Blog | wool.net.au | Les Potts

Pre-Sale Storage Locations

Thu, 23 Feb 2012 09:49:07 +1100

This issue continues to be a problem for some buyers - luckily not our clients. However we have been requested to prepare a paper for the wool industries eComerce committe - WIEDPC - who meet 5/3/2012.

Centre–Storage vs Storage Organization/Centres

At the November 2011 National Selling Committee meeting, changes were agrred upon to ensure that sale storage locations were correctly declared prior to sale.

My understanding is that:
The decision merely recognised an existing practice.
it was not considered necessary to seek WIEDPC input as the standards covered the situation.
Issues
There have been incidences where the data transmitted by the selling broker has been misinterpreted by buyers. However in all cases it is understood that the correct storage organization has been recorded; and that cataloguing, invoicing and wool order data corresponds.
Incidental implications:
Some data clash occurs between differing companies exchanging, based on the various interpretations.
Some buyers have chosen to ‘modify’ the data before transmitting to overseas clients to avoid confusion.
An example:
Sale Code: S 33
Centre-Storage N
Storage Organization: AWNS
It should be noted that:
The brokers PSC charge relates to the Sale Code, not the Storage Organisation/Location and is currently transmitted correctly –i.e. new 10/11A records are transmitted. It is my understanding that the Centre-Storage (N) was transmitted as an indication of the PSC charge applicable and that the wool was originally stored in that location, but subsequently moved.
Some brokers print a sale code on the top of a catalogue page – of say S33N – whilst some lots on the page may have a location lot number prefix of S.
Catalogue page numbers are currently transmitted correctly – in that, whilst a number of 10 records are transmitted for the same ‘page’ all lots have the same page number. A new 10 record is required as there is a change to the Location Storage – 11A record.
If no page numbers where transmitted then the standards would require multiple printed pages.
Recommendations
It is largely seen as a clarification of the WIEDPC standards in relation to the following key data items:
Storage Organization – the purpose of the introduction of this field was to explicitly define the current storage organization and location.
Centre-Storage – this field is often redundant when used in conjunction with the Releasing and Storage Organizations, and does not necessarily reflect the current location of the wool. For post-sale documents, the convention is for this field remains constant and the Storage Organisation changes to reflect current centre. It is proposed for this convention to be applied pre-sale as well.
Recommended changes to the WIEDPC Standards involve refining the definition hierarchy and further editorial changes.

Recommended Changes to the standards notes:
1.Centre-Storage
The code for the centre in which the wool is stored. For wool not sold
under Sale by Separation, the storage centre will be the same as the
selling centre. This does not mean that either can be omitted.
The code for the centre where the wool was originally catalogued. If the wool has been moved to another centre the Storage Organisation will explicitly define the current location.
2.Releasing Organisation
This is the organisation responsible for the storage of the wool, and to whom electronic or paper delivery orders will be directed for release to the buyer. It is often the same as the invoicing organisation and the selling organisation, and storage organisation.
3.Location - Storage
CONDITION
Mandatory when Releasing Organisation is not sufficient to accurately identify where the wool is stored.
The Location Storage field may be left blank only if the Releasing Organisation is sufficient to identify the wool store. If the Releasing Organisation is not the same as the Location Storage, then this field must be filled.
(Insert definition from Data Dictionary below)
The Location - Storage is a group field comprising a 5 character AWEX code for the Storage Organisation followed by 15 characters
4.Location - Storage
Data Dictionary
This field is used when the information already transmitted is not sufficient to specify the current storage location, organisation, and locate the wool.
Storage Organisation – The organisation and centre that currently stores the wool.
Storage Description - This may be location within store, or the particular
store (if the Releasing Storage Organisation has more than one store in the
location).

Selling multiple stored lots on the same catalogue page

Wed, 08 Feb 2012 08:10:58 +1100

Since the resumption of sales earlier this year brokers have started cataloguing more than one storage location on the same catalogue page. When wool selling regulations “existed”, this was not allowed, however in November 2011 NASC have approved cataloguing in this manner – refer NASC minute N32/11/8 http://bit.ly/AE5TTs.

To enable buyers to better understand the implications we have prepared a summary of issues for further discussion.

Catalogue Pages and Sale Identifications We will refer to the ‘same page’ as is the current practice of only printing a new page when the broker’s catalogue page alters. Whilst it has been a tradition to print a new page when the sale identification changes, the above means that a new page will be printed only when the selling broker indicates a new page. For example we may have a page of lots with an initial sale defined as M32G (Melbourne Sale 32, sale storage location of Geelong), then M32M but with the same page number. This is because a buyer will not print multiple pages for each location as they do not want to be ‘out of step’ with the auctioneer. Of course we may need to be aware that there is nothing stopping a broker selling ‘under’ sale identifications of – say – M32M but with a storage organization of Geelong. So it may simply be a matter of removing the redundant sale storage location suffix.

