the growing season33. At each stage, samples are collected from ten randomly selected vines, assumed to be representative samples from the total number of vines in the vineyard. Winegrape Maturity Forecasting Module The winegrape maturity forecasting module was to be built around the baume / brix readings and supported by ripening algorithms to project the harvest date. The projected harvest dates were then to be made available to the wine company that the grower was contracted with. 33 A bunch count one month after budburst; a berry count after fruit set; and counting and weighing bunches one week before harvest.

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The users Southcorp and BRL Hardy sponsored groups of growers to participate in the pilot. Growers were drawn from the Mildura, McLaren Vale, Adelaide Hills and Barossa Valley regions. With the horticulture growers from Murray Valley and Riverland joining the pilot, over 100 growers participated. The technology solution

Key Point The Freshport electronic business system was designed to require continuous Internet connectivity with all functions done online and accessible though standard Internet browsers.

The Freshport electronic business system was designed to require continuous Internet connectivity with all functions done online and accessible though standard Internet browsers. The technology was implemented around an industrial strength platform with a variety of tools, utilities and techniques that ensured it was scalable and reliable, and could be properly maintained. As with many application service providers operating through the “Internet bubble” however, the infrastructure was engineered to be far in excess of what was realistically required. The Freshport pilot system involved the following processes for growers:

Step 1 – Registration - The grower registered with Freshport. - Freshport allocated the grower a userid and password. Step 2 – Logging in to Freshport - The grower connected to Internet, enters the Freshport URL and logs in. Step 3 – Profile set up - The grower entered profile data for their business and production sections (Screens 1 and 2 at

end). This data allows all screens and selection options such as drop lists to be customised with the grower’s own information and to apply to the spray diary, crop forecasting and maturity forecasting modules.

Step 4 – Data capture (details for the spray diary module only are listed for illustrative purposes and to enable comparisons with the much more advanced ChemCheck system) - The grower works through a series of data entry screens as described in the points below.

1) Screen 3 – Selecting the year of application and the block (vineyard). 2) Screen 4 – Entering the date of application and conditions. 3) Screen 5 – Entering the equipment calibration data (optional). 4) Screen 6 – Entering the patch (production section) treated and growth stage. 5) Screen 7 – Entering the target (pest / disease / condition) being treated. 6) Screen 8 – Entering the chemical used and application details. When more than one

chemical was applied in the treatment, this screen wass repeated. 7) Screen 9 – Once the chemical has been selected, links to the manufacturer, product

information and label painted and could be opened. This screen shows this function. 8) Screen 10 – Spray diary reports could be generated for an application or for a period

of time; and sent by email to the wine company the grower had contracted with.

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Freshport was a pilot electronic business implementation. The first objective of the pilot was to prove the potential of an electronic business approach to improve winery / grower communications. The second objective was to identify and understand unforeseen problems with the adoption of electronic business systems.

Key Points

Wine companies sponsored groups of growers to participate.

The following implementation principles were agreed between Freshport and the participating wine companies:

- The objectives were clearly stated – they were to:

1) Prove the potential of an electronic business approach to improve winery / grower communications

2) Identify and understand unforeseen problems with the adoption of electronic business systems.

- Freshport developed the specifications with input from the participating wineries, developed and tested the systems, and provided the web server infrastructure allowing the electronic business system to be available 24 x 7. Freshport also provided training to the participating growers and a help desk facility.

- The wine companies sponsored groups of growers to participate and provided grower services liaison support, as and when required.

- Participating growers were all expected to have at least basic personal computer skills and access to the Internet.

The pilot included the following elements and issues:

- Group introductory training session (1/2 day) run by Freshport. - An initial detailed survey of participants was conducted a fortnight later. Requests for

enhancements were identified and Freshport undertook to make the necessary modifications34.

- Although some growers were able to use the Spray Diary with no help, some required extensive assistance and it was clear that the issues raised had to be resolved.

- Freshport released a major site revision with a positive response from the user community. - Freshport follow up continued with little assistance required by users (although it was clear

that a small proportion of the participants were not going to complete the exercise). - The Pilot was completed, all active participants were notified, and copies of spray diaries and

final feedback comments were obtained. Pricing Because Freshport was a pilot program participating growers were not asked to contribute any more than their time and the cost of Internet connection. 34 For example, the initial set up of block profiles was time consuming, there were too many screens and the time taken to move from one to another was slow.

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Outcomes

Growers need incentives to capture and transmit this information.

Growers with low levels of computer literacy struggle with traditional computer applications no matter what technology platform is used.

Electronic business solutions have to be very simple to use, adaptable to change, zero or very low cost to deploy (i.e. no license fees), able to work on Windows PCs, offline rather than internet only, integrated with email as the information carrier and able to support paper easily.

For a number of years as there will a significant number of growers who will insist on a paper alternative for data recording.

Electronic business solutions requiring continuous Internet connectivity and significant data entry are unlikely to be sustainable due to the inadequate Internet infrastructure available in many regional areas. Solutions that provide for offline data entry and use Internet as a “post office” to upload and download data are likely to be much more acceptable.

Key Points

Electronic Forms technology has considerable potential to facilitate the capture, recording and transmission of a wide range of viticulture information. Because of its inherent simplicity and by retaining the look and feel of paper forms, growers should more easily accept electronic forms technology than traditional web forms.

The pilot achieved its objective and the lessons have been taken forward in frameworks used in ChemCheck (see case study). To demonstrate that the web based spray diary was a viable and cost effective alternative to current manual methods, Freshport set the following key performance indicators (KPI’s) to be achieved in the pilot:

- 75% of growers were able to complete a spray diary - The average number of help desk calls per grower per year to be less than 5 - There would be acceptable Internet performance in all regions (i.e. response times generally

less than 10 seconds for a page to paint so that growers do not become frustrated). The target KPI of 75% of growers completing a season spray diary was not achieved with the pilot group. The results achieved were:

- 57% of growers completed an electronic business based spray diary. - 47% of growers emailed a completed spray diary to a winery. - 26% of growers started but did not complete a spray diary. - 16% did not complete the initial set up required to complete an electronic business based

spray diary i.e. entering profile data. The main contributing factors were:

- The low computer literacy skills of 16% of the growers – Freshport assessed the computer literacy skills of the participating growers as good (63%), acceptable (21%) and low (16%).

- Unacceptable Internet performance experienced by some growers. - Too much avoidable complexity in the spray diary application, and - The loss or transfer of some key grower liaison staff (of the wine companies) leading to a

perception that the pilot had been completed.

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The general conclusions drawn were as follows:

- The pilot confirmed the viability of web based data capture for growers with medium to high levels of computer literacy given appropriate training and acceptable Internet response times.

