Teague Australia

Teague Australia is a seed and grain brokerage firm involved in domestic and export marketing, the provision of grain market information as well as agency and consulting services. Teague is based in Adelaide, South Australia and employs eight full time employees.

As the leader in the seed and grain broking business, Director, Tim Teague, believed that e-commerce could provide a means for maintaining its number one position in the market.  Whilst the trading and services functions of the business were well established, Tim believed greater attention was required in the area of customer service.  In particular, Teague wanted to emphasise a customer centric approach to doing business and sought to implement a Customer Relationship Management system.  To this end, the company set up several initiatives including online customer accounts and Short Message Service (SMS) information services.

In addition to using email for communicating with customers and suppliers, Teague set up a website providing customers with a 24 hour information channel.  The website provides data and statistics on commodity trades as well as weather and currency exchange data.  The Internet is also used to conduct research and administrative functions such as online banking and payroll.  Remote access to the company network via the Internet allows Tim to work from home.

The e-commerce initiative contributed $27,000 to gross revenue in 2002.  This was the result of online trading of commodities as well as the purchase of market reports from the company website. Cost savings amounted to $59,980 during 2002, predominantly due to the reduction in telecommunication costs and improvement in staff efficiency. 

Teague Australia intend to upgrade their current Integrated Services Digital Network (ISDN) connection to broadband Asymmetric Digital Subscriber Line (ADSL) in order to gain achieve efficiencies from web-based processes.

The Business

Teague Australia is a family company offering commodity brokerage services in grain and seeds.  The company is involved in domestic and export marketing, agency services for Australian and overseas breeders, arrangement of contract multiplications for overseas companies, general consulting and the provision of update information for customers.  The company's customer base consists of both domestic (65%) and international markets (35%).

Teague has been in operation for 14 years and is based in Adelaide, South Australia.  The company employs eight full time employees.

Getting Started

Director, Tim Teague, initiated e-commerce in 1996 with the aim of maintaining the company's leadership position in the grains and seeds trading market.   Tim identified superior customer service as a potential differentiator between Teague Australia and its peers.  To this end, it was decided a Customer Relationship Management (CRM) system would be implemented. 

PriceWaterhouseCoopers were engaged to develop an appropriate e-commerce strategy for the business.  Tim conducted research both online and in reading Information Technology (IT) journals to examine other businesses that had adopted similar strategies. 

Teague employed an external IT company to develop the company website which is now maintained in-house.  The website is marketed through trade shows and registration with search engines.  It is also promoted via business conferences and on company stationery.

Customer Relationship Management (CRM)

CRM emphasises a customer centric approach over a focus on products and services.  Internet capabilities have been used to help Teague manage customer relationships in an organised way.  In an industry where the transfer of information is crucial to business operations, Teague recognised the demand for convenient and responsive communications.  The ability to provide this service will foster customer satisfaction and ultimately instil customer loyalty. 

With over half of its customers located in rural areas, Teague required a system that would allow customers to access information conveniently and cost-effectively.  As face-to-face meetings with customers are rare, the increasing uptake of email has provided staff with the means of providing better customer service through prompt response to queries and greater access to required information.  

Traditional methods of distribution such as fax and mail have been upgraded to email and SMS.  An in-house analyst sends future prices and currency details to customers by SMS every morning.  In addition, the website has been designed to provide a complete resource centre in which to lodge enquiries/offers, access statistics, weather forecasts and market reports.

Current E-commerce Strategy

One of the first processes to be brought online at Teague was communications.  Email is now the predominant method of corresponding with customers and sending order confirmations to suppliers.  In particular, rural and international customers benefit from the convenience of electronic transmission without the restrictions of geography and different time-zones.  Currently, over 90% of suppliers use emails to interact with Teague. 

The company website is the main vehicle from which customers are provided with information and market intelligence.  Customers are able to obtain technical details and visual depictions of the commodities being traded and market reports on price trends and statistics.  Furthermore, enquiries and offers for the trading of seeds and grains can be lodged online to the trading team.  The website is updated once a week and provides links to industry sources such as farmshed.com.au and seedquest.com.au.

Company staff now conduct online research to obtain weather and rainfall forecasts, global industry developments such as the status of lentil crops in Canada or the pea harvest in France.  This enables staff to keep abreast of changes in trading conditions.  Furthermore, the Internet provides staff with a means of monitoring competitors, their services and prices.  Subscriptions to online financial data allows the in-house analyst to monitor changes in future prices and exchange rates.  This information is then distributed every morning to customers via SMS. 

