A New Normal for Ag Retail Supply Chain

Feb 02, 2023

Written By: Reid McBride

We are coming out of two of the most difficult and chaotic supply chain seasons that we have had to endure in recent memory. Over the past two years we were working under the motto “if you think the past three months were bad, hold on to your hats because the next three will be worse”. Unfortunately, for manufacturers, distributors, retails, and farmers this motto was true, more often than not.

Glyphosate was painfully short and as a result the price kept climbing to never-before-seen heights. Glufosinate followed suit, and we saw many retails allocated to a point where they could not fully service their canola seed sales. Force majeure notices were delivered to manufacturers relating to multiple products, with phenoxy’s seeing the largest effect.

In a “normal” year, a retail would deal with an average of twenty short or allocated products. At the height of the 2022 growing season, we had well over one hundred and fifty short and allocated products. It was a perfect storm, everything that could go wrong, did.

As we move into the 2023 growing season, we are being promised a more “normal” season by our manufacturing and distribution partners. But what does a normal growing season look like for the ag retail supply chain?

I think we can assume that normal does not really exist. Every season is different and provides it’s own challenges. Last year we were challenged with glyphosate, glufosinate, phenoxy’s, and insecticide demand. So far this season, we are seeing glyphosate and glufosinate stabilize; however, canola seed availability, fluroxypyr availability for co-packs, and lambda label requirements have moved into the spotlight as potential areas of concern.

So if every season is different and presents it’s own challenges, what does the promise of “normal” mean? In this instance it means a true desire, hope, and plan for less disruption than we have seen in the past two years. But it also means there will continue to be disruption and unforeseen issues that throw a wrench in those plans.

The challenge of planning around these unforeseen issues is where our supply chain team enters the picture. By no means did we get it perfect over the past two years; however, when many retails were seeing mounting challenges with supply chain, in many cases, we looked at those same situations as opportunities.

There are things we can control, and those we can not. We focused on the things we could control and managed to put ourselves in some great buying situations. For our supply chain team the “New Normal” revolves around forecasting, relationship building, diversifying our risk, and an agronomy first focus.

Forecasting seems like such an easy thing to do; however, we have constantly found that it is a differentiator of our business. Our brand of forecasting happens from the ground up. We rely on building crop plans with our customers which help inform our retail teams as to cropping intentions and crop input needs. Each of our retails sit down and forecast by product, and by manufacturer. Our Supply Chain team consolidates these and uses them to inform our purchasing decisions. We start this process early in August and September, and it is a live process that changes as the season draws closer. Our customers and their relationship with our team are key to this process. Relationship based forecasting is part of our new normal.

I spoke to the relationship between our customers and our retail teams, it is imperative. It is also imperative that we build strong relationships with our manufacturer and distribution business partners. By providing these partners with timely and accurate forecasts, they are able to plan their business better, they are able to allocate product to us better, they are able to deliver product to our sheds earlier. We also find ourselves in a position to find out about short and allocated products sooner due to these strong relationships. We ask for brutal honesty from these partners, we can not plan if we do not know, and we trust that we are being given the best information that is known at the time. These mutually beneficial relationships are a part of our new normal.

Diversifying our risk means a number of things, but it is at the base of many of our decisions. We diversify our risk by relying on multiple distribution partners. When product is in short supply and we need a favor, it is nice to have pre-planned business already in place to build upon. We have adopted a strategy to support multiple brands for important active ingredients. We have a lead brand, a secondary brand and a generic/fighter brand for many of the key actives we support. If one manufacturer finds themselves short, we are able to manage our needs with other brands. We have also focused on an “un-pack” strategy, making our company less reliant on co-formulations and co-packs. We focus on basic active ingredients, a very strong adjuvant and surfactant offering, and an agronomy team that can build custom solutions. Focusing on risk reducing purchasing practices is certainly part of our new normal.

Being a fully integrated, agronomy focused independent retail is probably our best defense against a disruptive supply chain. If something is short or sold out, not a problem, our team comes up with Plan B, Plan C and Plan D. We have been able to pivot to different products, different solutions, and the value that our agronomy first mindset gives our supply chain team and our customers can not be measured. This is without a doubt the cornerstone of our new normal.

We can expect disruption, we can expect product allocation and we can expect product shortages; however, planning and being open and prepared to create unique solutions for our customers and business partners will allow us to continue to move forward and grow with a win-win-win mentality. To better prepare yourself and your farm for the season ahead, be sure to work with your local Crop Advisor to ensure your crop plan has the best chance to succeed and pivot as challenges arise. As always we are excited about the future of agriculture.

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