- Most participants would continue to record spray entries using Freshport or equivalent. - Growers with low levels of computer literacy will be unlikely to accept PC based software for

data capture nor web based data capture. They have a negative predisposition to solutions that look like they have to purchase and use “software”, and solutions that use Internet. Internet is likely to be seen in a different light when it comes to viewing business data that their hub has created.

In a technical and operational sense, the pilots highlighted a number of challenges that cause rethinking of the data capture and communications technology deployed and the general approach taken to deployment: Technology issues A common statement by growers was that it took longer to enter the data on a web form than on paper (which growers were use to). This was partly due to set up requirements, navigation, the amount of data sought by the hubs for the pilot, and poor Internet performance. Setting up (i.e. creating the block profile) and becoming familiar with application functionality was time consuming and frustrating. This was especially true for growers with large blocks and multiple sections. Internet performance and site navigation were a problem. Freshport addressed many of these concerns by simplifying the application interface and reducing the site graphics to an absolute minimum. Even so, poor Internet response (when continuous connectivity is required) is still likely to be a barrier to adoption in the foreseeable future. Murray Valley users appeared to have significantly slower Internet response than the Barossa and McLaren Vale users. KPI response times could not reliably be met in the Mildura region. Although some experienced computer and Internet users managed to create their spray diaries with almost no support, other users required ongoing help desk support during the set up and for the first few entries. Growers with low levels of computer literacy would be unlikely to complete a Spray Diary. The KPI average of less than 5 help desk calls was achieved. Most growers had initial problems remembering passwords creating an amount of frustration. All overcame this with experience and familiarity. Operational issues Most growers considered that the winery gained most from an electronic spray diary. Because of this there was debate about who should pay for the provision of the service (the general reluctance of growers has to be addressed). Despite this participating growers increasingly recognised the benefits of maintaining their records on computer especially where the paper records were lost in transit (as happened with one grower). The data required by hubs (in this case the wineries) varies. A flexible development platform allowing multiple versions of an equivalent form, which allows changes to be made quickly and easily, and has low maintenance costs, is highly desirable. Targeted training, ongoing help desk support and the availability of peer support are essential to overcome initial teething problems.

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Many participants expressed some concern that their data was held on a third party server with perceived security risk. Some growers requested additional application functionality while some noted that the Freshport Spray Diary captures more data (i.e. calibration) for individual sprays than is requested on the paper Spray Diaries. The inclusion of automatic calculations of the chemical rate per hectare and rate per 100 litres proved to be a disaster given the number of enquiries received. This feature was removed in the second release. Strong ongoing support and endorsement of the electronic Spray Diary by wineries is a critical success factor for commercial deployment (i.e. the business need has to be very evident). Growers who had a change of grower services liaison and growers who perceived (incorrectly) that pilot had ceased stopped posting their entries. Other issues raised included

- Having one source for reporting and resolving issues with the form and the underlying technology.

- Having the ability to save off a local copy of the completed form. - Having the ability to protect any local copies from unauthorized access. - Completing and returning the form contents at no cost – growers will not bear even nominal

costs for completing a form. - Having the ability to interact with a responsive, stable system – the guideline here is that

frustration begins at 5 seconds response and interest is lost completely somewhere beyond 12 second response time. Outages, in all cases, cause loss of interest.

- Offering friendly, easy-to-use forms to reduce grower confusion – i.e. forms with context-sensitive help, edit rules that restrict input to valid values only, conditional forms navigation that directs the growers’ attention and activity to specific fields in a specific sequence, and forms that render exactly the same image, whether they are printed or presented on a screen.

- Paper may always be faster to complete than the automated Spray Diary. The next step – from paper to electronic paper

- Some of the people associated with the Freshport pilot have spent much time searching for the best way forward having regard to the issues listed above. The experience suggests that a successful solution will have the following characteristics:

1) Be very simple to use. 2) Use data entry screens resembling paper based forms (where possible identical to

paper) 3) Has embedded “smarts” that minimize data entry and validates data entered eg drop

lists, automatic calculations, action buttons (eg email) sitting on the form, 2D bar coding of data

4) Able to be changed very easily 5) Able to be deployed at zero or very low cost (i.e. no license fees) 6) Able to work on PC’s running as low as Windows 95 7) Operate offline rather than through continuous Internet connection, but integrates

with email as the information and data carrier. 8) Data on forms can be “exported” into databases.

- An electronic forms platform that automates existing paper forms matches this specification. Because of its inherent simplicity, our research indicates it is likely to be more readily accepted by growers than installing software packages and Internet only solutions.

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Further information

Graeme Forsythe Graeme Forsythe & Associates Pty Ltd 28 Auld Avenue, Eastwood NSW 2122 Phone: 61 2 9874 1009 Fax: 61 2 9874 8343 Email: [email protected] Web: www.gfassociates.com.au

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Grower Profile Data

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70%

80%

Citrus DriedGrapes

Grapes -Various

OtherCrops

TableGrapes

WineGrapes

Grower Profile - Use Computer in Business

66%

68%

70%

72%

74%

76%

78%

80%

Citrus DriedGrapes

Grapes -Various

OtherCrops

TableGrapes

WineGrapes

Grower Profile - Have Computer

61

0%

10%

20%

30%

40%

50%

60%

Citrus DriedGrapes

Grapes -Various

OtherCrops

TableGrapes

WineGrapes

Grower Profile - Buy / Upgrade Intention

0%

5%

10%

15%

20%

25%

30%

35%

40%

Citrus DriedGrapes

Grapes -Various

OtherCrops

TableGrapes

WineGrapes

Grower Profile - Intention to Use Internet

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

Citrus DriedGrapes

Grapes -Various

OtherCrops

TableGrapes

WineGrapes

Grower Profile - Have Purchased on Internet

62

Freshport screens – Profile Setup (examples only)

Screen 1 Block / Patch Profile Set Up

Screen 2 Block / Patch Profile Index

63

Freshport screens – Spray applications (examples only) Screen 3 Spray Application Index Screen 4 Spray Application Data Entry – General Data Screen 5 Spray Calibration Data Entry

64

Screen 6 Patch Treated & Growth Stage Data Screen 7 Pests & Disease Data Screen 8 Chemical(s) Used Data Screen 9 Chemical Label Display

65

Screen 10 Spray Diary Report

66

8. NETCO Co-operative – Grains & Pulses

Summary

Sector Grain + Pulse

Crop All grain and pulse types

Operator Netco

Initiative Netco Virtual Private Network & Shared Back Office Services

1 This case study covers the establishment by Netco of a virtual private network to support communication and transactions, and a shared back office service support function based on Thede Ward.

Scope

2 Netco is an umbrella co-operative for ten regionally based grain trading and input supply co-operatives.

1 Netco

2 Member co-operatives of Netco (10)

Players

3 Grain & pulse growers

Key messages

Netco’s emerging business model for “sharing services” is an enabler of change and a facilitator for the progressive adoption of electronic business by the ten member co-operatives and their farmer members.

