106730250 archer daniels midland
DESCRIPTION
Archer daniels Midland Business EthicsTRANSCRIPT
Understanding Management, Business and Organization 2
INDEX
Topic Page No.
About ADM - 3
History & Evolution - 4
Value Creation - 5
Business Model - 6
Strategy - 8
Organizational Structure - 9
Understanding Management, Business and Organization 3
About ADM
The world's population is growing and along with it the demand for quality foods,
livestock feed, alternative fuels, and environmentally friendly alternatives to
traditional chemicals is also increasing. As one of the world's leading agricultural
processing company, ADM plays a great role in meeting all of these needs.
According to Forbe’s Fortune 500 Companies List of 2012, ADM is ranked 92nd
.
Today, 30,000 ADM employees around the globe convert oilseeds, corn, wheat and
cocoa into products for food, animal feed, industrial and energy uses. With more than
265 processing plants, 400 crop procurement facilities, and the world’s premier crop
transportation network, ADM helps connect the harvest to the home in more than 160
countries.
They trade, transport, store and process corn, oilseeds, wheat and cocoa into products
for food, animal feed, chemical and energy uses. The company turns crops, such as
soybeans and corn, into renewable products with uses ranging from food to industrial.
It is located in Decatur, Illinois.
The Company’s operations are classified into three reportable business segments:
Oilseeds Processing, Corn Processing, and Agricultural Services. Each of these
segments is organized based upon the nature of products and services offered. The
oilseed processing segment extracts oils from resources like soybeans, cottonseed,
sunflower seeds, canola, peanuts, and flaxseed that can be used for food and feed
products. The firm processes oilseeds and sells them in the market as raw materials
for other processing. The corn processing segment transforms corn into syrup,
starches, glucose, dextrose, and sweeteners. These products are mostly used in the
food and beverage industry, but can also be used to produce bio-products like ethanol
alcohol. The agricultural services segment utilizes the company’s grain elevator and
transportation network to buy, store, clean, and transport agricultural commodities,
such as oilseeds, corn, wheat, oats, rice, barley, etc. The firm resells these
commodities primarily as food and feed ingredients for the agricultural processing
industry.
Understanding Management, Business and Organization 4
History & Evolution
1902- George A. Archer and John W. Daniels begin a linseed crushing business.
1923- Archer-Daniels Linseed Company acquires Midland Linseed Products
Company, and the Archer Daniels Midland Company is formed. Every decade since
its corporate inception, ADM has added at least one major profit source to its
agribusiness: milling, processing, specialty food ingredients, cocoa, nutrition, and
more.
1971- Dwayne Andreas became Chief Executive Officer of ADM, and is credited
with transforming the firm into an industrial powerhouse. Andreas remained CEO
until 1997. He was one of the most prominent political campaign donors in
the United States, having contributed millions of dollars
to Democratic and Republican candidates alike.
1999- Executive Marty Andreas announced, under pressure from the European
agricultural industry, they were going to separate crops into genetically modified and
non-genetically modified groups to give their customers a choice. Previously the
company had not disclosed their crop sources.
2001- Paul B. Mulhollem became the President of ADM. The Archer Daniels
Midland Company made history by becoming the first U.S. Company to sign a
contract with Cuba since the embargo against Cuba was imposed October 1960.
2006- Patricia A. Woertz became CEO. Formerly of Chevron, she is expected to
focus on developing ethanol and biofuels. In February 2007 Ms. Woertz was elected
Chairman of the Board at ADM.
2011- Archer Daniels Midland announced that the soybean processing facility
in Galesburg, Illinois was closing immediately, and its operations would be
transferred to other ADMoilseeds facilities. The facility has been idle since April’11.
Understanding Management, Business and Organization 5
Value Creation
Value creation is the sequence of activities and information flows that a company and
its suppliers must perform to design, produce, market, deliver and support its
products.
ADM’s operations span the entire agricultural processing value chain, and their
unsurpassed global asset base enables them to add significant value at every stage.
Sourcing- ADM’s worldwide sourcing and trade operations use proprietary global
crop intelligence and our unparalleled network of grain elevators and terminals to
obtain agricultural products in quantities sufficient to meet customer demand.
Transportation- They draw upon a vast global network of rail, shipping, trucking and
storage resources to deliver crops to their intended destinations quickly and
efficiently.
Processing- Processing plants turn crops into hundreds of products for food, animal
feed, chemical and energy uses by producing multiple products from a single crop,
they extract the maximum possible value from each seed, kernel or grain.
Distribution- Finished products leave processing plants and find their way to the
global marketplace via the trucks, railcars and barges that make up transportation
network.
Sales- Sales, marketing and technology teams serve as consultants to customers is a
host of different industries, where they work to identify opportunities for new and
existing products alike.
Archer Daniels Midland Company produces thousands of ingredients used worldwide
in food, animal feed, nutrition, cosmetics, and even by the industrial and chemical
industries. Within this extensive offering of products are brands known and respected
around the globe. ADM grows or buys the raw crops, transports them as necessary
between countries and facilities for processing, transforms them into the desired
value added product, and then sells them to the customers around the globe.
More than 230 processing plants around the world generate a remarkable array of
products made from corn, wheat, cocoa, oilseeds and other feedstock, and the breadth
of operations gives flexibility to adjust manufacturing activities to respond to shifts in
a dynamic global marketplace.
Value Creation is basically the end product of the Business Model which is described
below.
