September 6, 2024 • 52 mins
Have you ever wondered how to transform your grain inventory management for peak efficiency and profitability? In this episode of Whole Grain, we're joined by Jim Voigt, a long-time veteran of the grain industry with extensive experience in inventory management.
Voigt's career spans several decades, during which he has significantly contributed to the growth and efficiency of major companies like ADM. He has sourced and trained more than 5,000 employees to supervise and manage ADM grain facilities in North and South America, facilitated the expansion of ADM’s Domestic Grain Operations, and played a pivotal role in establishing ADM’s International Grain Operations in South America. He has also co-founded ADM’s Continuous Improvement Support Team, enhancing plant efficiencies and inventory management. As the president of JFV Solutions Inc., Jim Voigt provides top-tier consulting services, facility analysis, and operations management training. Jim Voigt is also past president of GEAPS' International Board of Directors.
Voigt's career at ADM and extensive experience in the grain industry make him the perfect guide to explore the essential components of inventory management, and how they can profoundly impact operational success, profitability, and sustainability.
We tackle some of the most pressing challenges in grain storage management. Jim sheds light on the critical importance of time management and proper training to prevent those end-of-month shocks. Discover the nuances of permanent versus temporary storage solutions, and gain insights into best practices for maintaining grain quality amidst the complexities of airflow management and environmental factors. Voigt's real-life experiences and case studies offer practical strategies to navigate these challenges effectively.
Finally, we discuss the future of grain inventory management, from the implementation of SOPs to the integration of advanced automation and technology. Voigt explains how these innovations enhance accuracy, reduce human error, and improve operational efficiency across multiple locations. We also touch on the complexities of forecasting in the grain industry, sharing the importance of flexibility and contingency planning.
Tune in to learn how modernization and technology can revolutionize your inventory management practices, ensuring sustained success in a rapidly evolving industry.
Links:
- GEAPS' Management Basics for Grain Facility Supervisors online course
- GEAPS membership information
- JFV Solutions, Inc.
Grain Elevator and Processing Society champions, connects and serves the global grain industry and its members. Be sure to visit GEAPS’ website to learn how you can grow your network, support your personal professional development, and advance your career. Thank you for listening to another episode of GEAPS’ Whole Grain podcast.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Jim Lenz, GEAPS' Director of (00:03):
In today's episode, we're diving
deep into a critical topic foranyone involved in grain
handling and processinginventory management.
Stay tuned for this highlyinformative discussion.
Jim Lenz, your host andproducer of the show, and
(00:25):
director of global education andtraining at GEAPS, where the
mission of the Grain Elevatorand Processing Society is to
champion, connect and serve theglobal grain industry and our
members At GEAPS, we work to bethe global community and thought
leader for the grain industrywhich feeds and fuels the world.
Thanks for listening today andfor joining the network of
thousands of other grainhandling and processing
professionals across the globetaking strategic steps to grow
(00:45):
professionally.
The Whole Grain Show will giveyou the competitive advantage to
win at work so you can makemore of an impact.
Today we're joined by Jim Voigt,a long-time veteran of the
grain industry with extensiveexperience in inventory
management.
Jim will help us explore theessential components of
inventory management, discussingwhy it's crucial not only for
(01:06):
operational efficiency, but alsofor overall profitability and
sustainability in the grainindustry.
Throughout our conversationwe'll cover a range of topics,
including the challenges facedin managing inventory in grain
facilities, the impact ofeffective inventory control on
operational success and theimportance of understanding key
(01:26):
terms and concepts.
We'll also examine differentstorage methods, the use of
technology and data analytics ininventory tracking, and best
practices to optimize inventorylevels.
Additionally, Jim will sharereal-life case studies and
success stories, giving youpractical insights into how
effective inventory managementstrategies can lead to
(01:47):
significant cost savings andenhanced operational performance
.
We'll also look ahead to thefuture, discussing emerging
trends that are revolutionizingthe way we manage inventory in
the green industry.
This episode is packed withvaluable information for
professionals looking to improvetheir inventory management
practices.
Let's get started.
(02:17):
Today.
We have the pleasure ofwelcoming Jim Voigt, a
distinguished expert in thegrain handling and processing
industry.
Jim's impressive career spansseveral decades, during which he
has significantly contributedto the growth and efficiency of
major companies like ADM.
He has sourced and trained over5,000 employees to supervise
and manage ADM grain facilitiesin North and South America,
(02:39):
facilitated the expansion ofADM's domestic grain operations
and played a pivotal role inestablishing ADM's international
grain operations in SouthAmerica.
He has also co-founded ADM'scontinuous improvement support
team, enhancing plantefficiencies and inventory
management.
As the president of JFVSolutions Incorporated, Jim
(03:00):
provides top-tier consultingservices, facility analysis and
operations management training.
Jim Voigt is also pastinternational president and
chairman of the board of GEAPS.
Jim, thank you for spendingtime with the GEAPS.
Whole Grain Podcast listeners.
Jim Voigt (03:15):
Thank you.
I appreciate the opportunity toshare my thoughts with your
audience today, Jim.
Jim Lenz, GEAPS' Director o (03:20):
Jim , to allow our listeners to get
to know you and to start theshow with a bit of positive
spirit, could you share with ourlisteners a mantra or success
quote that you live byprofessionally?
Jim Voigt (03:32):
Sure, Jim, I think one of the ones I try and stay
humble with this and keep myperspective is that you do not
need to be the smartest personin the room to succeed.
I always found it best to builda team and a network with
individuals whose strength andknowledge offset my weaknesses
and that allowed me to have thesuccesses I have had.
Jim Lenz, GEAPS' Director of (03:53):
Oh , I like that.
Thank you for sharing, Jim.
You've had such a special anddiverse set of roles and
responsibilities in the grainindustry.
Could you highlight some ofthose roles in the industry?
Jim Voigt (04:03):
Well with the career I've had and the opportunities I
had.
That's kind of a difficultquestion for me, jim, but I
think looking at it is I had theopportunity to grow with ADM,
where we went from about 50locations to over 400 globally
in about an eight or nine yearperiod, turned it into the
largest grain company in theworld, and I got to be directly
involved in making that happen.
(04:23):
That was exciting.
I would also say that theopportunity to work in 20
different countries around theworld was a great experience.
But I think the thing thatprobably gives me the most
satisfaction is today I lookaround and I see the head of
operations for a lot of thesemajor grain companies, large
grain companies in the US andthese are people that I had
found trained and developed inmy career at ADN.
(04:46):
That's a lot of satisfactionthere.
Jim Lenz, GEAPS' Directo (04:49):
That's incredible.
That's why it's so special, Jim, to have you on the show, just
to have that wealth ofexperience, to see the fruits of
your labor, meaning a lot toyou that you've trained and
worked with these individuals.
What makes working in the grainindustry so special to you?
Jim Voigt (05:04):
I started with Continental Grains Allied Mills
Feed Division in East St Louisin 1974.
But prior to that, in my youth,I grew up in Northern
California in the rural part ofthe state.
It was ranching, farming, thelumber industry, and I was
involved in 4-H starting at age10 through 18.
I got into a sheep project andI had about 150 head of sheep
(05:27):
rented to my own ground withShearing Sheep commercially and
I just found an interest inagriculture.
So I chose a career inagricultural business management
when I went to college.
As far as my study, I justenjoyed that environment and the
agricultural lifestyle andworking with people who just
have very common good values andthat transferred over into the
(05:48):
grain industry.
The thing about that is Itraveled a lot, as I mentioned
the number of facilities.
I had global responsibility, soI never developed personal
friends.
All my friends are actuallygrain industry people in that
I've built lifelongrelationships with many of them
and so it's just.
My world has been the grainindustry.
(06:09):
That's all I've known, probablysince I've been 10 years old.
Jim Lenz, GEAPS' Director o (06:12):
Wow , I didn't know that about you.
It's great to hear so manypeople getting started with
programs that are out there,like 4-H, like FFA.
You certainly were one of thoseand that piques curiosity from
early adolescence and beforethat.
So very, very interesting.
Now we are talking today aboutinventory management strategies.
(06:32):
I think a great place to diginto the conversation is
defining inventory managementand secondly, why is inventory
management so criticallyimportant?
Jim Voigt (06:43):
Simply put, I mean grain inventory management is
the process of tracking,analyzing and controlling your
stored grains to minimize thelosses in quantity, quality on
your inbound receipts and youroutbound shipments.
That's the simple version of it.
Obviously there's a lot to themakeup of it, but we can go into
(07:07):
.
There's a lot of businessmanagement tenants that support
all these things happening inthe role of management and you
get into managing assets andworking capital in particular,
which working capital consistsof accounts receivable, accounts
payable, and inventory.
That's the key word there.
So then, when we look at thatinventory piece of it, jim, that
inventory is made up of rawmaterials and processed goods,
finished products, parts andsupplies.
(07:28):
So obviously today we want tofocus on that inventory piece
and specifically graininventories.
So let's maybe take a look andhave an example of why this is
critical for us, of why this iscritical for us.
Let's take I've got a 6 millionbushel elevator that I am
(07:51):
operating okay, maybe the valueof that's around $20 million.
If I put two and a half times mystorage capacity of volume
through that house a year, I'mlooking at about 15 million
bushels of grain growing throughthat facility.
Just for assumption, let's say,of that, 12 million of that is
corn valued at $4 a bushel.
(08:11):
3 million of that is beansvalued at $12 a bushel.
That puts the value of thegrain going through that
facility annually at $84 million.
Obviously most of us don't have$84 million laying around the
ground by grain width.
We're going to have to financethat.
So I've got interest costs ontop of that, jim, that let's
(08:32):
just take the rate of 2% andI've added another $1.7 million
to the value of that inventory.
So when I look at thatcomparison I got a facility
worth $20 million.
So when I look at thatcomparison, I got a facility
worth $20 million.
I've got throughput in one yearof somewhere around $86 million
(08:53):
, almost four times the value ofthe facility in inventory.
That is why in our industry wehave to put a priority on
managing those inventories,because it's our largest
investment.
Jim Lenz, GEAPS' Director (09:02):
It's about managing risk as well,
isn't it?
Jim Voigt (09:05):
Yeah, it definitely is.
That's a big yes on that.
And you know most people.
When you think of riskmanagement, the first thing that
comes to your mind is insuranceIn our industry, on the
commercial side especially, theythink of hedging.
Hedging is a means of riskmanagement in our industry, of
risk management in our industry.
But when we look at theoperating side, we sometimes
(09:27):
don't apply that risk managementthought process and it's
interesting that we do it insafety.
In safety, we do the job hazardassessments or job safety
assessments where we go out andwe identify our risk and then we
find ways to analyze andcontrol all those risks and
monitor what we're doing.
We can need to do the same thingin our operation processes,
(09:51):
apply that same risk managementstrategy where we're going to go
out there and we're going toidentify the risk we're going to
analyze that risk, what's theseverity of it, how likely is it
to happen then we're going toprioritize which of those risks
we're going to control, howwe're going to treat them or
eliminate or reduce them, andthen monitor, ensure our plan is
(10:11):
working and we need to applyrisk management, particularly
when we're looking atinventories.
Jim Lenz, GEAPS' Director (10:18):
What is the impact of effective
inventory management, bothoperational profitability and
sustainability?
Jim Voigt (10:28):
Well, why don't we back up a second, Jim?
We talked about the value ofthis grain we're putting through
here.
Let's take that $84 millionnumber for this facility we
identified.
If I had a 1% shrink or loss onproduct through that facility,
that would equate to $840,000.
Now, through risk managementtechniques, if I was able to cut
(10:49):
that in half, I would drop thatnumber to $420,000.
