Services have important role for global grain

by World Grain Staff
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While comparisons are not easy to come by, it is likely that few global businesses are as product-oriented as the grain trade. When it comes to grain alone, the focus historically has been on quality and price, as well as origin. That same product focus applies to the major processors of grain, particularly wheat flour millers who pride themselves on quality, not solely of the finished product but also of the wheat they grind. Similarly, suppliers of equipment as well as non-capital inputs naturally reflect the focus of their customers and thus have been tied to product quality. Without suggesting this emphasis may be misguided, developments under way across the broad sweep of worldwide manufacturing prompt wonder whether an industry like grain is neglecting the opportunities inherent in providing excellent services as well as superb products.

Attention is being paid to the mounting inclination of industrial enterprises, especially those that paid single-minded attention to efficient manufacturing and product improvement, to embrace what is now called "industrial services." Within companies deemed progressive on this score, research reveals that more than half of their employees are often not engaged with products but are providing services taking many forms. These range from offering direct help to customers with maintenance to working to improve the environment where a company’s plants may be located.

When it comes to supplying services as a business, three benefits are often cited in making comparisons with returns from single-minded product focus. By their very nature, services usually are considerably more profitable than running grain handling and processing facilities. Here the efficiency of human capital plays a powerful role. A second advantage is that services properly structured avoid the business cycles that plague many companies. Sure, the broad grain industry has done well in the face of the recent severe global recession. But services tend to outperform, regardless of whether the comparison is with producers of consumable products or suppliers of capital equipment essential to an efficient grain industry. No wonder then that makers of capital equipment, including a few of the leaders in machinery used in handling and processing grain, have shown the way in providing services. In instances, this business represents as much as half of company revenues and in some cases a considerably larger share of profits.

The third benefit, which seems particularly appropriate for grain-based foods as well as suppliers to the industry, is how services solidify ties with customers. This explains why a few progressive companies seeking to build their business in food or other manufacturing have put the same or even more emphasis on services than on products or equipment. By recognizing problems their customers face, such as how best to respond to fast-moving ingredient markets, these companies seek to build relationships that may be more enduring than those reliant on products alone.

The range of possibilities for valuable services both to and by the grain industry is vast. It varies from help for companies seeking to become energy efficient and environmentally friendly to improved maintenance of computer-controlled equipment. It includes help in responding to markets and training people to cope with new technologies and new markets. Helping companies comprehend the endless possibilities of modernization loom high on many service-oriented agendas emerging from the recent recession. Perhaps the time will come when the success of a business is gauged not just by its ability to handle and produce excellent products at minimal costs, but also by the way it is building relationships and expanding its revenue base by offering new services. Numerous opportunities exist for doing this at the supplier level. Equally great opportunities are open to grain-based food manufacturers in working with traditional customers as well as food service and food retailers. It’s hard to imagine any limits to what the grain industry should be able to offer in the way of services as well as products.