Tips of the Month (2009-2010)

 

 

 

December 2010

Feeding management - The 3 key drivers of success

Working in Idaho last week doing feeding audits and feeder schools inspired me to write this month’s “Tip of the month”.

From my experience working with many dairy feeders, I believe there are 3 key drivers of success when it comes to feeding cows. I called them the PAC drivers of success:


• Precision
• Attention to details
• Consistency

If feeders can focus and excel in these areas a successful feeding program is almost guaranteed. Here are the details:

Precision – This is particularly important due to high feed cost and importance of feeding the right amount of each ingredient every time. Like I always tell feeders during the training schools, precision while feeding is crucial to the profitability of the dairy and to herd health.

It is very important for feeders to be very precise when loading ingredients in the mixer, mixing the feed the right amount of time, and dropping the right amount of feed in each pen.

What should you evaluate when looking at feeding software reports?

1. Loading error by feeder by ingredient – Define goals and expectations. Shoot to be under 1%.

2. Feeder work cost error – This report will show whether the feeder’s precision loading and handling ingredients is costing the dairy; or if it’s right on target based on forecasted feeding cost.

3. Mix time by date and batch of feed prepared – It’s all about precision feeding and mixing each batch of feed the right amount of time. While preparing a batch of feed the feeder must be focused on the loading and mixing process exclusively and should not be distracted by getting more hay, or cleaning feed bunks, etc while mixing.

4. Feeder drop error – Is your feeder feeding the right amount of feed to each pen? Target should be under 0.5% error per pen. If one pen consistently gets under fed by 3% for example, because that feeder tends to drop more feed in the first pen, then this can affect milk production by about 3 pounds a day in that pen!

For more information on evaluating feeder’s performance read my previous article at www.apndairy.com/Media_PubArticles.html.

Attention to details – Feeders by trait need to be detailed oriented and should focus on keeping a clean and organized feed, commodity, and forage storage area. Feed losses can be substantial in dairies where feeders don’t focus on keeping storage facilities clean and organized. Great, detailed oriented feeders always identify TMR variations between days, or within pens before herd health and performance is affected. They are always alert to any cow feeding behavior change or manure variability, and always maintain tractors, mixers, and other equipment in excellent condition.

Some feeders are better than others when it comes to attention to details, but everyone can be coached and trained to improve in this area. Also, having good processes in place can reduce the lack of attention to details from some feeders.

Consistency – This is the absolute key driver of success and profitability of any dairy operation. This relate to every task and process within the feeding program:

1. Start feeding always at the same time – Pen feeding order should always be the same and each pen must be fed always at the same time. Target a variation of +-5 minutes.

2. Mixing times should always be the same – Check mixing time per load on the reports, and ensure that they are always almost the same between loads, and between days.

3. Feed delivered at the feeding bunk should be the same as what’s on the nutritionist’s feeding program. Like I tell feeders, the feed delivered on Monday must look the same as the one delivered on Tuesday or Wednesday.

4. Push up feed always at the same time and the same number of times every day.

In summary, it is very important to create awareness among feeders of the importance of their role at the dairy. Sharing with them feeding costs and herd health information can be great motivators.

Developing reward programs focusing on consistency, precision, and accuracy can be beneficial in dairies that are already achieving very good results and want to take their feeding program to the next level.

For more information on feeding audits and feeder’s training programs please contact me @ 215-738-9130 or via email @ felix@apndairy.com.



November 2010

Take advantage of good milk prices. They won't last long!

There are only a few more weeks left before the end of the year and milk prices remain strong. Take advantage of this now because they will most likely drop during the first quarter of 2011. This is the time to squeeze as much profits out of your cows as possible (without jeopardizing herd health).

Don’t look at feed cost alone when evaluating opportunities to improve your feeding program. Instead, focus on profitability by monitoring income over feed cost (IOFC) on a monthly base. IOFC is measured in dollars $ per cow per day and determines how much money is left to pay all other operating costs plus profit. This is the best parameter to evaluate the profitability of a feeding program and is calculated using the following equation:

IOFC ($/cow/day)= Milk Price * (Milk Production / 100) – Feed Cost

Even though reducing feed cost is essential for the success of any dairy operation, focusing on maximizing IOFC is a better approach for short term decisions.

Here are ten of the most important actions that you can take to improve IOFC at your dairy:

1-Make more milk – This is the key driver of profitability under the current market conditions. Work with your nutritionist and evaluate opportunities to improve your feeding program. There may be ingredients, additives, or supplements that could improve herd performance and you are not currently using. However, don’t implement any technology or products that will not give you an immediate return on your investment.

2-Improve components – Take advantage of the current milk fat and protein prices by feeding diets that will promote higher milk protein and butter fat.

3-Reduce Somatic cell counts – By doing so, your milk price will increase due to a better milk bonus, which will consequently increase IOFC . Not only that, but by reducing SCC, milk production per cow will also increase.

4-Promote higher dry matter intakes – DMI is a key driver of milk production. Any practice that can improve DMI should be evaluated. Some of the factors that will affect intakes are cow comfort (including feed bunk space available per cow), water availability, feed quality, number of feedings per day, number of times feed is pushed up in the bunk, etc.

5-Improve feed efficiency- There are many factors that will affect feed efficiency. Milk production per cow is the main one. Also, by getting cows pregnant in time, feed efficiency can be significantly improved due to herd’s lower DIM. This is because cows are more efficient converting feed to milk in early lactation, so cows with long lactations due to breeding problems can reduce feed efficiency of the herd. Also, feeding good quality forages and using feed additives, like yeast culture, will also improve feed efficiency.

6-Reduce shrink losses – By better controlling feed losses feed cost can be reduced and therefore IOFC improved. Although difficult to measure, shrink losses are dollars spent that will not generate any profits. Dairy managers should evaluate forage storage and feed-out practices and implement new technologies and practices that will reduce shrink losses in forages. Also, focusing on proper grain storage and handling techniques can result in reductions in shrink losses of considerable amount. For more information on reducing feed losses read my article on Hoards Dairyman called “Cutting feed cost begins at home”.

7-Reduce variability during feeding – Day to day feeding consistency is a key driver of profitability. Many factors will impact feeding consistency like feeder’s performance, the use of proper equipment, and the use of feeding management software. Also, new technology like the NIR feed analyzer that can be installed in the payloader bucket can help reduce variability in the diets between pens and batches of feed by adjusting amounts of forages and other ingredients fed based on the dry matters and nutrient contents.

8-Improve feed bunk management- Dairies with good feeding and feed bunk management can target lower feed refusals and therefore reduce feed cost. Also, consistency and uniformity in the amount and quality of the feed dropped in the bunk will have an impact on performance. See my article on “Cutting feed cost begins at home” for more information.

