Growmark, Inc. Distribution Center – Alpha, IL

Shyenne Horras Sarah Le’Jeune

Sean Long

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Table of Contents

Section Page Number

Company History…………………………………………………………………...................p.3

Business Structure………………………………………………………………………..…p.3-4

The Distribution Center at Alpha…………………………………………………………...…p.4

Product Offerings……………………………………………………………………………..p.5

Source of the Raw Materials………………………………………………………………..p.5-6

Transportation………………………………………………………………………………p.6-7

Facility……………………………………………………………………………………...p.7-8

Technology and Inventory Management………………………………………………...…p.8-9

Safety……………………………………………………………………………………..…p.10

Appendix………………………………………………………………………………...p.11-13

Works Cited……………………………………………………………………………...…p.14

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Company History

Growmark’s beginning came about in the 1920’s as farmers were making the transition

from horse-drawn machinery to tractors. Large oil companies were unwilling to deliver to rural

areas, so farmers came together to form cooperatives to ensure a reliable fuel source. A number

of these farmer owned cooperatives came together to form Illinois Farm Supply Company in

1927. Illinois Farm Supply grew to provide many products that farmers need including

lubricants, chemicals, fertilizers, feed and seed. In 1955, the company adopted the FS brand

trademark which is still used on their products today. In the 1960’s, Illinois Farm Supply joined

forces with similar cooperatives in Iowa and Wisconsin to form FS Services, Inc. The company

later merged with Illinois Grain and selected the name Growmark. The name comes from

combination of services offered by the company; GROWing and MARKeting of crops. Since

their beginning, Growmark has expanded their territory to include Indiana, Ohio, Michigan,

Pennsylvania, New York, and Ontario.

Source: Martin, Craig

Business Structure

Growmark is different from its investor-owned corporate competitors because it is a

cooperative. A cooperative exists to service its members. The customers are the members and

each member is given one vote in electing a board of directors. Most cooperatives do not retain

earnings, but rather, they pay patronage to their members. Due to the distinctive structure of

cooperatives, a heavy importance is placed on customer service. After all, the customers are the

owners. In a case study written for Growmark, Yoshinori Suzuki acknowledges that due to the

unique structure and emphasis on customer service in an agricultural cooperative, Growmark

needs to have management strategies tailored to their business.

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Growmark is headquartered in Bloomington, Illinois. The Bloomington office is home to

the dispatch and brokerage departments which help the warehouses keep their retail centers

stocked with products. The retail operations are referred to as “member-companies.”

Sources: Growmark.com; Suzuki, Yoshinori

The Distribution Center at Alpha

The decision to build a distribution center at Alpha came with the changing livestock

market in the late 1970’s. Bagged livestock feed was a substantial part of Growmark’s sales.

They used to have 4 warehouses placed close to fed mills in Iowa, Wisconsin, and Illinois, but

the industry was moving away from bagged feed to bulk feed. Growmark’s sales were also

shifting more toward crop protection products and general merchandise. The warehouse

locations at the time had 30% of their business coming from transferring goods between the 4

warehouses. These were unnecessary shipments from one warehouse to another. The logistical

solution was to consolidate the warehouses into one at Alpha, Illinois. Alpha is a central location

for serving the Illinois, Iowa, and Wisconsin member companies and is just 3 miles off Interstate

74. Construction of the distribution center was completed in 1981. The facility has a brief but

reputable history, modern strategies to meet all demands, and state of the art technology for

safety and inventory management at multiple levels.

Today, Growmark FS has a total of five warehouses across Iowa, Illinois, and Wisconsin.

Warehouses are located in Des Moines and Iowa City Iowa, Springfield and Alpha Illinois, and

finally the lone outpost in Amherst Junction Wisconsin. Lease arrangements are currently

underway for a warehouse in Nashville, Illinois. The lease will offer same day service to

southern Illinois to meet the demands of a longer growing season in the southern part of the state.

Sources: Martin, Craig

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Product Offerings

Growmark offers their own FS brand products as well many other products through their

supplier relationships. At the Alpha distribution center there are approximately 7,700 line items

encompassing 7 product groups: seed corn, seed beans, turf seed, crop protection, energy, facility

equipment, and grain systems. Please refer to Figure 1 in the appendix to see a few examples of

seed brands carried by Growmark. Many of the bulk products in the energy category, such as

diesel and propane are shipped from terminal to the member company or customer directly via

tanker trucks and so these products do get shipped through Alpha. Products that sell in relatively

smaller quantities, usually packaged products, are distributed through the Alpha location.