And if I could get that numberdown to a quarter percent, which
is more where we'd like to seethat number, I've reduced that
to $210,000.
So you can see that we'vebasically added $600,000 to our
bottom line if we can get fromthat 1% down to a quarter
(11:10):
percent.
And that's what our job inmanagement is to minimize those
losses, to make sure that we areprofitable and profitability
drives sustainability.
We also have to consider thatwe may have some quality losses
on the grain in there.
That would be in addition tothat if we're not managing all
our processes correctly, whetherwe're over drying or some other
things.
A third piece of that would beis are we efficiently doing our
(11:32):
mix and blends, where we'retaking full advantage of the
grain we have in there togenerate income?
So now controlling shrink andthe mix and blend can have a
whole lot larger impact on thefacilities and profitability
than just controlling cost,which is still an important
thing we need to do.
Jim Lenz, GEAPS' Direct (11:50):
There's so many challenges in inventory
management Got to be organized.
Inventory management requires asystematic approach.
Process encompasses severalcritical aspects, as you noted.
What do you believe are oftenrecognized challenges faced in
managing inventory and grainfacilities?
Jim Voigt (12:08):
Well, I think probably the first thing that
comes to mind is the lack ofemphasis on making inventory
management a priority in theplanning that goes with it,
particularly on the operatingside and our day-to-day
activities.
We're worried about justgetting trucks dumped, grain
dried trucks loaded out, trainsloaded out, whatever it is.
So those day-to-day activitiesconsume us and inventory becomes
(12:31):
this once-a-month activity wedo.
That's kind of similar to goingto the dentist and getting a
tooth pulled.
That's how we feel about it andwe let those daily activities
drive what we're doing.
So I think the first thing isjust where our emphasis is at in
lack of planning.
But time is another thing.
I mentioned all these dataactivities.
(12:51):
We've got trucks to dump, crewsto schedule equipment, to
maintain employees, to manageall these things going on, and
they take priority.
They truly do, unless you'veplanned out your time management
and prioritize the things thatare really important.
So if you don't want to have asurprise at the end of the month
, you really need to find timeevery day during that prior
(13:13):
month to concentrate on theinventory management program.
Okay, one of the otherchallenges we face, jim, is
people and every meeting, eachmeeting I've been to in the last
year, regardless of the topic,when we start talking about what
the barriers to performing ourjobs are, it's finding qualified
(13:38):
people, and this can roll overinto inventory management as
well.
If I've got people that aren'treally qualified working out
there on a dated basis, theyrequire a lot more of my time to
supervise and I may spend a lotof time training someone who
for 60 days and they finallydecide this isn't what they want
to do and they leave and theytake off.
(13:58):
So this additional pressurethan what we used to have to
manage train find people isreally drawing time away from
attacking inventories.
With that, you know theprocesses that we need to do
that contribute to the inventorything.
You know plant maintenance, howwe weigh and grade a lot of
things, drying, aeration thoseall figure into things that will
(14:21):
help us down the road.
But if we don't have time to doall the training required to
get those done correctly, letalone the training to manage
inventory, it puts us behind atthe end of the month.
Jim Lenz, GEAPS' Director (14:33):
Yeah , it certainly does.
Definitely big picture planningand thinking here.
What are some examples ofquantitative losses as well as
qualitative losses?
Jim Voigt (14:44):
Well, I think you know the couple I mentioned that
come to mind are over-drying,maybe over-aerating, creating
excessive moisture losses, andthey can also affect quality.
So if I'm drying 20% corn andmy goal is to have 15 or 15.5
moisture corn come out of thatdryer and I've got an operator
(15:05):
that's not following the properprocedures or hasn't received
adequate training or supervision, I may have a 14% corn coming
out the bottom of that dryerwhich I'm shrinking and taking
loss from the moisture on that.
Similarly, if I've got anaeration system where maybe my
plan is to put 15% to 17%moisture corn into a storage,
(15:26):
run my fans through the fall andin the spring take out 14, 5,
15 corn, If I over aerate duringthat winter months, I may have
a surprise it may be a littledrier.
And this is especially truewhen we look at temporary
storage gym where we rely on thefans to hold the tarps on, so
those fans are running nonstop,but when we're running the fan
(15:49):
that's a grain dryer and sotemporary piles can create some
extra issues from this onshrinkage.
As far as weight Quality-wise,the excessive drying with
excessive temperatures can causeheat damage.
If we're not managing thatstorage properly, we're going to
have mold growth or insectactivity that's going to degrade
the grain we can get intolong-term.
(16:11):
I mean improper facility designor lack of maintenance or
creating impact points or wherewe're damaging grain, breaking
it up.
One of the big things we see alot in our industry is a
procedural thing where somethingas simple as training operators
for the bucket elevator leg isnot back legging.
When that throat wiper is notadjusted correctly, that grain's
(16:33):
coming down the backside ofthat grain.
We're breaking it plus usingmore energy, and just an
improper mix and blend canreduce the quality upgrades that
we potentially should beputting money in our pocket with
.
So all these things impactquantity and quality, as well as
many others.
Jim Lenz, GEAPS' Director of (16:50):
So many things impact the bottom
line here.
You've outlined some of thoseareas of losses.
Let's look at a little bit moreon the challenges in relation
to permanent storage.
You mentioned temporary storagethere a bit, and since more and
more facilities are addingtemporary storage of grain, this
can also lead to a differentset of challenges you highlight
(17:11):
a little bit there.
Can you expand on that andprovide examination on both
types of storage?
Jim Voigt (17:17):
Well, as an industry, you look how our storage has
evolved.
I mean at one time we had abunch of large concrete houses
or old wooden elevators outthere and then we got into the
area of corrugated steel binsand we had external stiffeners,
internal stiffeners.
You look at the bin sizes.
I mean there was a time when a48-foot diameter bin was a big
(17:37):
bin and now we've got these160-foot I think it's the
biggest one out there monsterthat holds one bin, holds two
and a quarter million bushelsyeah, amazing, at the heights of
our bin.
In the wheat country it's verycommon to see 120, 150 foot tall
bins, where back here in corncountry we try and hold those
bins under 100 feet.
We've got flat bottom bins.
(17:58):
We've got hopper bottom bins.
We've got bins with offsetdraws to one side.
We've got where we actuallyhave side draws we're loading
trucks out of.
We've got bins with offsetdraws to one side.
We've got where we actuallyhave side draws we're loading
trucks out of.
We've got a lot of differentconfigurations in the industry
on bins and they all reactdifferently.
You couple that with.
Let's look at duration Typical.
When I started in the industryyou had a 20th of CFM on and
(18:22):
corn you had Maybe if you hadreally good corn bins had a
tenth of a CFM of air per bushel.
Those numbers drop to an eighth, to a sixth, to a fifth.
We keep adding more air on howwe're managing this grain.
So, depending on theconfiguration, how bins flow
because each bin flows a littlebit differently it changes how
that grain goes in and out andhow it stores on turning it.
(18:45):
Obviously the different typesof grain corn, wheat, beans,
rice, barley, canola, whateverare all going to store
differently.
But we need to also considermoisture and the cleanliness of
the grain.
And then we've got theenvironmental factors.
I mean what's temperature,what's humidity?
Storing corn is a whole loteasier in Minnesota than it is
in Louisiana.
So a lot of variables here, jim.
(19:13):
But to look at the differencebetween permanent and temporary
storage, I guess we need to findthat a little bit, because some
of what we might call temporaryis really something
transitional.
If I've got a bunker or a flatthat I have a hard surface in,
I've got a tunnel with areclaimed conveyor, I've got a
permanently installed fieldconveyor.
I've got aeration on it but Iput a tarp on it.
(19:33):
Is that temporary storage or isthat permanent storage?
I mean, it's how you want tolook at it.
But I think our policies andprocedures in handling that type
of storage have gotten to thepoint where you really can
almost consider that permanentstorage, in that the results if
I look at the grain going in, myshrinkage on quantity and my
(19:54):
shrinkage on quality coming outof those types of piles, if
they're managed correctly, isreally not much different than
your classic permanent storage.
Now, true temporary storage, ifI've got something out there
that maybe it's not even covered, it's just a pile on the ground
, I'm going to pick up rightaway.
I've got it down on dirt orgrass or rock or something where
(20:16):
it's not this quasi-permanentstorage.
Yeah, those are openingyourself to greater losses and
it takes more management tomanage those systems.
But you need to think about iswhat's the end result going to
be?
If I know I'm putting a pileout there now just to get
through harvest and I'm going topick it up before Christmas,
that's one thing.
But if I'm going to have tocarry it through to next May or
(20:38):
June, then I have to treat thatpile a lot differently, or I'm
going to have some shrinksurprises.
Jim Lenz, GEAPS' Director (20:46):
Yeah , so there's so much to consider
and, as you said, temporaryversus more permanent storage,
the means by and how things are,storage and different
capabilities that are out there.
You know each one has to beexamined.
Can you share some examplesfrom your own experiences with
these challenges and how theywere addressed?
Jim Voigt (21:07):
Yeah, I mean ADM.
Well, we're a large company andwe had a lot of the same
problems as everyone else has.
We just maybe had them on alarger impact.
One of the things that I foundthe way to address these was we
needed to work with a team andhave strong two-way
communication on a daily basis,and I had to do that with the
(21:29):
origination team, the tradingteam, logistics and people.
We all kind of sat in a pod inour office to do that.
That allowed us to developbasically a plan for the crop
year what we were going to seed,what the market conditions are.
We had to look at whether thereare carries in the market or not
and were we going to prioritizespace for corn or beans or
wheat, and then also whatquality of grain were we going
(21:52):
to need to fulfill our contractsand when and where were we
going to need that.
So that whole planningcommunication thing became
critical for me in my pastexperiences.
And also I needed to understandwhat were the capabilities of
my facilities, jim.
What could they not do?
I mean, there's limits,obviously, to all systems.
(22:14):
So I had to understand mystrengths and weaknesses and
when we were letting out thoseplans, I had to know what those
were and account for those.
So I compensate for some ofthose.
You know we developed specificSLPs if we were going to go one
way with storing grain or someothers if we're going to go
another way.
What I did with my repair andmaintenance budgets capital
(22:35):
investments also were drivenlong-term from these storage
plans, basically what I'm goingto call my storage plan, which
is part of the inventorymanagement.
Training was also critical forus in that you know we were
working with the accountingdepartment and they provided the
leadership for us really in theinventory process and they
determined, you know, whatknowledge, skills and tools were
(22:57):
needed to successfully completean inventory management process
and develop the SOPs.
And then we would take that andbuild a training program for
our employees, make sure that wehad qualified individuals who
were doing the day-to-dayactivities, impact inventory as
well as the inventory processitself.
Then, finally, standardizationis really helpful in the
(23:21):
inventory process where you havethese SOPs and everybody's
doing it the same way, whenyou've got multiple locations
and you start moving peoplearound or moving people to help
during inventory or criticalevents during harvest.
If you have standardizedprocesses and procedures, that
greatly can help in managingthat inventory piece,
(23:42):
maintenance again I've mentionedthat numerous times but having
that facility in top shape,where all the equipment's
running correctly, we don't haveany spillage or leakage or
breakage points.
We have those all controlled.
It's also very important.
Jim Lenz, GEAPS' Director of (23:59):
In my past experiences A lot of
industries, not just theagriculture industry.
It's no secret.
They're becoming fewer innumber of organizations, but
they're becoming larger.
Isn't all because of organicgrowth.
A lot of that can be because ofmergers and acquisitions.
So when you talk aboutstandards, jim, isn't that a big
challenge to organizationsbecoming larger?
(24:19):
Isn't that always somethingthat needs to be a priority
during these acquisitions?
