Good Company Research Paper: United States Sugar Corporation Research Paper Example
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The objective of this study was to identify how a company involved in agribusiness infuses transportation economics, efficient supply chain management, and inventory control practices in its processes. The level of infusion was related with the benefits that this brought to the company. The company studied was the United States Sugar Corporation. The research includes information on the railroad that the company owns and operates and which has immense benefits to it, the use of technology in the agriculture and sugar refining sections, and the monitoring of the supply chain. The results of the research show that the movement of raw material into the company and of finished products to the market strongly depends on an efficient transport network and a thorough inventory control framework. The success of United States Sugar Corporation can be used as a benchmark by other companies involved in sugar production.
United States Sugar Corporation is a company that is involved in the production of sugarcane, orange juice products and also operates a short-line railroad in Florida (www.ussugar.com, 2011). The headquarters of the company are in Clewiston, Florida. The company farms over 180,000 acres in Palm Beach, Glades, and Hendry counties and its workforce totals 1700 people, many of whom are highly skilled or hold wage jobs. Moreover, the company has adopted automation and employees work in fully automated environments. The company accounts for about 8% of sugar produced in the United States by achieving capacities of 650,000 to 700,000 tons of cane sugar. The orange juice segment of the company is called Southern Gardens Citrus, and it employs nearly 300 people. The orange juice section is a largest supplier of not-from-concentrate (NFC) juice made from oranges in United States. The capacity of the juice section is billed to reach 20 million orange boxes that are used in the production of over 100 million gallons of juice. Additionally, the United States Sugar Corporation owns and operates the South Central Florida Express railroad whose track is 156 miles long, has 950 railcars and 14 locomotives. The short-line railroad employs 54 people. The purpose of the railroad is transport sugarcane from farms, processed products to the market, farm equipment and fertilizer to farms, and products for paper, citrus, and lumber industries.
Transportation of bulk agricultural raw materials can be expensive for companies and has the potential to account for a large component of the costs of production. Therefore to counter the huge transport costs, companies have to be innovative and institute means of transport that will reduce transport costs in the long-term (Bowersox et al, 2002). United States Sugar Corporation has countered the possible high transportation costs by developing a private agricultural railroad within its complex that it fully owns and operates. The company transports all its sugarcane via this internal railroad to its sugar factory. Rail transport has several advantages for the Corporation: it uses less fuel as compared to transportation of cane via trucks, and it significantly reduces traffic on highways. Consumption of less fuel is good for the company because it considerably lowers costs incurred due to transportation of raw materials. All the agricultural operations of the company are connected to the sugar factory and sugar refining operations by the internal railroad. In addition, use of rail transport greatly improves the capacity or raw materials that can be transported. Sugarcane is harvested and loaded on cane cars whose capacity reaches 40 tons of sugarcane, essentially the production of an acre. About 1300 cane cars use the internal railroad to transport sugarcane to the factory for eventual refining. The incorporation of the internal railroad in the agricultural complex enables the production process to be continuous, and operate for 24 hours reducing the occurrence of temporary shutdowns.
Moreover, United States Sugar Corporation operates the South Central Florida Express. This rail transport service plays a major role in transporting farm equipments and fertilizer to the agricultural complex. The service enhances the efficiency of the company and enables it to be cost-effective. Additionally, two spurs of the railroad connect businesses and agricultural communities of Lake Okeechobee with mainline railroad to the south and north. The interconnection of the railroads enables the efficient transportation of sugar and orange juice products to markets hence reaching customers. The efficient transportation of finished products via the railways service enables the company to reach a broad customer base encompassing national and local companies. Therefore, efficient transport infrastructure is a win for any company. It enhances market accessibility ensuring the products achieve high sale volumes that translate into good revenues for the company. United States Sugar Corporation has incorporated the tenets of transportation economics in its operations by ensuring huge amounts of raw material are hauled in cheaply and finished products reach a wide market faster and more efficiently.
Furthermore, the company has an efficient supply chain starting from getting raw materials from farms to the hauling of finished products to the market. The company has incorporated vertical integration in its production systems that enable product quality control. The quality control begins from the fertile cane fields where high-quality raw materials are sourced and transported to the company. In addition, the vertical integration enables the monitoring of product quality in the processing and refining stages. The company has installed state-of-the-art facilities that are fully automated ensuring easy control and monitoring of the manufacturing process. Integration enables efficient control of flow of materials and easy rectification of the process deviations thus the company can consistently produce high-quality products that fulfill the needs of the customers. Additionally, an integrated and organized production ensures that the company does not run out of finished products stock or utilize immature low-quality raw materials that can hamper the quality of the final product (Bowersox et al, 2002).
On inventory control practice, United States Sugar Corporation has employed a web-based architecture that schedules the production process, the distribution, and optimization of inventory capacity (Cohen, 2001). The framework is very appropriate for problems that arise as a result of large-scale optimization. Moreover, the framework enables the manufacturing process to be consistent since there is timely inlet of high-quality raw materials and monitoring of the sugar production and refining process. The economies can achieve economies of scale with the web-based architecture that schedules all the production and distribution. The company has implemented the ERP inventory-control system which integrates all the activities that happen starting from the cane fields to the hauling of the finished products to the market. In addition, the company employs up-to-date technologies in its agriculture section to increase the amount of sugar produced from each acre and orange juice gotten per tree. Currently, the entire sugarcane crop of the company is planted using Autosteer technology, and the company uses computer models geared towards optimizing cane harvest. Moreover, an identification program that is based on automated radio frequency is used to track every harvest wagon or rail car. This provides information such as the variety, field number, and load time. The importance of this is that the company can get real-time visibility of data to sugar and railroad operations thus ensuring better management of the manufacturing process and cane quality.
A transportation economics strategy can effectively position United States Sugar Corporation to maximize shareholder value by minimizing costs incurred in transportation of raw materials and ensuring consistent and reliable hauling of finished products to the market. Building an internal railroad is a great investment that last for the long-term and will require fewer maintenance costs and will constantly be used to bring in raw materials. Moreover, easy accessibility of the local and national markets enhances product visibility and uptake hence growing the company’s revenues which mean appreciation of shareholder’s investments (Lazonick and O’sullivan, 2000)
The success of United States Sugar Corporation can be used by other companies as a benchmark. The adoption of efficient transport economics has the potential to reduce transport costs considerably enabling the company to increase its revenues. Moreover, the company has a robust supply chain that has infused technology enhancing the production process. This reduces spoilage of both raw materials and finished products. Furthermore, immense innovation in the agriculture section improves cane quality raising the amount of sugar that can be gotten on acre of land. Companies that are innovative and inculcate newer technologies into their processes stay in the lead in their industries and can be used as benchmarks by the averagely performing ones (Elmuti and Kathawala, 1997).
Bowersox, D. J., Closs, D. J., & Cooper, M. B. (2002). Supply chain logistics management (Vol. 2). New York, NY: McGraw-Hill.
Cohen, M. D., Kelly, C. B., & Medaglia, A. L. (2001). Decision support with Web-enabled software. Interfaces, 31(2), 109-129.
Elmuti, D., & Kathawala, Y. (1997). An overview of benchmarking process: a tool for continuous improvement and competitive advantage. Benchmarking for Quality Management & Technology, 4(4), 229-243.
Lazonick, W., & O'sullivan, M. (2000). Maximizing shareholder value: a new ideology for corporate governance. Economy and society, 29(1), 13-35.
United States Sugar Corporation. (2011, January 1). U.S. Sugar Corp. | Science & Technology. Retrieved March 27, 2015, from http://www.ussugar.com/technology/technology.html
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