ERP for the Agriculture Sector in Nigeria. Transforming Big Data into Big Value in the Agriculture Industry. 0 P a g e

Transcription

1 ERP for the Agriculture Sector in Nigeria Transforming Big Data into Big Value in the Agriculture Industry 0 P a g e

2 ERP FOR AGRICULTURE IN NIGERIA: Transforming Big Data into Big Value in the Agriculture Industry facilitates information flow between all business functions, and manages connections to outside stakeholders. Abstract In agribusiness, there are strong tendencies towards increasing the role of IT in creating positive value, decreasing costs and ensuring high quality food products to final recipients. At the same time, the number of regulations concerning the food market is on the increase, including those associated with the necessity to ensure the identification of the origin of ingredients and semi-products in food supplied to the market. Another reason is the increasing scale of production in food processing enterprises. The specification of perishable products (such as best before date and origin) is also strongly emphasized. In the conditions of an increasing number of trade contacts, efficient IT systems are required to support the management of the entire value chain in the agriculture sector. The purpose of this white paper is to therefore expatiate the importance of ERP Systems in the Agriculture sector in Nigeria. ERP (Enterprise Resource Planning): OVERVIEW ERP provides an integrated real-time view of core business processes, using common databases maintained by a database management system. ERP systems track business resources cash, raw materials, production capacity and the status of business commitments: orders, purchase orders, and payroll. The applications that make up the system share data across the various departments (manufacturing, purchasing, sales, accounting, etc.) that entered the data. ERP Organizations consider the ERP system a vital organizational tool because it integrates varied organizational systems and facilitates error-free transactions and production. However, ERP system development is different from traditional systems development in that ERP systems run on a variety of computer hardware and network configurations, typically using a database as an information repository. ADVANTAGES ERP systems centralize business data from different business processes in an organization, which: Eliminates the need to synchronize changes between multiple systems Brings legitimacy and transparency to each bit of statistical data. Facilitates standard product naming/coding. Provides a comprehensive enterprise view (no "islands of information"), making real time information available to make proper decisions. 1 P a g e

3 Protects sensitive data by consolidating multiple security systems into a single structure. Benefits ERP can greatly improve quality and efficiency of the business, by keeping a company's internal business process running smoothly. ERP supports upper level management, providing critical decision making information. ERP creates a more agile company that better adapts to change. ERP makes a company more flexible and less rigidly structured so organization components operate more cohesively. ERP can improve information security. A common control system, such as the kind offered by ERP systems, allows organizations the ability to more easily ensure key company data is not compromised. ERP provides increased opportunities for collaboration. ERP provides a collaborative platform that lets employees spend more time collaborating on content rather than mastering the learning curve of communicating in various formats across distributed systems. The Role of IT in Agriculture: ERP SYSTEMS IN THE AGRICULTURE INDUSTRY The productivity gains in the agricultural sector globally are directly attributable to the technological advances and resulting efficiencies that define today s modern farmer. With the world s population expected to reach 9 billion by 2050, the UN estimates that food production will need to grow by 70% to keep pace with demand. The only way to meet this demand is through the continued evolution and adoption of Agriculture Technology and ERP Software is helping farmers worldwide improve their business processes by lowering costs and increasing productivity. In building enterprises around agriculture in Nigeria, you stand to affect the lives of the average Nigerian. Food and Beverage companies globally have to face new challenges every day. Since they work with fresh agriculture produce, they quintessentially work against the clock to move merchandise out of the warehouses. All companies in agribusiness face the complexity of managing their business processes. In this context, technology has to be a support to facilitate daily operations and improve strategic decision making. Some need to integrate long chains of processes, ranging from agriculture inputs to retail distribution. The perishable nature of these type of products, makes value chain management more complex. Total traceability of all the processes across the agriculture value chain is a mandatory requirement in ERP systems in order to offer a total guarantee to consumers i.e. the ability to trace a produce right back to its source. Production planning must be as close as possible to the demand if losses are to be avoided on products or materials. Crops Management A complete, integrated solution for an organization dedicated to agriculture. Integrated management of specific crop processes, purchasing and manufacturing with the remaining modules of the standard solution 2 P a g e

