Stephen Toms Chief Financial Officer 1
ADDING VALUE THROUGH SUPPLY CHAIN INTELLIGENCE! Queensland Cotton! A leader in the international cotton market, is faced with intense competition and subsequent pressure on margins.! Our objectives - Gain intelligence about our customer base Increase profitability by enhancing customer service Maintain our competitive edge in the global market. 2
Topics of Discussion - 1. Queensland Cotton s role in the supply chain 2. Our Sources of Information (Data) 3. Our interface to Growers 4. The Future 3
Queensland Cottons Role -! Supply chain enablers:! Farm inputs! Finance! Process raw cotton (gin)! Logistic and marketing services 4
Grower / Farmer Crop Inputs Scientific Inputs Money Inputs Merchandising Chemicals Loans Agronomic Services Purchase Contract Raw Cotton Modules Fee for Service Marketing Logistics Warehousing Shipping Warehousing Ginning Processing Service Seed Merchant Selling Contract Seed Spinners Customers Bales Lint 5
Our Sources of Information -! SAP engine Room! Customised Modules! Scientific Services! Logistics input! External Data Sources 6
SAP Customised Grower View SAP Standard Knight Ridder QC SCIAG Bale Logistics Banking System SAS Data Warehouse Sales Force View Credit View Risk View USA D.W. Finance View 7
Our Interface to Growers -! SAS data warehouse! F5 - a specialist internet marketing group.! 4% of companies provide customers with a personalised web page! 68 % of Cotton Growers have access to the internet (43% in wheat and 25% in wool)! Access by growers increases exponentially (from 400 to over 1600 hits a week in 3 months) 8
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How did we get approval to do this?! A Concept drawing all the pieces of the puzzle together! Analysed what current technology had to offer! In depth study University of New South Wales Australian Graduate School of Management (AGSM) MBA students! Cost Benefit it had to have a financial upside not just speculative: Cost reductions first and foremost Next is how to charge a fee for the service 10
What This Means -! TURNING POINT FOR FUTURE BUSINESS TRANSACTION! END CONSUMERS EXPECT INSTANT, ACCURATE AND USER FRIENDLY INFORMATION! GLOBALISATION REQUIRES EASILY TRANSFERABLE DATA! BEING AT THE LEADING EDGE ADDS VALUE FOR ALL OUR STAKEHOLDERS -» CUSTOMERS» RETAIL USERS» EMPLOYEES» COMMUNITY 11
The Future -! Think about this scenario: In a world where the end consumer is becoming more and more conscious of product content we can see a need for visibility throughout the supply chain Eg Current debate on genetically modified foods Recylability of parts in Automobiles etc. 12
Spinners SAS Data Warehouse Yield Info Monitoring GPS Mapping Info Cotton Farm Textile Manufacturer Retailer Bales Gin Classing Info Seed Food Manufacturer Consumer $50 The Future Cattle Feed 13
Return on Investment Our Data Warehouse / Web interface EXAMPLE! Detailed cost study by AGSM! Potential 35% Saving in transaction costs! Initial Spend $1.0m! Bite size chunks! NPV Medium Term Savings $5.1m over 5 yrs! We have been running live for about 3 months and already anecdotally telecommunication costs down significantly we are in process of a proper benchmark process. 14
Our Conclusion -! We can see the enormous changes that instant and transparent information can bring to the cotton commodity supply chain! The data warehouse provides us with the ability and flexibility to draw on information from all current and future sources to enhance our own and our customers business intelligence requirements.! If transaction costs can be lowered then this provides the initial impetus to fund the set-up of intelligent supply chain information systems. 15
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