Farmers belonging to the member co-operatives don’t necessarily need to be direct users of electronic business to be direct beneficiaries of it – if their co-operative is using electronic business in its operations.

For growth of the business it was important to provide a common systems platform linking member co-operatives.

Netco have focussed on developing the back end (in house) capabilities of the business first (Thede Ward also has the capacity to provide front end services to Netco clients).

Implementation is incremental and is rolled out on a fully commercial basis as new co-operatives join the network.

IT support and training has been provided on a “peer learning” basis from early adopter co-operative members.

Strategy

The initiatives being taken had to recognise the differences in capability and use of business systems between member co-operatives, and the differences in business growth and maturity (i.e. business cycle).

67

Netco required infrastructure in the form of a communications facility linking it with its ten member co-operatives, and an operating system for grain marketing that allows it to provide professional services to the member co-operatives on a uniform basis.

Netco implemented a virtual private network linking it and the ten member co-operatives.

Technology

Netco selected Thede Ward Systems (a North American based software company specialising in management information solutions for agribusiness) to provide their operating system for grain marketing.

Netco profile

Netco is an umbrella organisation or second tier co-operative providing back and front end services, leverage and critical mass to ten independent, regionally based co-operatives.

Netco has experienced substantial growth to be one of the key emerging agribusinesses in the Australian grains sector.

Key Points

Netco`s services include provision of price risk management, merchandising and back office functions through its shared services division and the operation of a recently deployed virtual private network for transactional information.

Netco Netco is an umbrella organisation or second tier co-operative providing back and front end services, leverage and critical mass to ten independent, regionally based co-operatives.

Queensland Rockhampton Capgrains Co-operative Association Ltd

Parkes Australian Producers Co-operative Ltd

Ardlethan Mirrool Creek Grain Co-operative Ltd

Moulamein Moulamein Grain Co-operative

Walgett Walgett Special One Co-operative

Gilgandra Gilgandra Marketing Co-operative Ltd

New South Wales

Wagga Wagga Shepherds Producers Co-operative Ltd

Donald Pea Growers Co-operative Ltd Victoria

Warrnambool Southern Quality Produce

Western Australia Rivervale United Farmers Co-operative Company Ltd

68

Netco was originally formed in 1995 and since then has experienced substantial growth to be one of the key emerging businesses in the Australian grains sector. The following points highlight the dimensions of the Netco business:

- 5 member co-operatives as at April 2001 - 10 member co-operatives as at June 2002 with a national reach from Rockhampton in

Queensland to Perth in WA - Membership now totalling approximately 6,000 producers or 13% of the entire grain

growing community in Australia - Membership grain production totalling approximately 6-8 million tonnes per annum or 25%

of the national cereals, oilseeds and pulse crops, and 20% of Eastern Seaboard production - Total turnover of AUD 250m in 2001 - Turnover of 1 million tonnes through the co-operative of membership tonnage in 2001 - Turnover of approximately 250,000 tonnes of fertiliser across the group in 2001 - Turnover of AUD 20m non-fertiliser farm inputs on 2001.

Netco`s member services include provision of price risk management, merchandising and back office functions through its shared services division and the operation of a recently deployed virtual private network for transactional information. While Netco operates in market place that has traditionally been commodity driven there is recognition that value adding is vital to the future sustainability and growth of the business. Increasingly this means that the mode of trade generally is moving away from a “buy and sell” mentality to one where the ability to validate product integrity and assurance on a through chain basis is assuming a greater importance in developing new business. Netco has received funding through AgriChains Solutions Ltd35 to assist in developing its business case for value added products with the following key elements:

- To develop new directions for Netco member co-operatives - To develop strategic marketing and operational plans, including consultation with potential

Australian and Japanese stakeholders 35 AgriChains Solutions Ltd was a subsidiary of Supermarket to Asia (since replaced by National Food Industry Strategy Limited).

69

- To implement Netco's business and marketing plans to supply differentiated value added grain products initially according to the specifications of its Japanese customers.

Australian grains industry The Australian grains industry is undergoing unprecedented change. This change in itself has been the stimulus for the emergence of co-operatives such as Netco including:

- National Competition Policy impacts and an increasingly deregulated environment - Industry rationalisation, and consolidation of infrastructure and marketing entities,

particularly on the eastern seaboard - Increased competition and sophistication of supply chain logistics - Privatisation of plant breeding organisations - An increasing need for product differentiation, transparency, traceability and / or Identity

Preservation of product - The introduction of GMO`s into cropping systems - A heightened awareness of food safety and an emerging need for on farm QA for select

markets - The convergence of sustainability and environmental management issues with “mainstream”

production processes - An influx of external capital with the public listing of a number of major grain

agribusinesses - An increasing need for information management systems capable of managing more

sophisticated information requirements. Historically Australia`s grain markets have been characterised by a high degree of regulation which in turn has fostered a dislocated approach to value chain management. With limited marketing outlets producers have typically been passive participants in the chain with little opportunity to influence the market beyond their own production outputs. Service providers and marketers equally abrogated responsibility for activities beyond their immediate area of influence or did not always acknowledge the consequences of supply chains acting in a fragmented manner. Logistic efficiencies, information transfers and market signals suffered as a result. Grain supply chains have historically had very little real interaction with the processing and retail end of the chain. Ownership and operation of assets were managed independent of other levels in the chain and within well-defined boundaries. Industry change however has fostered changes in supply chain dynamics – there is an increasing amount of horizontal and vertical integration and an increasing sophistication in production and marketing risk management tools. This sophistication and integration also leads to greater complexity in terms of market behaviour, which in itself requires more complex system solutions to manage transactions. Regional co-operatives (i.e. such as the co-operatives that are members of Netco) have emerged largely as a result of producers seeking to differentiate themselves in the market and / or dissatisfaction with established marketing arrangements and service provision levels. Producers have also identified a benefit in developing a more channelled approach to marketing of their product through entities where they maintain a significant degree of control. The key differentiation of cooperatives by virtue of their ownership is their ability to maintain transparency to producers and focus on farm gate returns.