Packaging for liquids may be in 250 gallon totes, 55 gallon drums, 2.5 gallon jugs, all the way

down to 1 pint bottles. Granular products, powder products, and seed may be packaged in 50

pound bags stacked and wrapped on a pallet, hard-sided boxes, or 2,000 pound “big-bags.”

Sources: Martin, Craig

Source of the Raw Materials and Manufacturing

As Growmark is a “regional cooperative providing agriculture-related products and

services as well as grain marketing”, there is not much manufacturing done solely by the

company. While Growmark does own a lubricant production facility Council Bluffs, Iowa, the

majority of their products transported through the Alpha Distribution Center are manufactured by

other companies at locations near Illinois, Iowa, and Wisconsin. While Growmark does work

with a number of suppliers, the information on their names and locations was not available as

much of this information is password restricted to member cooperatives.

Still, manufacturing and processing does take place at the distribution center. For

example, 3.2 million pounds of turf grass is mixed at Alpha each year. Instead of hauling turf

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seed back and forth, the mixes are now created in the warehouse to improve efficiency.

Processing and repackaging of products is also done in the warehouse, especially regarding grain

and fuel. Diesel exhaust fluid (DEF) is contained in a 10,000 gallon tank at Alpha, and then

packaged into individual barrels for shipping to members. Samples are taken from on any

returned seed sent to a laboratory for germination tests, so that the seed may be relabeled with its

newly determined percent germination before being resold in order to prevent any

misinformation for the next consumer.

Sources: Growmark.com; Martin, Craig

Transportation

Growmark specializes in transportation and farm supply, especially at the Alpha

Distribution Center. According to the center manager, Craig Martin, each member company gets

route delivery once a week, with each region having its own unique day (see figure). However,

members can get deliveries on other days if necessary, but in order for the member to avoid a

$50 fee, the order must at least 1,000 pounds or $2,000 in value. These requirements keep

member companies from making “frivolous” deliveries, though back orders are always delivered

as soon as possible and do not need to meet these specifications.

While Growmark does use barge and rail transport at other facilities, trucks are utilized at

Alpha. The company owns their own trailers and leases the trucks from Williams National, in

order to avoid trucker wage expenses while still being able to load their trailers at their own pace.

When receiving merchandise, the trucker will show their packing slip or freight bill to an

employee to ensure the correct location. The pallets and number of items contained within them

are counted to ensure accuracy, and then placed in their assigned warehouse location. According

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to the manager at Alpha, this process takes around two hours from the time the truck pulls in to

the when all the items are on the shelves in inventory.

The majority of shipments from the distribution center are less than truckload (LTL), and

contain twenty-two pallet spaces for a total of twenty-two potential stops. Technology called

“direct route” is utilized for shipping at Alpha since it uses information on the weight of the

objects, the types of placards that need to be displayed, and hours of service to determine the best

shipping route. This software has provided time saving and compliance benefits that have

improved efficiency at the distribution center. Continued efficiency at the distribution center is of

key importance considering that annual sales of products going through the warehouse exceed

$150 million.

Sources: “GROWMARK Updates Member Resource Platform”; Martin, Craig

Facility

The Growmark FS facility in Alpha uses a 240,000 square foot distribution center

including all offices and truck docks. The facility has its very own back-up power generator

station in the event of power outages located behind the facility. All computer systems are

backed up by battery in the event of a power outage, to ensure that the computers never go off

line during the wait time for the generators to kick in. The facility is designed to be as energy

efficient as possible with individual heaters that keep the facility slightly pressurized to reduce

energy costs. The 210,000 square foot facility is able to efficiently maintain a temperature of 52

degrees during the frigid winter months. The facility operates twenty-four hours a day, five days

of the week, except during the growing season. During a 16 week period beginning in March, the

facility operates six days per week to meet the demand of the growing season.

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It is during this 16 week growing season the Alpha facility does approximately 65% of

their annual distribution. Growmark FS at Alpha stores 7,700 different line items, with 7

different product groups which include three seed divisions. This facility is one of twenty-five

facilities in the United States, mixing 225 of their own brand of turf blend inside the facility.

There employees take FS brand seed from inventory, which is reduced from available inventory,

and brought a mixer where they get their finished product of FS brand turf blends. Along with

their brands of turf blend, diesel exhaust fluids are the only products that are packaged at the

facility today.