9-Monitor feeders accuracy and consistency- It is crucial to define key performance indicators like loading and feeding accuracy as well as feeding consistency and uniformity that will help your feeders stay in track. Furthermore, monitor performance and communicate with your employees by giving good, productive feedback about their feeding performance at least weekly. This can be beneficial to reduce feed cost and improve profitability. For more information on this topic read my article published in NE Dairy Business magazine called “Work with feeders to reduce feed cost, improve efficiency”.

10-Spend time and money training your feeders- Your feeders control more than 50% of the operating costs of your dairy. Work with your nutritionist and outside consultants that specialize in feeding management and can speak the native language of your employees. (See economic benefits of training feeders). Well trained, and skilled feeders can significantly improve your profits.

Finally, act now before milk prices drop. Evaluate if increasing milk production can have a positive impact in your IOFC and bottom line profitability. Furthemore, work with your nutritionist and external consultants to benchmark and set goals on what your dairy’s IOFC should look like for next year based on future milk and grain prices.

 

October 2010

Improve profits by focusing on efficiency

Another rough year is awaiting us? At least that’s what first quarter indicators would suggest for next year. Lower milk prices combined with higher grain and commodity prices will make it challenging for dairy producers to make profits during the first half of 2011.

Certainly, risk management plans including milk and commodity marketing strategies are tools that can help producers better control their profits. Also, improving efficiencies at the dairy can help reduce costs and make more profits.

Here are my Top 5 areas that need close attention when it comes to improving efficiencies:

1. Maximize parlor performance and efficiency – How many milkers and cow pushers work in each shift at your dairy? What’s the operating cost of your parlor? Are there opportunities of reducing these costs? Can milk quality be improved? These are all factors that will affect parlor efficiency and overall profitability of the dairy.

Some of the parameters / indicators that should be monitored periodically are:

1. Pounds of milk / stall per hour

2. Labor cost / cwt

3. Cows / Hour or parlor throughout

4. SCC

For more information on improving parlor performance and efficiency read previous articles at www.apndairy.com/Media_PubArticles.html.

2. Maximize IOFC (Income over feed cost) – Feed represents more than 50% of the variable cost in any dairy operation. This is why IOFC is one of the most important parameters to monitor at least on a monthly basis.

What will help improve IOFC? Here are a few important factors:

1. Higher milk production

2. Lower feed cost

3. Better feed efficiency

4. Feeders accuracy and consistency

5. Feed bunk management

6. Better cow comfort

I will review each one of these in a future “Tip of the month”.

3. Improve the transition cow program – The pre-fresh and fresh cow stage are crucial for the success of any dairy operation. Cutting costs and corners in these two areas can be very detrimental to the profitability of any dairy. Important indicators of a good transition program are:

1. Cow comfort

2. DMI and feed quality

3. Good quality, properly trained, and with good “cow sense” labor

4. Keeping good records and monitoring systems

4. Get cows pregnant, fast – Measure the success of your breeding program by calculating pregnancy rates. This will be most affected by:

1. Good feeding program

2. Good heat detection

3. Good breeding program

4. Reducing calving and fresh cow problems

5. Maximize labor efficiency – Employees are the most important resource of any dairy operation. Labor efficiency can be measured in different ways. Number of cows per employee, labor cost per cwt, and pounds of milk sold per employee are the most typical. What can affect labor efficiency?

1. Wages

2. Labor productivity

3. Proper labor training

4. Keeping employees motivated

5. Monitoring labor performance

6. Giving feedback to employees

There are always opportunities of improving efficiency and profitability. Focus on these 5 areas by developing key performance indicators and setting goals for each area. Industry benchmarks can be used but it is always recommended to develop your own goals and benchmarks for your own dairy. Finally, work with your nutritionist, veterinarian, and consultants to develop these goals and expectations.

I will discuss each one of these five points in future tips of the month.

 

September

How to lead your team during unpredictable times

I hear many dairy owners and managers preach about the importance of “consistency” when it comes to managing a dairy. In fact I also preach about this when I talk to front line workers and employees working at any dairy operation.

But yet, some of those same managers and owners that preach about the importance of consistency, are the first to become inconsistent with their decisions and make unpredictable changes during unstable economic times. They typically ask their nutritionist to make changes in the diets without evaluating the effect that these changes will have on IOFC, or they may layoff employees without evaluating how these layoffs will affect herd health, labor morale and productivity, and bottom line profitability of the dairy.

Instead, what great dairy managers do is anchor themselves in ideas, plans, and goals that are solid, even during uncertain times like the ones we are living today. Great managers know and understand that the dairy industry has become very unpredictable but still they lead in a consistent manner and therefore, they get more predictable results.

How do they do it?

Great leaders follow these 4 things that lower performance managers don’t:

1. They define and focus on their top goals – There are 2 main issues that I typically find when working with some dairy managers. Either a-they don’t have any defined goals, and if they do they are not communicating them properly to the rest of the employees, or b-When they have goals that often times get distracted from their goals.

a. No defined goals: Too many dairies have no goals to speak of. In some instances the manager or owner may have a set of goals defined but when I ask the employees about those goals they look at me as if I were an alien. It is very important for any organization to have 1, 2 or 3 clear, well-defined measurable goals that can be shared with employees. Examples of well-defined and measurable goals can be found on my website @ www.apndairy.com. Of course, these goals will vary from dairy to dairy and it’s always recommended to have your key employees, nutritionist, veterinarian, and consultants involved when defining those goals.
b. Managers get distracted from the goals: Even if the goals are well defined, often times pressures of the day-to-day activities take over and managers and employees forget about the goals. It’s the leader/manager’s role to regularly emphasize the goals, rethink people’s jobs to help them achieve those goals, and minimize the distractions at work in order to better focus on the goals that need to be achieved.
In summary, the manager’s job starts with identifying the goal(s), communicating those goals, explaining them, and making sure that everyone understands them. There should only be 1, 2, or 3 well-defined goals and you may have different goals for different units within your dairy. For example: One or two main goals for calf feeders, one or two main goals for feeders, one or two main goals for milkers, etc.

2. Make sure everyone know what role they play and what they need to do to achieve those goals – Many times dairy managers set up goals but, they don’t define and communicate what needs to be done to achieve those goals. Good leaders will give employees all the necessary tools to succeed; including SOP’s, job descriptions, and any other tools necessary to achieve those goals. Also, great managers will involve team members in defining how those goals will be reached.