70

The electronic business initiative Netco was chosen as a case study as it satisfied the bulk of the selection criteria36 and most importantly because of the uniqueness of the Netco business model, the expanding market position Netco holds within the Australian grains supply chain and thus its influence over grower members. This case study provides a somewhat different perspective from the others. It does not concentrate on growers specifically. Rather we have sought to look at the influence of Netco and its emerging business model as an enabler of change and as a facilitator for the progressive adoption of electronic business by the ten member co-operatives and their farmer members. Netco, through Capgrains Co-operative Association, offer electronic business for purchasing chemicals, fertilisers and other farm inputs. Whilst an electronic marketplace is not the subject of this report, the initiative of Netco and Capgrains needs to be reported and their success recognized with significant turnover of fertilizer and non-fertiliser inputs being achieved. Orders are collated into month only lots, resulting in increased order sizes and direct delivery from the manufacturer or warehouse to local town, or on-farm where there is sufficient volume in a region. Monthly ordering and direct delivery, together with Netco’s substantial purchasing volume, ensures very competitive pricing. The business need

Netco’s emerging business model for “sharing services” is an enabler of change and a facilitator for the progressive adoption of electronic business by the ten member co-operatives and their farmer members.

Farmers belonging to the member co-operatives don’t necessarily need to be direct users of electronic business to be direct beneficiaries of it – if their co-operative is using electronic business in its operations.

Key Points

For growth of the business it was important to provide a common systems platform linking member co-operatives.

The concept of an umbrella co-operative is relatively new in the Australian grains industry but has provided a way of dealing with a number of issues common to new emerging marketing entities. The diagram next page highlights the core functions of the Netco business. 36 Refer Section 2.

71

Shared Services Division

Netco Group

Policy Division Farm

Services Division

Marketing& Risk Manage-ment

Division

Finance Division

Policy development; Representation to other lobby groups; Proxy consolidation.

Consolidated farm inputs procurement; Netco branded Products; Fertiliser imports; National Agronomy network.

Pool management; National branded risk management Products; Central arbitrage; Desk & national customer accounts; Branded products central export desk.

Provision of IT system administration; Provision of other back office services; consolidated Insurance; Other services.

Provision of finance and accounting assistance; Consolidated finance facility; Procurement and development of common reporting, risk management, and policy / auditing services.

CapGrains Co-operative Association Australian Producers Co-operative Mirrool Creek Grain Co-operative Moulamein Grain Co-operative Walgett Special One Co-operative Gilgandra Marketing Co-operative Shepherds Producers Co-operative Pea Growers Co-operative Southern Quality Produce United Farmers Co-operative Company

72

Grain co-operatives typically tend to operate on limited resources particularly through the startup stage and will also tend to have limited exposure to the complexities of grain trading and risk management. A high percentage of co-operatives rely initially on management information systems that are either inadequate and / or inappropriate for their needs. This does restrict growth in the business as well as potentially exacerbating financial risk. From Netco`s perspective there is also an absolute correlation between the volume of grain handled and traded, and the requirement for uniformity in processes and procedures. In other words, as the business grows and the volumes of product traded by Netco increase, the more the deployment of a uniform system has become a necessity to manage risk and leverage critical mass. Netco`s own business model is in the early stages of deployment and will continue to evolve however there are some key points to note:

- Netco provides an overall management service through its five divisions to member co-operatives on a fee for service basis however all co-operatives maintain their absolute independence within the network. Co-operatives maintain the discretion to market their product independently or as part of the NETCO collective.

- Consistent with the principle of maintaining independence, member co-operatives are not obliged (but are actively encouraged) to use Thede Ward as their management information system.

73

- As a general rule individual co-operatives are currently responsible for their own back office functions (data input) to manage the commodities they market. There are some instances however where Netco undertook this role as some of the smaller and newly formed co-operatives came on board. As a result Netco is heavily reliant on the ability to source timely and reliable information from the co-operatives themselves to in turn provide a service back to them.

- Privacy and confidentiality of the individual co-operative data is paramount. Co-operatives can only access their own information on the virtual private network.

As an end-to-end service provider, Netco’s expertise stems from its involvement in all aspects of the “grain food chain” – from the first request by a customer for a specific product through to delivering products throughout the world. Netco use the following diagram to outline their step-by-step involvement. We have added the “shared services” reference. Netco’s emerging business model is an enabler of change and a facilitator for the progressive adoption of electronic business by the ten member co-operatives and their farmer members. While Netco would still achieve organic growth without electronic business, the deployment of uniform back office systems and a virtual private network linking Netco with its member co-operatives, has allowed that process to accelerate. By virtue of the “independent” business model that Netco has adopted, the virtual private network (i.e. the electronic business initiative) has become integral to the business and the glue that binds and supports that model.

Customer requirement received by Netco

Supply of seed, fertilizer and cropping inputs to Netco farmers

Price management (forward contracts, hedging, basis contracts and marketing pools)

Harvesting and bulk delivery to storage facilities

Container packing (bulk or bagged)

Bulk vessel loading

Processing facility

Delivery to customer

Sh

are

d S

erv

ices

74

The requirements

Key Points Netco required infrastructure in the form of a communications facility linking it with its ten member co-operatives, and an operating system for grain marketing that allows it to provide professional services to the member co-operatives on a uniform basis.

The major requirements of Netco were:

- A communications infrastructure that links Netco with the member co-operatives. Netco operates out of Sydney and the member co-operatives operate through four of the Australia states.

- A capacity to provide a centralised view of the entire network`s grain inventory, contracts and risk management profile.

- An operating system for grain marketing that allowed it to provide professional services to the member co-operatives on a uniform basis (the shared services). Member co-operatives can only see their own information, not that of the other member co-operatives i.e. this reinforces one of the unique attributes of the Netco business model whereby member co-operatives maintain their independence even within the network.

Other considerations were the:

- Varying degrees of capability in computer literacy and the use of business systems between member co-operatives.

- Different levels of experience in grain trading and risk management. - Limited exposure for some co-operatives to management and grain trading accounting

(some of the co-operatives have traditionally concentrated on input supply). - Varying rates of maturity (in terms of the business cycle) creating different issues for

regional co-operatives. The users The users of the electronic business toolsets being implemented by Netco are Netco itself and the ten member co-operatives operating throughout Australia. Growers belonging to the member co-operatives are not the immediate targets for the electronic business system covered in this report. However it is possible that growers may be provided direct on-line access to their own receival and payment information in the future. Administrative staff of the member co-operatives have maintained responsibility for contract execution at a local level. The technology solution

Netco implemented a virtual private network linking it and the ten member co-operatives.

Key Points

Netco selected Thede Ward Systems (a North American based software company specialising in management information solutions for agribusiness) to provide their operating system for grain marketing.

The electronic business technology solution that Netco is adopting is illustrated next page. Netco implemented a virtual private network linking it and the ten member co-operatives. This supports the capture and exchange of transactional data between Netco and individual co-operatives.

