For folks like Eric Froebel, director of Global Engineering Processes and IT Architecture at AGCO Corporation, the crisis of global hunger can be summed up by some straightforward logic.
“The world’s population is growing, while the planet’s arable land is decreasing,” he tells me during a recent interview. “That means the yield from smaller amounts of land have to feed more people.”
Froebel believes the answer to feeding 9 billion people by the year 2050 could lie in greater innovation throughout the agricultural industry.
As he describes it, AGCO’s own idea of innovation includes both global thinking and local action.
Global Business Processes
AGCO is an international maker of agricultural equipment. The company’s well-known brands, such as Massey Ferguson, Challenger, GSI, Valtra, and Fendt, are built at manufacturing and assembly locations around the globe and sold through a network of over 3,000 dealers in countries from Australia to Zambia.
AGCO definitely adopts a global approach when it comes to ensuring high-quality, highly efficient business processes across its worldwide operations. Their methodology for product planning is a good example.
Froebel explains that AGCO is constantly innovating – designing new machines for market while improving existing products. The development cycle from inspiration to implementation in the farm field is typically from two to five years depending on the complexity of the project.
“We want to reduce costs and improve product margins,” Froebel says. “And we believe our greatest chance is early in the design cycle.”
AGCO recently rolled out additional software – the SAP Product Lifecycle Costing solution – to help achieve product target costs during new product development.
The new software solution is helping AGCO establish a single global methodology for tracking and analyzing new product costs that it can use at any of its design and manufacturing locations.
“We have multiple engineering design centers in North America, South America, Europe, and Asia Pacific regions and more than 20 manufacturing locations worldwide,” Froebel says, “but our goal is to be able to design anywhere, build anywhere, and do so as efficiently as possible.”
Thinking globally has its rewards, but there are times when AGCO intentionally chooses to act locally.
For example, Froebel tells me about Africa where the company has made a significant investment in regional farming. This includes establishing a 150-hectare (371-acre) demonstration and training center just outside Zambia’s capital city of Lusaka. Here, local farmers are taught how to farm with greater efficiency and productivity.
AGCO’s regional response also features the “People’s Tractor.”
Bundled in a package containing a disk harrow, subsoiler, disk plow, planter, and tipping trailer, the 35-horsepower People’s Tractor is designed to let a small number of farmers pool their resources to buy an affordable entry into mechanized farming.
In an article on the website of the International Federation of Agricultural Journalists (IFAJ), Dr. Rob Smith – a senior vice president and general manager at AGCO – talks more about the company’s philosophy.
“AGCO is committed to inclusive and sustainable mechanization,” Smith says. “…Sustainability means designing our products for Africa. It means building our products locally, and providing educational training on successful agricultural practices.”
Innovation Comes in Many Forms
AGCO makes some of the most sophisticated farm equipment on the market today.
“Many of our tractors and combine harvesters feature advanced telematics, GPS guidance systems, and wireless communications,” says Froebel.
This high-tech machinery is perfect for enabling the precision farming that is revolutionizing agriculture in many parts of the world. But there are times when the best idea is something as simple as the People’s Tractor.
“World food consumption just keeps going up,” Froebel reminds me. “We need to be innovative everywhere we operate.”
To learn more about SAP Product Lifecycle Costing