3. Keep score – It is essential to track measures that will lead to the achievement of the goals. There are two types of measures to track: lag measures and lead measures. Lag measures will tell us what happened and are the type of measures that managers usually look at on a monthly bases to evaluate the dairy overall. Instead, lead measures are predictive and can be influenced by people’s daily performance. Managers and employees can look at these measures daily, weekly, and/or monthly. Good managers focus on a few lead measures that the team can control and helps employees stay focused on them by monitoring those lead measures consistently. An example of these would be parlor throughput, milk flow, and milk per stall per hour. Combined, these are lead measures that will help milkers in each shift stay focused on their task and achieve their parlor performance and efficiency goals expected by the manager.

4. Set up a regular cycle of follow-through – Conduct regular meetings where both manager and employees are held accountable for achieving results. This is the time to ask and discuss about the goals and to refresh what needs to be done in order to achieve those goals. If these meetings are not done and goals are not discussed on a consistent basis then employees will quickly forget about them and won’t care.

The meetings should be conducted weekly and sometimes daily if necessary. Develop a scoreboard where team members can see where they are at in reference to their goals. Have employees discuss what changes they may have done or issues that they might have in reference to achieving those goals and plan what to do next.

Clearly, leading teams during unpredictable times is a difficult task in hand. Following these 4 steps will help you improve your leadership skills. Remember that it is not enough to announce your goals and expect people to be on board. To become a great leader you must engage your team to figure out the necessary measure to achieve those goals and then relentlessly monitor those measures.



August

Orienting the new employee – A weak spot in many dairies

What does your training program for new employees look like? Do you have one? If you do, does it consist of having one of your best milkers spending time with the new employee? Or is it the milker going back to Mexico in charge of training the new employee, who happens to be his/her brother or uncle? These people may have been your best milkers, but once they’ve given their notice, they won’t care much about your business anymore. This means that most likely they will do an incomplete and casual training of your new employee, and they may pass all their bad habits onto them.

Unfortunately, I see many employees fail and leave a dairy too soon because they never received a proper orientation and training. This is especially true with people that are working at a dairy for the first time and have little or no experience working with cattle and equipment.

This is why it is so important to spend some time planning out the first few weeks in as much detail as possible before the new employee starts. Independent of how formal or informal the orientation program is there are a few things that must be covered during the training period to ensure the success of the program.

Here are a few points that I consider very important to include in any orientation/training program for new employees at a dairy operation:

1. Designate a trainer / buddy – This can be a supervisor or employee who’s been doing the job for a long time and will be motivated by the idea of training a new employee. You may be tempted to select your best milker for this job, but many times this person may not be the best communicator or might not enjoy sharing information and knowledge with others. Training the trainer is a crucial step towards the success of any orientation program.
2. The first day at work – A tour of the dairy and house (when housing is offered), introduction to co-workers, and information about break areas, time cards, uniforms, and other items are usually covered during the first day at work. No work should be done this day, instead the manager along with trainer and supervisor should spend time with the new employee to share information about the dairy, history, mission, and vision of the company, house and work rules, expectations at work, review employee handbook, and fill out any necessary forms and information required by the dairy.
3. Second day at work – During the first days of work the shadowing program is recommended. This consists of having the new employee follow the assigned trainer for a few days in order to get the new employee accustomed to the work environment and job that he/she will perform. This may take just one day for people with experience or maybe 2 to 3 days for people who never did the job before. Regardless of how much experience the new employee has, I always recommend spending at least one full day shadowing the trainer. This is a good opportunity for the trainer/buddy to show the new employee the ropes.
4. During the first week – The manager and supervisor should spend time explaining performance goals and expectations for the first month of work. Explain in detail how the new employee will be evaluated and make sure that the new employee has an opportunity to ask all the questions he/she may have.
5. First month training
– Both classroom style and on the-job training are necessary and beneficial for almost every job at the dairy. Detailed explanation of the why’s, how’s, what’s, when’s, and who’s of the job are a must in order to increase the chances of success of any new employee. This is the time to discuss and describe in detail cow handling policies of your dairy, as well as standard operating procedures. For example, using videos of how the milking routine must be performed at your dairy is of great benefit. As part of the evaluation, having an outside trainer that can speak the language of the new employee is always recommended. Furthermore, the trainer should perform evaluations and videotape new employees to explain areas that the trainee needs to improve or correct and the areas where he/she is performing very well.

It is imperative that once the new employee takes over the job, your supervisor or trainer continues auditing his/her work until you and your supervisor believe the work reaches your standard expectations. During this time, it is also important to continually provide feedback to the trainee. Feedback should include both casual comments about their performance and regular feedback meetings.

Remember that the first weeks on the job can set the tone for an employees experience at your dairy. Usually, new employees will be more receptive and eager to learn during these first weeks, so make sure that you and your supervisors do their best to make these first weeks a great experience for new employees.



July

Improve profitability by monitoring feeders performance

Are the feeders you work with doing a good job? How accurate are they when loading those expensive mineral blends or supplements into the mixer? How is their bunk delivery accuracy? These and others are some of the questions I ask herdsmen and managers when discussing feeding programs. Remember that feeders play a key role in the profitability of the dairy.

These are my top three things I always suggest monitoring on a daily bases in order to keep track of feeder’s performance:

Loading accuracy – Knowing how accurately your feeders are loading each ingredient into the mixer is very important for two reasons. First, loading errors can compromise cow health and will affect milk production. Second, improving loading accuracy will lead to reduced feed cost for not over feeding expensive ingredients. Remember that just an extra shake of the loader bucket can cost thousands of dollars more to the dairy. According to data from TMR Tracker, a feed management software, the ingredients that are usually more variable during loading are dry hay, soybean meal, supplements, and haylage. Use a feeding management software to monitor each feeder’s loading accuracy daily, and evaluate which are the ingredients at your dairy that tend to be more inaccurately loaded. Establish a bonus program once the feeders achieve an expected standard performance to help improve this (go to my website at www.apndairy.com for more information on incentive programs for feeders).

Feed delivery accuracy – Are the feeders at your dairy delivering the right amount of feed to each pen according to cow numbers and intakes? Many times one batch of feed is split into two pens delivering half of the feed in one pen and half in the other. If one pen consistently gets under fed by 3% for example, because that feeder tends to drop more feed in the first pen, then this can affect milk production. How bad would it be? If that pen is averaging 90 pounds of milk that means that cows in that pen should be eating about 54 pounds of dry matter a day, which would be approximately 108 pounds as fed if there is 50% dry matter in the TMR. Feeding 3% less feed could reduce milk production by about 3 pounds a day!

On the other hand, the pen that was overfed will have more refusals which will probably end up being fed to heifers or low producing cows. Therefore, the cost of feeding heifers or low producing cows will be higher than what it should.