Of course this only applies to those brokers who transmit a page number. Those that do not will have the traditional practice applied – refer WIEDP standards.

The change just reflects an existing practice! The NASC decision was merely a decision to enact what brokers were already doing, but not correctly presenting at point of sale. It is our understanding that the decision was primarily designed for situations where a broker ‘cored’ a clip in one location, then for reasons such as lack of storage needed to move individual lots to another location. However the broker wanted the clip presented in the catalogue ‘as one’; that is, the clip was not to be ‘split’ over several pages. For example, a clip may be received and cored in Geelong, but one lot moved to Melbourne. It should be noted that previously, at the time of invoice the correct storage location was defined. This opens up an issue should there have been an insurance claim post fall of the hammer; as it is then that the lot transfers to the buyer, not upon receipt of the invoice.

Precedent implications! There are now no constraints on this practice, and therefore there are no restrictions on brokers selling SxS lots on the one page. For example, it is now possible for brokers to sell – on the one page – Melbourne lots, with Brisbane lots, with Freemantle lots etc. Some of the implications of this decision follow.

Multiple PSC costs per storage location. The current practice, in the above scenario, is to apply the PSC (Post Sale Charge) of the ‘cored’ location to the lot, not the storage location of the lot. For example, a lot cored in Geelong but then moved to Melbourne for sale will have a Geelong PSC charge. If this is the case then it is questionable that the charge is in fact a “post-sale charge” – that is charges solely attributable to costs “getting the lot to the buyer”. It is more likely that the costs are associated with the selling/coring location, not the delivery location. It is also unlikely that brokers will change this practice, or buyers have any influence on these costs, so it may be better to revert back to the previous definition of the charge as a “buyer’s fee”; and buyers continue to educate the growers, and mills, on how they discount for these wools. As the PSC is no longer based on the storage location, the implications are that we may see PSC charges based on various factors, possibly even clip based PSC’s, or wool characteristic charges, etc.?

PSC Tracking and verification. Most buyers monitor brokers PSC to ensure they are ‘converted’ to a bidding prices discount/premium. That is, there are discounts and premiums applied to the greasy bid price based on the PSC, freight costs, storage location performance/quality costs etc. Whilst it has always been the practice to monitor these charges, it now becomes somewhat more difficult; to the extent that all lots will now likely have conservative charges built into the buyer’s bareme to the detriment for the grower. Whilst most buyers record the actual PSC cost against each lot, buyers also commonly apply additional PSC premiums to allow for additional freight, locations performance costs etc. It is not uncommon for broker to ‘accidentally’ have a wrong pre-sale PSC and then correct the charge upon invoice. Hence the buyers usually have record the minimum PSC for a location. The PSC tracking and verification processes will now require far greater sophistication should the above implications be enacted.

Storage Organizations and EDI Codes It has become apparent that some brokers did not realise that every individual storage location must be recorded/approved by AWEX/EDI standards. Apart from the legal/insurance issues, buyers must have the actual valid storage organization recorded in the catalogue transmission to enable appropriate bid strategies. The current ‘review’ has identified storage locations not currently covered by EDI codes!

Lot Size

Mon, 16 Jan 2012 14:19:26 +1100

Wool Sellers opt for smaller lots - Weekly Times Now http://bit.ly/ydMdNr

“Woolgrowers are selling more bales in smaller lots despite the extra cost, to the annoyance of the auction room buyers…..it was worth remembering small lots on a per-bale basis were more expensive to handle, test and display. There were also additional costs to the buyer in post-sale handling charges”.

It is true that single bale lots are a nuisance; however there are not many cost incentives to make larger lots. The largest costs are broker driven costs such as the broker selling charges to the grower and the post-sale charges to the buyer; all on a per bale basis. The broker also places heavy charges for bulk classing and interlotting. Then you add dumping, freight, shipping etc. on a per bale basis, there is not much of an incentive to increase the lot size!

Broker Post Sale Charges (PSC)

Tue, 20 Dec 2011 14:50:34 +1100

Since we started reporting on lots selling through the auction system the most common query has related to the broker post sale charges – those charges a broker invoices the buyer of the lot. As they are costs that will be indirectly imposed on growers we have been requested that we report these costs.

With the assistance of buyers we have prepared 2 lists – one for Melbourne and one for Sydney sales. These are the last known declared PSC charges, by brokers, that are taken into account when a buyer bids for wool at auction.

As the costs may change from sale to sale, buyers bidding systems are automatically updated based on the latest broker electronic catalogue data.

Melbourne

Sydney

Wool EDI Costs

Thu, 08 Dec 2011 10:00:20 +1100

We include this topic in the general blog as these costs are among the many that are 'passed' on to growers.

It is often cited that as these costs are common then all buyers bear the same costs, and therefore prices paid at auction will be 'equitable'. However the 'equity' is between buyers, not with growers. It is a cost that growers need not bear.

