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Monitoring Data for the Monitoring Data for the TeamTeam
Slide Source:Bradley J. HiltyPenn State Dairy Alliance(814) 865-4683bhilty@psu.edu
Monitoring Data for the Profit TeamI. Successful dairy businesses
II. Key benchmarks for business
III. Targets for teamsa. Detecting bottlenecks
b. Monitoring monthly
c. Using resources
IV. Past team successes
I. Successful Dairy Businesses
I. Successful Dairy Businesses
Successful dairy businesses must provide:
1. Adequate returns to owner labor and management, in addition to:
2. Adequate returns to capital investments!
I. Successful Dairy Businesses--Profitability Factors
Profitability - ROA
Operations Efficiency Operating Expense Ratio
(OER)
Capital Efficiency Asset Turnover Ratio
(ATR)
Return to Unpaid Family Labor &
Owner Labor and Management
I. Successful Dairy Businesses
--Business Management Keys
Strategic Management:
Doing the RIGHT things!
Operations Management:
Doing THINGS right!
Strategic Management Deals with the “Big Picture”
II. Key Benchmarks for Business
II. Key benchmarks for business Profitability
ROA – 8-10% Financial efficiency
OER – <75% for corp. <65% other structures Capital efficiency
ATR - >.60 dairy and crops; >1 dairy only
Profitability
Return on Assets(ROA) >10%
Liquidity
Term Debt & Lease Coverage Ratio (TDLCR) > 1.20
Solvency
% Equity% Equity > 60%
Financial EfficiencyOperating Expense Ratio
OER< 75%-Corp OER<65% -SP/P
Capital EfficiencyAsset Turnover Ratio
ATR >.6 Dairy & Crops
ATR> 1.0 Dairy Five “Star”
Financial Benchmarks
II. Key benchmarks for business
Analyzing Reports Key Production Areas
Management Area Benchmark GoalProduction Milk/Cow/Day 85Repro Status Days in Milk 175-185Repro Performance Pregnancy Rate 22-24%Udder Health SCC <200 KTotal Cow Management Cull Rate 25-35%
Other diagnostic benchmarks are also important.
II. Key benchmarks for business
III. Targets for Teams
a. Detecting Bottlenecks
III. Targets for Teams
Monitoring the right information helps detect and prevent bottlenecks
Busines$ense What is a Bottleneck?
PRODUCTS
Production Systems Are Pipelines
INPUTS
Busines$enseWhat is a Bottleneck?
INPUTS PRODUCTS
A restriction in the product pipeline
It is important to detect & correct the most restrictive bottleneck first.
Fixing the wrong bottleneck is of no benefit.
III. Targets for Teams
b. Monitoring Monthly
III. Targets for Teams---Using the right information
What factors are critical to success? Milk Volume
Milk per cow per day DIM
Repro Performance Udder Health - SCC
Cow numbers Cull Rate Replacement performance Repro Performance
III. Targets for Teams---What are key indicators?
Milk per cow per day DMI Milk Starts Peak phase milk
Components Prot / Fat Ratio
Udder Health Early Lactation SCC
Culling Transition cow problems
III. Targets for Teams---Monitoring information
Milk Production – Daily Feeding data – Daily??
DMI, FE, IOFC SCC / Milk Quality Indicators – Dairy tests PG rate – 21 days Cull Rate – monthly / annually Others – see monthly monitor
III. Targets for Teams
c. Using resources
Monitoring Tool
Monthly Monitor
Available on website or through Dairy Alliance office at:
1-888-373-7232
Monthly Monitor 3.0.xls
Publication:Analyzing Your Dairy Business: A Systematic Approach to Using Benchmarks
Profit Team Tools
Contact the Dairy Alliance Office for copies at:1-888-373-7232
Other Profit Team Tools
Dairy Farm Business Summary
Contact the Dairy Alliance Office for more information at:1-888-373-7232
PA Dairy Tool from Penn State
Contact the Dairy Alliance Office for more information at:
1-888-373-7232
Past Profit Team Successes
2004 data with pilot farms.
Pennsylvania Dairy Profit Teams – Pilot Year of Project
Some Key Numbers (2004) Herd Size ~ 205 55-740 Milk per Cow ~ 20,000 12.5 K – 28
K ROA ~ 3.0 % -16.8 % - 23.8% ATR ~. 40 .18 - .93
Investment/Cow ~ $ 11,000 $4,700 - $20,000 OER ~ .80 .55 - 1.18 Cows/FTWE ~ 37 17 – 65 Operational COP ~ $13.80 $9.15 - $18.78
Questions?
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