Growmark, Inc. Distribution Center Alpha, IL. Shyenne Horras Sarah Le Jeune Sean Long

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1 Growmark, Inc. Distribution Center Alpha, IL Shyenne Horras Sarah Le Jeune Sean Long

2 2 Table of Contents Section Page Number Company History...p.3 Business Structure.. p.3-4 The Distribution Center at Alpha... p.4 Product Offerings..p.5 Source of the Raw Materials..p.5-6 Transportation p.6-7 Facility...p.7-8 Technology and Inventory Management... p.8-9 Safety.. p.10 Appendix...p Works Cited... p.14

3 3 Company History Growmark s beginning came about in the 1920 s as farmers were making the transition from horse-drawn machinery to tractors. Large oil companies were unwilling to deliver to rural areas, so farmers came together to form cooperatives to ensure a reliable fuel source. A number of these farmer owned cooperatives came together to form Illinois Farm Supply Company in Illinois Farm Supply grew to provide many products that farmers need including lubricants, chemicals, fertilizers, feed and seed. In 1955, the company adopted the FS brand trademark which is still used on their products today. In the 1960 s, Illinois Farm Supply joined forces with similar cooperatives in Iowa and Wisconsin to form FS Services, Inc. The company later merged with Illinois Grain and selected the name Growmark. The name comes from combination of services offered by the company; GROWing and MARKeting of crops. Since their beginning, Growmark has expanded their territory to include Indiana, Ohio, Michigan, Pennsylvania, New York, and Ontario. Source: Martin, Craig Business Structure Growmark is different from its investor-owned corporate competitors because it is a cooperative. A cooperative exists to service its members. The customers are the members and each member is given one vote in electing a board of directors. Most cooperatives do not retain earnings, but rather, they pay patronage to their members. Due to the distinctive structure of cooperatives, a heavy importance is placed on customer service. After all, the customers are the owners. In a case study written for Growmark, Yoshinori Suzuki acknowledges that due to the unique structure and emphasis on customer service in an agricultural cooperative, Growmark needs to have management strategies tailored to their business.

4 4 Growmark is headquartered in Bloomington, Illinois. The Bloomington office is home to the dispatch and brokerage departments which help the warehouses keep their retail centers stocked with products. The retail operations are referred to as member-companies. Sources: Growmark.com; Suzuki, Yoshinori The Distribution Center at Alpha The decision to build a distribution center at Alpha came with the changing livestock market in the late 1970 s. Bagged livestock feed was a substantial part of Growmark s sales. They used to have 4 warehouses placed close to fed mills in Iowa, Wisconsin, and Illinois, but the industry was moving away from bagged feed to bulk feed. Growmark s sales were also shifting more toward crop protection products and general merchandise. The warehouse locations at the time had 30% of their business coming from transferring goods between the 4 warehouses. These were unnecessary shipments from one warehouse to another. The logistical solution was to consolidate the warehouses into one at Alpha, Illinois. Alpha is a central location for serving the Illinois, Iowa, and Wisconsin member companies and is just 3 miles off Interstate 74. Construction of the distribution center was completed in The facility has a brief but reputable history, modern strategies to meet all demands, and state of the art technology for safety and inventory management at multiple levels. Today, Growmark FS has a total of five warehouses across Iowa, Illinois, and Wisconsin. Warehouses are located in Des Moines and Iowa City Iowa, Springfield and Alpha Illinois, and finally the lone outpost in Amherst Junction Wisconsin. Lease arrangements are currently underway for a warehouse in Nashville, Illinois. The lease will offer same day service to southern Illinois to meet the demands of a longer growing season in the southern part of the state. Sources: Martin, Craig