Jim Voigt (24:25):
Well, obviously, when we look at an organization's
prior acquisition, we tried toget a feel for what their
culture was, what theirmanagement style was, before we
brought them on board.
It gave us a little jump onthat process, jim.
Once they came in, you had torespond pretty quickly to make
changes to get things aligned.
(24:45):
Adm was kind of a uniquecompany.
We approached thingsconsiderably different than a
lot of companies.
We had no organizational chartsback then.
We had no job descriptions.
We didn't do budgeting.
We dealt on a lot of settingexpectations and accountability.
Inventory management was a keypart of that.
Management was a key part ofthat.
When we acquired a lot of theseother companies, their emphasis
(25:13):
on inventory management wasn'tas high as what ours were.
We saw a greater value in it.
We made changes very quickly tointroduce our concepts into
those new facilities and weprovided the training and the
leadership and supervision forthat to take place.
It was frequently a challenge.
Jim Lenz, GEAPS' Director (25:30):
Yeah , I can imagine.
Hey, Jim, as we continue thisdiscussion, it's important to
establish a clear understandingof terminology.
The terms and theirimplications are essential for
effective inventory managementfor grain facilities or in-grain
facilities.
They help in maintaining hackerrecords, inventory records,
(25:50):
optimizing storage practices,ensuring grain quality and
making informed market decisions.
So I'm curious and listenersmay be curious, just to get on
the same page here, because wehave so many people also joining
the grain industry who areabsolutely new to the industry.
Can you share with thelisteners some of those
important terms and theirmeanings associated with
inventory management and grainfacilities?
Jim Voigt (26:11):
Sure, Well, let's start with one.
We've thrown out the wordshrink, which is basically just
the actual physical loss andweight between inbound and
outbound shipments, and that canconsist of moisture shrinks,
handling shrinks or accountingerrors or possibly even theft.
Then there's the word variance,and you think variance is
similar to shrink, but really,when we talk about variance in
(26:34):
inventory management, it's justthe difference between the cause
for these variances and makingwhatever adjustments are needed
to bring the records intoagreement.
One that's kind of a littledifficult to get your arms
(26:57):
around sometimes for new peoplein the industry is something
called pack factor.
Jim Lenz, GEAPS' Director (27:01):
Okay .
Jim Voigt (27:02):
When you place grain in a grain bin, over time that
grain, the pressure and theweight of the grain at the top
of the bin, is going to pushdown on the grain in the bottom
of the bin.
It's going to compact.
It's going to remove some ofthe air spaces between the grain
.
So when I fill that bin say Ifill a bin clear full I can come
back 30 days later and I canput more grain in that same bin
(27:25):
because it's compacted.
So there is a mathematicalcorrection factor I can put on
when I'm measuring grain binsand this is just pure
mathematics and there's three orfour different models out there
to do it.
But it's a calculation to showyou, looking at test weight and
the bin measurements and bulkdensity rather than test weight,
(27:48):
if you want to use that termwhere you can calculate how much
that grain is going to compact.
So when we measure a bin wehave to apply that factor to it
to get a more accurate reading.
Now there's some concern thatthe models out there may be not
(28:09):
reliable over a full range ofdifferent commodities in
different size bins.
So there's a lot of studiesbeing done.
The Ag Research Service of theUSDA, plus people like
University of Kentucky, havebeen doing the research on
seeing if there's a moreempirical, scientific way to do
those calculations.
And one of the real concerns isthere's not been a lot of
(28:31):
studies done on these largediameter bins the 105s, the 132s
how compaction is really takingplace.
Fact factor is a big one.
Angle of repose is another termwe use a lot and simply stated
when you pile grain up it'sgoing to peak up and at the
point where that grain stopsflowing it becomes static.
(28:51):
It becomes that measurement ofthe angle of that is the angle
of repose for that particularcommodity.
Now that can vary.
Obviously it'll vary betweencommodities, but it can also
vary based on the moisture andthe amount of form, material or
dockage or stuff that'scontained in the grain.
(29:12):
And when we're measuring, oftenyou'll hear coned or an inverted
cone.
And when grain is placed in abin and it hasn't been emptied
or say you cord the bin and yourefilled it, you're going to
have that peak or that cone onthe top of the bin.
That's referring to the cone.
If I've pulled from the bin tothe point where that cone goes
(29:34):
down and it's just inverted oropposite of being full, that's
what's known as an inverted cone, the contrary or different, for
those is where we'll have anirregular surface.
So if the bend's not flat,somebody can go in and level it
out, which we tend not to doanymore because of bend entry
(29:55):
issues.
Jim Lenz, GEAPS' Director of (29:55):
So if I don't have a cone, or an
inverted cone and level it out,which we tend not to do anymore
because of bin entry issues.
Jim Voigt (30:01):
So if I don't have a cone or an inverted cone, I may
have an irregular surface wherethe bins hung up to one side or
materials hanging on the walls,or if it's large diameter bins,
I might have a still-eyed mitesticking up.
Those are irregular surfacesand very difficult to measure.
We talked a little earlierabout handling losses.
Those are the physical lossesof grain by weight due to
receiving and moving andshipping grain through the
(30:21):
facility to be in dust spills.
Breaks create those issues.
Moisture losses would be theactual reduction in weight due
to the loss of moisture and thatcan be through natural or
artificial drying such as graindryers or irrigation.
There are standardized moisturetables out there that you can
use to calculate those moisturelosses.
(30:43):
Then there's the term totalshrink and that's basically just
combining my handling lossesand my moisture losses to come
up with a total.
One of the terms you'll hearfrequently in inventory is
cutoff time.
So when we go to take inventory, ideally we shut the facility
down.
We're not taking any grain intothe facility, we're not
shipping grain out of thefacility.
(31:04):
We're not transferring grainwithin the bin to bin or around.
We've also cut off all thepaperwork.
There's no new documents beingcreated.
Typically this time is known asa cutoff time, where this ends
at three o'clock on Friday.
This is our cutoff time forinventory.
That is usually established bythe accounting department.
(31:25):
Grade factors that's just astandardized determination of
quality and condition of thegrains.
But what I wanted to apply thatin was when we look at grain
factors on soybeans.
Form material on soybeans istreated differently than most
other grains in that under theUSDA standards, the percentage
of weight of form material ofsoybeans is actually deducted
(31:47):
from the received weight at thetime of grading, even though you
may be putting that weight intoyour bins may be.
Putting that weight into yourbins is not accounted for.
So it's kind of a little bonus,if you will, in managing our
soybean inventories.
Jim Lenz, GEAPS' Director o (32:09):
Can you provide us with a brief
overview of what some people mayrefer to as traditional
inventory control methods usedin the grain industry and how
they differ from more modernmethods being employed today?
And also, please take intoconsideration processes and
procedures.
Jim Voigt (32:20):
You know, I think, jim, if you look at the basic
process of taking inventory,it's creating documents for what
you've received in the quality.
It's measuring a bin.
It's making adjustments for padfactor, drying losses, aeration
losses.
(32:40):
In moisture.
You may apply a handling shrink, like on corn.
On wet corn.
At ADM we applied a 1.4 shrinkfactor to account for all those
handling losses, and then weadded the moisture shrinks on
top of that, those handlinglosses, and then we added the
moisture shrinks on top of that.
So all those processes, thosehave been around for a long,
(33:01):
long time.
There's nothing new.
If you were following those tothe T back 30 or 40 years ago,
you still had a very goodinventory management program.
You could achieve the sameresults, or plus the same
results you can today with thetechnology, or close to the same
results you can today with thetechnology.
Now, what's changed today,though, is we have more
automation of source documents.
(33:23):
We have scale tickets andgrading certificates that are
automatically dumped into thesystem.
From a commercial standpoint,we used to sell brain contracts
by hand.
Now those are automated.
Computers are doing those veryactively, very quickly.
(33:44):
We're seeing automation and theuse of controllers out in the
plant in areas such as dryingand aeration.
That's taking some of the humanair out.
And obviously one of the bigvariables in measuring grain is
a person dropping that tape.
I had instances where we hadsome really crazy readings.
At one location, jim and weinvestigated it.
We were using the tape the guymeasured bins with every day.
Well, that tape had gotten ascrew conveyor.
(34:04):
One time the bottom six feet ofit were missing.
So the guy who used it dailyknew the six feet were there
missing.
He added to all hismeasurements every day when he
turned them in.
But the people doing theinventory did not know that and
so those six feet weredisappearing in every bin when
we measured them.
So technology now has theability to go in and scan the
(34:26):
surface of these bins, creating3D imaging and simulation to
show you exactly what thatsurface looks like and calculate
the quantity in it.
That's where the change is.
It's the automation, thetechnology and the measurement
and the document handling andthen controlling the processes.
Jim Lenz, GEAPS' Director of (34:45):
I mean the green industry.
It is an innovative industry Iknow there's a lot of industries
going has gone through changes.
The green industry is certainlyno different.
Just with the evolution oftools and applications and
technologies within industryTools and software they've been
huge on inventory, tracking andmanagement, hasn't it?
Jim Voigt (35:05):
Yeah, yeah.
And what that does is it makesthe information a lot more
timely and accurate,particularly the source
documents, the use of computersand software and automation,
scanning devices, networksystems where all the
information is collected anddumped in together.
It reduces the time to enterdata and reduces that human
(35:27):
error.
In a lot of cases it lets usget more into looking at
individualized data.
Individualized loads andsettlements can be matched up
very easily in real time and wecan get more real-time
management of the inventory nomore at with just the click of
the mouse.
That ability to look at stuffin real time allows for a more
(35:49):
constant monitoring and abilityto address the variances
immediately, instead of waiting.
And you know, two weeks laterin the month I want to take
inventory to trying to figureout what happened.
Yeah.
Jim Lenz, GEAPS' Director of (35:59):
So great tools out there to take
advantage of for sure.
So you've shared some insightsin the use of inventory
management systems, or IMSsystems, and their benefits.
Anything else you want to addto that?
Jim Voigt (36:11):
Well again, I mean they're you know they're going
to help you with tracking yourinventory in the real time on a
low-by-low basis and you canlook at purchases, deliveries,
receipts, processing, storage,shipping, all those things you
can tie into that IMS and theaccounting.
(36:35):
People particularly love it insettling contracts and knowing
where their position are to passon to the trading side and the
amount of errors that have beenreduced in settling grain
contracts and the time thatturns that over.
That's been a very positiveresponse from a customer service
standpoint.
Having the traders have accessto this knowledge and knowing
what quantity and quality wehave in lets them make more
informed decisions on how andwhen they're going to sell grain
(36:57):
and the benefits from anoperating perspective.
You know we can offset a lot ofour challenges but the more we
reduce stress from errors andpressure on time, the greater
the morale is for our facility,the happier people are working
there and quite frankly you knowthis people issue is a
(37:18):
challenge for all of us and ifwe can improve that work
environment for our employeesthrough the use of automation it
makes it a lot easier to findand retain people and I'll be
honest, you know I like scanningbin technology.
I have yet, in my 50-yearcareer, met a person who really
enjoys climbing up the side of abin on a ladder when it's 10
(37:42):
below, with a 30-mile-an-hourwind, to go up and drop a tape
in it.
Jim Lenz, GEAPS' Director (37:46):
Data analytics, real-time monitoring
.
It's been a game-changer inoptimizing inventory levels and
so much more.
Yeah, who really wants to dothat?
I mean, jim, you've provided acomprehensive examination of
inventory management for wholegreen podcast listeners.
What are your recommendationsfor best practices in inventory
(38:06):
management?
Jim Voigt (38:08):
Planning is my number one, I guess I'd say, jim,
understanding your facility andknowing what its capabilities
are.
Standardization is veryimportant.