Feed refusals – In order to monitor this it is important to weight refusals. Typically I hear all kinds of excuses for not weighing refusals, the most common one being not having enough time. However, this will help better assess how well feeders are reading feed bunks and how consistent their work is. Why is this important? It’s all about controlling feed cost. If your current feed refusals are 5% and your feed cost is of $5.50 per cow a day, then your feed losses or at best feed that will be of lower value, if fed to heifers or low producing cows, will be of almost $100,000 per year (for every 1,000 milking cows). In contrast, when running a more slick bunk management, by keeping feed refusals at 2 to 3%, feed losses or what is then fed to other group of animals would represent less than $40,000.

Furthermore, by monitoring feed refusals you and the nutritionist can better measure dry matter intake, feed efficiency, and inventory control and shrink losses. All these will be useful to more accurately calculate the bottom line profitability of the dairy (by calculating income over feed cost (IOFC)).

These should be the three main key performance indicators (KPI) used to evaluate feeders performance at the dairy. However, there are a few steps that any dairy manager or herdsmen should take before implementing these KPI. And those are:

1. Establish feeders SOP (standard operating procedures)
2. Develop a training program for feeders
3. Give good and periodic feedback

Finally, work with your nutritionist or outside consultant to establish the parameters and expectations for you monitoring system as well as for developing a training program for your feeders. If necessary, bring an outside specialist that can speak the same language as your feeders to ensure everyone is properly trained and understand the importance of their role in the dairy.

For more information on feeder’s training programs, developing SOP’s, and improving communication with your feeders don’t hesitate to contact me.

 

June

Incentive programs work

“I don’t believe in giving a bonus or incentive pay to my employees, I tried it once and it didn’t work”. “They are getting paid to milk cows, why should I pay more for them to try harder?”. These are comments I hear from some dairy producers when I suggest implementing incentive programs for employees.

The reality is that when designed and executed properly, and done at the right time, bonus programs DO work. Incentives will increase performance and drive productivity improving efficiency and the bottom line profitability.

Here is my Top 10 list of tips that will help you get the most out of any incentive plan:

1. DON’T implement any bonus program until performance is at your standard expectations: I like using bonus programs to achieve excellence not mediocrity. Many times I see dairy producers implementing bonuses to get people to come to work on time, or to get milkers to do a consistent milking routine. Don’t use incentives to correct problems or poor performance. Instead, use them to achieve goals and improve productivity, efficiency, and profitability.
2. Keep it simple! Bonus structures must be simple and easy to understand by your workers.
3. Use few performance parameters: Develop the bonus program based on 1 or 2 parameters. Three at the most! Example: When working with milkers focus only on SCC, parlor throughput, and milk flow in the first minute.
4. Keep track of performance daily: You should post the performance numbers daily for your employees to see. The payout can be weekly or monthly, but feedback should be available daily.
5. Give them all the tools and support they need: Don’t set up goals and expectations that will be impossible to achieve, be realistic. Do they have all the tools that they need to achieve the goals? Employees can get frustrated if the bonus is impossible to achieve because the milking units are not working properly, or the mixer is too old and doesn’t have the proper maintenance service that it should have.
6. The bonus plan should be flexible: As goals get accomplished you may have to increase your expectations. Also, some performance parameters may change depending on the time of the year.
7. Have conditions to be eligible for the bonus: Many times, workers will break rules or do almost anything to get the incentive pay. Set up some rules and conditions that will prevent this. For example: When implementing a bonus program for calf care workers based on number of calves weaned, establish a baseline or budget for use of feed and medicine. Better yet, develop feeding and treatment SOP’s to ensure that things are done properly and at the right time.
8. Workers should be properly trained: Before implementing any bonus structure employees must understand the importance of their job, the impact of their job in achieving the goals, and why, how, when, and what they are suppose to do in order to achieve excellent performance and productivity.
9. Communicate and explain the bonus structure: Before implementing the bonus plan, organize a meeting with employees and explain the bonus structure. Explain why you want to implement this bonus and ask for feedback and opinions about it. Better yet, make sure you review the plan with your key employees or supervisors before meeting with the rest of the team. Get their feedback and ideas of what type of incentive may work better for your workers.
10. Separate incentive pay from regular pay: I always suggest issuing separate checks or paying the bonus in cash and giving it out on a different day than their paycheck. Also, pay incentives on time!

Remember, when done right bonus programs can be a very effective way of rewarding excellence to individual employees or teams. Finally, share the incentive program with your veterinarian, nutritionist, and/or consultant and get them involved in the program.  

 

May

Communication skills towards success

Strong communication skills are crucial for successful team leadership. Good communication strengthens relationships, improves performance, and motivates employees.

Here are a few tips to improve communication:

  1. Communicate purpose and meaning: Have a common goal and share it with all your employees. Having a common goal will inspire a diverse group of people to work hard together. Remember that the more employees know about your goals, the more buy-in you will get and the better chances that you will have to achieve those goals.
  2. Have meetings with your employees: Have a meeting with everyone at least once a month to update employees about goals, performance, and other good or not so good things that may be going on at the dairy. Use this monthly meeting to keep SOP’s and routines refreshed and also to keep employees motivated. Don’t make the mistake of meeting with your people only when there is a problem or things are going poorly.
  3. Excel at giving good and periodic feedback: This is a great way to tell your employees what you are looking for, and when done right it can be an excellent way to keep employees motivated. For example, post the key performance indicator numbers daily in a place where feeders have daily access like a break room. Or personally talk to your feeder to let him know that he is doing a great job and show him the numbers to confirm this.
  4. Listen actively: This shows respect and makes it more likely that the other person will share information in the future. Encourage employee’s suggestions and stay open to other viewpoints. Their input may show you things you might miss, or they may spot barriers to implementation. This will also help them embrace their jobs more.
  5. Develop SOP’s (Standard operating procedures). This may seem time consuming, but when done right it can bring a lot of benefits to the dairy. SOP’s will help reduce errors and variations between workers; it will improve worker’s confidence, and can be a useful tool when training new employees. Make sure you translate all protocols into Spanish if you have Spanish-speaking employees.  

 

April

Recognizing dairy worker's performance

When was the last time you recognized someone at your dairy for going the extra mile to do something for you, or for performing an excellent job?

Employee recognition doesn’t always have to be a formal process that involves monetary compensation and is structurally established at the beginning of the year or the month. In many instances, some of the best opportunities to build morale are recognizing employees in the spot. Here is a good example: Jose just covered a milking shift for a person that called in sick at the last meeting. Not only that but, he also identified a more than average number of cows in heat during that shift. How do you reward this person for his extra effort during that day?