Teague uses a free online translating service which enables the company to receive and send non-English correspondence to overseas customers.  Electronic communication is particularly useful in transmitting digital photos of stock as they may have different names in overseas markets.  This provides clarity of trading terms and minimises the incidence of misunderstandings.

Several operational processes have been automated, including the administration of banking and payroll. Using the Internet, Tim is able to remotely access company files and databases from home, allowing greater flexibility.

The company employs a number of security measures to protect its e-commerce system.  Much of the technical and trade data available on the website can only be accessed by selected customers using a login and password.  Firewall technology and antivirus software are installed to prevent system malfunction and downtime as a result of infection or unauthorised intrusion.  Business data is backed up daily and stored by tape off-site.

Revenue and Costs

* Note: Capital Expenditure is amortised over a four-year period

Financial Analysis

As a result of online trading and purchasing of market reports, Teague generated an additional $27,000 in gross revenue in 2002.  Of this figure, domestic sales represented $20,000 while international sales represented $7,000.

A total cost saving of $59,980 was achieved during the year.  The majority of cost savings were related to the company's ability to service customers in international markets.  The transmission of digital photos of stock have minimised the need to send samples of grains and seeds overseas, reducing postage and freight costs by $3,900.  Online correspondence also reduces the amount of overseas travelling expenses by $10,000.  Staff time spent in general administrative tasks such as sending fax confirmations, obtaining statistics and research have been reduced by $20,800.

The automation of some operating processes has produced significant cost savings in staff time. The use of email and SMS to distribute information to customers has reduced time spent administering correspondence ($7,800).  Other staff time saved is due to the use of online banking and payroll ($3,120), online research of currency and statistics ($7,800) and electronic documentation and storage ($5,000).

The initial establishment cost of e-commerce totalled $73,880.  A considerable proportion of this figure was allocated to time spent by Tim and colleagues in research ($25,000). The cost of hiring an external IT company for web development was $13,000.  A further $10,000 was incurred in consulting fees for the design of the e-commerce strategy. 

New equipment was installed to enable e-commerce.  Teague purchased a Structured Query Language (SQL) database and antivirus software for $12,000 and $300 respectively.  Hardware installation included a new mail server and router ($10,000), a web server ($2,000) and backup software program ($100).

Ongoing costs of e-commerce totalled $36,570 in 2002.  Costs associated with maintaining the website including Internet Service Provider (ISP) fees at $2,400, web hosting at $3,200 and staff time spent in updating the website at $5,000.  Telephony costs incurred $4,200 while staff time spent transmitting information to customers by SMS totalled $3,000 per annum.  In addition, $18,470 has been allocated for the amortisation of capital expenditure over a four-year period.

Non-Financial Benefits

In line with the company's initial CRM goals, the e-commerce initiative undertaken by Teague has been successful in optimising the dissemination of information to customers.  Manual and ineffective methods of correspondence such as fax and mail have been upgraded such that customers now receive daily SMS alerts of futures and currency data.  The use of email by staff to send digital photos of stock and general correspondence has provided customers and suppliers with a cost-effective and reliable medium through which business relationships can be furthered.

Improvements in business processes through online technologies have enhanced the profile of the business as innovative and dynamic.

Challenges

One of the main drawbacks faced by Teague in the implementation of e-commerce was the time and effort required. Tim spent a considerable amount of time conducting research at the preliminary stage of the initiative. The cost of Tim's time represented over half of the total development cost of the project.

Delays were also experienced due to miscommunication between Teague and the IT company in terms of the development timeframe and objectives of the system.  The effectiveness of e-marketing efforts to the regional market were diminished by the relatively high cost of Internet access.  As a result, many regional customers did not check their email and were discouraged from fully utilising the company website.   

Future

In the near feature, Teague plans to further develop the SQL database to facilitate better communications between interstate offices. The link will also enable a virtual trading floor where bids and offers can be entered from each office.

In response to the large amounts of communication flowing between the company and domestic and overseas customers, Teague intends to strengthen connectivity by upgrading from an ISDN connection to broadband ADSL.  This technology will provide a faster transmission rate and improve the reliability of online transactions.