75

Netco chose Thede Ward Systems Inc to supply the operating system for grain marketing, Thede Ward is a North American based software company specialising in integrated enterprise electronic business management information solutions for agribusiness. Their software applications are targeted at grain merchandisers, feed mills, fertilizer dealers / distributors, co-operatives and seed companies. The Thede Ward grain merchandising system is a DOS based system that can be customised, and provides a comprehensive and fully integrated suite of modules including standard general ledger functions and more specific grain marketing functions including:

- Contract and pool management (including invoicing and settlement) - Inventory management and tracking - Foreign exchange - Position management (including marking to market) - Risk management (commodity futures)

Netco Public site etc

Member Co-operative Public sites

United Farmers

Walgett

Special One

Capgrains

Shepherds Producers

Netco Virtual Private

Network

Netco Web Site

Member Co-ops without

Web Sites

Member Web Sites

Netco Member Co-operative

members can order inputs through the

Netco web site

Capgrains and Shepherds Producers have restricted

functions for their growers. Walgett Special One and United

Farmers don’t. Other Member Co-operatives do not

have web sites.

Shared

Services Back Office

Netco

Co

-op

era

tive m

em

ber

Gro

wers

Log

in

Gen

era

l P

ub

lic

Gen

era

l P

ub

lic

Co

-op

era

tive m

em

ber

Gro

wers

Log

in

Input purchasing

Co-ops access VPN by separate

dial up

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In the Netco implementation Thede Ward is operating on a thin client basis via dial up. Dial- up is achieved independently of both Netco and member web sites using connectivity technology provided by ViaDuct. The server for the network is currently located at Shepherds Producers Co-operative at Wagga Wagga (as an early adopter) but will be centralised in the near future at Netco as the Shared Services function becomes fully resourced. Issues relating to deployment and use of the system include:

- User “friendliness” of a DOS based system (note Thede Ward can convert their system to a Windows environment however the cost of doing so is prohibitive and doesn’t provide any technical benefits over DOS).

- Users can only input data on-line. This restricts the flexibility of the system at a regional level particularly for co-operatives where line access and infrastructure are inadequate to handle high levels of data transfer (this issue is exacerbated at harvest when volumes of data are at their peak).

- Ensuring sufficient back up IT support and training for regional administrative staff particularly in the implementation stages.

- Grain trading and management systems are complex, reflecting the nature of the business. For some co-operatives this has been a steep learning curve where the maturity of their respective business is not yet in alignment with the capabilities of the new management system.


Netco have focussed on developing the back end (in house) capabilities of the business first (Thede Ward also has the capacity to provide front end services to Netco clients).

Implementation is incremental and is rolled out on a fully commercial basis as new co-operatives join the network.

IT support and training has been provided on a “peer learning” basis from early adopter co-operative members.

Key Points

The initiatives being taken had to recognise the differences in capability and use of business systems between member co-operatives, and the differences in business growth and maturity (i.e. business cycle).

The considerations in implementation of the electronic business system framework included:

- Ensuring that as far as practicable the majority of the member co-operative’s transactional business could be transferred to the Thede Ward system. In some cases as an example co-operatives preferred to maintain some elements of their existing accounting systems.

- Training and support would also need to take account of developing grain trading and risk management capabilities in some co-operatives as much as providing functional IT support for the new system.

- The initiative at the outset concentrates on the member co-operatives providing services to producers and not the producers themselves. Extension of the initiative could only be considered after the co-operatives themselves were fully functional.

- The independence of the co-operatives needed to be recognised and maintained. To an extent this was more a function of establishing the appropriate business rules within Netco rather than the technology itself. This meant that data security and confidentiality must be provided for.

- Ensuring that the transactional costs of doing business could be better quantified and substantially lowered by implementing common business systems.

77

Pricing Not applicable. Current status The Netco implementation is a continuing process. Further information

Mike Chaseling Peter Flottmann Netco Synecon Pty Ltd "The Wheelhouse", 14/37 Nicholson Street, Balmain NSW 2041

PO Box 31, Pymble NSW 2073

Phone: 61 2 9818 4622 Phone: 61 2 9418 4984 Fax: 61 2 9810 0446 Fax: 61 2 9403 3405 Email: [email protected] Email: [email protected] Web: www.netcoop.com.au/index.asp Web: www.synecon.com.au Shepherds Web: www.shepherdsproducers.com.au CapGrains Web: www.capgrains.com.au/ United Farmers Web: www.ufcc.com.au/ Walgett Special One Web: www.wsoc.com.au

Acknowledgements Mike Chaseling & Mick Cattanach – NETCO Tony Usher & Peter Vowles – United Farmers Co-operative Angus McKerrow – Capgrains Co-operative Association Ltd Hannes Ehlers & Michelle Galvin – Australian Producers Co-operative Narelle Rodway – Gilgandra Marketing Co-operative Sue Robinson – Mirrool Creek Grain Co-operative Peter Francis – Shepherds Producers Co-operative

78

9. Ausfresh Produce – Table Grapes Summary

Sector Horticulture

Crop Table grapes

Operator Ausfresh Produce Pty Ltd (Ausfresh)

Initiative Australian Table Grapes to Sainsbury’s (UK)

1 This case study covers the development and implementation of an information management underlay allowing the capture, consolidation, processing and exchange of information up and down the chain.

2 Examples include the quality control check reports done by Redbridge on receival, and the records for Eurepgap compliance that Sainsbury’s is requiring of it’s program suppliers.

Scope

3 The demand chain covers table grape growers in the Murray Valley exporting through Ausfresh Produce under a supply program to Sainsbury’s Supermarkets in the UK. The UK importer is Redbridge Holdings.

1 Mildura table grape growers

2 Ausfresh Produce (exporter)

3 Redbridge Holdings (importer – UK)

Players

4 Sainsbury’s Supermarkets (UK)

Key messages

UK (and European) supermarkets are enforcing higher standards in quality assurance (food safety, product specifications and brand management) that requires more rigorous product inspection regimes through the product life cycle and increased chain transparency (transferring information up and down the chain).

There is a joint commitment by members of the chain to build a more transparent chain that has a market orientation and addresses customer needs. A core element of the 2002 supply program was to commence implementation of an information capture and exchange underlay that underpins product traceability and integrity.

The initial requirements information capture and exchange underlay were to automate spray diary records; to support the Eurepgap certification process; and to automate the grape quality checking forms used by Redbridge. The system had to complement Redbridge’s existing quality checking processes, rather than Redbridge having to adapt the processes to suit the technology.

Strategy

A prototyping and review process was followed to develop the electronic forms with Redbridge (operating out of London and GFA out of Sydney).

79

Strategy (cont)

Email was used to exchange forms. Linkage of the forms to a secure Internet “post office” facility was deferred until the users were comfortable with the technology.


The electronic business system is built around an electronic forms platform. It makes data input forms on the computer screen look identical to the paper forms that are used in the manual system. This technology is low cost and very flexible allowing changes to be implemented easily.

Technology

The electronic business system allows data entry to be done offline and the forms have been mainly transmitted by email.