These are some ideas of how to recognize Jose’s or other people’s hard work and excellent performance:

• Hand him a calling card in recognition (make sure you always have a few cards handy).
• Take him for lunch or bring lunch to him. Spend some quality time with him and recognize his great work and thank him for it.
• Write a short thank you note and stick it to his paycheck.
• Have a pizza party for achieving a special goal. This is particularly effective when recognizing a team effort or excellent job.
• Taking employees to training conferences or having a formal training program with an outside trainer at the farm can be a great way to not only recognize their good work, but also to keep employees motivated.
• A satellite radio can be a good idea as an incentive to achieve an important team goal that they could use in the parlor to listen to the music or talk shows they like, in the language they want.

Independently of how you recognize employee’s excellence, don’t do the same thing every time. If done routinely it will soon become part of the expected compensation package. Instead, this week give a calling card, next week bring them lunch, the week after don’t do anything at all. Unexpected surprise recognition can be the most powerful of all!

Next month I will discuss more formal ways of recognizing excellent work through bonus programs, cross training, etc.  

 

March

Tips to develop a wage structure for your dairy

How do you compensate your employees for the work they do for you? Do you pay your employees fairly? Do you often find yourself giving raises only to those employees that ask for it? Do you usually give raises based on seniority or merit?

These are just some of the very important questions that I ask many of my clients when discussing employee compensation programs. If you want to avoid having people constantly asking for raises, if you want to avoid having unhappy employees because they think they are not being compensated accordingly, or if you want to reduce your labor turn over rate, I suggest that you develop a wage structure for your dairy by following these steps:

Step 1 – Figure out your compensation philosophy – Do this by asking yourself the following questions: 

• What can you afford to pay your employees based on your profit expectations and labor efficiency goals?
• How should your salaries compare to those of other dairies and industries in your area?
• Will you offer bonuses and incentives?
• How much will you spend on benefits, and how will this influence pay rates?
• How and when will raises be given?
• How often will you review your compensation philosophy?
• How will you communicate this philosophy to your employees?  

There is no right or wrong answer to these questions. Whatever your philosophy may be, make sure that you keep it simple and you put it in writing. Also, communicate your philosophy and structure to your employees. Be consistent with your approach and evaluate your structure once a year.

Step 2 – Set up pay grades and rates of pay – Having job descriptions in place will help you develop a pay grade system for your dairy. A pay grade is a group of jobs within your dairy operation that share the same wage levels. For example, in your dairy you may consider that milkers and calf care people should be compensated the same way. Therefore, these two position will be included in the same pay grade.

At the same time, each pay grade will have a rate of pay. This rate of pay represents the lowest and highest pay within that same pay grade. For example, a milker with many years of experience, that is also in charge of training new milkers may be at the highest pay of the pay grade. A new milker, with limited experience, just recently hired will be at the lowest level of that same pay grade.

Step 3 – Define when to give pay raises and why – Some dairy operations will give pay increases on set dates of the year, or at anniversary dates, or employment milestones. The best timing for your dairy will depend on your budgets, philosophy, and compensation system.

One of the best ways to negotiate a pay increase with employees is through the “negotiated performance appraisal” developed by Gregory Billikopf, from University of California (read my article on this topic under Media). This can be a great tool to set up individual goals and expectations for each employee. Later in the year a more traditional performance appraisal can be performed at which time the employer or manager will determine if the employee deserves the raise or not according to expectations.

This way, pay raises can be given based on performance and merit rather than just because the employee has been working at the dairy for so many years. There are other ways to compensate seniority that can be more effective and fair for all employees.

Step 4 – Use bonuses and incentives as part of your compensation package – These should be considered as part of the total compensation package. Bonuses and incentives are effective ways to compensate an individual or a team for accomplishing performance goals. These shouldn’t be used to make people go from doing a poor job to doing a decent job. Bonuses and incentives should be used to promote excellence at work and accomplish challenging, but yet realistic goals. These goals should be specific and should be monitored periodically. An example of this could be if a parlor manager needs to improve milk quality (going from 200,000 to below 150,000 to obtain extra bonus). In this case, the parlor manager will set up a bonus based on SCC and prepping procedures based on milk flow in the first minute.

Step 5 – Define your full benefit package – I often times see dairy operations with excellent compensation packages that unfortunately don’t do a good job promoting it with their employees. It is important to list and describe all the benefits that come with working for your dairy. Also, make sure you communicate these to your employees and you put a dollar figure to each one of those benefits. Examples of these are: health insurance, housing, expenses covered with the housing, meat and vegetables available at the dairy, etc.

Step 6 – Communicate your salary structure plan - Once you develop your salary structure and define your incentive programs, how can you make the plan work? Here are some guidelines that will help you:  

• Document your plan in writing and explain it to your labor force. Use simple language when meeting with new employees to explain how your compensation package works.

• Train your middle managers and supervisors to ensure that they understand the bonus and incentive programs.

• Pay salaries and bonuses on time. Plan these payouts to occur as soon as possible after the rewarded performance occurs.

• Evaluate the effectiveness of the plan on an ongoing basis. When working with incentive programs, make sure that these are generating the intended results. Are employees motivated to achieve the goals or did they lose interest?

When done right, a good compensation program can be a powerful management tool and a compelling motivator. It can also help recruit better quality employees and reduce labor turn over rate.

For more information on salary structures and incentive programs contact Felix Soriano, APN Consulting, LLC.  

February

Develop an obsession with Standard Operating Procedures (SOP's)

Consistency is a key driver of profitability in any dairy operation. From feeding, to milking routine, to calf care procedures, we always preach about the importance of day–to-day consistency in every process at the dairy. “That’s what the cows like and need!”; we tell our employees. But what do you do as a manager or supervisor to reduce variability at the dairy? Do you have an SOP for every process at the dairy? If you do, when was the last time you reviewed those SOP’s to try to improve efficiency or find ways to reduce cost in a process?

Standard operating procedures are critical to reduce variability between working shifts and within employees from a same shift. These SOP’s will be also helpful during the training process of a new employee or when refreshing protocols with old employees.

A good SOP specifies in writing what should be done, how, when, where, and by whom. Here are a few tips that will help you write your own SOP’s or evaluate the protocols that you already have in place:

  • Be very concise, clear, and use simple words when writing an SOP. Wordy and long sentences will be confusing to the operator/employee.

  • Use steps and sub-steps to simplify the procedure. Also, using pictures and a brief, but detailed description of each step of the procedure can be very useful (especially for employees that may have difficulty reading).

  • When writing procedures of tasks that require a lot of decision making consider using a flow-chart format to simplify the process. A good example of this would be a calf diarrhea treatment protocol, or a mastitis treatment protocol.

  • Before writing an SOP spend time observing employees perform the task. Describe each step, how long it takes, and what tools they need to perform the job effectively.

  • Get input from the people responsible for doing the job before finalizing a process. Many times they will have good ideas on how to improve a process and make it more efficient. Giving them the opportunity to share their ideas will make them feel more engaged in the job and they will be more supportive when adopting a new protocol.

