If you can measure it, you can manage it
27 February 2020
Managing a business which sprawls across nearly 500,000ha is a big job for 35-year-old John Frith.
Together with his parents Charlie and Liz, John and his wife Angela own and operate Glen Arden Cattle Co, which includes properties at Roma and Morven in Queensland and between Tennant Creek and Alice Springs in the NT.
The diversified business includes around 12,000 head of predominantly Droughtmaster cattle across breeding, backgrounding and lot feeding enterprises, as well as irrigated cropping.
Looking at the business from an enterprise level
The opportunity to become involved in an industry benchmarking program with consulting company Bush Agribusiness in 2014 was a turning point for the Friths.
“We haven’t looked back,” John said.
“The benchmarking process and way of thinking has given us a framework which lets us work on our business, instead of just in it.”
The Friths originally ran their business as an integrated model but since they started benchmarking, they’ve changed to running individual ‘profit centres’ or enterprises.
“This lets us look at each enterprise individually to make sure they’re profitable in their own right, as well as identifying where things might be underperforming,” John said.
“This ability to quickly identify issues at a specific enterprise level is extremely valuable.”
Setting the right KPIs
Through the benchmarking process, the Friths have established specific key performance indicators (KPIs) for each enterprise, which are routinely measured and reported against.
The main KPIs include earnings before interest tax per adult equivalent, kilograms of beef per adult equivalent, labour efficiency and cost of production.
Despite challenging seasonal conditions, benchmarking has enabled the Friths to achieve a steady increase in kilograms of beef produced per adult equivalent, as well as improve labour efficiency.
“With an increase in scale and improved technology like remote water monitoring across all properties and satellite pasture mapping, we can now run more cattle per team member.”
Benchmarking has also provided the Friths with an in-depth understanding of each part of their business and this awareness has ultimately led to growth.
“Once you intimately know what’s going on and really understand the numbers in your business, then you can focus on the right things and naturally grow your earnings, regardless of external factors like markets and seasons,” John said.
“For us, a focus on reducing expenses at overhead and individual enterprise levels has allowed us to grow our earnings year-by-year.”
John will share his benchmarking journey at the MLA-supported Business EDGE Young Guns workshop in Brisbane on 10-11 August.
His insights will include the importance of measurement, diligent record keeping and objective decision making.
“We record every cost, purchase, sale and animal movement and allocate it down to an enterprise level,” John said.
“If you can measure it, you can manage it.
“It sounds labour intensive but once the system is there it is quite simple and gives us the ability to pull out data for analysis and input it into the benchmarking templates.
“At the end of the day, you need to give the ship a rudder.
“The measurement and tracking of key performance indicators lets you really learn about your business which is what ultimately drives business strategy, improvement and growth.”
John also sees collaboration with other top performers as a major benefit of the benchmarking process.
“With our benchmarking group we get to see the leaders of different fields and learn from them,” John said.
“There’s always room to improve and the opportunities to share knowledge which come when you’re surrounded by high performers has been invaluable to us.
“Having a great team working with and around you makes it all possible.’’