Chain profile

Key Point UK (and European) supermarkets are enforcing higher standards in quality assurance (food safety, product specifications and brand management) that requires more rigorous product inspection regimes through the product life cycle and increased chain transparency (transferring information up and down the chain).

Ausfresh Produce Pty Ltd Ausfresh (principal – Don Lyon) is a Melbourne based grower, packer and exporter of fresh fruits and vegetables specialising in fruits such as table grapes, mangoes, kiwifruit, citrus, stonefruit, apples and pears. Ausfresh also exports vegetables such as broccoli, cauliflower, lettuce and celery. Produce is grown and sourced Australia wide from areas such as the Sunraysia region and the Goulburn Valley in Victoria, Queensland, Western Australia, South Australia, Tasmania, New South Wales, and also from New Zealand. The company exports by sea and air to a range of countries including as Malaysia, Hong Kong, Singapore, Taiwan, Japan and Europe. With long and established connections, Ausfresh Produce is recognised throughout Asia and Europe as one of Australia's leading fresh produce export companies. The case study covers Australian table grapes grown in the Murray Valley (mainly Mildura area) for programmed supply by Ausfresh to Sainsbury’s – one of the major supermarket chains in UK. The UK importer and distributor to Sainsbury’s is Redbridge Holdings. The grapes exported are sourced from a group of some 10 growers with the maturity time and sea freight period, fitting an available supply window. This group was originally built around the Marciano family, who has played a key role in fruit growing, packing and marketing for Ausfresh.Produce.Packing is done in Sainsbury’s bags using two packhouses in the Mildura area. Quality assurance & checking This chain is typical of one having to address the requirements for increased transparency and more rigorous compliance. UK (and European) supermarkets are enforcing higher standards in quality assurance (food safety, product specifications and brand management) that requires more rigorous product inspection regimes through the product life cycle and increased chain transparency (transferring information up and down the chain). The commentary under the heading “Relevance and Benefits” (page 3) reflects what is happening in this chain.

80

Where quality assurance principles are adopted throughout a demand or supply chain, there are many check points where product inspections are undertaken – eg in the field before harvest, before packing, pre-shipment and on outturn at the customer or importer’s warehouse. At each point information is captured, processed and exchanged. Records must be kept for process and audit purposes. The electronic business initiative The business need

Key Point There is a joint commitment by members of the chain to build a more transparent chain that has a market orientation and addresses customer needs. A core element of the 2002 supply program was to commence implementation of an information capture and exchange underlay that underpins product traceability and integrity.

There is a long-term relationship between the chain partners. Regular reciprocal visits take place. Ausfresh normally travels to UK twice yearly, to finalise program arrangements for the next export season and to inspect outturn. Sainsbury’s international table grape buying manager visits Australia each year to inspect the crop and review the business processes. Redbridge staff travel to Australia to supervise grading, sorting and packing in Australia – for 2002 they had a QC specialist working in the packhouses for 3 weeks and Redbridge’s senior technical manager was on site for another week. There is a joint commitment to build a more transparent chain that has a market orientation and addresses customer needs:

- Ausfresh has to supply information about the grapes through their life cycle including spray diaries. Strict guidelines (to European standards) apply to chemicals that can be used and the MRL’s allowed. Redbridge encouraged Ausfresh to supply this data electronically in 2002.

- Ausfresh must pack to very strict and comprehensive product and packing specifications set by Sainsbury’s. These specifications are rigorously enforced. Despite shortages in 2002 from other international suppliers, Sainsbury’s would not compromise on specification (such as reducing berry size) that would have allowed additional supplies from Australia.

- A key performance indicator for Redbridge is the number of complaints from customers in relation to their purchases of grapes sold by Sainsbury’s (this applies to both Australian and other source grapes). That this indicator exists puts the onus on Redbridge to enforce rigorous quality checking on intake and outturn from their depot with the results made available to both Sainsbury’s and Ausfresh.

Sainsbury’s are also now requiring that their international suppliers (such as the Ausfresh growers) become certified to Eurepgap, which is the European retailers code for good agricultural practice37. Eurepgap is a very comprehensive new standard that will increasingly be imposed on suppliers by their supermarket customers. It takes good agricultural practice beyond food safety type (i.e. chemical use) to aspects that include demonstration of environmental responsibility, worker welfare practices etc. It is a clear signal from supermarket buyers that their customers want the grower of the produce they buy to demonstrate good agricultural practice in the production of that produce. 37 The Eurepgap code is available from www.eurepgap.org. The certification process and the development of an electronic communications platform for the exchange of information among the chain members was supported by AgriChains Solutions Ltd (a subsidiary of Supermarket to Asia since replaced by National Food Industry Strategy Limited).

81

The main supplying vineyard for Ausfresh is a joint venture vineyard operated by the Ausgrape Partnership (Ausfresh and the Marciano family). Certification of this vineyard to the Eurepgap standard will be granted in April 2003 and it will be the first such certification of an Australian supplier. Certenz, an audit company that is part of the AgriQuality New Zealand group, has undertaken the audit process for the Eurepgap certification. Certenz were the only accredited certification body available for Australasia. A core element of the 2002 supply program was to commence implementation of an information capture and exchange underlay that underpins product traceability and integrity i.e. electronic business. The requirements

Key Point The initial requirements information capture and exchange underlay were to automate spray diary records; to support the Eurepgap certification process; and to automate the grape quality checking forms used by Redbridge. The system had to complement Redbridge’s existing quality checking processes, rather than Redbridge having to adapt the processes to suit the technology.

The requirement was to:

- Automate the capture and exchange of chemical spray records. - Automate the grape quality checking forms used by Redbridge (Grape Weight Check and

Grape Intake Check). - Support the Eurepgap certification process by automating the Internal Audit Checklist and

the associated recording forms that could be appropriately held in an electronic format. In addition, the infrastructure provided had to:

- Allow the forms to be filled in offline (i.e. without being connected to Internet). - Provide a mechanism by which the filled forms could be immediately transferred to other

members of the chain (i.e. chemical spray records by Ausfresh to Redbridge; grape quality checking forms to Sainsbury’s and Ausfresh; Eurepgap documents by Ausgrape to Certenz).

- The system had to complement Redbridge’s existing quality checking processes, rather than Redbridge having to adapt the processes to suit the technology. In addition, it had to be able to be used by Redbridge across all its international grape suppliers.

There was no requirement at this stage to take any of the data from the Redbridge grape quality checking forms and the Eurepgap forms into a database. The users The members of the Ausfresh chain are:

- Murray Valley growers supplying table grapes to AusfreshAusfresh - Redbridge Holdings (UK) - Sainsbury’s (UK)

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The technology solution


The electronic business system is built around an electronic forms platform. It makes data input forms on the computer screen look identical to the paper forms that are used in the manual system. This technology is low cost and very flexible allowing changes to be implemented easily.