  • When necessary, use an outside consultant to help you develop or review your SOP’s. Many times, a specialist can bring new ideas that can help make processes more efficient and cost effective.

  • When changing an SOP, test it before implementing it with all the shifts. A good example would be modifying part of the milking routine. Try that routine with your best shift for a month and monitor parlor performance. Then, show the improved parameters to the rest of the employees and officially implement the new SOP with all shifts.

  • Spend time training employees when developing a new routine/SOP. This is a critical part of the success of any new procedure. Even the smallest change in an SOP requires some training.

  • Modify SOP’s depending on the time of the year. Weather conditions during different times of the year may affect the way jobs need to be done. An example of this could be stall maintenance, or manure handling.

  • Post simple step-by-step SOP’s where the information is needed for quick reference, such as the milking routine in the parlor, or washing and disinfecting instructions in the calf barn.

Remember, most profitable dairies focus on ways to improve consistency in their processes by developing and periodically reviewing SOP’s. Finally, SOP’s will also ensure employee safety and good cow practices at all times.

To view examples of SOP’s go to “Services, protocols” on this website.

 

January 2010

Feed losses, how can you help your feed manager reduce them?

Investing in new technologies and tools to reduce feed losses is critical to the success of any dairy operation. However, if you don’t invest on training, coaching, and monitoring the people in charge of implementing your feeding program you may not see the expected returns on your investments.

Although you will never eliminate feed losses completely, it doesn’t mean that you and your feed manager can’t focus on controlling and minimizing losses to the max. In order to accomplish this you need a well planned feeding management system and very well prepared and trained feeders and feed manager to execute the feeding program.

Here are five steps that will help you accomplish this:

Step 1. Develop a simple but well planned feeding management system – With the help of your nutritionist and feed manager develop a comprehensive management plan which covers every aspect of the feeding process. Emphasis should be put on those key control points that will directly affect feed losses like:

  • Feed handling and storage
  • The mixing and feeding process
  • Feed bunk management

Step 2. Establish a monitoring system – Once you determine the main control points where most of the feed losses occur you need to establish a monitoring system that will help keep track of those losses. Using a feeding management software will help keep track of feed losses. At the same time, it will allow the feed manager to better monitor feeder’s performance and accuracy.

Step 3. Develop standard operating procedures (SOP’s) and job descriptions – With the help of your feed manager and an outside consultant establish and communicate the role that the feeders and feed manager have in the dairy. Also, developing SOP’s is critical to reduce variation among and within feeders.

Remember that feeding consistency is one of the key factors to reduce feed losses.

Step 4. Develop key performance indicators (KPI’s) – With the help of your nutritionist and feed manager establish those parameters of the feeding process that affect feed losses the most and that are directly affected by your feeder’s performance. These KPI’s should be monitored daily or at least weekly. Examples of these KPI’s could be loading accuracy, delivery accuracy, and shrink losses of key ingredients.

Step 5. Develop a training program – With the help of your nutritionist, outside consultant, and feed manager develop a training program for feeders that will cover all the main aspects of feed and forage quality assessment, feed handling and storage, the mixing and feeding process, feed bunk management, and mixer maintenance. A good training program will reduce errors and feed losses, and will keep established feeders refreshed and motivated.

Remember that your feed manager plays a key role in the success of your feeding management program. This person should be in charge of executing the feeding program and monitoring feed losses periodically.

Help your feed manager succeed by providing continuous training to improve his/her supervisory skills if working with many feeders. If necessary, bring an outside specialist to help you with this training. Also, training on the use and applications of your feeding management software can be very helpful.

Finally, communicate with your feed manager at least weekly. Remember that constant communication is very important if you want your employees to succeed. Goals, expectations, and KPI’s should always be part of the conversation.

 

December

Get ready for 2010

We’ve probably gone through one of the worst dairy economic crisis in history. Fortunately, many dairy economic indicators suggest that 2010 will be a much better year for dairy producers with very promising milk prices.

Although it will take a while to recover from this crisis (some will take longer than others) , producers need to be prepared to take advantage of good milk prices ahead.

Here is a list of management practices you need to consider that will help you maximize your productivity and profitability in 2010:

1-Focus on income over feed cost (IOFC) – Cutting feed cost has been the main focus of both nutritionists and producers this year. Now it’s time to focus on maximizing herd performance and feed efficiency. Don’t make any nutritional changes without calculating IOFC first. Monitor IOFC weekly or at least monthly. Work with your nutritionist to maximize IOFC.

2-Reduce feed losses – If you haven’t done so yet, make an assessment of your bunk management and feed losses. Is there room for improvement? Evaluate the way you handle and store commodities, by products, and concentrates, and ensure that losses are minimized in the commodity bays.

3-Monitor the mixing and feeding process – Do you have feeding protocols? If you don’t, work with your nutritionist to develop SOP’s to ensure feeding and loading consistency between feeders. SOP’s will also reduce variations between and within batches of feed. Monitor loading

Inv and feeding accuracy of your feeders to reduce feeding costs. Finally, ensure that feed refusals are kept low (not more than 2%).

4-Focus on your transition cow program – Don’t cut corners or feed cost on your close ups and fresh cows. Furthermore, spend more money in these two groups to maximize performance and health. Remember that what happens at this stage will affect peak milk and the entire lactation performance of the cows.

5-Maximize parlor performance – To get the most out of your cows you need to ensure that your milkers are performing a consistent milking routine. Review your milking routine if necessary to ensure optimum milk letdown and monitor milker’s performance all the time. Meet with your milker’s on a monthly basis to show them parlor performance numbers and SCC. Finally, conducting training and refresher meetings with your employees is crucial to keep them motivated and performing to your expectations.

So remember, you can’t afford to miss the boat. Be ready to make as much milk as possible next year but, maintaining cost and efficiency always in check.


November

Top 10 things to do when managing your workers

What is your management style? Are you a hands-off, laid back type of manager or a more highly engaged type? Independently of your style, it is your job to tell people what to do and how to do it all the time. Remember that the success of your dairy will depend on the success of the employees working for you.

If you want to succeed as a manager I suggest you follow my top 10 list of things you should always do for your workers:

1-Know your people very well – Every employee is different, yet many supervisors take the same approach when it comes to managing every worker in their group. I always suggest supervisors to manage based on what works best for each employee, but in order to do that you have to know your people very well.

This is why is so important to do an assessment of each person of your team. Start by assessing each person’s strengths and weaknesses as employees.

2-Communicate with your people at least weekly – Constant communication with your workers is critical if you want to succeed as a supervisor. Talk to each one of your team members about work when things are going well, wrong, or average.