As previously noted the wool industry has, for decades, been a leader in eCommerce. When the industry used ‘in-house’ IT facilities there were costs then that are not as significant today. Yet costs continue to rise.

When other industries are experiencing dramatic improvements in technology, delivery methods and cost; in Australia we continue to be held back. In New Zealand data is ‘free’, while in Australia it is becoming a more significant cost impost. Even a small buying company can be paying as much as $30k per year to receive data that other industries would expect to get for free. For example the brokers ‘public’ catalogue is the most expensive data. These costs are then 'passed' on to growers.

EDI Bale Weights

Mon, 28 Nov 2011 09:24:13 +1100

In formulating a position on declaring bale weight tolerances in the pre-sale auction catalogue it is noted that:

Bale weights are not certified?
Most brokers do not collect bale data from AWTA, most record the bale numbers and weights, and transmit this data to AWTA.
With non-tested sale lots, there is no AWTA involvement. Therefore we need a process soley ‘within the sellers system’.
The bale weight transmitted is only the ‘declared’ weight – e.g. not the weight at dump. There is evidence that the bale weights may be over 204kg, but recorded as that, with a commitment to bale weight adjust at a later date that never happens=; in these cases EDI data is still transmitted as 204kg
There will need to be some further calculation by seller to ‘search’ bale data, for each lot to be transmitted, to calculate required data – so there is a ‘cost’ involved.
Both the ‘heavy’ and ‘light’ bale data needs to be transmitted, as different sectors place different importance on each. For example, the heavy bales for OH&S and container opening, and light for bale stacking.
Not all buyers require, or place significance, on this data – for example some bales will be rehandled ‘locally’, or shipped un-dumped.
The weight ‘limits’ vary dependent upon the micron, and may change over time.
It is only the catalogue transmission that ‘excludes’ this bale weight data.
What about buyers who do not ‘pick up’ EDI catalogues – is the printed catalogue to be altered?
The big problem will not be affected! What to do when a seller sells bales outside the bale weight ‘limits’?

Where – does the data go in the EDI file?

At ‘Brand’ level (79A) - no space

At the ‘Lot’ level (20) – 4 & 1 space

At the ‘Lot Extension’ level (21A) – 2 spaces

At the Lot AWEX level (21C – AWEX Data) – 21 spaces – but this is a conditional record so not available to buyers!

A new record – is it worth it?

What – is to be transmitted?

A simple indicator identifying a lot as having bales outside the ‘regulations’ may be sufficient to filter the lot. In this case the basic lot record (20) could be used. The problem with this is that it falls into the usual problem of an empty field means the seller has not adjusted the software, or there are no bale weights outside the regulations? This type of transmission is more frequent than the incidence of bale weight problems.

Bale Weights

Wed, 23 Nov 2011 07:57:07 +1100

Pre-sale access to under & overweight bale data has again been raised as an issue at various levels. The most recent EDI committee meeting discussed options for declaring the bale weights in electronic catalogues.

For those interested, the EDI committee minutes, correspondence from the WIEDPC to NASC, and ACWE to both broker associations, are useful resources as to the ‘state of play’.

This issue is not new, and I recall developing software more than 15 years ago to reduce the impact of under & over weight bales in optimising unit configurations at the dump. In recent years this is the 4^th time it has been raised at the EDI committee.

As there does not appear to be any success in buyers making claims for bales sold outside the current regulations, making further moves via a ‘commercial solution’ unlikely.

Our quick survey of approx. 200,000 bales ‘shipped’ shows more than 500 bales overweight, and 10 underweight; with 50% of these bales direct from an auction sale.

Sample Rebates

Tue, 15 Nov 2011 16:43:02 +1100

Why have you not shown the sample proceeds in the cost analysis? Previously this was rebated back to the grower and now just goes back into the brokers revenue! The sale of growers samples is now the largest 'clip' sold at auction - buyer Melbourne

The sample 'rebate' is not really a cost! Yet it is agreed that it is 'lost' growers income.

For eample, in our example fleece lot the sample was 6kg, 'valued' at 1200 c/kg. Therefore the 'value' of the sample is $72. Now the broker has never really paid the grower this full value as there would be costs associated with preparing these samples for sale as a bale/lot. However it was not that long ago that brokers routinely paid the grower 75-80% of the sample value back to the grower. In this case approx. $57; or $19.20 per bale or 14.50 greasy c/kg.

It is interesting that the sample rebate is greater than that allowed by the example buyer cover all the buying costs, finance costs, risk etc. It is little wonder this has been raised.

So the broker earns far more than the wool buyer without risk? Eventhough the buyer markets the clip, takes the risk, finances the wool etc? - same buyer.

The broker needs to maintain a warehouse, testing equipment, field staff etc. Of course statistics can 'lie'. The sample lot was not meant to be representative