Training, if you look at allthe things we do, whether it's
receiving grain, drying grain,these same principles apply to
(38:29):
all the activities we do in thefacility.
And so we don't normally thinkabout inventory management
except once a month, andsometimes we don't apply the
logic we need to to it.
So if we just do some of thethings we do every day on a
common sense basis and applythat to inventory management,
we'll see great improvements.
(38:50):
Forecasting, jim, is a littlebit of a challenge for our
industry in that there are somany variables.
We need to plan, and I'm astrong, firm believer in we plan
, but every plan needs one ortwo or three or four contingency
plans.
In our industry, the weather isour big variable.
What kind of crop are we goingto have coming in?
(39:10):
What's the quantity?
What's the quality coming infrom the farm?
When is it going to come in?
Those are issues.
What's the cost of freight outthere?
What's quality coming in fromthe farm?
When is it going to come in?
Those are issues.
What's the cost of freight outthere?
What's going to happen Allthese things.
Look at carrying the market.
Is there value in holding grainand carrying it in the future
versus selling it today?
Those decisions have to be made.
We're impacted by domesticpolicies.
(39:32):
We're impacted by geopoliticalsituation.
The Ukraine crisis is a classicexample of total disruption of
the grain markets.
What China feels like doing ona day-to-day basis as far as
importing grain has huge impactson us.
The cost of money all of thesevariables make it extremely
difficult to forecast any degreeof accuracy.
(39:55):
We can look at historic dataand that, but every year is
going to be different and wehave to be flexible enough and
confident in our capabilitiesthat we can have a plan and
we're going to be able to changeit and come up with a new plan
as market conditions dictate.
Jim Lenz, GEAPS' Director (40:13):
Being nimble.
Good planning, have goodsystems in place.
That all makes sense.
Hey, I was wondering if youcould share with our podcast
listeners, as they may becurious, if you have any case
studies in real life successstories you'd be willing to
share.
Do you have any real lifeexamples, in particular for
inventory managementimplications in the industry and
, if you do, how did thosestrategies lead to cost savings
(40:35):
and improved efficiency?
Jim Voigt (40:37):
Sure, Well, as I mentioned, Maydium has grown
through acquisition.
We acquired a lot of companies,I don't know.
10 or 12 companies in aneight-year period.
Typically all those companieshad their own culture and
business models and plans andthey were contrary to ours.
One particular company weacquired was experiencing pretty
large shrinks across the boardthroughout their facilities.
(40:59):
I'm in excess of 1% and thatwas accepted in that
organization as normal.
Obviously, based on ourexperience, that wasn't normal.
So when we started digging intowhy was that happening, we
found a number of things thatcame to light.
We had in our program that theydidn't.
One of the big things is weattempted to get an empty bin
(41:21):
cut off, or empty binmeasurement, on every single bin
in our 460 million bushels ofpermanent storage every year.
We didn't always succeed inthat but we always tried.
The thing is, the most accuratebin to measure is an empty bin.
The second most accurate bin tomeasure is an empty bin.
The second most accurate bin tomeasure is a full bin.
This particular firm had notdone any empty bin cutoffs in
(41:43):
five or more years.
They really did not know whatthey had.
Secondly, my old boss at ADM.
There was a gentleman namedBernie Kraft.
He had a thing that says youcan expect what you inspect,
which means you need to haveenough knowledge.
Be out active in yourfacilities, know what their
capability is of, know how yourpeople are operating, to manage
(42:04):
those things.
And this particular firm, theiroperating group, never left
their corporate office, theynever went out into the field
and the results of that showed.
The other thing they had was nostandardization processes and
each individual facility wasallowed to kind of operate on
their own and in some casesshift to shift.
They operated differently.
(42:25):
We came in and instituted ourempty bin cutoffs.
We went in and did thatactually at the purchase and we
would empty a bin, run anothergrain into it.
So we turned the inventory sowe could measure every bin empty
.
I, physically, and my teamphysically, went through all the
facilities and we got to knowthe people understand where they
were at, what processes we had,what tools we needed to provide
(42:46):
for them to be successful, whattraining.
And then we went in and put inour standardized SOPs throughout
on how we ran day-to-day aswell as conducted inventories
SOPs throughout on how we randay-to-day as well as conducted
inventories.
By doing that, within a year'stime, we took that 1% plus
shrinkage down into that quarterto a third of a percent range,
(43:07):
which was a substantial amountof money.
Jim Lenz, GEAPS' Director o (43:07):
Wow , great example.
Now the field of inventorymanagement.
It's rapidly evolving.
With new technologies,innovations, we see progression.
What emerging trends arecurrently shaping inventory
management in the grain industry?
Jim Voigt (43:21):
Well, I think the cost of these systems has always
been a barrier, jim.
They've been around for quite awhile.
Other industries have used thema lot.
We've had limited introductioninto the grain industry, but the
costs are coming down astechnology is becoming more
common.
It's more affordable.
The other issue we've got isthis pressure on finding help.
(43:45):
I mean it's difficult to findjust a warm body, sometimes put
in a facility, let alone aqualified warm body.
So this is driving us to look atmore technology and more
automation and integratedsystems, the concept of being
able to collect all your dataautomatically through various
(44:05):
monitoring equipment, computerentry type stuff that's done
automatically, where it can alsobe verified, verified, and then
getting that into a centralnetwork where all the data is
stored and can be analyzed andactions taken, whether those
actions may be fully automatedusing the computer or going
forward in artificialintelligence, whether it's still
(44:27):
a human making those decisions,but the fact that we have
timely, accurate data at theclick of a mouse to make
decisions off of, accurate dataat the click of a mouse to make
decisions off of, that is ourfuture For those of us who
embrace that.
I think it's going to be abright future.
For those of us who are alittle hesitant on embracing
that, sustainability may becomea challenge.
(44:47):
So embracing change is alwaysscary, jim, but it's kind of the
Darwinism thing in there thatthose of us who adapt to the
changing environment around uswill survive.
Jim Lenz, GEAPS' Directo (45:01):
That's good advice that you give the
grain facilities ensure theyremain ahead of these trends, or
make considerations to havegood, sound decision-making
tools as we look at preparingfor the future.
Hiring the right individuals tooversee inventory management is
crucial for the success ofgrowing facilities.
In your experience, Jim, whatspecific skills and experiences
(45:25):
should facilities look at whenhiring for these roles?
Jim Voigt (45:28):
Well, typically the lead in the inventory process,
jim, is on the administrativeside, in a smaller location.
It may be a facility manager orit may be a designated, you
know, head and countercontroller.
They're going to provide thedirection, the leadership and
help lead that team.
(45:48):
In that those individualstypically want someone who is,
you know, organized, disciplinedand has very good communication
skills.
When we look at the peopleinvolved from an operating
perspective, these are thepeople you know, maybe two
levels we can look at themanagement supervisory level and
we can look at the employee,the people doing the work level.
(46:10):
Let's look at that one first.
First, I want someone who's gota good attitude, is willing to
be trained and to listen and whostrives to perform and be part
of a team.
So, you know, they're going tofollow those SOPs that we have
out there and if they feel thatthere's something in them that
doesn't make sense, they'regoing to ask you why, why are we
(46:30):
doing this?
Explain this to me.
And those are the type ofemployees I want working for me
out, you know, in the facility.
From a leadership standpoint,I'm looking for people who are
driven or focused.
I really like the guy thattells me he wants my job.
He has, you know, wants afuture in front of him because
he's going to accept challengesand responsibility and do the
(46:51):
best he can.
But again, organizationalskills and strong, strong
communication skills and someonethat's willing to learn.
I strive to learn something newevery day and I've been in this
industry 50 years and I prettywell accomplish that every day.
There's just a lot ofinformation out there, and
(47:12):
especially with all thesechanges in technology.
Jim Lenz, GEAPS' Director (47:16):
Yeah , curious minded goes a long
ways.
Now, for those who are ininventory management, that's
part of the job.
How does it contribute to theoverall success and growth of
the facility?
Jim Voigt (47:26):
I think you can look at a couple of ways.
If you're controlling thequantity and quality losses, you
have one thing you're going toprove employee morale because
you're going to have a bunch ofpeople out there in the facility
going what the hell are youguys doing?
So morale is going to improvefrom that.
You'll definitely seeimprovements in profits.
As you know, in our example wesaw $600,000 that went to the
(47:49):
bottom line.
Those improved profits willhelp ensure the sustainability
of the company and its abilityto service its customers.
If we can improve that customerservice, customer satisfaction,
experience, that is the truekey to sustainability and
success.
Jim Lenz, GEAPS' Dire (48:09):
Wonderful .
You've kind of said that before, but I just wanted to ask a
summary statement.
But that last one you haven'tmentioned before yeah, providing
prime customer success.
Jim, we thank you for being amember of Jeeps and for your
contribution to today'simportant message on the GEAPS
Whole Grain Podcast.
We know many of the individualslistening today to the show are
GEAPS members, but I know thereare many listeners who are not
(48:32):
Jeeps members and they are inthe grain industry.
But before we conclude, I'dlike to start a sentence and I
would love for you to concludethe sentence, Jim, being a GEAPS
member to me means, means what.
Jim Voigt (48:45):
Well, it's being part of an industry where, working
together, we can assist infeeding the world, and knowing
that I have a network of peoplearound me that can help me
succeed in my personal andbusiness goals.
Jim Lenz, GEAPS' Director (49:02):
Thank you, jim Boyd.
You've been an active member ofthe Grain Elevator and
Processing Society for manyyears and, of course, you've
even served as pastinternational president and
chairman of the Board of GEAPS.
You have a special audienceright now listening who have
dedicated their careers in thegrain industry.
For those who are consideringto be Jeeps members, could you
(49:22):
share from your experience whatmakes being a GEAPS member so
special?
How can being a GEAPS membersupport their career in their
organization?
Jim Voigt (49:31):
Well, Jim, it gets back to, I think, one of the
first comments I made about notbeing the smartest person in the
room.
When you come into thisindustry, you are definitely not
the smartest person in the room.
You're ignorant to how thisindustry operates and does
business.
And ignorant is not a bad word,it just means transfer of
(49:55):
knowledge from old, gray-hairedfolks like myself to the new
people coming in behind us inthe industry.
And I don't know any place thatyou can go where that pool of
knowledge exists at a greaterlevel than within Jeeps and
where you have people that arewilling to share that knowledge
(50:16):
with the folks coming behindthem.
I think that's the true valueof GEAPS it's a depository of
readily available knowledge forpeople to advance their personal
and business careers.
Jim Lenz, GEAPS' Director o (50:30):
Jim , thank you so much.
On behalf of the entire GEAPSstaff.
We thank you for yourcontributions to the
organization and its members andcustomers.
Now you've offered an in-depthexamination of inventory
management here in the podcast.
It's such an important topic.
It really offers the greatestpotential return to the
profitability of a company, andso we just applaud your
(50:51):
perspective.
It's really a special treat tohave you on the show today.
Thank you so much.
Jim Voigt (50:56):
Well Jim.
Jim Lenz, GEAPS' Director o (50:56):
I'd like to thank you.
Jim Voigt (50:57):
I'm honored to be here and I would like to say we
didn't get down into a lot ofdetail in this podcast today.
Time did not allow that.
But I've had the opportunityand the pleasure to work with
GEAPS on upgrading the 501section of training on inventory
management section of trainingon inventory management and in
(51:19):
that 501 course we get into alot more of the details on the
specific SOPs in grain inventorymanagement.
Jim Lenz, GEAPS' Director o (51:23):
Yes , your contribution to that
module has been instrumental inthe upgrading of the course and
we're excited to share that atthe time of this.
Recording will be very soon andthat's a great place to add
value to your understanding ofconcepts related to inventory
management coming up for youlisteners.