5 5 Product Offerings Growmark offers their own FS brand products as well many other products through their supplier relationships. At the Alpha distribution center there are approximately 7,700 line items encompassing 7 product groups: seed corn, seed beans, turf seed, crop protection, energy, facility equipment, and grain systems. Please refer to Figure 1 in the appendix to see a few examples of seed brands carried by Growmark. Many of the bulk products in the energy category, such as diesel and propane are shipped from terminal to the member company or customer directly via tanker trucks and so these products do get shipped through Alpha. Products that sell in relatively smaller quantities, usually packaged products, are distributed through the Alpha location. Packaging for liquids may be in 250 gallon totes, 55 gallon drums, 2.5 gallon jugs, all the way down to 1 pint bottles. Granular products, powder products, and seed may be packaged in 50 pound bags stacked and wrapped on a pallet, hard-sided boxes, or 2,000 pound big-bags. Sources: Martin, Craig Source of the Raw Materials and Manufacturing As Growmark is a regional cooperative providing agriculture-related products and services as well as grain marketing, there is not much manufacturing done solely by the company. While Growmark does own a lubricant production facility Council Bluffs, Iowa, the majority of their products transported through the Alpha Distribution Center are manufactured by other companies at locations near Illinois, Iowa, and Wisconsin. While Growmark does work with a number of suppliers, the information on their names and locations was not available as much of this information is password restricted to member cooperatives. Still, manufacturing and processing does take place at the distribution center. For example, 3.2 million pounds of turf grass is mixed at Alpha each year. Instead of hauling turf

6 6 seed back and forth, the mixes are now created in the warehouse to improve efficiency. Processing and repackaging of products is also done in the warehouse, especially regarding grain and fuel. Diesel exhaust fluid (DEF) is contained in a 10,000 gallon tank at Alpha, and then packaged into individual barrels for shipping to members. Samples are taken from on any returned seed sent to a laboratory for germination tests, so that the seed may be relabeled with its newly determined percent germination before being resold in order to prevent any misinformation for the next consumer. Sources: Growmark.com; Martin, Craig Transportation Growmark specializes in transportation and farm supply, especially at the Alpha Distribution Center. According to the center manager, Craig Martin, each member company gets route delivery once a week, with each region having its own unique day (see figure). However, members can get deliveries on other days if necessary, but in order for the member to avoid a $50 fee, the order must at least 1,000 pounds or $2,000 in value. These requirements keep member companies from making frivolous deliveries, though back orders are always delivered as soon as possible and do not need to meet these specifications. While Growmark does use barge and rail transport at other facilities, trucks are utilized at Alpha. The company owns their own trailers and leases the trucks from Williams National, in order to avoid trucker wage expenses while still being able to load their trailers at their own pace. When receiving merchandise, the trucker will show their packing slip or freight bill to an employee to ensure the correct location. The pallets and number of items contained within them are counted to ensure accuracy, and then placed in their assigned warehouse location. According

7 7 to the manager at Alpha, this process takes around two hours from the time the truck pulls in to the when all the items are on the shelves in inventory. The majority of shipments from the distribution center are less than truckload (LTL), and contain twenty-two pallet spaces for a total of twenty-two potential stops. Technology called direct route is utilized for shipping at Alpha since it uses information on the weight of the objects, the types of placards that need to be displayed, and hours of service to determine the best shipping route. This software has provided time saving and compliance benefits that have improved efficiency at the distribution center. Continued efficiency at the distribution center is of key importance considering that annual sales of products going through the warehouse exceed $150 million. Sources: GROWMARK Updates Member Resource Platform ; Martin, Craig Facility The Growmark FS facility in Alpha uses a 240,000 square foot distribution center including all offices and truck docks. The facility has its very own back-up power generator station in the event of power outages located behind the facility. All computer systems are backed up by battery in the event of a power outage, to ensure that the computers never go off line during the wait time for the generators to kick in. The facility is designed to be as energy efficient as possible with individual heaters that keep the facility slightly pressurized to reduce energy costs. The 210,000 square foot facility is able to efficiently maintain a temperature of 52 degrees during the frigid winter months. The facility operates twenty-four hours a day, five days of the week, except during the growing season. During a 16 week period beginning in March, the facility operates six days per week to meet the demand of the growing season.

8 8 It is during this 16 week growing season the Alpha facility does approximately 65% of their annual distribution. Growmark FS at Alpha stores 7,700 different line items, with 7 different product groups which include three seed divisions. This facility is one of twenty-five facilities in the United States, mixing 225 of their own brand of turf blend inside the facility. There employees take FS brand seed from inventory, which is reduced from available inventory, and brought a mixer where they get their finished product of FS brand turf blends. Along with their brands of turf blend, diesel exhaust fluids are the only products that are packaged at the facility today. The facility houses eighteen enclosed loading docks which are fully functional. When the distribution center was constructed 45 foot trailers where the norm. Now, for low density items, a 53 foot trailer is typical, plus over the road truckers have an additional 8 feet on the cab. Only two 53 ft trailers with an over the road cab at a time are allowed at the inside docks due to safety and maneuverability concerns. Construction is underway to add seven additional outdoor loading docks to accommodate more over the road truckers. The expansion of the loading docks capabilities will maximize efficiency of incoming and outgoing freight scheduling. All incoming shipments are verified twice to mitigate shipment errors, and to reduce unnecessary loading and reloading of shipments not intended for the Alpha facility. The facility proudly stands by their ability to have products available for distribution just two hours after any incoming freight arrives. Source: Martin, Craig Technology and Inventory Management

