The OCF found that in addition to resolving massively increased complexity in market allocation issues stemming from the growing segmentation of the market, implementing the SAP solution gave them the benefits of CRM for the first time, and enabled them to realize major benefits from going digital.
The Chicken Farmers of Ontario [CFO], a Burlington-based industry group that acts on behalf of approximately 1100 farms in Ontario who collectively raise 200 million chickens a year, has been around for over fifty years. However, they expect more change in the next three years than in the past fifty, as the market for their products gets massively more complicated.
The organization’s historic role has been the management of Ontario chicken production on an allocation model, allocating the volume of production to match the quotas given each farm. The quotas are thus effectively a license to produce a set amount of chicken and take it to market.
“The problem is that market complexity has become massively more complex,” said John Um, Director, IT & Supply Management Services at the CFO. “There has been growing segmentation for new products, For example, there are different processes to manage market needs for the Chinse-Canadian market. New segments of the market, like antibiotic-free, and organic, have grown up. Other new regulations like traceability have emerged, driven by consumer demands.”
Um said that this process of change isn’t a new one, and the industry has always had to deal with it to some degree. He did stress, however, that it had reached a pivotal point.
“Things have gotten much more complex as the culture in Ontario gets more diverse and market needs get more complex,” he said. “We had to make changes to meet these needs.”
Um said that the proprietary system that the CFO had used to manage its allocation model simply wasn’t up to today’s demands.
“We were using a custom application that ran our allocation model, and allocated the volume set to the quotas allowed,” he said. “Because of the new complexity, more sophistication was needed, and we had to bring a lot more flexibility into it.”
Um said the CFO decided to put out an RFP for a new system.
“We wound up with 26 bids,” he said. “There were a lot of custom solutions, a lot of agricultural solutions, and three from solution providers which used SAP.”
“They were able to map our custom process for allocating quota to MRP [Materials Resource Planning],” Um said. “They mapped it using Business All-in-One, and then made significant customizations of their own on top.
Michael Pearson, CONTAX’s President, said that while the CFO is a small business in terms of their size, in terms of the complexity of their demands, the solution was more for a mid-size business.
“They are a small office of less than 40 but represent over 1100 farms, and are a three billion dollar industry,” he said. “They control a lot of chicken.”
CONTAX built a private cloud solution for the CFO – a new type of IT setup for the organization.
“Six years ago, everything was in a closet,” Um said. “Then we migrated to a co-lo, and now with SAP everything is in the private cloud.”
Um said the CFO has realized several major new benefits from the solution, in addition to being able to manage the more complex regulatory environment.
“It was the first time we had implemented CRM,” he said. “Before we had no tools at all, and relied on our field service people to know our farmers. Now we have a much better profile of farmers and industry stakeholders, which gives us a much better insight into the farming business than we ever had before.” They also put in a full back end, including finance and HR modules.
The system also enabled the CFO to move from paper to digital.
“We’ve now converted the industry so everything is digital and done on the SAP platform, by requiring that the people in the industry go digital,” Um said. He acknowledged it was a big cultural shift, which they managed through webinars and workshops. He also emphasized that the benefits had been significant to all parties.
“It has led to traceability efficiencies and the elimination of data entry errors,” he said. “It’s been great for the farmers too, who can now do things remotely 24/7 when they want, whereas before everything used to have to be done on the spot.”