3-Tell your people what to do – If you expect an employee to do his job, you have to tell him exactly what to do. Not only that, but you also need to tell him when to do it, how to do it, and why he needs to do it that way. Using standard operating procedures will help you ensure that every employee does a consistent job which matches the specifications required by your dairy operation. Also, spend some time and money training every employee and make sure that every new worker goes through a planned orientation program.

4-Listen actively – This shows respect and by doing so you will have a better chance that your workers will be willing to share information with you in the future. Employees know when you are not paying attention and they will get angry, discouraged, and will feel unimportant thinking they are wasting your time.

5-Eliminate any frustrations or roadblocks – Pay special attention to the needs of your stars or high performers. Often times excellent workers leave a job because of frustrations that their direct bosses were not able to resolve for them.

6-Define clear goals and expectations – In order to make your workers accountable, the first step is to spell out expectations up front and in clear terms. How is their performance evaluated?

7-Monitor and document performance every step of the way – Keeping detailed notes and tracking each worker’s performance will help them achieve your expectations and goals.

8-Give feedback – Based on my experience, lack of feedback is the number one thing that front line workers complain about when I ask them about their managers.

9-Define the rules of the game – Every dairy operation should have an employee handbook with a short but clear list of rules / policies that every employee should follow. It is also important to clearly define what are the consequences of not abiding to those rules.

10-Correct failure and reward success – Do you have anyone in your team not performing to your expectations? If so, what are you doing about it? On the other hand, whether is through bonus programs, or special perks, or schedule preferences, or all of the above, make sure that high performers are properly rewarded and compensated for their hard work.

Finally, my last piece of advice is not to manage people “by special occasion”, instead solve small problems before they turn into big problems. Bottom line, keeping periodic and consistent communication with every employee, as well as monitoring, measuring, and documenting performance of each employee will help address problems as they come up.

So write a list of the people you are responsible for and get started!  

 


October

Negotiated Performance Appraisal (NPA) – A great tool to use with your employees

As we get close to the end of the year, take time of your busy schedule to meet with your team leaders, supervisors, and/or middle managers to review this year’s performance and goals. Also, this will be a great opportunity to discuss goals and expectations for next year.

Although it won’t replace daily communication, the negotiated performance appraisal (NPA) can help you jointly develop a plan for performance expectations and improvement, and how to achieve those goals individually with each one of them.

Here are a few tips on how to make the NPA work:

• Define your goals before implementing a negotiated performance appraisal.

• Always communicate the objectives of the NPA with employees before the meeting. Make sure they understand it is for their own benefit and the benefit of the dairy.

• Meet first with your middle managers before they implement this NPA program with the entire workforce. This will give them the opportunity to learn the details about how to run the NPA meetings before doing it with their own people.

• If possible, have a third party involved in the NPA to help guide the employees before and during the NPA. Preferably this person should have experience in labor management and be bilingual in English and Spanish when necessary.

• Have a follow up meeting after a few weeks of the meeting to review what was discussed and finalize the plans and implementation of the program.

• Meet again after 6 months or one year (depending on what was stipulated during the NPA) to have a more traditional performance appraisal to discuss progress on goals.

• Use the traditional system to negotiate salary raises and bonus programs based on the agreements made during the NPA evaluation.

The negotiated performance appraisal can be a great tool to use once or twice per year as a coaching tool with your employees. You will be able to improve people’s skills, define goals and expectations for them, and develop a succession plan for your operation with your key employees.

For more information on how to run a negotiated performance appraisal and what questions to ask please call me at 215-738-9130 or email me at felix@apndairy.com

 


September

Who’s in charge of feeding your cows?

The feeder plays a very important role at the farm. This is why in many dairy operations owners are still reluctant to have someone else other than themselves feed the cows.

Why not make one of your Spanish speaking employees a feeder? From my experience, communication barriers and lack of formal training are two main reasons why Spanish-speaking employees are less likely to be responsible for feeding and bunk management.

When evaluating the potential of an employee to take the feeding management role, these are some of the abilities and talents they need to look for:

1-Positive attitude and proactive – Find someone that is always trying hard to do his / her best, someone that is constantly thinking of new ideas and processes to make the job more effective and efficient.

2-Responsible and on time every day – This is very important since the feeder plays a critical role in the performance of the animals. Feeding cows at the same time every day and having a very consistent TMR are critical.

3-Open-minded and eager to learn more – This position will require constant training and skill development.

4-Organized and detail oriented – This person will have to monitor and manage feed inventory, keep feed intake records, and be consistent with the feeding process.

5-Self confident – Have decisiveness and make decisions on his/her own. For example, after testing forage moisture levels change the amount of forages fed accordingly or make the adjustments on the feeding software program used. At the same time, this person has to be willing to ask questions when in doubt.

6-Literate in Spanish and / or English (preferably both) – This position will require the ability of writing, reading, and in some cases doing basic math calculations.

7-Analytical, but yet practical – This person will have to evaluate herd performance, feed intake, feeders reports, etc. and based on that information make the necessary changes to maintain or improve performance.

8-Likes to be challenged – There are always new concepts, ideas, and technologies that can be put into practice in the feeding area of the dairy industry.

9-Honest – Not afraid to admit when they make a mistake.

10-Have knowledge or is willing to develop basic computer skills – In order for this person to become a proficient feeder, he or she will have to learn some basic computer skills to be able to work with excel spread sheets, computerized feeding software, and dairy data analysis software.

It is not realistic to think that an employee with all these attributes will be easily found. In fact, even though many of these qualities will be necessary, especially the ones associated with attitude and behavior some can be taught or developed. So once you have identified the right candidate from within your organization to cover a future opening for the Feeding Management position, make a list of the skills and abilities that this person will have to develop and / or improve in order to succeed in this position. Having a job description will help establish these needs.

Also, if you have this job description in Spanish it will help to communicate the job requirements to your employee.  



July - August

Work with your feeders to reduce feeding cost

How often do you monitor feeding accuracy of your feeders? When was the last time you talked to your feeders about their role in the dairy’s profitability?

Communicating with your feeders is crucial if you want to reduce feed cost and improve feed efficiency. Furthermore, feedback is what most employees mention when asked about things that their managers should improve. Here are six practices that feeding managers should consider to improve feeder’s performance and reduce feed cost:

1. Have a meeting with your feeders and talk to them about the importance of their role on the dairy. Refresh protocols and explain the whys of each step of the loading, mixing, and feeding process. Be specific about the economic impact that their performance and accuracy have on feed cost and income over feed cost. Take this opportunity to talk to them about the current dairy economic crisis and give an example of income over feed cost.

