Monitoring Data for the Monitoring Data for the TeamTeam

Slide Source:Bradley J. HiltyPenn State Dairy Alliance(814) 865-4683bhilty@psu.edu

Monitoring Data for the Profit TeamI. Successful dairy businesses

II. Key benchmarks for business

III. Targets for teamsa. Detecting bottlenecks

b. Monitoring monthly

c. Using resources

IV. Past team successes

I. Successful Dairy Businesses

I. Successful Dairy Businesses

Successful dairy businesses must provide:

1. Adequate returns to owner labor and management, in addition to:

2. Adequate returns to capital investments!

I. Successful Dairy Businesses--Profitability Factors

Profitability - ROA

Operations Efficiency Operating Expense Ratio

(OER)

Capital Efficiency Asset Turnover Ratio

(ATR)

Return to Unpaid Family Labor &

Owner Labor and Management

I. Successful Dairy Businesses

--Business Management Keys

Strategic Management:

Doing the RIGHT things!

Operations Management:

Doing THINGS right!

Strategic Management Deals with the “Big Picture”

II. Key Benchmarks for Business

II. Key benchmarks for business Profitability

ROA – 8-10% Financial efficiency

OER – <75% for corp. <65% other structures Capital efficiency

ATR - >.60 dairy and crops; >1 dairy only

Profitability 

Return on Assets(ROA) >10%

Liquidity 

Term Debt & Lease Coverage Ratio (TDLCR) > 1.20

Solvency 

% Equity% Equity > 60%

Financial EfficiencyOperating Expense Ratio

OER< 75%-Corp OER<65% -SP/P

Capital EfficiencyAsset Turnover Ratio

 ATR >.6 Dairy & Crops

ATR> 1.0 Dairy Five “Star”

Financial Benchmarks

II. Key benchmarks for business

Analyzing Reports Key Production Areas

Management Area Benchmark GoalProduction Milk/Cow/Day 85Repro Status Days in Milk 175-185Repro Performance Pregnancy Rate 22-24%Udder Health SCC <200 KTotal Cow Management Cull Rate 25-35%

Other diagnostic benchmarks are also important.

II. Key benchmarks for business

III. Targets for Teams

a. Detecting Bottlenecks

III. Targets for Teams

Monitoring the right information helps detect and prevent bottlenecks

Busines$ense What is a Bottleneck?

PRODUCTS

Production Systems Are Pipelines

INPUTS

Busines$enseWhat is a Bottleneck?

INPUTS PRODUCTS

A restriction in the product pipeline

It is important to detect & correct the most restrictive bottleneck first.

Fixing the wrong bottleneck is of no benefit.

III. Targets for Teams

b. Monitoring Monthly

III. Targets for Teams---Using the right information

What factors are critical to success? Milk Volume

Milk per cow per day DIM

Repro Performance Udder Health - SCC

Cow numbers Cull Rate Replacement performance Repro Performance

III. Targets for Teams---What are key indicators?

Milk per cow per day DMI Milk Starts Peak phase milk

Components Prot / Fat Ratio

Udder Health Early Lactation SCC

Culling Transition cow problems

III. Targets for Teams---Monitoring information

Milk Production – Daily Feeding data – Daily??

DMI, FE, IOFC SCC / Milk Quality Indicators – Dairy tests PG rate – 21 days Cull Rate – monthly / annually Others – see monthly monitor

III. Targets for Teams

c. Using resources

Monitoring Tool

Monthly Monitor

Available on website or through Dairy Alliance office at:

1-888-373-7232

Monthly Monitor 3.0.xls

Publication:Analyzing Your Dairy Business: A Systematic Approach to Using Benchmarks

Profit Team Tools

Contact the Dairy Alliance Office for copies at:1-888-373-7232

Other Profit Team Tools

Dairy Farm Business Summary

Contact the Dairy Alliance Office for more information at:1-888-373-7232

PA Dairy Tool from Penn State

Contact the Dairy Alliance Office for more information at:

1-888-373-7232

Past Profit Team Successes

2004 data with pilot farms.

Pennsylvania Dairy Profit Teams – Pilot Year of Project

Some Key Numbers (2004) Herd Size ~ 205 55-740 Milk per Cow ~ 20,000 12.5 K – 28

K ROA ~ 3.0 % -16.8 % - 23.8% ATR ~. 40 .18 - .93

Investment/Cow ~ $ 11,000 $4,700 - $20,000 OER ~ .80 .55 - 1.18 Cows/FTWE ~ 37 17 – 65 Operational COP ~ $13.80 $9.15 - $18.78

Questions?