Key Points

The electronic business system allows data entry to be done offline and the forms have been mainly transmitted by email.

The electronic business technology solution for Ausfresh is illustrated38 below. 38 Illustrative only. For example there is a single member login function used by members to access functions for data uploading, data and report retrieval, and accessing general member information.


Dem

an

d C

hain

M

em

ber

Lo

gin

E-Forms Archive

Data Warehouse

Reports &

Queries

Trust relationships and permissions identify which parties can access data

and reports.

Res

tric

ted

Web Site Electronic Forms Upload

Dem

an

d C

hain

A

dm

in L

og

in

Demand Chain Member Register

Demand Chain Members (login required)

Electronic Forms downloaded, filled and sent as attachments to email (ie no use is made of the web)

Stand-alone Electronic Forms filled and sent as attachments to email (ie no use is made of the web)

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Specific comments in relation to each of the components are:

Chemical Spray Records

- An email system was used for the exchange of spray diary documentation for the 2002 season as the project only commenced late 2001.

- The ChemCheck system was used for the 2003 season (refer to the ChemCheck case study for more information on ChemCheck).

Redbridge Grape Quality Checking Forms - A simple, flexible and low cost infrastructure using electronic forms technology was

prototyped and piloted during the 2002 season. For the pilot the forms operated stand-alone and were exchanged by attaching them to email i.e. the exchange process worked independently of a web site.

- Subsequently the forms were linked to a secure Internet “post office” facility and “posted” to the web site for access by others in the supply chain subject to the business rules agreed between Ausfresh and Redbridge. This facility is available for the 2003 season.

- There was no requirement at this stage to take the data off the forms into a database. - Development of the forms started with the existing Redbridge formats. As the project

developed, and as Redbridge became more familiar with the capability of the technology, they extended the functions in each form to automate the calculation of actuals versus allowed tolerances for many of the criteria being checked. Ultimately about eight iterations of the initial prototype were developed before implementation.

Eurepgap Forms - A simple, flexible and low cost infrastructure using electronic forms technology was

developed covering the Internal Audit Checklist and the associated recording forms. The forms operated stand-alone and were exchanged by attaching them to email.

Electronic forms technology is an innovative approach to enabling demand and supply chains to conduct business electronically. It is attractive because it supports the preferred business processes of the supply chain rather than forcing those processes to adapt to the technology; and it is simple, flexible and low cost. The key features include:

- Use of an electronic forms platform from Graeme Forsythe & Associates (GFA) (www.gfassociates.com.au) and Formatta Corporation39 (www.formatta.com). The Formatta Filler, which is free to growers and other users and very small in download file size (less than 1Mb), must be installed on all computers that are used to open an electronic form. Formatta Designer is used to build forms, and the Formatta Server is a series of application programming interfaces that enable the data to be automatically read from the form into the database, and the form to be pre-populated with known profile data and drop lists on forms to be dynamically generated.

- Offline data capture. - Use of an email system to transmit the electronic forms; (upgraded with a link to a secure

Internet “post office” facility for the Redbridge grape quality checking forms for the 2003 season).

39 Formatta supply Server, Designer & Filler technology for electronic forms. This technology is explained in more detail in the Excelerate and ChemCheck case studies.

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A prototyping and review process was followed to develop the electronic forms with Redbridge (operating out of London and GFA out of Sydney).

Key Points

Email was used to exchange forms. Linkage of the forms to a secure Internet “post office” facility was deferred until the users were comfortable with the technology.

The following implementation principles were adopted:

- Keeping the system simple. - Making it flexible and adaptable to change. - Make the form look like the paper equivalents currently used by Redbridge. - Because Redbridge operates out of London and GFA out of Sydney, use a prototyping and

review process. - Utilising low cost and simple to use technology that emulates the look and feel of a paper

based system. This also supports growers that do not have a computer and / or Internet access. - Providing for data to be entered offline or online.

Pricing Not applicable. The electronic business system was developed for the chain as an element of a much bigger project. Current status The ChemCheck system was used for the 2003 season. Redbridge have the Grape Quality Checking Forms linked to a secure Internet “post office” facility and “posted” to the web site for access by others in the supply chain for the 2003 season shipments. The documentation associated with the Eurepgap certification process was handled using electronic forms exchanged using email. Further information

Graeme Forsythe Don Lyon Graeme Forsythe & Associates Pty Ltd Ausfresh Produce Pty Ltd 28 Auld Avenue, Eastwood NSW 2122 Suite 503, Level 5, 89 High Street, Kew VIC

3101 Phone: 61 2 9874 1009 Phone: 61 3 9853 3802 Fax: 61 2 9874 8343 Fax: 61 3 9853 3925 Email: [email protected] Email: [email protected] Web: www.gfassociates.com.au Web: www.ausfreshproduce.com.au

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Redbridge grape quality checking screens – (examples only)

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Eurepgap documentation screens (examples only)

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10. Conclusions The overall objective for this project was to learn about the application of electronic business in agribusiness supply and demand chains using case studies of commercial systems, and to develop guidelines to help prospective implementations do so successfully. The specific objectives for the project were to:

- Develop case studies of groups using electronic business demand chain applications. - Develop “how to” guidelines that remove the fear and uncertainty of electronic business. - Determine costs and benefits to the players involved, and “methodology” for farmers to value

the benefits of electronic business. - Identify the “drivers” for electronic business. - Identify the barriers that need to be addressed to facilitate the take-up of electronic business,

and how they have been addressed by farm businesses and agribusiness demand chains. - Develop and implement a technology transfer strategy for electronic business based on the

knowledge gained. Develop case studies of groups using electronic business demand chain applications The project was undertaken after the so-called dot.com crash occurred. This caused the landscape for electronic business to change significantly. The premature and immature models (including many marketplaces) failed. Electronic business deployments became driven by the internal needs of the chains and the businesses in the chain, and were deployed where value was being added, rather than promoted by independent application service providers as a generic solution. The landscape in which agricultural produce is transacted is also changing. It is increasingly under the influence of a number of key trends including globalisation, consumer awareness and activism, food science developments and the opportunities provided by information and communications technology. Demand chain management is becoming a new strategic driver. It starts with the customer and ensures that the process of delivering value to the customer is the driver of the chain. In this model, the businesses in the chain will usually have pre-existing relationships, alliances and contracts that set the guidelines for supply and title change. Business relationships that were ad hoc, adversarial and often lacking in trust, and where product supply was pushed up the chain at the consumer, rather than being pulled up the chain in direct response to customer requirements, are being replaced by collaborative relationships and contracted or programmed production arrangements. Produce is grown for the buyer and to the buyer’s specification; not in anticipation of finding a buyer. The chain is integrated and is itself the basis of competition, rather than the individual businesses within it. Effective demand chain management typically exhibits “through chain transparency”. Transparency leads to trust, builds efficiency and reduces costs through the chain. It normally requires an IT capability and is the catalyst for much chain innovation and electronic business. This environment, the decision to exclude marketplaces from the study, and the need to find deployments involving multiple roles in a chain, impacted the selection of case studies. In five of the case studies the author’s company has had a direct involvement in the development and implementation of the electronic business system that was the subject of the case study.