4 (Finance, Commercial, Warehouse, Production etc.) Module maintenance of machinery with the possibility of direct communication between machines. Wide range of products categorized. AGRICULTURE IN NIGERIA: OVERVIEW Agriculture is a very wide industry covering forestry, hunting, fishing, crop cultivation and livestock raring. While Food is predominantly what we are talking about here, agriculture goes past food. Every home uses some lumber, leather bags from cow hide, paper from processed plants etc. So much of our lives depends on agriculture that without it you will very quickly realize the unimportance of even a cellphone. Supply Chain Management Integration and direct communication with automated warehouses Optimizing the total cost of storage. Sales and Distribution. Full traceability from the plantation management or purchase of raw materials to product delivery. Maintenance Module for machinery. Possibility of direct communication between their machines and the ERP. Wide range of products categories. Manufacturing and Quality Control. Full traceability from plantation management to product delivery. Line-level planning of the agricultural processes. In Nigeria, there exist 170 million people who consume imported agricultural goods. This is a sad development especially when one factors in the fact that imported food negatively impacts many aspects of Nigerian life. 1 st, imported food are typically more expensive and economically tasking on the Nigerian family because of the customs tariff, transportation cost, exchange rate burdens and multi-level price increases attached to imports. 2 nd, imported food is detrimental to employment in this country because it 3 P a g e

5 requires extremely less labor force to import a ship load of wheat as opposed to the labor needs of a 1000 Hectare farm. 3rd imported food diminish the value of our foreign exchange as they apply high pressure to our currency system. and despite its huge marine resources N97 billion worth of fish in While these estimates are alarming, what s interesting is that this import dependence creates a lot of room for local producers, processors and distributors. This is because Nigeria has every one of these items in ample supply. Yet in a country with vast expanses of farmable land, generously divined water resources and a cheap labor force we are yet to actualize speedy development through farming. REASONS FOR AGRICULTURAL PRODUCT DEFICIT IN NIGERIA 1. Bad governance 2. Unrealistic goals and self-indulgence 3. Infrastructure deficit 4. Lack of skilled labor pool 5. Inability to manage large scale operations 6. Limited access to financing ECONOMIC OPPORTUNITIES Population: Success in Nigeria means access to 170 million customers within the country, therefore a ready market if you can capture their interest with reasonable price points. Resources: Nigeria is extremely conducive for agriculture, with a combination of 88% arable land, adequate water supply by rain, rivers and other bodies of water and a young labor force. Location: It is a great access point to all of sub- Saharan African. It also has massive ocean access which can facilitate trade to neighboring African countries and global markets. Import Dependence: It is estimated that Nigeria imported N635 billion worth of wheat, N356 billion worth of rice, N217 billion worth of sugar The areas of interest in Nigeria today are: Production: Rice, Wheat, Sugar, Millet, poultry, Fish, Cassava, Palm and related items, Cattle etc. Distribution: Generally the distribution of produce in Nigeria is in need of resuscitation as it is mostly done as general transport with no tailored approach. Processing: Opportunities abound as the majority of processed food in Nigeria is imported. RECENT STRIDES IN THE NIGERIAN AGRICULTURE SECTOR. Agriculture continues to contribute about 40% to Nigeria s GDP in (this is based on Nigeria s National Bureau of Statistics Economic Outlook 2012 Report). Agriculture is predominantly practiced in the rural areas of the country; hence, there is the need to ensure that farmers in the rural areas get access to farm input such as fertilizers, seeds and information to enhance their productivity. In July 2012, the Nigerian federal government introduced the Growth Enhancement Support Scheme (GES). The GES Initiative, a scheme of Agriculture Transformation Agenda (ATA) was designed to deliver government subsidized farm inputs directly to farmers via GSM phones. The GEES scheme is powered by the e-wallet, an electronic distribution channel which provides 4 P a g e