So stay tuned to that.
Essentials for Supervisors.
Thank you so much, Jim,Appreciate it.
(51:45):
Thank you.
The Whole Grain Show is aproduction of GEAPS the Grain
Elevator and Processing Society.
The Grain Elevator andProcessing Society is the
largest organization dedicatedto advancing the grain handling
and processing industry.
To learn more how GEAPS cansupport you, your career and
your organization, be sure tovisit www.
GEAPS.
(52:05):
com.
That's G-E-A-P-S dot com.
Hey, if you're a vendor orsupplier of the industry, the
Whole Grain Podcast offers aterrific opportunity to
spotlight your business.
The podcast offers a terrificopportunity to spotlight your
business.
If you are interested in usdeveloping audio ads to support
your product or service, or ifyou and your organization want
to sponsor an episode and be afeatured guest, please reach out
to me, Jim Lenz, Director ofGlobal Education and Training at
(52:25):
GEAPS, and we will help you getstarted with the process.
My email is james@geaps.
com.
We look forward to connectingwith you everybody, thanks for
joining us for another episodeof whole grain.
Make it a great day.
In today's episode, we're diving
deep into a critical topic foranyone involved in grain
handling and processinginventory management.
Stay tuned for this highlyinformative discussion.
Jim Lenz, your host andproducer of the show, and
(00:25):
director of global education andtraining at GEAPS, where the
mission of the Grain Elevatorand Processing Society is to
champion, connect and serve theglobal grain industry and our
members At GEAPS, we work to bethe global community and thought
leader for the grain industrywhich feeds and fuels the world.
Thanks for listening today andfor joining the network of
thousands of other grainhandling and processing
professionals across the globetaking strategic steps to grow
(00:45):
professionally.
The Whole Grain Show will giveyou the competitive advantage to
win at work so you can makemore of an impact.
Today we're joined by Jim Voigt,a long-time veteran of the
grain industry with extensiveexperience in inventory
management.
Jim will help us explore theessential components of
inventory management, discussingwhy it's crucial not only for
(01:06):
operational efficiency, but alsofor overall profitability and
sustainability in the grainindustry.
Throughout our conversationwe'll cover a range of topics,
including the challenges facedin managing inventory in grain
facilities, the impact ofeffective inventory control on
operational success and theimportance of understanding key
(01:26):
terms and concepts.
We'll also examine differentstorage methods, the use of
technology and data analytics ininventory tracking, and best
practices to optimize inventorylevels.
Additionally, Jim will sharereal-life case studies and
success stories, giving youpractical insights into how
effective inventory managementstrategies can lead to
(01:47):
significant cost savings andenhanced operational performance
.
We'll also look ahead to thefuture, discussing emerging
trends that are revolutionizingthe way we manage inventory in
the green industry.
This episode is packed withvaluable information for
professionals looking to improvetheir inventory management
practices.
Let's get started.
(02:17):
Today.
We have the pleasure ofwelcoming Jim Voigt, a
distinguished expert in thegrain handling and processing
industry.
Jim's impressive career spansseveral decades, during which he
has significantly contributedto the growth and efficiency of
major companies like ADM.
He has sourced and trained over5,000 employees to supervise
and manage ADM grain facilitiesin North and South America,
(02:39):
facilitated the expansion ofADM's domestic grain operations
and played a pivotal role inestablishing ADM's international
grain operations in SouthAmerica.
He has also co-founded ADM'scontinuous improvement support
team, enhancing plantefficiencies and inventory
management.
As the president of JFVSolutions Incorporated, Jim
(03:00):
provides top-tier consultingservices, facility analysis and
operations management training.
Jim Voigt is also pastinternational president and
chairman of the board of GEAPS.
Jim, thank you for spendingtime with the GEAPS.
Whole Grain Podcast listeners.
Jim Voigt (03:15):
Thank you.
I appreciate the opportunity toshare my thoughts with your
audience today, Jim.
Jim Lenz, GEAPS' Director o (03:20):
Jim , to allow our listeners to get
to know you and to start theshow with a bit of positive
spirit, could you share with ourlisteners a mantra or success
quote that you live byprofessionally?
Jim Voigt (03:32):
Sure, Jim, I think one of the ones I try and stay
humble with this and keep myperspective is that you do not
need to be the smartest personin the room to succeed.
I always found it best to builda team and a network with
individuals whose strength andknowledge offset my weaknesses
and that allowed me to have thesuccesses I have had.
Jim Lenz, GEAPS' Director of (03:53):
Oh , I like that.
Thank you for sharing, Jim.
You've had such a special anddiverse set of roles and
responsibilities in the grainindustry.
Could you highlight some ofthose roles in the industry?
Jim Voigt (04:03):
Well with the career I've had and the opportunities I
had.
That's kind of a difficultquestion for me, jim, but I
think looking at it is I had theopportunity to grow with ADM,
where we went from about 50locations to over 400 globally
in about an eight or nine yearperiod, turned it into the
largest grain company in theworld, and I got to be directly
involved in making that happen.
(04:23):
That was exciting.
I would also say that theopportunity to work in 20
different countries around theworld was a great experience.
But I think the thing thatprobably gives me the most
satisfaction is today I lookaround and I see the head of
operations for a lot of thesemajor grain companies, large
grain companies in the US andthese are people that I had
found trained and developed inmy career at ADN.
(04:46):
That's a lot of satisfactionthere.
Jim Lenz, GEAPS' Directo (04:49):
That's incredible.
That's why it's so special, Jim, to have you on the show, just
to have that wealth ofexperience, to see the fruits of
your labor, meaning a lot toyou that you've trained and
worked with these individuals.
What makes working in the grainindustry so special to you?
Jim Voigt (05:04):
I started with Continental Grains Allied Mills
Feed Division in East St Louisin 1974.
But prior to that, in my youth,I grew up in Northern
California in the rural part ofthe state.
It was ranching, farming, thelumber industry, and I was
involved in 4-H starting at age10 through 18.
I got into a sheep project andI had about 150 head of sheep
(05:27):
rented to my own ground withShearing Sheep commercially and
I just found an interest inagriculture.
So I chose a career inagricultural business management
when I went to college.
As far as my study, I justenjoyed that environment and the
agricultural lifestyle andworking with people who just
have very common good values andthat transferred over into the
(05:48):
grain industry.
The thing about that is Itraveled a lot, as I mentioned
the number of facilities.
I had global responsibility, soI never developed personal
friends.
All my friends are actuallygrain industry people in that
I've built lifelongrelationships with many of them
and so it's just.
My world has been the grainindustry.
(06:09):
That's all I've known, probablysince I've been 10 years old.
Jim Lenz, GEAPS' Director o (06:12):
Wow , I didn't know that about you.
It's great to hear so manypeople getting started with
programs that are out there,like 4-H, like FFA.
You certainly were one of thoseand that piques curiosity from
early adolescence and beforethat.
So very, very interesting.
Now we are talking today aboutinventory management strategies.
(06:32):
I think a great place to diginto the conversation is
defining inventory managementand secondly, why is inventory
management so criticallyimportant?
Jim Voigt (06:43):
Simply put, I mean grain inventory management is
the process of tracking,analyzing and controlling your
stored grains to minimize thelosses in quantity, quality on
your inbound receipts and youroutbound shipments.
That's the simple version of it.
Obviously there's a lot to themakeup of it, but we can go into
(07:07):
.
There's a lot of businessmanagement tenants that support
all these things happening inthe role of management and you
get into managing assets andworking capital in particular,
which working capital consistsof accounts receivable, accounts
payable, and inventory.
That's the key word there.
So then, when we look at thatinventory piece of it, jim, that
inventory is made up of rawmaterials and processed goods,
finished products, parts andsupplies.
(07:28):
So obviously today we want tofocus on that inventory piece
and specifically graininventories.
So let's maybe take a look andhave an example of why this is
critical for us, of why this iscritical for us.
Let's take I've got a 6 millionbushel elevator that I am
(07:51):
operating okay, maybe the valueof that's around $20 million.
If I put two and a half times mystorage capacity of volume
through that house a year, I'mlooking at about 15 million
bushels of grain growing throughthat facility.
Just for assumption, let's say,of that, 12 million of that is
corn valued at $4 a bushel.
(08:11):
3 million of that is beansvalued at $12 a bushel.
That puts the value of thegrain going through that
facility annually at $84 million.
Obviously most of us don't have$84 million laying around the
ground by grain width.
We're going to have to financethat.
So I've got interest costs ontop of that, jim, that let's
(08:32):
just take the rate of 2% andI've added another $1.7 million
to the value of that inventory.
So when I look at thatcomparison I got a facility
worth $20 million.
So when I look at thatcomparison, I got a facility
worth $20 million.
I've got throughput in one yearof somewhere around $86 million
(08:53):
, almost four times the value ofthe facility in inventory.
That is why in our industry wehave to put a priority on
managing those inventories,because it's our largest
investment.
Jim Lenz, GEAPS' Director (09:02):
It's about managing risk as well,
isn't it?
Jim Voigt (09:05):
Yeah, it definitely is.
That's a big yes on that.
And you know most people.
When you think of riskmanagement, the first thing that
comes to your mind is insuranceIn our industry, on the
commercial side especially, theythink of hedging.
Hedging is a means of riskmanagement in our industry, of
risk management in our industry.
But when we look at theoperating side, we sometimes
(09:27):
don't apply that risk managementthought process and it's
interesting that we do it insafety.
In safety, we do the job hazardassessments or job safety
assessments where we go out andwe identify our risk and then we
find ways to analyze andcontrol all those risks and
monitor what we're doing.
We can need to do the same thingin our operation processes,
(09:51):
apply that same risk managementstrategy where we're going to go
out there and we're going toidentify the risk we're going to
analyze that risk, what's theseverity of it, how likely is it
to happen then we're going toprioritize which of those risks
we're going to control, howwe're going to treat them or
eliminate or reduce them, andthen monitor, ensure our plan is
(10:11):
working and we need to applyrisk management, particularly
when we're looking atinventories.
Jim Lenz, GEAPS' Director (10:18):
What is the impact of effective
inventory management, bothoperational profitability and
sustainability?
Jim Voigt (10:28):
Well, why don't we back up a second, Jim?
We talked about the value ofthis grain we're putting through
here.
Let's take that $84 millionnumber for this facility we
identified.
If I had a 1% shrink or loss onproduct through that facility,
that would equate to $840,000.
Now, through risk managementtechniques, if I was able to cut
(10:49):
that in half, I would drop thatnumber to $420,000.
And if I could get that numberdown to a quarter percent, which
is more where we'd like to seethat number, I've reduced that
to $210,000.
So you can see that we'vebasically added $600,000 to our
bottom line if we can get fromthat 1% down to a quarter
(11:10):
percent.
And that's what our job inmanagement is to minimize those
losses, to make sure that we areprofitable and profitability
drives sustainability.
We also have to consider thatwe may have some quality losses
on the grain in there.
That would be in addition tothat if we're not managing all
our processes correctly, whetherwe're over drying or some other
things.
A third piece of that would beis are we efficiently doing our
(11:32):
mix and blends, where we'retaking full advantage of the
grain we have in there togenerate income?
So now controlling shrink andthe mix and blend can have a
whole lot larger impact on thefacilities and profitability
than just controlling cost,which is still an important
thing we need to do.
Jim Lenz, GEAPS' Direct (11:50):
There's so many challenges in inventory
management Got to be organized.
Inventory management requires asystematic approach.
Process encompasses severalcritical aspects, as you noted.
What do you believe are oftenrecognized challenges faced in
managing inventory and grainfacilities?
