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Managing By Numbers

Full, consistent use of facts and figures in the beef cattle industry is still in its infancy. But, competition and a need for greater efficiency are driving a desire for data collection and interpretation as a way of improving management and profitability.Currently, cattle feeders are leading the production segments in managing by the numbers. And, more and more members of this segment are utilizing

Full, consistent use of facts and figures in the beef cattle industry is still in its infancy. But, competition and a need for greater efficiency are driving a desire for data collection and interpretation as a way of improving management and profitability.

Currently, cattle feeders are leading the production segments in managing by the numbers. And, more and more members of this segment are utilizing the services of information clearinghouses like Professional Cattle Consultants (PCC).

A data management company started in 1973, the Weatherford, OK-based firm currently gathers and interprets information on 600,000 head of feedlot closeouts and placements each month. That information allows feedyard owners and managers to measure cattle and operational performance in a number of areas. But, the bottom line is that feedlot management can use the information to measure their numbers against a regional or national average of their peers.

As of this writing, PCC is the only organization that provides comprehensive performance information on a national basis. Other organizations, including Cattle-Fax, perform similar functions, but analyze marketing data.

PCC, says co-owner Bobbie Tippens, works with feedyards across North America to confidentially gather daily performance information. The staff then compiles and calculates it into a standard and usable form, reporting to the yards with performance figures that serve as benchmarks for monthly measurement.

Measurements The typical measurements on cattle performance that PCC gathers include: dry matter feed conversion, average daily gain, cost of gain, dry matter consumption, medical costs, mortality rates, even price analysis. The company also looks at inventory analysis with a monthly snapshot of how many cattle were shipped and placed and the resulting cattle on feed each month.

PCC president, Joe Young, says early publishing ensures faster delivery than the USDA Cattle on Feed Report, so managers can identify trends and make plans accordingly. Reports often are customized to a specific yard, general comparative categories are shown in Table 1.

"While inventory analysis is an important part of service, the biggest part of what we do is benchmarking," Young says. "Given the kind of margins the industry has worked on the past few years, improving efficiency of one percent can really impact the bottom line."

Feedyards are using these measurements as a tool to make sure they're competitive, Young adds. They're examining commodity purchases that ultimately affect their ration prices. Feeders are also able to measure their competitiveness in charging for services, he says.

"You can't measure anything if you can't quantify it," Young says. "One of the keys to all of this is that we're seeing more detailed recordkeeping in feedyards, especially the last 10 years."

The other key to any analysis is an apples-to-apples comparison, he adds. There must be standardization to the way data is analyzed.

"Some might take that for granted, but the fact is we spend an inordinate amount of time verifying information and making sure it is returned in a standard format," Young says.

Cattle performance and facets of yard performance aren't the only elements examined by PCC. It also produces a voluntary salary and feed markup survey.

"In this survey we look at how the feedyard is compensated for its services, measuring feed markup, medical markups and a few others," Young says.

A second part of the survey compares salaries. Compensation rates for 11 feedyard positions are examined, as are benefits, workmen's compensation rates and health insurance costs. This information is compiled in an annual report, divided by feedyard size and location. A national comparison is also provided.

Another survey analyzes costs. Most subscribers, Young says, have a solid understanding of how competitive they are on the revenue side. But, one that hasn't been measured nationally until recently is the cost of operations. PCC's Annual Feedyard Cost Survey measures various operational costs on a head-per-day basis.

"The range in cost structures for feedyards is particularly wide. Feedyards are using the information from this survey to manage costs they may not have been able to fully examine before now," Young says.

Where's It Headed? PCC's expertise in data management enables it to work in tandem with other livestock-related businesses to develop the services and products that will enable producers to identify characteristics of individual animals for profitability.

Cost-effective technology available today is enabling more producers to obtain carcass data from packers, thus helping them identify traits among sires and dams beneficial to overall herd goals. PCC has identified methods that will make individual animal management easier and more profitable. More importantly, Tippens says, the end result will be a greater ability by producers to meet consumer demand.

Work Together The demand for such information and the need to integrate the cattle industry through information is driving PCC and other companies to work together. For example, PCC and Allflex USA are cooperating to develop a program where individual animal management becomes the norm.

"We've made a decision to work with others for the benefit of our mutual customers," Young says. "When we enter into agreements or alliances with other companies, we ask ourselves, 'Is it good for customers and producers?' "

"Allflex and PCC are complementing companies," Tippens adds. "We're working on a couple of projects that would ultimately source-verify cattle from birth through the carcass and packer and back to the producer."

Dave Warren, president of Allflex, says people are realizing the industry is coming together via sharing of data and information. Since 1993, Allflex has been working on technologies that allow for individual animal management from the producer to the feeder to the packer.

"The key is getting carcass data and performance data back to the producer," Warren says. "When that happens, you suddenly see people have data upon which they can base sound decisions.

"Whether it's benchmarking or other data management, integrity of information is the most critical element of data," Warren says. "You may be a relatively small producer and have spent many years developing a bloodline. What we've found is that in the same group of cattle there will be a $300 difference in the value of carcasses. If you're going to use that data to make breeding decisions, the integrity of it has to be as strong as a veterinarian's advice."

The Future In the future, Young sees information service increasingly improving. PCC, for instance, is doing "instant transmission" with customers who can accommodate it, Young says.

"We've simplified the way clients provide information. I see a lot of capability in the future to automate and update the customers each month so they can run more analysis at their location," Young adds.