6 an efficient and transparent system for the purchase and distribution of agricultural inputs based on a voucher system. The scheme guarantees registered farmers e-wallet vouchers with which they can redeem fertilizers, seeds and other agricultural inputs from agrodealers at half the cost, the other half being borne by the federal government and state government in equal proportions. As part of the GES Scheme, the Federal Ministry of Agriculture led by the Minister Dr.Akinwumi Adesina, recently announced that the Ministry will equip millions of farmers in the rural areas with mobile phones. According to the Minister, the project will link farmers directly to government and viceversa so that government will be able to monitor the progress of farmers as well as disseminate valuable information to them. ERP SYSTEMS: DATA CHALLENGES IN A DEVELOPING AGRICULTURE INDUSTRY Information and data is an essential ingredient in agricultural development programs but Nigerian farmers seldom feel the impact of agricultural innovations either because they have no access to such vital information or because it is poorly disseminated. As often happens, agricultural information and data is not integrated with other development programs to address the numerous related problems that face farmers. The information provided is exclusively focused on policy makers and those who manage policy decisions with scant attention paid to the information needs of the targeted beneficiaries of the policy decisions. The non-provision of agricultural information is a key factor that has greatly limited agricultural development in developing countries. INFORMATION NEEDS OF SMALL SCALE FARMERS No one can categorically claim to know all the information needs of farmers especially in an information dependent sector like agriculture where there are new and rather complex problems facing farmers every day. The information needs may be grouped into four headings: extension education; agricultural technology; agricultural credit and inputs; and marketing. Modern farm inputs are needed to raise small farm productivity. 1. Extension Education: The general lack of awareness among small scale farmers can be attributed to their high level of illiteracy. This contributes to the low level of adoption of agricultural production technology 2. Agricultural Technology: Agricultural technology for the small scale farmer must help minimize the hard labor of farm chores. It should be labor-saving, labor-enhancing and labor-enlarging. 5 P a g e

7 3. Agricultural Credit: Agricultural credit encompasses all loans and advances granted borrowers to finance and service production activities relating to agriculture, fisheries and forestry and also for processing, marketing, storage and distribution of products resulting from these activities. 4. Marketing: The farmer's market information needs are those that enable him make rational and relevant decisions. Market information services have the function of collecting and processing market data systematically and continuously, and of making it available to market participants in a form relevant to their decision making. INFORMATION NEEDS OF THE MINISTRY OF AGRICULTURE 1. Geographical Coverage: The Ministry of Agriculture does not have accurate data on the number of available farmlands in the country and coverage areas. 2. Expenditure and Spending: Because data on subnational expenditure in specific sectors including agriculture are not readily available from a central source, data on federal, state and local government expenditure must be collected at the state and local government area (LGA) levels. For effective distribution of funds to appropriate projects, government must have real time and accurate data on all current expenditures in the agriculture sector 3. Number of Farmers in the Scheme: Number of registered farmers in the scheme to know the exact amount of farmers and avoid uneven and inaccurate distribution of credit facilities to Ghost Farmers. 4. Data from other parties involved in the scheme: Financial Data from the banks and Credit facilities, information from the telecom operators, social media and so on are also relevant to the ministry in order to make effective business decisions. Every data is as important to the success of any industry. SOLUTION: ERP FOR AGRICULTURE: Seeking compliance and control without complexities The Agriculture industry needs flexible, industryspecific business solutions to help it improve its competitiveness, efficiencies and keep pace with ever-changing technology improvements. Recognizing the breadth of agricultural barriers, these farmers have varying needs in dealing with complexities, the key features that will drive the success of an ERP implementation in an agricultural environment include: Powerful agricultural process cost calculations to ensure accurate costing, forecasting as needed. Comparison of inter ratios and performance delivered via Business Intelligence reporting anywhere, anytime with drill down analysis. Management, reporting and comparison of farmer and contractor production and performance levels. Warehouse management which ensures proper goods received allowing complex packing procedures on shipment and 6 P a g e