Jim Voigt (12:08):
Well, I think probably the first thing that
comes to mind is the lack ofemphasis on making inventory
management a priority in theplanning that goes with it,
particularly on the operatingside and our day-to-day
activities.
We're worried about justgetting trucks dumped, grain
dried trucks loaded out, trainsloaded out, whatever it is.
So those day-to-day activitiesconsume us and inventory becomes
(12:31):
this once-a-month activity wedo.
That's kind of similar to goingto the dentist and getting a
tooth pulled.
That's how we feel about it andwe let those daily activities
drive what we're doing.
So I think the first thing isjust where our emphasis is at in
lack of planning.
But time is another thing.
I mentioned all these dataactivities.
(12:51):
We've got trucks to dump, crewsto schedule equipment, to
maintain employees, to manageall these things going on, and
they take priority.
They truly do, unless you'veplanned out your time management
and prioritize the things thatare really important.
So if you don't want to have asurprise at the end of the month
, you really need to find timeevery day during that prior
(13:13):
month to concentrate on theinventory management program.
Okay, one of the otherchallenges we face, jim, is
people and every meeting, eachmeeting I've been to in the last
year, regardless of the topic,when we start talking about what
the barriers to performing ourjobs are, it's finding qualified
(13:38):
people, and this can roll overinto inventory management as
well.
If I've got people that aren'treally qualified working out
there on a dated basis, theyrequire a lot more of my time to
supervise and I may spend a lotof time training someone who
for 60 days and they finallydecide this isn't what they want
to do and they leave and theytake off.
(13:58):
So this additional pressurethan what we used to have to
manage train find people isreally drawing time away from
attacking inventories.
With that, you know theprocesses that we need to do
that contribute to the inventorything.
You know plant maintenance, howwe weigh and grade a lot of
things, drying, aeration thoseall figure into things that will
(14:21):
help us down the road.
But if we don't have time to doall the training required to
get those done correctly, letalone the training to manage
inventory, it puts us behind atthe end of the month.
Jim Lenz, GEAPS' Director (14:33):
Yeah , it certainly does.
Definitely big picture planningand thinking here.
What are some examples ofquantitative losses as well as
qualitative losses?
Jim Voigt (14:44):
Well, I think you know the couple I mentioned that
come to mind are over-drying,maybe over-aerating, creating
excessive moisture losses, andthey can also affect quality.
So if I'm drying 20% corn andmy goal is to have 15 or 15.5
moisture corn come out of thatdryer and I've got an operator
(15:05):
that's not following the properprocedures or hasn't received
adequate training or supervision, I may have a 14% corn coming
out the bottom of that dryerwhich I'm shrinking and taking
loss from the moisture on that.
Similarly, if I've got anaeration system where maybe my
plan is to put 15% to 17%moisture corn into a storage,
(15:26):
run my fans through the fall andin the spring take out 14, 5,
15 corn, If I over aerate duringthat winter months, I may have
a surprise it may be a littledrier.
And this is especially truewhen we look at temporary
storage gym where we rely on thefans to hold the tarps on, so
those fans are running nonstop,but when we're running the fan
(15:49):
that's a grain dryer and sotemporary piles can create some
extra issues from this onshrinkage.
As far as weight Quality-wise,the excessive drying with
excessive temperatures can causeheat damage.
If we're not managing thatstorage properly, we're going to
have mold growth or insectactivity that's going to degrade
the grain we can get intolong-term.
(16:11):
I mean improper facility designor lack of maintenance or
creating impact points or wherewe're damaging grain, breaking
it up.
One of the big things we see alot in our industry is a
procedural thing where somethingas simple as training operators
for the bucket elevator leg isnot back legging.
When that throat wiper is notadjusted correctly, that grain's
(16:33):
coming down the backside ofthat grain.
We're breaking it plus usingmore energy, and just an
improper mix and blend canreduce the quality upgrades that
we potentially should beputting money in our pocket with
.
So all these things impactquantity and quality, as well as
many others.
Jim Lenz, GEAPS' Director of (16:50):
So many things impact the bottom
line here.
You've outlined some of thoseareas of losses.
Let's look at a little bit moreon the challenges in relation
to permanent storage.
You mentioned temporary storagethere a bit, and since more and
more facilities are addingtemporary storage of grain, this
can also lead to a differentset of challenges you highlight
(17:11):
a little bit there.
Can you expand on that andprovide examination on both
types of storage?
Jim Voigt (17:17):
Well, as an industry, you look how our storage has
evolved.
I mean at one time we had abunch of large concrete houses
or old wooden elevators outthere and then we got into the
area of corrugated steel binsand we had external stiffeners,
internal stiffeners.
You look at the bin sizes.
I mean there was a time when a48-foot diameter bin was a big
(17:37):
bin and now we've got these160-foot I think it's the
biggest one out there monsterthat holds one bin, holds two
and a quarter million bushelsyeah, amazing, at the heights of
our bin.
In the wheat country it's verycommon to see 120, 150 foot tall
bins, where back here in corncountry we try and hold those
bins under 100 feet.
We've got flat bottom bins.
(17:58):
We've got hopper bottom bins.
We've got bins with offsetdraws to one side.
We've got where we actuallyhave side draws we're loading
trucks out of.
We've got bins with offsetdraws to one side.
We've got where we actuallyhave side draws we're loading
trucks out of.
We've got a lot of differentconfigurations in the industry
on bins and they all reactdifferently.
You couple that with.
Let's look at duration Typical.
When I started in the industryyou had a 20th of CFM on and
(18:22):
corn you had Maybe if you hadreally good corn bins had a
tenth of a CFM of air per bushel.
Those numbers drop to an eighth, to a sixth, to a fifth.
We keep adding more air on howwe're managing this grain.
So, depending on theconfiguration, how bins flow
because each bin flows a littlebit differently it changes how
that grain goes in and out andhow it stores on turning it.
(18:45):
Obviously the different typesof grain corn, wheat, beans,
rice, barley, canola, whateverare all going to store
differently.
But we need to also considermoisture and the cleanliness of
the grain.
And then we've got theenvironmental factors.
I mean what's temperature,what's humidity?
Storing corn is a whole loteasier in Minnesota than it is
in Louisiana.
So a lot of variables here, jim.
(19:13):
But to look at the differencebetween permanent and temporary
storage, I guess we need to findthat a little bit, because some
of what we might call temporaryis really something
transitional.
If I've got a bunker or a flatthat I have a hard surface in,
I've got a tunnel with areclaimed conveyor, I've got a
permanently installed fieldconveyor.
I've got aeration on it but Iput a tarp on it.
(19:33):
Is that temporary storage or isthat permanent storage?
I mean, it's how you want tolook at it.
But I think our policies andprocedures in handling that type
of storage have gotten to thepoint where you really can
almost consider that permanentstorage, in that the results if
I look at the grain going in, myshrinkage on quantity and my
(19:54):
shrinkage on quality coming outof those types of piles, if
they're managed correctly, isreally not much different than
your classic permanent storage.
Now, true temporary storage, ifI've got something out there
that maybe it's not even covered, it's just a pile on the ground
, I'm going to pick up rightaway.
I've got it down on dirt orgrass or rock or something where
(20:16):
it's not this quasi-permanentstorage.
Yeah, those are openingyourself to greater losses and
it takes more management tomanage those systems.
But you need to think about iswhat's the end result going to
be?
If I know I'm putting a pileout there now just to get
through harvest and I'm going topick it up before Christmas,
that's one thing.
But if I'm going to have tocarry it through to next May or
(20:38):
June, then I have to treat thatpile a lot differently, or I'm
going to have some shrinksurprises.
Jim Lenz, GEAPS' Director (20:46):
Yeah , so there's so much to consider
and, as you said, temporaryversus more permanent storage,
the means by and how things are,storage and different
capabilities that are out there.
You know each one has to beexamined.
Can you share some examplesfrom your own experiences with
these challenges and how theywere addressed?
Jim Voigt (21:07):
Yeah, I mean ADM.
Well, we're a large company andwe had a lot of the same
problems as everyone else has.
We just maybe had them on alarger impact.
One of the things that I foundthe way to address these was we
needed to work with a team andhave strong two-way
communication on a daily basis,and I had to do that with the
(21:29):
origination team, the tradingteam, logistics and people.
We all kind of sat in a pod inour office to do that.
That allowed us to developbasically a plan for the crop
year what we were going to seed,what the market conditions are.
We had to look at whether thereare carries in the market or not
and were we going to prioritizespace for corn or beans or
wheat, and then also whatquality of grain were we going
(21:52):
to need to fulfill our contractsand when and where were we
going to need that.
So that whole planningcommunication thing became
critical for me in my pastexperiences.
And also I needed to understandwhat were the capabilities of
my facilities, jim.
What could they not do?
I mean, there's limits,obviously, to all systems.
(22:14):
So I had to understand mystrengths and weaknesses and
when we were letting out thoseplans, I had to know what those
were and account for those.
So I compensate for some ofthose.
You know we developed specificSLPs if we were going to go one
way with storing grain or someothers if we're going to go
another way.
What I did with my repair andmaintenance budgets capital
(22:35):
investments also were drivenlong-term from these storage
plans, basically what I'm goingto call my storage plan, which
is part of the inventorymanagement.
Training was also critical forus in that you know we were
working with the accountingdepartment and they provided the
leadership for us really in theinventory process and they
determined, you know, whatknowledge, skills and tools were
(22:57):
needed to successfully completean inventory management process
and develop the SOPs.
And then we would take that andbuild a training program for
our employees, make sure that wehad qualified individuals who
were doing the day-to-dayactivities, impact inventory as
well as the inventory processitself.
Then, finally, standardizationis really helpful in the
(23:21):
inventory process where you havethese SOPs and everybody's
doing it the same way, whenyou've got multiple locations
and you start moving peoplearound or moving people to help
during inventory or criticalevents during harvest.
If you have standardizedprocesses and procedures, that
greatly can help in managingthat inventory piece,
(23:42):
maintenance again I've mentionedthat numerous times but having
that facility in top shape,where all the equipment's
running correctly, we don't haveany spillage or leakage or
breakage points.
We have those all controlled.
It's also very important.
Jim Lenz, GEAPS' Director of (23:59):
In my past experiences A lot of
industries, not just theagriculture industry.
It's no secret.
They're becoming fewer innumber of organizations, but
they're becoming larger.
Isn't all because of organicgrowth.
A lot of that can be because ofmergers and acquisitions.
So when you talk aboutstandards, jim, isn't that a big
challenge to organizationsbecoming larger?
(24:19):
Isn't that always somethingthat needs to be a priority
during these acquisitions?
Jim Voigt (24:25):
Well, obviously, when we look at an organization's
prior acquisition, we tried toget a feel for what their
culture was, what theirmanagement style was, before we
brought them on board.
It gave us a little jump onthat process, jim.
Once they came in, you had torespond pretty quickly to make
changes to get things aligned.
(24:45):
Adm was kind of a uniquecompany.
We approached thingsconsiderably different than a
lot of companies.
We had no organizational chartsback then.
We had no job descriptions.
We didn't do budgeting.
We dealt on a lot of settingexpectations and accountability.
Inventory management was a keypart of that.
Management was a key part ofthat.
When we acquired a lot of theseother companies, their emphasis
(25:13):
on inventory management wasn'tas high as what ours were.
We saw a greater value in it.
We made changes very quickly tointroduce our concepts into
those new facilities and weprovided the training and the
leadership and supervision forthat to take place.
It was frequently a challenge.
Jim Lenz, GEAPS' Director (25:30):
Yeah , I can imagine.
Hey, Jim, as we continue thisdiscussion, it's important to
establish a clear understandingof terminology.
The terms and theirimplications are essential for
effective inventory managementfor grain facilities or in-grain
facilities.
