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Agrimarketing : May 2009 Supplement
04 AG BIZ PROFILE:16 Thinking Outside Box 5/5/09 9:44 AM Page 5 “When you run a business you learn fromthe school of hard knocks.As tough as itwas, I really enjoyed the challenges presented by thememberowners and trying to exceed their needs and expectations.” In 1982, he returned to Cenex headquarters to take over themanagement of its lubricants product line. Over the years, he stayedwith the business’ Energy group taking on varying assignments, receiving a number of promotions (see sidebar) andwas named to his current position in 2000. MARKET GROWTH “In the grand scheme of things,” Westbrock says, “we are a relatively small player in the energy business, although we are the largest co-op engaged in energy. So, we have to formmany partnerships and alliances to achieve success against the likes of the multinationals. “We have also got to be innovative in our product offerings and service for the uniquemarketswe serve. “One example is our propane business. Our principalmarket for the product used to be drying crops for storage.However, today’s crop varieties dry downmuch quicker in the field.More important,we realized several years ago that our businessmodelwas not providing the inventory control and financial returns ourmembers expected. So we rebuilt our businesswith a focus on serving customers of all kinds, fromcorn growers to homeowners and businesses.We support retailers who see value in the Cenex brand, andwe have strong programs that help retailers deliver propane safely and efficiently.All of that combined has built our propane business quite successfully.” Westbrock says he and his team make a special effort to determine what their customerswant and then deliver it. “The first thing I didwhen I took over the Energy groupwas to truly sort out our customers’ needs. What I found is theywant a dependable supply of fine quality products. We did that by clearly defining the Cenex brand and its reliable reputation, so retailerswouldwant to align with us to provide it.” CHS EnergyManagement Teampictured (l to r) Don Olson, Sr VP, Refined Fuels; KevinWilliams, Sr VP, Energy Sales; Dan Ostendorf, VP Controller, Energy Accounting; Darin Hunhoff, VP, Propane; Leon Westbrock, Exec VP/COO, Energy; Bob Zimmerman, VP, RawMaterialMarketing&Supply; Chris Johnson, Exec Asst, Energy; Anwer Hussain, Sr VP, Lubricants, and Dan Knepper, Sr VP, Laurel Operations. Leon is an enthusiastic supporter of the Cenex convenience store (c-store) concept and has helped growthe business to a network of over 1,600 locations. Prior to launching this concept,most fueling stationswere located near co-ops, often near co-op locationswith railroad trackswhere grain and fertilizer were shipped out and received. Today,most Cenex branded c-stores are located onmajor highways or near high-traffic areas in increasingly suburban and urban areas. CHS energymanagement recog- nized therewere significant opportunities for providing gasoline and quality service to areas outside their traditional customer areas in rural regions and small towns. They got busymeetingwith the local affiliates tomake themaware of the potential and encouraged themtomake the change.Westbrock reports, “The toughest thing oftenwas helping coop directors see the opportunity to do businesswhere the consumers were, alongmain streets and interstate highways.” Theywere soon convinced, however, and the Cenex brand helpedmany cooperatives increase revenues by tapping into broader consumer demand for convenient, friendly service, plus quality gasoline and diesel. Another innovation his group implementedwas the introduction of the credit card payment reader in the pump. Today, paying at the pump seems ordinary, but in 1978,when the conceptwas introduced, itwas a rev- olutionary idea. “Thatwas developed more out of necessity,”Westbrock explains. “Some of our gas stations are in such remote locations, they are not regularly attended to by a person. To keep that business going,we developed the pay-at-the-pump service allowing 24/7 service.” He is also proud of the organiza- tion’s refined fuels distribution system. SportingGPS-enabled tank monitors, co-ops can keep track of each customer’s bulk fuel inventory. When it is running low, a refueling truck is sent. “Rather than counting on the driver to stop by to top off the tank or requiring the customer to call for a refill,”Westbrock reports, “the new systemallows better,more efficient truck routing and customers have a steady supply.” It’s awin-win situation for both co-ops and customers. “Customers like it because they knowtheywill have fuelwhen they need it and they pay for it like electricity—onlywhen they use it,” he adds. But not all of the group’s innova- tions have been driven by themarketplace.When the federal governmentmandated production of ultra-low-sulfur diesel to reduce sulfur emissions, CHS refinerieswere among the first in the nation tomeet or exceed those requirements. “We had to decide thenwhether wewanted to stay in the refinery business or get out,” he says. “Even thoughwe havewhat the industry would consider small refineries that (more on page 6) May 2009 s Agri Marketing 5