2. Define your KPI’s (Key performance indicators). You should be able to monitor these KPI’s daily, and these should be directly affected by the feeder’s performance. Also, these KPI’s should have an impact on cow performance, feed cost, and overall profitability of the dairy. Using a feed management software like Feed Watch or TMR Tracker will help monitor feeder’s performance more easily and accurately. Some examples of KPI’s that will affect the dairies bottom line are:
a. Loading accuracy (Individual ingredients and overall feed)
b. Feeding accuracy (Variation between expected amount of feed per pen and actual amount fed)
c. Mixing time (This can have an impact on herd health and performance)
d. Shrink losses of key ingredients (Keeping good ingredient and forage inventories is crucial)

3. Give good and periodic feedback to your feeders. This is a great way to tell your feeders what you are looking for, and when done right it can be an excellent way to keep employees motivated. For example, post the KPI numbers daily in a place where feeders have daily access like a break room. Leave a note saying “great job” or “Keep up the good work” when numbers are improving or are excellent. Before posting these numbers, make sure that everyone understands the meaning of these KPI’s.

4. Recognize great performance and penalize poor performers. Develop a bonus program that will reward excellent performance but at the same time will penalize poor performance. Feeders need to know in advance (upfront contract) what the consequences are for not performing according to your expectations. A good example can be rewarding loading accuracy (Feeders can make more money as the loading error is reduced). This reward may vary depending on the type and cost of the ingredient.

5. Develop SOP’s (Standard operating procedures). This may seem time consuming, but when done right it can bring a lot of benefits to the dairy. SOP’s will help reduce errors and variations between feeders; it will improve feeder’s confidence, and can be a useful tool when training new employees. Have your key feeder participate of the development of these SOP’s. This will give him a sense of ownership of the SOP’s and will help you get the entire team buy into the implementation of the new protocols. Make sure you translate all protocols into Spanish if you have Spanish-speaking employees.

6. Develop a training / orientation program for new feeders. This will reduce errors, feed cost, and will also improve the chances of success of your new feeder. First, establish who the trainer will be and then train that person as a trainer (train the trainer). If necessary, bring an outside specialist that can help you develop this training/orientation program. Preferably, this consultant should speak the same language as your employees. Important topics to consider for a training program are:

a. Dry matter calculations
b. Importance of loading accuracy
c. The mixing process
d. The feeding process
e. Feed bunk management
f. Mixer maintenance
g. Proper silo face bunk management
h. Feed inventory
i. Feed shrink

By taking these steps you will improve your feeders desire to perform at their maximum level. Reinforcing the importance of their role, constantly giving feedback, and rewarding excellent performance can go a long way with your employees and will reduce feed costs and improve IOFC.




May - June

Improve your parlor profitability - Focus on parlor performance and efficiency

Excel at monitoring parlor performance, productivity, efficiency, and operating cost.

You may have heard the term “you can’t manage something that you can’t measure”. This is also true for a parlor manager or farm owner who expects to make good parlor management decisions. By closely and periodically monitoring parlor performance and efficiency you can:

1. Better evaluate the potential impact of any management change (like going from 3X to 2X milking in a low group).
2. Better evaluate your current parlor operating process, efficiency, and profitability.
3. Motivate change among employees by showing parlor and milking shifts data.

The performance indicators should be related to productivity, efficiency, and profitability.

What should be monitored?

Cows per hour / Turns per hour – Either one of these can be a major component of parlor efficiency and labor productivity and it is determined by the number of cows that are milked per hour (cows per hour) or the times each side is filled in one hour (turns per hour).

Milk flow in the first 15 seconds and first 30-60 seconds - These are very useful as monitors of milk letdown and udder preparation.

Somatic cell counts - Monitor bulk SCC daily and post this information for your employees to see. Your benchmark and goals for this should be communicated with your employees and established as a common goal for the milking team. Everyone should be focused on improving milk quality, and every employee should have a basic understanding of the meaning and importance of having low bulk SCC’s. Having training programs and refreshers with your milking team can be very helpful. Work with an external consultant that can communicate in the native language of your employees if necessary.

Pounds of milk sold per employee (Full time worker employee as described by Penn State) - This is a major component of parlor efficiency and should be evaluated at least on a monthly basis.

Revenue per employee (Full time worker employee as described by Penn State) – This is calculated by the total income of milk sold divided by the number of full time worker employees. Like the other parlor parameters to monitor, a benchmark and more challenging goal should be established. Also, discussing this with the parlor manager will help the farm owner find areas that can be improved and areas where costs can be reduced. 

Income over parlor operating cost - This is calculated by the total income of milk sold divided by the parlor operating cost. This is a major component of parlor profitability. However, detailed information of parlor operating cost is important to be able to make an accurate assessment of this parameter.

Summary

During any crisis there are also opportunities. If you haven’t done it yet, use this dairy economic crisis as an opportunity to review your parlor performance and efficiency and begin monitoring parameters that will help your dairy become more profitable. In some cases you may realize that you can operate your parlor with less people but in some cases that may not be true.

 

 

March - April

Talk to your workforce about current dairy economy

For the last couple of months I’ve been spending most of my time meeting with dairy farm workers and talking about the current dairy economy and discussing ways to improve efficiencies, profitability, and performance. My main goal at these meetings has
been to create awareness among employees about the current economic crisis and the impact that their role has in reducing operating costs and improving efficiency and productivity.

Surprisingly enough, many farm workers (especially Spanish speaking employees) are not aware of what their employer is going through. In some cases they are relatively well informed about the global economic crisis, but they rarely associate this with what is going on at the dairy farm level.

Here are a few suggestions of things you should be doing in order to create worker’s awareness:

• Set up a meeting with all your workers and discuss current milk prices. Be specific and
give examples of how current milk prices are affecting the farm’s profitability. You don’t need to show them your exact profit numbers if you are not comfortable, but you can use national milk prices and milk to feed cost ratio parameters as examples. It is important that your employees realize how bad the situation is and focus on reducing costs and being more efficient.

• Discuss with them how, they as employees, can help reduce costs (eg: don’t waste the disinfectant used for pre and post dipping cows, better managing foot bath products, or being more conscious when using medicines, etc). Also, if you are providing housing for your employees, make sure that you discuss electric and heat bills with them and budget their expenses.

• One week later, meet individually with each team (milker’s supervisors, transition cow managers, calf care people, feeders, etc) to discuss more specific ways to reduce costs and improve efficiency in each dairy area. Many times, your employees will have good ideas of how to reduce costs, be more productive, and improve a system’s efficiency. They can also come up with good ideas of where and how to save more or waste less.

Finally, this can be a good time, if you haven’t done it yet, to develop (along with your managers) a budget for each department within your dairy. Reviewing the budget on a monthly basis with each one of your leaders along with the goals for each sector of your dairy can be another way of controlling and better monitoring your operating costs.