They help in maintaining hackerrecords, inventory records,
(25:50):
optimizing storage practices,ensuring grain quality and
making informed market decisions.
So I'm curious and listenersmay be curious, just to get on
the same page here, because wehave so many people also joining
the grain industry who areabsolutely new to the industry.
Can you share with thelisteners some of those
important terms and theirmeanings associated with
inventory management and grainfacilities?
Jim Voigt (26:11):
Sure, Well, let's start with one.
We've thrown out the wordshrink, which is basically just
the actual physical loss andweight between inbound and
outbound shipments, and that canconsist of moisture shrinks,
handling shrinks or accountingerrors or possibly even theft.
Then there's the word variance,and you think variance is
similar to shrink, but really,when we talk about variance in
(26:34):
inventory management, it's justthe difference between the cause
for these variances and makingwhatever adjustments are needed
to bring the records intoagreement.
One that's kind of a littledifficult to get your arms
(26:57):
around sometimes for new peoplein the industry is something
called pack factor.
Jim Lenz, GEAPS' Director (27:01):
Okay .
Jim Voigt (27:02):
When you place grain in a grain bin, over time that
grain, the pressure and theweight of the grain at the top
of the bin, is going to pushdown on the grain in the bottom
of the bin.
It's going to compact.
It's going to remove some ofthe air spaces between the grain
.
So when I fill that bin say Ifill a bin clear full I can come
back 30 days later and I canput more grain in that same bin
(27:25):
because it's compacted.
So there is a mathematicalcorrection factor I can put on
when I'm measuring grain binsand this is just pure
mathematics and there's three orfour different models out there
to do it.
But it's a calculation to showyou, looking at test weight and
the bin measurements and bulkdensity rather than test weight,
(27:48):
if you want to use that termwhere you can calculate how much
that grain is going to compact.
So when we measure a bin wehave to apply that factor to it
to get a more accurate reading.
Now there's some concern thatthe models out there may be not
(28:09):
reliable over a full range ofdifferent commodities in
different size bins.
So there's a lot of studiesbeing done.
The Ag Research Service of theUSDA, plus people like
University of Kentucky, havebeen doing the research on
seeing if there's a moreempirical, scientific way to do
those calculations.
And one of the real concerns isthere's not been a lot of
(28:31):
studies done on these largediameter bins the 105s, the 132s
how compaction is really takingplace.
Fact factor is a big one.
Angle of repose is another termwe use a lot and simply stated
when you pile grain up it'sgoing to peak up and at the
point where that grain stopsflowing it becomes static.
(28:51):
It becomes that measurement ofthe angle of that is the angle
of repose for that particularcommodity.
Now that can vary.
Obviously it'll vary betweencommodities, but it can also
vary based on the moisture andthe amount of form, material or
dockage or stuff that'scontained in the grain.
(29:12):
And when we're measuring, oftenyou'll hear coned or an inverted
cone.
And when grain is placed in abin and it hasn't been emptied
or say you cord the bin and yourefilled it, you're going to
have that peak or that cone onthe top of the bin.
That's referring to the cone.
If I've pulled from the bin tothe point where that cone goes
(29:34):
down and it's just inverted oropposite of being full, that's
what's known as an inverted cone, the contrary or different, for
those is where we'll have anirregular surface.
So if the bend's not flat,somebody can go in and level it
out, which we tend not to doanymore because of bend entry
(29:55):
issues.
Jim Lenz, GEAPS' Director of (29:55):
So if I don't have a cone, or an
inverted cone and level it out,which we tend not to do anymore
because of bin entry issues.
Jim Voigt (30:01):
So if I don't have a cone or an inverted cone, I may
have an irregular surface wherethe bins hung up to one side or
materials hanging on the walls,or if it's large diameter bins,
I might have a still-eyed mitesticking up.
Those are irregular surfacesand very difficult to measure.
We talked a little earlierabout handling losses.
Those are the physical lossesof grain by weight due to
receiving and moving andshipping grain through the
(30:21):
facility to be in dust spills.
Breaks create those issues.
Moisture losses would be theactual reduction in weight due
to the loss of moisture and thatcan be through natural or
artificial drying such as graindryers or irrigation.
There are standardized moisturetables out there that you can
use to calculate those moisturelosses.
(30:43):
Then there's the term totalshrink and that's basically just
combining my handling lossesand my moisture losses to come
up with a total.
One of the terms you'll hearfrequently in inventory is
cutoff time.
So when we go to take inventory, ideally we shut the facility
down.
We're not taking any grain intothe facility, we're not
shipping grain out of thefacility.
(31:04):
We're not transferring grainwithin the bin to bin or around.
We've also cut off all thepaperwork.
There's no new documents beingcreated.
Typically this time is known asa cutoff time, where this ends
at three o'clock on Friday.
This is our cutoff time forinventory.
That is usually established bythe accounting department.
(31:25):
Grade factors that's just astandardized determination of
quality and condition of thegrains.
But what I wanted to apply thatin was when we look at grain
factors on soybeans.
Form material on soybeans istreated differently than most
other grains in that under theUSDA standards, the percentage
of weight of form material ofsoybeans is actually deducted
(31:47):
from the received weight at thetime of grading, even though you
may be putting that weight intoyour bins may be.
Putting that weight into yourbins is not accounted for.
So it's kind of a little bonus,if you will, in managing our
soybean inventories.
Jim Lenz, GEAPS' Director o (32:09):
Can you provide us with a brief
overview of what some people mayrefer to as traditional
inventory control methods usedin the grain industry and how
they differ from more modernmethods being employed today?
And also, please take intoconsideration processes and
procedures.
Jim Voigt (32:20):
You know, I think, jim, if you look at the basic
process of taking inventory,it's creating documents for what
you've received in the quality.
It's measuring a bin.
It's making adjustments for padfactor, drying losses, aeration
losses.
(32:40):
In moisture.
You may apply a handling shrink, like on corn.
On wet corn.
At ADM we applied a 1.4 shrinkfactor to account for all those
handling losses, and then weadded the moisture shrinks on
top of that, those handlinglosses, and then we added the
moisture shrinks on top of that.
So all those processes, thosehave been around for a long,
(33:01):
long time.
There's nothing new.
If you were following those tothe T back 30 or 40 years ago,
you still had a very goodinventory management program.
You could achieve the sameresults, or plus the same
results you can today with thetechnology, or close to the same
results you can today with thetechnology.
Now, what's changed today,though, is we have more
automation of source documents.
(33:23):
We have scale tickets andgrading certificates that are
automatically dumped into thesystem.
From a commercial standpoint,we used to sell brain contracts
by hand.
Now those are automated.
Computers are doing those veryactively, very quickly.
(33:44):
We're seeing automation and theuse of controllers out in the
plant in areas such as dryingand aeration.
That's taking some of the humanair out.
And obviously one of the bigvariables in measuring grain is
a person dropping that tape.
I had instances where we hadsome really crazy readings.
At one location, jim and weinvestigated it.
We were using the tape the guymeasured bins with every day.
Well, that tape had gotten ascrew conveyor.
(34:04):
One time the bottom six feet ofit were missing.
So the guy who used it dailyknew the six feet were there
missing.
He added to all hismeasurements every day when he
turned them in.
But the people doing theinventory did not know that and
so those six feet weredisappearing in every bin when
we measured them.
So technology now has theability to go in and scan the
(34:26):
surface of these bins, creating3D imaging and simulation to
show you exactly what thatsurface looks like and calculate
the quantity in it.
That's where the change is.
It's the automation, thetechnology and the measurement
and the document handling andthen controlling the processes.
Jim Lenz, GEAPS' Director of (34:45):
I mean the green industry.
It is an innovative industry Iknow there's a lot of industries
going has gone through changes.
The green industry is certainlyno different.
Just with the evolution oftools and applications and
technologies within industryTools and software they've been
huge on inventory, tracking andmanagement, hasn't it?
Jim Voigt (35:05):
Yeah, yeah.
And what that does is it makesthe information a lot more
timely and accurate,particularly the source
documents, the use of computersand software and automation,
scanning devices, networksystems where all the
information is collected anddumped in together.
It reduces the time to enterdata and reduces that human
(35:27):
error.
In a lot of cases it lets usget more into looking at
individualized data.
Individualized loads andsettlements can be matched up
very easily in real time and wecan get more real-time
management of the inventory nomore at with just the click of
the mouse.
That ability to look at stuffin real time allows for a more
(35:49):
constant monitoring and abilityto address the variances
immediately, instead of waiting.
And you know, two weeks laterin the month I want to take
inventory to trying to figureout what happened.
Yeah.
Jim Lenz, GEAPS' Director of (35:59):
So great tools out there to take
advantage of for sure.
So you've shared some insightsin the use of inventory
management systems, or IMSsystems, and their benefits.
Anything else you want to addto that?
Jim Voigt (36:11):
Well again, I mean they're you know they're going
to help you with tracking yourinventory in the real time on a
low-by-low basis and you canlook at purchases, deliveries,
receipts, processing, storage,shipping, all those things you
can tie into that IMS and theaccounting.
(36:35):
People particularly love it insettling contracts and knowing
where their position are to passon to the trading side and the
amount of errors that have beenreduced in settling grain
contracts and the time thatturns that over.
That's been a very positiveresponse from a customer service
standpoint.
Having the traders have accessto this knowledge and knowing
what quantity and quality wehave in lets them make more
informed decisions on how andwhen they're going to sell grain
(36:57):
and the benefits from anoperating perspective.
You know we can offset a lot ofour challenges but the more we
reduce stress from errors andpressure on time, the greater
the morale is for our facility,the happier people are working
there and quite frankly you knowthis people issue is a
(37:18):
challenge for all of us and ifwe can improve that work
environment for our employeesthrough the use of automation it
makes it a lot easier to findand retain people and I'll be
honest, you know I like scanningbin technology.
I have yet, in my 50-yearcareer, met a person who really
enjoys climbing up the side of abin on a ladder when it's 10
(37:42):
below, with a 30-mile-an-hourwind, to go up and drop a tape
in it.
Jim Lenz, GEAPS' Director (37:46):
Data analytics, real-time monitoring
.
It's been a game-changer inoptimizing inventory levels and
so much more.
Yeah, who really wants to dothat?
I mean, jim, you've provided acomprehensive examination of
inventory management for wholegreen podcast listeners.
What are your recommendationsfor best practices in inventory
(38:06):
management?
Jim Voigt (38:08):
Planning is my number one, I guess I'd say, jim,
understanding your facility andknowing what its capabilities
are.
Standardization is veryimportant.
Training, if you look at allthe things we do, whether it's
receiving grain, drying grain,these same principles apply to
(38:29):
all the activities we do in thefacility.
And so we don't normally thinkabout inventory management
except once a month, andsometimes we don't apply the
logic we need to to it.
So if we just do some of thethings we do every day on a
common sense basis and applythat to inventory management,
we'll see great improvements.
(38:50):
Forecasting, jim, is a littlebit of a challenge for our
industry in that there are somany variables.
We need to plan, and I'm astrong, firm believer in we plan
, but every plan needs one ortwo or three or four contingency
plans.
In our industry, the weather isour big variable.
What kind of crop are we goingto have coming in?
(39:10):
What's the quantity?
What's the quality coming infrom the farm?
When is it going to come in?
Those are issues.
What's the cost of freight outthere?
What's quality coming in fromthe farm?
When is it going to come in?
Those are issues.
What's the cost of freight outthere?
What's going to happen Allthese things.
Look at carrying the market.
Is there value in holding grainand carrying it in the future
versus selling it today?
Those decisions have to be made.
We're impacted by domesticpolicies.
(39:32):
We're impacted by geopoliticalsituation.
