Businessmodel of ADM

Customer Segments

ADM has a mass market business model, with no significant differentiation between customer segments. The company targets its offerings at firms in all industries that utilize agricultural products.

Value Proposition

ADM offers three primary value propositions: innovation, convenience, and brand/status.

The company has embraced innovation throughout its history. It operates a global research and development network that includes a sensory testing team that conducts detailed evaluations. It also maintains a cutting-edge culinary center, advanced pilot plants, and laboratories worldwide.

The company offers convenience by making life simpler for customers. It created e-ADM, an online customer portal that provides real-time news and information as well as a variety of useful tools. Specific services offered through the platform include the following:

• Electronic Data Interchange (EDI) – This service enables users to electronically send and receive a wide variety of documents including invoices, purchase orders, advanced shipment notifications, and purchase order changes.
• Documents Retrieval – This service allows users to receive invoices and contracts electronically. It also provides electronic storage of documents, enabling customers to save warehouse space.
• Online Inventory Services – These services feature patent-pending technology that offers real-time bulk ingredient monitoring through tank sensors and can send low inventory e-mail alerts. Inventory data is available 24/7 and the system provides customizable inventory reports and forecasting.
• PayADM – This service enables users to make payments or prepay shipments 24/7. It also maintains a complete payment history, including statements and invoices. It is completely free.
• Rail Car Tracking – This service provides up-to-the-minute data on shipment status, allowing users to trace shipments from anywhere so they can plan shipments orders and production runs.

• FarmerView – This service provides real-time information in areas such as commodity news, local and national weather, futures, ADM location grain bids, and ADM Grain market intelligence. The company has established a powerful brand due to its success. It is one of the world’s largest agricultural processors and food ingredient providers, with over 32,300 employees serving customers in over 160 countries. It generated $67.7 billion in revenues in 2015. Lastly, it has won many honors, including the following:

• Frost & Sullivan Product Leadership Award
• Corporate Achievement Award from the American Oil Chemists Society
• Most Innovative Food Ingredient Award at the Food Ingredients Europe exhibition
• Presidential Green Chemistry Awards from the U.S. Environmental Protection Agency ### Channels

ADM’s main channel is its direct sales team. The company promotes its offering through its website, social media pages, print/television/radio advertising, and participation in conferences.

Customer Relationships

ADM’s customer relationship is primarily of a self-service nature. Customers utilize its products while having limited interaction with employees. Despite this orientation, there is a co-creation element.

The company invites customers who are serious about product design and development to work with its R&D team through joint development agreements. These clients receive access to culinary and nutritional assistance, technical and application support, and state of-the-art equipment.

Key Activities

ADM’s business model entails processing and distributing agricultural commodities for its customers.

Key Partners

ADM’s key partners are the suppliers who provide the raw materials it needs to carry out its operations. The raw materials are largely agricultural commodities, and the suppliers include thousands of growers, grain elevators, and wholesale merchants in North America, South America, Europe, Asia, Australia, and Africa. ADM is also a member of over 200 business and trade associations, and thus maintains informal partnerships with fellow members.

Key Resources

ADM’s main resources are its physical resources, which include its 428 crop procurement locations, 280 ingredient manufacturing facilities, 39 innovation centers, and crop transportation network. The company owns 2,000 barges, 13,400 rail cars, 200 trucks, 1,300 trailers, and 10 oceangoing vessels; and leases 500 barges, 14,800 rail cars, 400 trucks, 110 trailers, and 21 oceangoing vessels.

Cost Structure

ADM has a cost-driven structure, aiming to minimize expenses through significant automation and low-price value propositions. Its biggest cost driver is cost of products sold, a variable expense. Other major drivers are in the areas of sales/marketing and administration, both fixed costs.

Revenue Streams

ADM has one revenue stream: revenues it generates from sales of its products to customers. Sales typically occur through the signing of short- and long-term contracts.