Understanding Management, Business and Organization 6
Business Model
1. Customer Segmentation- For its Food Processing Business, customers are
principally other manufacturers and processors.
2. Value Proposition- Value that the Company creates as described above is in
regard to the the Customer Segments identified for ADM Products and Services.
3. Channels- Company’s products are distributed mainly in bulk from processing
plants or storage facilities directly to customers’ facilities. The Company has
developed a comprehensive transportation system to efficiently move both
commodities and processed products virtually anywhere in the world. The Company
owns or leases large numbers of the trucks, trailers, railroad tank and hopper cars,
river barges, towboats, and ocean-going vessels used in this transportation system.
4. Revenue Streams- Revenue of ADM is received from its three major business
segments in food processing. Oilseed segement- 31% of Sales, Corn Segment- 11%
of Sales, Agricultural Services- 46% of Sales. The ADM’s remaining operations (8%
of sales) include food and feed ingredient businesses and financial activities which
also generate revenue for the company.
5. Key Activities- The Oilseeds Processing segment includes activities related to
the origination, merchandising, crushing, and further processing of oilseeds such as
soybeans, cottonseed, sunflower seeds, canola, rapeseed, peanuts, flaxseed, and palm
into vegetable oils and protein meals.
The Oilseeds Processing segment principally produces and markets processed oilseed
products as ingredients for the food, feed, energy, and other industrial products
industries. Crude vegetable oil is sold "as is" or is further processed by refining,
blending, bleaching, and deodorizing into salad oils. Salad oils are sold “as is” or are
further processed by hydrogenating and/or interesterifying into margarine,
shortening, and other food products. Partially refined oil is used to produce biodiesel
or is sold to other manufacturers for use in chemicals, paints, and other industrial
products. Oilseed protein meals are principally sold to third parties to be used as
ingredients in commercial livestock and poultry feeds. The Oilseeds Processing
segment also produces natural health and nutrition products and other specialty food
and feed ingredients. In North America, cottonseed flour is produced and sold
primarily to the pharmaceutical industry and cotton cellulose pulp is manufactured
and sold to the chemical, paper, and filter markets. In South America, the Oilseeds
Understanding Management, Business and Organization 7
Processing segment utilizes a network of grain elevators, port facilities and
transportation assets to buy store, clean, and transport agricultural commodities and
operates fertilizer blending facilities.
The Company’s Corn Processing segment is engaged in corn wet milling and dry
milling activities, primarily in the United States, related to its production of
ingredients used in the food and beverage industry including syrup, starch, glucose,
dextrose, and sweeteners. Dextrose is also used by the Company as a feedstock for
its bio products operations. Corn gluten feed and meal, as well as distiller’s grains, is
produced for use as animal feed ingredients. Corn germ, a by-product of the wet
milling process, is further processed as an oilseed into vegetable oil and protein meal.
The Agricultural Services segment utilizes the Company’s extensive grain elevator
and transportation network to buy, store, clean, and transport agricultural
commodities, such as oilseeds, corn, wheat, milo, oats, rice, and barley, and resells
these commodities primarily as food and feed ingredients and as raw materials for
the agricultural processing industry. Agricultural Services’ grain sourcing and
transportation network provides reliable and efficient services to the Company’s
agricultural processing operations and customers. Agricultural Services’
transportation network capabilities include ground, rail, river, and ocean freight
services.
Understanding Management, Business and Organization 8
Strategy
The Company has significant competition in the markets in which it operates based
principally on price, quality, products and alternative products, some of which are
made from different raw materials than those utilized by the Company. Given the
commodity-based nature of many of its businesses, the Company, on an ongoing
basis, focuses on managing unit costs and improving efficiency through technology
improvements, productivity enhancements, and regular evaluation of the Company’s
asset portfolio.
Since ADM is highly exposed to changes in the prices of the commodities it deals
with - on both sides, as a buyer and a seller, the risk is actually inherently somewhat
reduced. Add to that a strict risk management policy and you get a decent protection
during the recent volatile years.
Additionally, in order to meet future trends and needs, ADM acts in several ways:
1. It constantly expands its product portfolio.
2. It invests in new plants around the globe, to expand future growing and processing
capacities.
3. It constantly seeks ways to operate cheaper and more efficiently - in deploying new
techniques to grow the raw crops, to process them and to transport them.
4. It enters joint ventures with local distributors in new and emerging markets. An
example is the 16% investment in Wilmar, Asia's largest agricultural processor.
The Company’s research and development expenditures are focused on improving
processing efficiency and developing food, feed, fuel, and industrial products from
renewable agricultural crops.
Understanding Management, Business and Organization 9
Organizational Structure
There are boundary lines that define what is inside and what is outside an
organization. However, in case of ADM, they have been spinning off whole functions
and business units in order to become leaner, faster, and more focussed. Increasingly,
value creation is happening across company borders. At the same time ADM has
gone into many Mergers & Acquisitions in order to reach an efficient cost structure
and enhance their food print.
As part of its continued effort to streamline the organization and restructure work to
drive greater efficiencies and effectiveness, the company is consolidating
responsibility for smaller business operations into larger business units. Effective
immediately, management of ADM’s cocoa processing business will become part of
the company’s Oilseeds business unit; and responsibility for ADM’s wheat milling
business will become part of the company’s Agricultural Services business unit.
Previously, cocoa processing and wheat milling had been part of ADM’s reporting
segment called Others.
When it comes to internal lines of authority, then the Organization includes
Chairman, CEO & President, Corporate Officers and Board of Directors.