8 reporting that will maximize available space and inventory turnaround. Integration to on site capital equipment such as sprinklers and graders to deliver true cost of farming. Suitable for all agri-business including fruit, livestock, poultry, milling, forestry and all associated businesses. Management of formulae and recipes, potency, by-products, multiple packaging units per product, shelf-life, lost control and traceability, specific gravity, weight calculations. EXAMPLE OF ERP SYSTEM APPLICATION IN THE AGRICULTURE SECTOR myagri FOR INTEGRATED FARM MANAGEMENT myagri ERP for Agriculture is an example of an integrated farm management software, easy to operate, record, evaluate, analyze & control the farm operations and inventory control. Utilizing SAP s extensive versatility for gathering and capturing non aggregated data, myagri centralizes data execution from many different agriculture processes and automatically generates controlling, quality, planning and maintenance information. Eliminating the on-going challenge of expensive and inconsistent data entry, myagri empowers management and farmers to set common goals and establish a shared vision through the interpretation of real-time harmonized data while increasing end user productivity. You can get complete details of crops in the following areas Operations: Details of Job categories (Field preparation, Planting, Irrigation etc.) Details of Input categories (Seeds/ planting materials, Fertilizers, Manure) Pesticides, Tools & machineries, packing material, other consumables, etc. History of fertilizer, pesticide application. Production: Sales: Expenses & Jobs done in production. Complete track of production life cycle. Cumulative and different stock reports from farm items and outside items. Order booking and Packing List module. Export Invoice with full details covering FOB and Bank Certificate. Date wise realization of foreign currency. Country, currency and departmental sales reports. Market and sales report for commodities. Accounting: Purchase accounting Sales billing P a g e

9 E-wallet Voucher creations (Payment & Receipt) Payment & Banking details Reports cash flow & trial balance Profit, turnover & return ratios effectiveness to manage all data from systems in order to gain competitive advantage locally and globally An Integrated Value Chain ERP SYSTEMS: FINE TUNING THE SUPPLY CHAIN IN THE AGRICULTURE INDUSTRY The Agriculture Value Chain of an organization is a set of business processes that occur in the agriculture industry from the planting of the food crops right down to distribution to the end consumers. The supply process of the value chain is very key. This process is the determinant of how effective goods reach the intended consumers. It is impossible to achieve an effective supply chain in the agriculture value chain without information and communication technology (ICT). The beneficial effects are heavily dependent on the ability to integrate information systems appropriately from all processes across the agriculture value chain. In this sense, ERP systems implementation and integration of the extended value chain addresses both internal (the business processes within the organization) and external (business relationship with other organizations) integration. The bottom line is efficiency and For most distribution companies the implementation of ERP systems is now standard practice for helping to maximize efficiency. ERP systems can help boost inventory optimization, aid high-level critical decision making and help business agility. A typical business case of the effectiveness of the ERP System in the Supply Chain is the use of SAP ERP software to address the supply challenges of Ghanaian cashew Farmers. SAP, the global leader in ERP and business application software is engaging with the African Cashew Initiative (ACI) to solve the often long supply process a cashew farmer has to go through before his goods get to the end consumer. SAP explored the opportunities for an ERP system by bringing in mobile business applications that support small scale cashew farmers by bringing cashew nuts to the market faster and on time. 8 P a g e

10 SIMILAR CASES OF HOW E-WALLET CAN BE USED EFFECTIVELY WITH AN ERP CASE 1 APPLICATION: Applied Data Logix and Octagon Data Systems Ltd COUNTRY: India and Kenya Using SAP ERP Software running on a smart phone, the local buyer is able to record single buying transactions. Each bag is labelled with a barcode. By scanning the bar code on the bags of cashew nuts, the system can track every bag. The phone collects the data and sends it directly to the farmers cooperative. The cooperative controls the daily pricing for cashew nuts and this information is also sent to all buyers smart phones DESCRIPTION: These two partners have developed applications that use digital scales to collect data on a farmer s yields at tea and dairy community aggregation centers in Kenya. Agricultural product is weighed on a digital scale, and then data uploaded to a central repository which is an ERP System. The data is aggregated in the ERP System each month and the farmers are paid according to the records. This ensures that the farmers are paid their stipulated fee CASE 2 APPLICATION: Cropster REGION: Latin America The benefits of the system has enabled farmers to avoid long paper works involved in the supply chain process in the past. It has also increased the revenue of the cashew farmers and reduced the time spent in processing bags of cashew for each small scale farmer. DESCRIPTION: This application provides online tools for sustainable supply chains including producers, traders and processors of agricultural products. It also has a Monitoring & Evaluation tool embedded in the ERP Software, enabling efficient data collection and exchange within producer groups and between producer groups and NGOs or commercial partners. This tool is not a classical M & E platform, where data is only available to the questionnaire managers, but also to the people who are providing their answers and valuable insights. The tool also combines data generated through commercial processes (production, quality, and price) with questionnaire data. 9 P a g e

