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Business Intelligence Boosts a Dairy Coop's Profits

Sales and operations planning improves production efficiency, product selection, promotions and profitability.

Who knew organic farming could be so technology driven? You picture the free range and synthetic-hormone-free cows and chickens. But who would have thought data integration and reporting would be so vital to keeping the whole operation humming? In fact, Organic Valley, the largest organic dairy coop in the United States, has been thriving, with sales growing more than 600 percent over the last eight years to reach $530 million in 2008. In an industry in which slim, two-percent margins are common, business intelligence has been the key to keeping the 1,400-member coop profitable.

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The essential challenge for dairy farmers, and indeed many agribusinesses, is that they are part of a push supply chain. They can't turn their cows and chickens off, and because Organic Valley is a coop, it's obliged to take agreed-upon volumes of raw milk and eggs from each member. (In contrast, non-coop dairies and particularly non-organic dairies can subcontract and buy bulk dairy products on the open market.) The intelligence comes in when figuring out what to do with those raw materials, whether it's whole, 2%, 1%, skim or chocolate milk; cream, sour cream, cottage cheese or hard cheese; or dried milk or buttermilk powders used as food ingredients.

"That raw milk can potentially go into 100 different products," explains George Neill, Director of IT at Organic Valley. "At different levels of the organization, the people working on supply management, distribution or different product lines have a different perspective and they require different levels of detail on the same information."

Gauging demand and potential profitability across so many product lines is no simple matter, and it involves lots of information. For instance, Organic Valley uses an Adage ERP system from Infor, and in 2006, the coop launched a major IT initiative to support its first distribution center (DC). The DC required a warehouse management system (also from Infor) and an automated storage management system (for product storage, not data storage). Organic Valley also deployed MIS DecisionWare financial performance management software (soon after acquired by Infor) and demand and trade promotion planning applications from Demantra (since acquired by Oracle).

With all the new technologies and data sources coming on board, it was clear that Organic Valley's existing data mart and hand-coded ETL routines wouldn't be adequate. The coop was already using BusinessObjects software for reporting, but it was happy to discover that the vendor's Data Integrator, Data Federator and data quality software could fill the void.

Data Integrator (now a component of SAP BusinessObjects XI) handled the application integration needs. "With all these new transactional systems, we knew we needed something tighter than nightly batch processing," Neill says. "The initial implementation of Data Integrator was for the Warehouse Management System, ERP and Transportation Management System integration. Once that was in place, we used the same product for more conventional ETL needs."

There are plenty of disparate databases at Organic Valley, including multiple versions of Microsoft SQL Server for ERP, warehouse management and other apps, and Oracle for the Demantra apps. BusinessObjects Data Federator has been used for related tasks where Data Integrator doesn't quite fit.

"We were running into problems doing joins across SQL Server databases and we wanted to avoid creating staging tables for Oracle in the Data Integrator product," Neill says. "Data Federator gave us the flexibility to present Oracle data, SQL Server data, spreadsheet data and other data as a single source."

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