Power brokers

2005 is becoming the year of radio frequency identification (RFID), largely because Wal-Mart wants it so. While most manufacturers grudgingly admit the technology is the wave of the future, nobody wanted to go first. But Wal-Mart gave a stiff Jan. 1 deadline to its 100 largest suppliers, many of them food companies, to put RFID tags on cases and pallets. Nobody was willing to forgo Wal-Mart’s business.

“Wal-Mart combined myriad technological resources to change the entire paradigm of American business in the past 25 years,” according to Motley Fool. Its relentless pursuit of efficiency through technology – from controlling the flow of information among manufacturers, distributors and retailers and adopting UPC technology in the 1980s leading to a database that tracks every item it sells -- changed the face of retail shopping. “It created the model of the dominating retailer and changed the industry dynamic from one in which manufacturers pushed product downstream to retailers, to one in which the retailer pulls product from manufacturers and distributors only when needed.”

Scott is very much behind these efforts. He spent most of his 25-year career with the retailer in logistics and transportation, so it’s no wonder that he always looks for more efficient ways of doing business. He’s betting on RFID technology to reduce out-of-stocks, labor costs and inventory and to improve product traceability, an advantage in the case of a recall. The technology also improves Wal-Mart’s data on which products sell and which don’t, invaluable information when deciding which products to purchase from its suppliers.

“We have about 100 million customers a week who come through our doors,” Scott told TV personality Tavis Smiley. “I think in some ways, we’re extraordinarily difficult to compete with because of our associates. The quality of merchandise, the pricing, the way we do logistics and systems combine to create great value for working people who work so hard for a paycheck that they appreciate the company.”

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This nice guy finishes first

“I was going to be in eastern Europe anyway, so I sent a message that I’d like to meet with the new president of Ukraine,” Warren Staley says matter-of-factly. Viktor Yuschenko not only took the meeting, “He asked me how I saw agribusiness in his country and what I thought of some directions that he might take the Ukraine.”

Warren Staley, Chairman/CEO, Cargill Inc.

Warren Staley is proof nice guys don’t finish last. A leader can be powerful and personable at the same time, a financial success – for himself and his company -- and yet a civic volunteer.

Staley is a member of so many civic boards, “I end up working Saturdays and Sundays sometimes because I have to put Cargill first,” he said in a recent interview, when the Minneapolis-St. Paul Business Journal named him executive of the year.

Like ADM, Cargill is something of a supermarket to the world, a supplier of agricultural commodity ingredients more than branded products. Unlike ADM, Cargill is not public, but it publicizes at least its top-line figures. In its fiscal 2004 (ending May 31, 2004) the company had sales of $62.9 billion with net earnings of $1.3 billion.

The private nature of the company has not held back Cargill. “There may be more people in countries and governments outside the U.S. familiar with Cargill than there are people in the U.S.,” says Staley. “I don’t think the rest of the world expects large companies to be publicly held. In many ways, we were a multinational before the term was invented.”

Cargill started business in Argentina right after World War II. In the early 1950s, it established a European headquarters in Antwerp, later moved to Geneva. The company’s been active in Brazil for 40 years. “We went to China weeks after Nixon was there in 1972,” Staley recalls. “We were talking to Vietnam as soon as the U.S. government said it was OK to do so. We’ve been in Russia since 1990 and Ukraine since ’92.”

Staley says Cargill often starts as a trading partner, “moving grain and other agricultural commodities from where there’s a surplus to where there’s a deficit.” When it’s time to add value to those commodities through processing, Cargill is there to transfer the technology and often to make a capital investment. Cargill also uses its worldwide transportation network, of ships, barges, railcars and trucks as well as local distributors to move products across the globe.

“Many of our customers are global, and we need to be wherever they are,” he says. “Sometimes we’re there even before they are and can help them get established.”

The Yuschenko story is symptomatic of a company with this much reach and this much history in parts of the world. When Staley first started dealing with Ukraine – in addition to commodity trading, Cargill set up a sunflower oil processing plant there -- he often was directed to the head of the central bank. That banker is now the president.

“When the new premier of China, Wen Jiabao, visited the U.S. in December 2003, we got invited to the New York luncheon. Afterward, I had a little private audience, and he invited me to China to give him our views on agriculture and for me to better understand the challenges of agriculture in China.”