How to optimize management systems?

How to optimize management systems? – Interview with Natalia Bohacheva, CEO AgriChain

the digital transformation should be started by the company`s management systems optimization — NATALIA BOHACHEVA, СЕО AGRICHAIN

AgriChain is a subsidiary of ASTARTA-Kyiv, which was founded in 2017 to develop a comprehensive solution – a united information portal for agribusiness management. Natalia Bohacheva, CEO AgriChain believes that the most valuable for development is the opportunity to get feedback from the market, different structures, and large, medium, and small companies. This experience makes the system as flexible and adaptable as possible to the needs and processes of different companies.

— Are there any special features of building a complex information portal in Ukrainian realities of agricultural business?

Of course, there is. We have even developed the concept: “Ukrainian farm management”, which includes a number of factors at the macro-level: A long economic crisis, a difficult demographic situation in the village, and the peculiarities of post-Soviet mentality, which are reflected in the necessity to use systems of total control of production processes. If we talk about micro-management, it is complicated paper document circulation, untimely updating of information, theft of material values, and complicated communications of different departments. As a result of all these problems, the production cost is significantly increased. Therefore, the Agrichain team has developed the concept of creating its own system.

We mainly automate operating systems of medium and large agro-companies, operational management, direct cost management, and risk management. Cost management under the conditions of Ukrainian agribusiness is one of the main tasks because the production cost in Ukraine is much higher than Argentina, Brazil, and the USA. And we can only work with the cost, the cost of the part by optimizing processes.

— What are the advantages of the system implemented in Astarta?

It is the united information system covering all spheres of activity of the enterprise, the whole chain, starting from the land bank and ending with logistics of finished products to the port. Automated flexible business processes are the basis of the system, and each task and its execution stages are monitored. One of the main advantages of our development is the possibility to make managerial decisions in time and quality. Each of the modules has a sub-system in 1C in order to automate the workflow, the main tasks were set by operational processes.

Our main task here is to free the human resource from routine work. Decision-making tools are mobile applications, with the maximum concentration of all necessary data at hand. The system also allows us to build deep analytical reports on the basis of risk management, which are based on actual data because the online mode of events is what we want.

— What are the main tasks that you have set before you?

— Development of management and decision-making tools in all areas of agro-production, tools of building and automation of business processes of the company, to provide the employees with the most convenient tools for everyday work and management of their tasks, while creating a simple and clear interface. After all, we work with a fairly complex contingent of specialists.

— Which modules are included in the system?

— Agrichain Land — land bank management system, Agrichain Farm — online system of planning and management of agricultural production, Agrichain Scout — online crop monitoring management system, Agrichain Barn — online system for warehousing process management and warehousing logistics of the enterprise.
Agrichain Kit — is one of the technical modules we use in the system. It is a core that allows you to build business processes flexibly and quickly for each company or local process at the user level. Engineering and Repair Management is a module that has just started its work. We are moving into telemetry and automation of repairs — one of the most painful questions for agrarians.

The Agrichain Logistics module (online logistics management system for goods and finished products) began this year with a pilot at Astarta, in particular, which introduced solutions that allow automating the movement of equipment into electronic TNT. The ultimate goal is to link all processes related to logistics planning and transport and grain transportation to the port.

— What is the most relevant module today?

Each company has its own “pain points”, so we use a modular approach in decisions. Basically, the companies start automation processes with the audit and analysis of the state of the land bank as the main means and subject of production, so we offer our solution again. The second most important decision is seasonal planning for the harvest, which takes into account the activity of each specific enterprise. This block consists of three parts: A supplement for seasonal planning, a mobile supplement for the operational execution of the production program, and a 1C subsystem, which allows closing accounting. Today Astarta has already launched an operational circuit (mobile application plus 1C subsystem). It allows to carry out business operations in real-time: To reflect the fact of works, write off the parts, form accounting documents, and form analysis. We continue to work on this module to plan and monitor the performance of the entire production program, from planned seeding to performance indicators like EBITDA. An extremely relevant solution for all our clients is the Agrichain Scout module for managing crop monitoring, controlling crop loss risks, and responding to them quickly.

— What were the general difficulties in the implementation of modules?

The main problem in all the implementation is the effect of the news. Many specialists are hard to perceive the change in the standard process of work, it is necessary to work with it, first of all, to make them allies. The problem is also relevant for every agro-producer: Complex communications between different services (agronomic, accounting, warehouse). Therefore, a clear, well-coordinated process needs to be built and a common access point for different departments to be found. Usually, a lot of employees are involved in the communication process, and it is not effective.

An extremely large problem is the lack of control over operations, both in terms of technological norms and in terms of abuses. Therefore, our goal was to obtain an online plan for the actual program and cost implementation, and, accordingly, their impact on the overall budget, and final performance indicators.

— How does it work?

— The main problem in all the implementation is the effect of the resistance to new. Many specialists are hard to perceive the change in the standard process of work, it is necessary to work with it, first of all, to make them allies. The problem is also relevant for every agro-producer: Complex communications between different services (agronomic, accounting, warehouse). The main functional blocks of the seasonal planning and management system of the production program (do not mix with the technological map, which is part of this system) — These are planning of budget parameters and technology templates, planning of farm planning of bunker and billet yield, current and elevator logistics, the very technological program (a list of basic and auxiliary operations describing norms of introduction and expenses of the part), and also the consolidation of efficiency indicators. One of the goals of this system is to build a precise plan for future tasks and to get the actual performance of the enterprise in real-time mode.

