Grain Handling Success: Managing Cash Flow, Inventory, Weighbridge, Quality, and Safety

Grain handling and milling companies can face a variety of challenges that can threaten the going concern of the business. These include cash flow management, inventory management, weighbridge controls, quality management, and occupational safety. In this post, we will discuss these critical factors in more detail and provide tips on how to avoid common pitfalls in these areas.

Cash Flow Management

Cash flow management is crucial for any business, and grain handling businesses are no exception. Many people underestimate the importance of cash flow. A business can be profitable, yet close down if cash flow is not managed properly.

Some of the things that affect cash flow include credit terms offered to customers versus those allowed by suppliers, inventory cycles, cash and inventory losses, among others. It is therefore vital to have measures in place to manage these well to ensure a solid cash flow position. Some of the things you need to do include: having shorter credit terms with your customers and negotiating longer ones with your suppliers, knowing your customers well and avoiding bad debts, and having controls in place to mitigate risks associated with the points below.

Inventory Management in Grain Handling Businesses

Inventory management is important to any business. The value of grain stocks is quite significant and could make up between 30% to 60% of the revenue. Therefore, stock losses often have a huge impact on grain handling businesses and could threaten the going concern. Moreover, inventory ties down a significant sum of money in working capital.

That said, it is expected that businesses will incur allowable stock losses, and these should be priced in or deducted from suppliers. "Allowable" stock losses include moisture loss and rubbish. On the other hand, without proper controls, businesses could incur "unallowable" stock losses. An example of these is stock losses through fraud and theft. For grain handling and processing firms, this often occurs in two areas: the weighbridge, and the testing laboratory.

It is imperative that a system is put in place to ensure that stocks are accurate and physical and book stocks tally. Stock counts need to be done often, at least once a month if not weekly.

Weighbridge Controls

Weighbridge controls are essential for ensuring accurate inventory and preventing fraud and theft. Many things could go wrong with weighing systems, and inventory cannot be accurate if the weighbridge controls are not adequate.

With crafty employees, your records may show that you have bought a certain tonnage of grains in your facility while in reality, you have less physically. Unscrupulous suppliers could collude with your weighbridge staff and inflate the weights you receive. Also, your customers could collude with your staff to underestimate the weight of the product sold. Many tricks are used to do just that. Scales also lose calibration and could give you the wrong weights.

These issues underscore the importance of having good weighbridge controls. Some of these include: installing cameras, truck position sensors, using a tested and secure weighing software, securing your weighbridge indicator, weighbridge cross-checks, and calibration, among others.

Quality Management

Quality management in grain handling and processing businesses serves several important functions. The critical ones include ensuring food safety and determining the allowable losses that should be adjusted for. Grain handling businesses must factor in moisture loss and rubbish deductions. In the absence of this, the business may not be profitable.

It goes without saying that if your quality assurance staff are compromised and give false results, you could take in poor quality grain or fail to account for the allowable losses adequately. Therefore, it is important to have good sampling and testing procedures, and a good blind sampling programme to act as a check-and-balance. Training of quality assurance staff is a must, and so is ensuring their job satisfaction. Moreover, a good investment in laboratory equipment and calibration of these is highly advisable.

Occupational Safety in Grain Handling Businesses

Occupational safety is also a critical factor that cannot be overlooked. The safety of your facility and that of the employees is literally a matter of life and death to the going concern of your business. Grain handling businesses have very unique hazards and risks. These include dust explosions, engulfment risks, confined space risks, and more.

For instance, the loss of the facility to fire and employee fatalities could see you close down your business. It is important to have safety measures in place, such as fire alarms and extinguishers, emergency evacuation plans, and regular safety drills. Additionally, it is also important to ensure that all employees are properly trained on safety procedures and that they understand the importance of following them.

Conclusion

Managing cash flow, inventory, weighbridge controls, quality, and occupational safety are critical factors that can help ensure the success and longevity of your grain handling and processing business. By being aware of the common pitfalls in these areas and taking steps to mitigate them, you can help reduce the risk of closing down your business.