9 9 The facility uses standard 42 inch racks that are reduced down to 36 inch forward leaning racks, to reduce inventory collisions during movement. These racks are capable of withstanding their 18 foot vertical storage per aisle (see figure 4). All aisles are labeled alphanumerically starting from the front entry into the warehouse, ending in the back corner of the warehouse. Growmark FS credits the OMNI systems inventory and reporting technology for smooth inventory tracking and resupply management. The system is used by their corporate management to manage reorder points, safety stock, and other inventory needs. Inside the facility the OMNI system employs what could be described as the Chaos theory of inventory. Storage of items is not specifically located together based on likeness of purpose or brand. The facility uses a first in, last out method of distributing products. All floor and stored items are tracked by the OMNI system, and are located within the facility based upon frequency of demanded products. Flammable inventory is segregated to a room specified for inventory that is combustible or otherwise considered a fire hazard. Items with the lowest frequency of demand are located toward the back of the facility; conversely, high demanded items are closer to the front near the shipping docks. The locations of items being stored near the front for higher availability are flexible to meet seasonal demands. All back order demands from retailers are dealt with directly between the corporate offices and the retailer using the OMNI system as well. All outgoing freight, as well as items to be cross docked, are collected from the floor or rack storage, and is then staged in front of the loading docks where it is verified to vendor or customer order standards, sorted, palletized, and wrapped for outgoing shipments. Source: Martin, Craig

10 10 Safety Growmark is very conscious of safety issues within their distribution facility. They use a state of the art fire sprinkler system which has the capability to isolate where a fire may be within the facilities six sprinkler systems. This minimizes the risk of damaging inventory which may be across the facility, nowhere near the fire. Stringent controls are in place to deal with hazardous and non-hazardous chemical spills. Every employee is trained and is aware of the location of chemical mop gear. If a spill of non-hazardous chemicals exceeds 100 gallons, the EPA is immediately notified of the spill. However, any spill of hazardous materials over 25 gallons the EPA is to be notified. As previously highlighted, Growmark has an ever evolving supply chain management network and operation. Growmark has not only excelled in their distribution operation in Alpha, but has also set a high standard for distribution facilities in the region. Growmark s attention to every detail, flexibility and adaptation to the expanding markets and steadfast dedication to safety at the facility puts them at a premium position regarding supply chain management. Source: Martin, Craig

11 11 Appendix Figure 1: Green Yard is the FS brand of turf seed and turf seed blends. As grow soybeans are sold at Growmark member companies through an agreement with Monsanto. HiSoy soybean seed is a proprietary brand sold by Growmark. Dekalb seed corn is sold at Growmark member companies through an agreement with Monsanto. I InVision seed corn is a proprietary brand sold by Growmark. Figure 2: The mixing station where employees blend turf seed.

12 Figure 3: 12

13 Figure 4: *Notice how the pallets sit

13 13 Figure 4: *Notice how the pallets sit at a slight angle on the racks. Due to the narrow 36 in. racking, the angle means that when a pallet is lifted off one side of the rack it will not tear the packaging of the pallet on the opposite side

14 14 Works Cited Growmark.com. GROWMARK, Inc., Web. Nov < GROWMARK Updates Member Resource Platform. Agwired.com. Zimmcomm New Media, 23 Sept. 2013, Web. Nov < Martin, Craig. Alpha Distribution Center Manager. Personal Interview. 22 Nov Suzuki, Yoshinori. "Finding The Proper Fleet-Downsizing Strategies For U.S. Agricultural Cooperatives: A Case Of GROWMARK, Inc." Transportation Journal (American Society Of Transportation & Logistics Inc) 48.2 (2009): Academic Search Premier. Web. Nov <

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