11 CASE STUDIES OF SUCCESSFUL USE OF AN ERP SYSTEM IN THE AGRICULTURE INDUSTRY 1. Central Castilla Sugar Mill Colombia execution and management of the growing and harvesting processes. By planning different business scenarios, they reduced their uncertainty to almost zero. 2. AB Agri United Kingdom Organization Profile: Organization Profile: The Company was built on 1945 for just sugar cane production. By 1958 it processed tons of sugar cane daily. By 1966 the business growth in machinery and started processing tons of sugar cane daily. Situation: By 2003 the company had the need to integrate and automate their business processes with their field and harvest operational tasks to save time, resources and costs. On January 2005, Central Castilla started the SIO Project (Information & Operation System) with SAP ERP and myagri implementation. AB Agri, a subsidiary of global enterprise, Associated British Foods (ABF), operates in 60 countries around the globe to provide agricultural products and supporting services to a large variety of businesses in the food, drink, and biofuel industry supply chain. Situation: AB Agri sought to gain greater agility in responding to rapidly changing customer needs and manage its global growth efficiently while controlling costs. SOLUTION: Microsoft Dynamics AX ERP Solution: myagri ERP Integrated with SAP Business Intelligence Results: The Company achieved the automation and control of their field and production operational activities reducing costs in their resources management. The Company has improved the flow of product through the processing plants, allowing for much better AB Agri implemented Microsoft Dynamics AX for its operations in the United Kingdom. Today, 650 AB Agri employees use the solution. By implementing Microsoft Dynamics AX, AB Agri took an important step in building a unified business infrastructure that facilitates an unimpeded flow of information. 10 P a g e

12 Benefits for AB Agri Efficiently Supports a Growing, Global Manufacturing and Distribution Business. Satisfy Customer Needs Promptly and Cost-Effectively. Generate Efficiencies and Savings throughout their Operations. Realize Profitable Business Strategy. Reduce the Cost of Technology Ownership (TCO). complicated and cheaper systems can support the development of micro and small enterprises without them incurring high costs). Author s Profile CONCLUSIONS The implementation of ERP in agriculture business enterprises is a requirement resulting from the progress of information technology, BIG DATA and economic globalization. This is a method of not only improving the business processes in the agriculture industry but also a source of obtaining competitive advantage on the market, which leads to an improved financial situation of the industry. Analysis shows that there is significant internal variation within the scope of the food production sector with reference to the scope of IT system use in management of agricultural produce. However, without doubt the agriculture industry is a field in which the implementation, range and pace of ERP system implementation will be increasing. Due to the influence of ERP systems in obtaining a competitive advantage of enterprises, their implementation is highly recommended for the agriculture sector. Countries are now moving from the small subsistence farming to the industrialized and mechanized form of farming to meet growing population demands. However, attention should be paid to the appropriate adjustment of systems to the needs of the enterprise, depending on its size (less Charles Esumeh is a SAP consultant at Signal Alliance. He is a graduate of Electrical & Electronics Engineering from KNUST, Ghana. About Signal Alliance Founded in 1996, Signal Alliance is an end-to-end IT Company which specializes in systems integration has grown to be a most vibrant, forward moving ICT company in Nigeria with offices in Lagos and Abuja FCT. With solid industry experience spanning across the major sectors of the Nigerian industry, Signal Alliance offers services in the areas of Technology Support, Network Infrastructure, Enterprise Applications and Service Assurance. Signal Alliance boasts of highly skilled and certified consultants as well as major strategic partnerships with World industry giants such as Microsoft, Cisco and CA Technologies. The company prides itself on its ability to gain a thorough understanding of clients businesses and using appropriate technology as a bridge between where the client is and where it wants to go. 11 P a g e

13 Our Vision Our vision is to be a leading global ICT company shaping the market and the future of IT. Our Mission Our Mission to provide unique ICT solutions through skilled professionals, excellent customer engagement and dependable processes. Contact Us Lagos Office 8th Floor, UBA House, 57 Marina, Lagos. Abuja Office 3, Fez Street, Off Kumasi Crescent, Wuse 2, Abuja, Telephone , , , info@signalalliance.com Website 12 P a g e