The facility houses eighteen enclosed loading docks which are fully functional. When the

distribution center was constructed 45 foot trailers where the norm. Now, for low density items, a

53 foot trailer is typical, plus over the road truckers have an additional 8 feet on the cab. Only

two 53 ft trailers with an over the road cab at a time are allowed at the inside docks due to safety

and maneuverability concerns. Construction is underway to add seven additional outdoor loading

docks to accommodate more over the road truckers. The expansion of the loading docks

capabilities will maximize efficiency of incoming and outgoing freight scheduling. All incoming

shipments are verified twice to mitigate shipment errors, and to reduce unnecessary loading and

reloading of shipments not intended for the Alpha facility. The facility proudly stands by their

ability to have products available for distribution just two hours after any incoming freight

arrives.

Source: Martin, Craig

Technology and Inventory Management

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The facility uses standard 42 inch racks that are reduced down to 36 inch forward leaning

racks, to reduce inventory collisions during movement. These racks are capable of withstanding

their 18 foot vertical storage per aisle (see figure 4). All aisles are labeled alphanumerically

starting from the front entry into the warehouse, ending in the back corner of the warehouse.

Growmark FS credits the OMNI systems inventory and reporting technology for smooth

inventory tracking and resupply management. The system is used by their corporate management

to manage reorder points, safety stock, and other inventory needs.

Inside the facility the OMNI system employs what could be described as the “Chaos”

theory of inventory. Storage of items is not specifically located together based on likeness of

purpose or brand. The facility uses a “first in, last out” method of distributing products. All floor

and stored items are tracked by the OMNI system, and are located within the facility based upon

frequency of demanded products. Flammable inventory is segregated to a room specified for

inventory that is combustible or otherwise considered a fire hazard. Items with the lowest

frequency of demand are located toward the back of the facility; conversely, high demanded

items are closer to the front near the shipping docks.

The locations of items being stored near the front for higher availability are flexible to

meet seasonal demands. All back order demands from retailers are dealt with directly between

the corporate offices and the retailer using the OMNI system as well. All outgoing freight, as

well as items to be cross docked, are collected from the floor or rack storage, and is then staged

in front of the loading docks where it is verified to vendor or customer order standards, sorted,

palletized, and wrapped for outgoing shipments.

Source: Martin, Craig

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Safety

Growmark is very conscious of safety issues within their distribution facility. They use a

state of the art fire sprinkler system which has the capability to isolate where a fire may be within

the facilities six sprinkler systems. This minimizes the risk of damaging inventory which may be

across the facility, nowhere near the fire. Stringent controls are in place to deal with hazardous

and non-hazardous chemical spills. Every employee is trained and is aware of the location of

chemical mop gear. If a spill of non-hazardous chemicals exceeds 100 gallons, the EPA is

immediately notified of the spill. However, any spill of hazardous materials over 25 gallons the

EPA is to be notified.

As previously highlighted, Growmark has an ever evolving supply chain management

network and operation. Growmark has not only excelled in their distribution operation in Alpha,

but has also set a high standard for distribution facilities in the region. Growmark’s attention to

every detail, flexibility and adaptation to the expanding markets and steadfast dedication to

safety at the facility puts them at a premium position regarding supply chain management.

Source: Martin, Craig

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Appendix

Figure 1:

Green Yard is the FS brand of turf seed and

turf seed blends.

As grow soybeans are sold at Growmark

member companies through an agreement with Monsanto.

HiSoy soybean seed is a proprietary brand sold

by Growmark.

Dekalb seed corn is sold at Growmark member

companies through an agreement with Monsanto.

I InVision seed corn is a proprietary brand sold

by Growmark.

Figure 2: The mixing station where employees blend turf seed.

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Figure 3:

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Figure 4:

*Notice how the pallets sit at a slight angle on the racks. Due to the narrow 36 in.

racking, the angle means that when a pallet is lifted off one side of the rack it will not tear the packaging of the pallet on the opposite side

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Works Cited

Growmark.com. GROWMARK, Inc., 2013. Web. Nov. 2013.

<http://www.growmark.com/Pages/home.aspx>

“GROWMARK Updates Member Resource Platform”. Agwired.com. Zimmcomm New Media,

23 Sept. 2013, Web. Nov. 2013. <http://agwired.com/2013/09/23/growmark-updates-

member-resource-platform/>

Martin, Craig. Alpha Distribution Center Manager. Personal Interview. 22 Nov. 2013.

Suzuki, Yoshinori. "Finding The Proper Fleet-Downsizing Strategies For U.S. Agricultural

Cooperatives: A Case Of GROWMARK, Inc." Transportation Journal (American Society

Of Transportation & Logistics Inc) 48.2 (2009): 24-39. Academic Search Premier. Web.

Nov. 2013. <http://web.ebscohost.com/ehost/pdfviewer/pdfviewer?sid=3e2fc28c-2c14-

4aca-ba91-24f98b15c501%40sessionmgr4001&vid=2&hid=4114>