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E-Commerce and Agriculture: Where is There Value to Create?

E-Commerce and Agriculture: Where is There Value to Create?. Steve Sonka National Soybean Research Lab University of Illinois. Where’s the beef ????. Agenda. E-Commerce and information technology (IT) coming to ag IT implementation and industry redefinition Where are the IT gaps?

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E-Commerce and Agriculture: Where is There Value to Create?

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  1. E-Commerce and Agriculture:Where is There Valueto Create? Steve Sonka National Soybean Research Lab University of Illinois Where’s the beef ????

  2. Agenda • E-Commerce and information technology (IT) coming to ag • IT implementation and industry redefinition • Where are the IT gaps? • Implications

  3. Agenda • E-Commerce and information technology (IT) coming to ag • IT implementation and industry redefinition • Where are the IT gaps? • Implications

  4. ForcesPushingandPullingTowardsRedefinition e-Commerce Food safety traceback Biotechnology Precision ag Environmental responsibilities Consumer segments that desire differentiated farm output

  5. E-Commerce • Encompasses all electronically facilitated business processes, including data transfer among buyers, sellers and various supply chain entities. • Has three primary components • Supporting infrastructure, • Processes supporting how business is conducted, and • Commercial transactions.

  6. Agenda • E-Commerce and information technology (IT) coming to ag • IT implementation and industry redefinition • Where are the IT gaps? • Implications

  7. What is Industry Redefinition ? • Redefinition: When profound change occurs in the rules of competition • Between suppliers and customers • With consumers • Among competitors

  8. Knowledge Creation Stories of Competitive Dynamics • American Airlines and Sabre • American Hospital Supply • Frito Lay **** Broiler industry **** Common Feature Hallucination Vision Aggressively used data from their own operations to gain competitive advantage

  9. Information TechnologyAnd Strategic Change Jeffrey Sampler: How information technology redefines industries. ... Look at individual transactions (1) Separabilty (2) Aggregation potential

  10. Transaction Characteristics (1) • Separability: extent to which information can be separated from the associated transactions • Amount of information • CAPTUREDas transactions occur

  11. Transaction Characteristics (1) • Separability: extent to which information can be separated from the associated transactions 1950s 0 or 1 Today 011010100 110111000

  12. Transaction Characteristics (2) • Aggregation potential: extent to which the information’s value is “leverageable” beyond the original transaction 011010100 110111000 011010100 110111000 011010100 110111000 011010100 110111000 011010100 110111000 011010100 110111000 011010100 110111000

  13. Other inputs Farming Genetics Processing Consumers High/High High/High Low/Low Tomorrow The Sector: Today

  14. Separability Potash and Phosphate Institute

  15. The Dot.Com’s Come to Ag:A Two Day Sample Aggregation potential • J.R. Simplot Company &Aspen Technology – e-business solutions • Rooster.com -- Cargill, DuPont and Cenex Web site to sell inputs • www.farms.com -- new CEO & CTO • Cargill & Ariba –B2B exchange for food mfgrs and suppliers • Ocean Spray & Symbol -- warehouse productivity

  16. Other inputs Farming Genetics Processing Retail • Precision Agriculture • “B 2 B” E-commerce Two IT-DrivenChange Factors

  17. Agenda • E-Commerce and information technology (IT) coming to ag • IT implementation and industry redefinition • Where are the IT gaps? • Implications

  18. M a r g i n The Generic Value Chain Firm infrastructure Human resource management Support activities Technology development Procurement Inbound logistics Operations Outbound logistics Marketing & sales Services ---------- Primary activities ----------

  19. Food and Ag:A Series of Value Chains Input mfgrs Input retailers Farming First handlers Food mfgrs Retail

  20. Bar Coding andManufacturer / Retail Power Food mfgrs Retail

  21. Food mfgrs Retail Bar Coding andManufacturer / Retail Power

  22. Where IT’s Being EmployedToday Input mfgrs Input retailers Farming First handlers Food mfgrs Retail

  23. Farming Farming Farming Farming IT Within the Farming Sector Fixed asset utilization Precision ag as we thought it would be

  24. From “JIC” to “JWN” Just In Case Input retailers Farming

  25. Input mfgrs From “JIC” to “JWN” Just What’s Needed For Production Input retailers Farming

  26. Food mfgrs From Commodity toSupply Chains Farming First handlers

  27. Retail Food mfgrs First handlers Farming Input retailers Input mfgrs Tomorrow’s Consumer Driven System

  28. Agenda • E-Commerce and information technology (IT) coming to ag • IT implementation and industry redefinition • Where are the IT gaps? • Implications

  29. Managerial Implications • Anticipate interactions • Concentrate on timing and sources of value • Manage (create) intangibles

  30. Tangibles Intangibles Brands Knowledge Risk taking Assets Today !!! What earns high value ?

  31. In Conclusion…. • E-Commerce, application of IT, is a feature of tomorrow’s ag system • IT redefines industries, predictably • IT gaps exist at and around the producer level • Intangible assets with demonstrable value are the key

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