The scenario approach is applied. Its essence is in the creation of N-number models of the production program, which allows estimating different variants of development of events by cost and efficiency indicators. Here we tried to put maximum flexibility so that it was possible in calculations to carry out any scenario of development of events. Scenario modeling starts from the beginning of the year. When you select one option, it is adjusted, which is interpreted for the actual situation, which will always differ from the most accurate plan. According to this plan operating specialists work, starting with an agronomist and ending with a specialist in logistics, who plans the necessary number of cars for crop export. We create different patterns for each technology and culture and then use them in the above scenarios. This minimizes the time it takes to add a technology map and optimizes the team reset from the central office to the local office. When all budget parameters (prices for products, conditions of sale) are laid, the system plans to share. This three-factor model, which takes into account the structure of the sowing, optimal, ideal, and bad precursor, also determines the volumes of different cultures, this allows to form of as many clusters as possible in one crop. Then the system calculates the average weighted yield on the field in a certain culture taking into account historical data of the field. The volume of finished products losses and the structure plan of finished products are put into this system, that is, what we want to grow: Wheat of the highest class or fodder, etc.

The result is shown in the form of a table with yield, losses during the road, and other parameters. It is stated that planning is connected not to culture, but to every local field, on which there is information about soil composition, weather, and historical yield. At any time you can enter the actual data and all the indicators are again calculated giving the actual picture.

The next step is logistics, and current and elevator planning. The user defines the structure of the finished product export, the system calculates the shortest routes. As a result, we have a consolidated table: Of which fields what distance this gives an understanding of the cost part.

— What are the features of the technology map?

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The main part of seasonal planning is the own technological map, which can be downloaded from ready templates. It was important for us to make the most convenient interface. Having cultures, and fields, it is possible to form clusters to which certain technology will be applied. The system calculates when its own resource has ended and services are needed. Our task is to ensure that every user when he or she places new data about the volume of service, understands how it will affect the cost. It is important that specialists start to think about the categories of costs: How much each treatment costs, so that decisions are not spontaneous. Then we will be able to influence the cost of production because the system calculates the point of loss. The main goal of the system is to start managing the production program, not just to perceive the situation.
Cost management under the conditions of Ukrainian agribusiness is one of the main tasks because the production cost in Ukraine is much higher than Argentina, Brazil, and the USA. And we can work only with the cost, cost-effective part by optimizing the processes such decisions at the testing stage in the holding’s farms from 10 thousand to 45 thousand hectares.

— Is it possible to estimate the effect of automation systems implementation?

Much depends on the company’s readiness, on what it needs. The solution offered by AgriChain is unique, mainly on the market there are offers on scalping, accurate earthmoving, meteodata, GPS-monitoring systems, etc. We are primarily focused on the management unit — production management, namely: Directly by the land bank, operating cycle, cost management within the framework of the disciplinary business process, planting monitoring, warehousing logistics, procurement, machinery management, etc. Evaluation of the effectiveness of the implemented solutions should be based on the needs that the client wants to solve.

Basically, if clients go to our systems, start working with their processes, and I think it is correct. As for the exact earthmoving and deep analysis of the crops, differential insertion, it can be called “a cherry on the cake”, when everything has been rebuilt, then it is possible to plunge deep into such processes. It is possible to start with precise farming without a properly built production process in general, but there is a question of the scale of such technologies and their effectiveness at the number of investments in them. The bulk of agro-producers begins to introduce automation from the end, hoping to find a magic gun, which does not exist. If at the enterprise the bardak in the processes, then no one will give the buttons. First, all chains must be established and structured.

If you simply buy a specific it solution without auditing processes, and organizational changes, it will, in fact, be nothing but irritation to employees.

— What economic indicators can be achieved by example AgriChain and are similar systems in Ukraine?

— Ukraine has no analogs of such decisions in terms of complexity. For the first year of use of Land Management module (land bank management), the direct economy is 8,7 USD per hectare. If we speak about Farm Management (optimization of expenses for salary fund, administrative expenses, fuel expenses, staff optimization), then it is 9,5 USD per hectare in the first year. If all the modules are implemented as planned, even if it costs $2 per hectare on average, the economy will be substantial. However, in order to implement these solutions, it is necessary to have an administrative resource, change internal processes, and desire to rebuild and optimize.

— Is there a certain psychological component here?

It is important that the owners and shareholders of these economic indicators can reach the week motivated by changes. Astarta has such motivation, first of all, it has been set for the purpose of organizational transformation. In some processes, we actually met the target and began to review every process, which was historically formed and related to the work of our modules. These are the rewritten internal regulations and changed internal policies and orders.

All processes had to be adapted to the new management architecture, i.e. to review literally every instruction and operation, then teach people to work in a new way and start the whole system, while getting feedback, something to work out. For me, digital optimization is a certain abstraction, but organizational transformation based on and as an add-on digital is a concrete solution. Just digital will not work.

Source: ifarming