The Ukraine crisis is a classicexample of total disruption of
the grain markets.
What China feels like doing ona day-to-day basis as far as
importing grain has huge impactson us.
The cost of money all of thesevariables make it extremely
difficult to forecast any degreeof accuracy.
(39:55):
We can look at historic dataand that, but every year is
going to be different and wehave to be flexible enough and
confident in our capabilitiesthat we can have a plan and
we're going to be able to changeit and come up with a new plan
as market conditions dictate.
Jim Lenz, GEAPS' Director (40:13):
Being nimble.
Good planning, have goodsystems in place.
That all makes sense.
Hey, I was wondering if youcould share with our podcast
listeners, as they may becurious, if you have any case
studies in real life successstories you'd be willing to
share.
Do you have any real lifeexamples, in particular for
inventory managementimplications in the industry and
, if you do, how did thosestrategies lead to cost savings
(40:35):
and improved efficiency?
Jim Voigt (40:37):
Sure, Well, as I mentioned, Maydium has grown
through acquisition.
We acquired a lot of companies,I don't know.
10 or 12 companies in aneight-year period.
Typically all those companieshad their own culture and
business models and plans andthey were contrary to ours.
One particular company weacquired was experiencing pretty
large shrinks across the boardthroughout their facilities.
(40:59):
I'm in excess of 1% and thatwas accepted in that
organization as normal.
Obviously, based on ourexperience, that wasn't normal.
So when we started digging intowhy was that happening, we
found a number of things thatcame to light.
We had in our program that theydidn't.
One of the big things is weattempted to get an empty bin
(41:21):
cut off, or empty binmeasurement, on every single bin
in our 460 million bushels ofpermanent storage every year.
We didn't always succeed inthat but we always tried.
The thing is, the most accuratebin to measure is an empty bin.
The second most accurate bin tomeasure is an empty bin.
The second most accurate bin tomeasure is a full bin.
This particular firm had notdone any empty bin cutoffs in
(41:43):
five or more years.
They really did not know whatthey had.
Secondly, my old boss at ADM.
There was a gentleman namedBernie Kraft.
He had a thing that says youcan expect what you inspect,
which means you need to haveenough knowledge.
Be out active in yourfacilities, know what their
capability is of, know how yourpeople are operating, to manage
(42:04):
those things.
And this particular firm, theiroperating group, never left
their corporate office, theynever went out into the field
and the results of that showed.
The other thing they had was nostandardization processes and
each individual facility wasallowed to kind of operate on
their own and in some casesshift to shift.
They operated differently.
(42:25):
We came in and instituted ourempty bin cutoffs.
We went in and did thatactually at the purchase and we
would empty a bin, run anothergrain into it.
So we turned the inventory sowe could measure every bin empty
.
I, physically, and my teamphysically, went through all the
facilities and we got to knowthe people understand where they
were at, what processes we had,what tools we needed to provide
(42:46):
for them to be successful, whattraining.
And then we went in and put inour standardized SOPs throughout
on how we ran day-to-day aswell as conducted inventories
SOPs throughout on how we randay-to-day as well as conducted
inventories.
By doing that, within a year'stime, we took that 1% plus
shrinkage down into that quarterto a third of a percent range,
(43:07):
which was a substantial amountof money.
Jim Lenz, GEAPS' Director o (43:07):
Wow , great example.
Now the field of inventorymanagement.
It's rapidly evolving.
With new technologies,innovations, we see progression.
What emerging trends arecurrently shaping inventory
management in the grain industry?
Jim Voigt (43:21):
Well, I think the cost of these systems has always
been a barrier, jim.
They've been around for quite awhile.
Other industries have used thema lot.
We've had limited introductioninto the grain industry, but the
costs are coming down astechnology is becoming more
common.
It's more affordable.
The other issue we've got isthis pressure on finding help.
(43:45):
I mean it's difficult to findjust a warm body, sometimes put
in a facility, let alone aqualified warm body.
So this is driving us to look atmore technology and more
automation and integratedsystems, the concept of being
able to collect all your dataautomatically through various
(44:05):
monitoring equipment, computerentry type stuff that's done
automatically, where it can alsobe verified, verified, and then
getting that into a centralnetwork where all the data is
stored and can be analyzed andactions taken, whether those
actions may be fully automatedusing the computer or going
forward in artificialintelligence, whether it's still
(44:27):
a human making those decisions,but the fact that we have
timely, accurate data at theclick of a mouse to make
decisions off of, accurate dataat the click of a mouse to make
decisions off of, that is ourfuture For those of us who
embrace that.
I think it's going to be abright future.
For those of us who are alittle hesitant on embracing
that, sustainability may becomea challenge.
(44:47):
So embracing change is alwaysscary, jim, but it's kind of the
Darwinism thing in there thatthose of us who adapt to the
changing environment around uswill survive.
Jim Lenz, GEAPS' Directo (45:01):
That's good advice that you give the
grain facilities ensure theyremain ahead of these trends, or
make considerations to havegood, sound decision-making
tools as we look at preparingfor the future.
Hiring the right individuals tooversee inventory management is
crucial for the success ofgrowing facilities.
In your experience, Jim, whatspecific skills and experiences
(45:25):
should facilities look at whenhiring for these roles?
Jim Voigt (45:28):
Well, typically the lead in the inventory process,
jim, is on the administrativeside, in a smaller location.
It may be a facility manager orit may be a designated, you
know, head and countercontroller.
They're going to provide thedirection, the leadership and
help lead that team.
(45:48):
In that those individualstypically want someone who is,
you know, organized, disciplinedand has very good communication
skills.
When we look at the peopleinvolved from an operating
perspective, these are thepeople you know, maybe two
levels we can look at themanagement supervisory level and
we can look at the employee,the people doing the work level.
(46:10):
Let's look at that one first.
First, I want someone who's gota good attitude, is willing to
be trained and to listen and whostrives to perform and be part
of a team.
So, you know, they're going tofollow those SOPs that we have
out there and if they feel thatthere's something in them that
doesn't make sense, they'regoing to ask you why, why are we
(46:30):
doing this?
Explain this to me.
And those are the type ofemployees I want working for me
out, you know, in the facility.
From a leadership standpoint,I'm looking for people who are
driven or focused.
I really like the guy thattells me he wants my job.
He has, you know, wants afuture in front of him because
he's going to accept challengesand responsibility and do the
(46:51):
best he can.
But again, organizationalskills and strong, strong
communication skills and someonethat's willing to learn.
I strive to learn something newevery day and I've been in this
industry 50 years and I prettywell accomplish that every day.
There's just a lot ofinformation out there, and
(47:12):
especially with all thesechanges in technology.
Jim Lenz, GEAPS' Director (47:16):
Yeah , curious minded goes a long
ways.
Now, for those who are ininventory management, that's
part of the job.
How does it contribute to theoverall success and growth of
the facility?
Jim Voigt (47:26):
I think you can look at a couple of ways.
If you're controlling thequantity and quality losses, you
have one thing you're going toprove employee morale because
you're going to have a bunch ofpeople out there in the facility
going what the hell are youguys doing?
So morale is going to improvefrom that.
You'll definitely seeimprovements in profits.
As you know, in our example wesaw $600,000 that went to the
(47:49):
bottom line.
Those improved profits willhelp ensure the sustainability
of the company and its abilityto service its customers.
If we can improve that customerservice, customer satisfaction,
experience, that is the truekey to sustainability and
success.
Jim Lenz, GEAPS' Dire (48:09):
Wonderful .
You've kind of said that before, but I just wanted to ask a
summary statement.
But that last one you haven'tmentioned before yeah, providing
prime customer success.
Jim, we thank you for being amember of Jeeps and for your
contribution to today'simportant message on the GEAPS
Whole Grain Podcast.
We know many of the individualslistening today to the show are
GEAPS members, but I know thereare many listeners who are not
(48:32):
Jeeps members and they are inthe grain industry.
But before we conclude, I'dlike to start a sentence and I
would love for you to concludethe sentence, Jim, being a GEAPS
member to me means, means what.
Jim Voigt (48:45):
Well, it's being part of an industry where, working
together, we can assist infeeding the world, and knowing
that I have a network of peoplearound me that can help me
succeed in my personal andbusiness goals.
Jim Lenz, GEAPS' Director (49:02):
Thank you, jim Boyd.
You've been an active member ofthe Grain Elevator and
Processing Society for manyyears and, of course, you've
even served as pastinternational president and
chairman of the Board of GEAPS.
You have a special audienceright now listening who have
dedicated their careers in thegrain industry.
For those who are consideringto be Jeeps members, could you
(49:22):
share from your experience whatmakes being a GEAPS member so
special?
How can being a GEAPS membersupport their career in their
organization?
Jim Voigt (49:31):
Well, Jim, it gets back to, I think, one of the
first comments I made about notbeing the smartest person in the
room.
When you come into thisindustry, you are definitely not
the smartest person in the room.
You're ignorant to how thisindustry operates and does
business.
And ignorant is not a bad word,it just means transfer of
(49:55):
knowledge from old, gray-hairedfolks like myself to the new
people coming in behind us inthe industry.
And I don't know any place thatyou can go where that pool of
knowledge exists at a greaterlevel than within Jeeps and
where you have people that arewilling to share that knowledge
(50:16):
with the folks coming behindthem.
I think that's the true valueof GEAPS it's a depository of
readily available knowledge forpeople to advance their personal
and business careers.
Jim Lenz, GEAPS' Director o (50:30):
Jim , thank you so much.
On behalf of the entire GEAPSstaff.
We thank you for yourcontributions to the
organization and its members andcustomers.
Now you've offered an in-depthexamination of inventory
management here in the podcast.
It's such an important topic.
It really offers the greatestpotential return to the
profitability of a company, andso we just applaud your
(50:51):
perspective.
It's really a special treat tohave you on the show today.
Thank you so much.
Jim Voigt (50:56):
Well Jim.
Jim Lenz, GEAPS' Director o (50:56):
I'd like to thank you.
Jim Voigt (50:57):
I'm honored to be here and I would like to say we
didn't get down into a lot ofdetail in this podcast today.
Time did not allow that.
But I've had the opportunityand the pleasure to work with
GEAPS on upgrading the 501section of training on inventory
management section of trainingon inventory management and in
(51:19):
that 501 course we get into alot more of the details on the
specific SOPs in grain inventorymanagement.
Jim Lenz, GEAPS' Director o (51:23):
Yes , your contribution to that
module has been instrumental inthe upgrading of the course and
we're excited to share that atthe time of this.
Recording will be very soon andthat's a great place to add
value to your understanding ofconcepts related to inventory
management coming up for youlisteners.
So stay tuned to that.
Essentials for Supervisors.
Thank you so much, Jim,Appreciate it.
(51:45):
Thank you.
The Whole Grain Show is aproduction of GEAPS the Grain
Elevator and Processing Society.
The Grain Elevator andProcessing Society is the
largest organization dedicatedto advancing the grain handling
and processing industry.
To learn more how GEAPS cansupport you, your career and
your organization, be sure tovisit www.
GEAPS.
(52:05):
com.
That's G-E-A-P-S dot com.
Hey, if you're a vendor orsupplier of the industry, the
Whole Grain Podcast offers aterrific opportunity to
spotlight your business.
The podcast offers a terrificopportunity to spotlight your
business.
If you are interested in usdeveloping audio ads to support
your product or service, or ifyou and your organization want
to sponsor an episode and be afeatured guest, please reach out
to me, Jim Lenz, Director ofGlobal Education and Training at
(52:25):
GEAPS, and we will help you getstarted with the process.
My email is james@geaps.
com.
We look forward to connectingwith you everybody, thanks for
joining us for another episodeof whole grain.
Make it a great day.
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