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Commentary (sections 5-9) is provided for each case study on the business need that drove the initiative, the requirements of the users, the electronic business solution deployed and the principles followed in the implementation. Develop “how to” guidelines that remove the fear and uncertainty of electronic business The core task for the project was the development of “how to” guidelines. This was achieved by developing a list of critical success criteria drawn from the experience in each of the case studies (covered in section 3). The guidelines aim to help RIRDC:

- Enhance knowledge about electronic business in practice – assessing and broadening the opportunity based on the experience of users at farm and demand or supply chain level; identifying the costs and benefits; and the triggers for and barriers to adoption.

- Potentially increase the rate of adoption of electronic business by farm businesses and agribusiness demand chains with the resulting economic, business improvement and environmental outcomes.

- Define a practical technology transfer strategy. An important part of the process of compiling critical success criteria was to live the experience, and to share the frustrations, challenges and successes. It was important to identify the issues and challenges faced by the operators and users of the systems which often related more to change management, than to the technology used. This has important implications for technology transfer. The implementations are at different stages of maturity. Some are still at an early stage of development reflecting the challenge of getting a diverse group of users going. Others are involved in an active pilot process allowing prototype systems to be fine-tuned before commercial implementation, or they have matured to the stage of commercial rollout and beyond. The general framework used for Ausfresh Produce for example has now been implemented in a much more comprehensive format with multiple roles in other chains that are not covered in this report. Each implementation is very dynamic. Changes occur frequently. They evolve as an outcome of the changing business needs and particularly as the users become more familiar with the system and start to better understand what they can do. The status of each case study reported is as at February 2003. Determine costs and benefits to the players involved, and “methodology” for farmers to value the benefits of electronic business & Identify the barriers that need to be addressed to facilitate the take-up of electronic business, and how they have been addressed by farm businesses and agribusiness demand chains We found it almost impossible to quantify the costs and benefits to the players involved, and to develop a methodology to value the benefits of electronic business. Partly this is the result of the diversity of the case studies and partly a result of the range of maturity of them. A number of themes did emerge however that helps to put some boundaries around these issues. A demand or supply chain involves a diverse network of businesses operating at the different vertical levels and potentially multiples of similar businesses at each horizontal level. Unless there is a collective commitment to transparent processes that enables the sharing of information (whilst retaining confidentiality as business rules dictate), and thence the processing and valuing up of information to enable better chain management decisions, the initiative won’t be successful and won’t deliver a value proposition or return on investment.

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Securing the commitment of all players is not always going to be easy because of the numbers of businesses involved, the different roles played, the different business processes, the different business cultures, and the different information capture, processing and exchange needs. But it is an important objective otherwise the potential benefits and outcomes that the system can deliver will not be realised eg the opportunity to “value up” information such as consolidating data to generate crop forecasts, delivery intentions or non-conformity checks, is diminished. We also encountered (in some cases) a mindset among growers that the information they contribute to a demand or supply chain system transfers to members further up the chain, and that they don’t necessarily see a direct financial return on their costs of involvement if there is a direct charge to them. Often the information provided is their right to participate and the ticket to do so. The most important conclusion therefore is that without the chain as an entity, or a business further up the chain (than yours), mandating use of the system, complete adoption will always be challenging unless there are significant and obvious incentives to use the system (i.e. increased revenue, reduced costs or greater efficiency) and the users make the commitment to have a go. Ultimately there is little difference in using a demand or supply chain electronic business system to using an electronic business service such as online banking – why do we use those systems? We use them because they save us time and money; we don’t have to travel to the bank, we don’t have to find a park and we don’t have to wait in the queue inside the bank; we can use the system when it suits us and not just during bank opening hours (it is more convenient); we can get instant access to our account information; and so on. Even then, if the incentives and commitment are in place, the typical profile of a small and medium sized agribusiness user is that they are busily tied up just doing the work processes they have always done to keep their business ticking over. It is not difficult to guess what keeps getting put in the “to do” or “too hard” basket. Finding time to try a new way of doing a business process (i.e. an electronic way), when the business struggles to do what it has to in the way it always has, is always a popular excuse. It is unlikely that every chain member will have a computer and / or Internet access. An important challenge is help those members be involved. Various approaches are available including service bureaus or entering data further down the chain through a recipient created mechanism. The adoption of electronic business is ultimately about change management. It requires planning, training and support facilitation – specific to the chain and to the electronic business system; and certainly not promotion or extension of a generic nature. Identify the “drivers” for electronic business Electronic business is working successfully when the demand chain drivers are working and the chain is transparent i.e. interdependence of the members of the chain (rather than independence) and a willingness to share information (rather than holding on to it). There should be a clearly identified business need, issue, business improvement opportunity or problem that drives the electronic business implementation and an anticipated return on the investment the chain (or a key business within the chain) will make. If not, what is the purpose of investing in the system (or in “blue sky”)? The electronic business project will most probably be doomed to failure. The Australian and international landscape is littered with examples of e-commerce and electronic business solutions being developed by third party vendors (typically application service providers promoting electronic marketplaces) without a business need being identified. The problem must look for a solution. The solution should not look for the problem. Develop and implement a technology transfer strategy for electronic business based on the knowledge gained

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We have already addressed the need for a demand chain driver and the commercial need as central to any technology transfer strategy. Generic promotion of electronic business and associated extension activities will at best achieve awareness. It is very unlikely to result in adoption. Adoption will only occur when the user commits time and effort, rolls up their sleeves, has a go and gets their hands dirty – with a specific electronic business system built around a commercial need. Technology transfer planners should recognise this.

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11. References Australian Bureau of Statistics (2000) – ‘Use of the Internet by Householders, Australia’, Catalogue No. 8147.0, Canberra. Collins, R & Dunne, A (2002), Forming and Managing Supply Chains in Agribusiness: Learning from Others (CD). Loydell, J (2001), Australian Banana Industry Survey. Papandrea, F & Wade, M (2000), E-commerce in Rural Areas- Case Studies, RIRDC, Canberra. Parker, R & Papandrea , F (2002), The rural and Regional Guide to E-Commerce, RIRDC, Canberra. Roberts, A (2001) – Talking About Chains: A Discussion Paper Arising from the Proceedings of the ACS Chain Management Workshop, Brisbane.

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