World Grain - November 2009 - 62

GRAINOPERATIONS

Getting on
the same page
Improving communications between
operations and merchandising personnel
brings positive results to grain companies
by Arvin Donley

Because their job responsibilities and goals don't always
align, and in some cases may actually diverge, there is always potential for conflict and misunderstanding between
grain merchandisers and operations managers.
When a good working relationship doesn't exist between
these two parties, grain companies run the risk of business
decisions being made off of erroneous assumptions.
In a presentation entitled, "Improving Communications
Between Operations and Merchandising" at GEAPS Exchange 2009 in St. Louis, Missouri, Tim Paurus and Rick
Dusek of CHS Inc., Inner Grove Heights, Minnesota, U.S.,
described how a good working relationship between merchandising and operations personnel can enhance company
profitability and maintain a strong customer base.
They said merchandising and operations must communicate in an effective manner to procure, sell, handle and ship
products that meet each customer's needs in a safe and efficient manner.
The basic responsibilities of grain merchandisers are setting purchase and sales prices, developing marketing programs, managing commercial customer relationships, managing commodity risk and determining credit worthiness and
managing working capital usage of the grain department. In
setting the purchase price or the sales price, a merchandiser
will use all information available to provide a competitive
price to customers and then sell grain based off the highest
value to the organization.
In making these price determinations, many factors are
taken into account, including competition, quality of grain
(purchased, stored or sold), timing of delivery or shipment,
mode of shipment and availability of transportation.
64

Merchants are always thinking, "What is the best way to
sell what I have purchased?" or "What is the best sale for
what I will purchase?" The merchandiser is analyzing information and then making the best decision as to what direction to take.
Operations managers supervise operations at the terminal
with an emphasis on productivity, safety and cost-effectiveness. They are regularly making operational decisions involving employee safety, profit-and-loss results, and maintaining the integrity of the company.
They must focus on things such as: having a working
knowledge of government regulations that pertain to the
operations of the grain industry; implementing a loading/
unloading/binning plan to effectively control inventory and
monitor production; staying abreast of new equipment on the
market and changes in technology and how they could improve operations while maintaining a quality work environment; and implementing and maintaining the Environmental
Management System and Safety and Health Management
System as applicable to the facility.
The merchant is responsible for revenue enhancement and
the operator is responsible for cost containment, thus it is
easy to see how conflicts may arise.
Paurus, vice-president of terminal operations, and Dusek,
director of merchandising, noted that in most organizations,
merchandising and operations do not have a reporting function to each other.
They said that merchandising, in its purest form, can stand
alone with merchandisers operating in an environment where
they are only selling grain based off a weight and inspection
certificate. Operations, however, cannot function without
November 2009 / World Grain / www.World-Grain.com
http://www.World-Grain.com
World Grain - November 2009

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