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From Steer to Eternity

American beef producers are revolutionizing their industry with technology. New tracking systems allow ranchers to document every aspect of a cow's life, improving both quality and efficiency.

Beef producers are using a revolutionary supply-chain system to reduce costs and raise revenues. Your industry could be next

The sky is low, the color of skim milk, and a breeze rattles the scraggly mesquite trees that ring the entrance to Capitol Land and Livestock, a cattle dealer in Schwertner, Tex. Behind the company's stately, porticoed main building, a brown-and-white Charbray lumbers through a labyrinthine arrangement of open-air pens, gates, and alleys, stopping at last inside the squeeze chute, a narrow metal stall that restrains her movements. Wielding a tool that looks like a giant hole punch, a worker clamps a yellow plastic tag on one ear. The calf flares a nostril but appears otherwise unflustered.

Inside that thumbnail-size tag lies a tiny radio-frequency transponder. When the worker waves a metal wand over it, a unique ID number is transmitted wirelessly to a Dell laptop computer perched on an overturned trash can a few feet away. Jim Schwertner, Capitol's 46-year-old president, leans over the computer and watches as the number appears in an Excel spreadsheet. He then types in the fact that the worker is squirting TSV2, a vaccine for respiratory disease, into the calf's nose and injecting worming medicine into her flank. The computer is also cabled to a switch box with multiple serial ports resting on a chute-side table. The ports feed the computer output from an electronic scale and a digital thermometer inserted into the calf's rectum: this animal weighs a healthy 592 pounds and has a normal temperature of 101 degrees. Her vitals punctiliously recorded, the calf is released and trots off to her pen.

Capitol Land and Livestock, a $150-million company founded 51 years ago by Schwertner's father, doesn't look like the epicenter of an industry revolution. But the business--along with a handful of others, many of them in Texas--is experimenting with a technology-driven model of supply-chain integration and management that could, among other things, raise the price cattle producers get for their wares by 5% or more, reduce costs by 20%, significantly improve the quality and consistency of the meat sold in supermarkets and restaurants, and help quell public fears about beef safety. "It is the single biggest thing ever to happen to this industry," says James Herring, CEO of Friona Industries L.P., an operator of feedlots and feed-manufacturing companies and one of Schwertner's partners in the supply-chain project.

At a time when companies in many industries are consolidating suppliers and demanding new informational intimacy with business partners, the beef system is a prime example of how even the smallest organization can use relatively inexpensive technology to build a better product and secure relationships with customers. And while beef producers are among the first to embrace such a sophisticated system, the model has implications for any industry in which raw material of variable quality is transformed into finished products of variable quality by a multiplayer manufacturing chain.

The umbrella term for what the beef companies are doing is "source verification and performance-data tracking," the creation of a kind of bovine audit trail that captures every event in an animal's life, from birth to butcher. Schwertner's company is using a primitive version of the system, but he expects to have a more sophisticated model in place in a few months. What won't change are the ear tags: each calf is outfitted with a tag containing a small antenna that's attached to an integrated circuit storing a unique ID. The tags work roughly like bar codes: when swept by an electronic reader, they transmit their ID numbers wirelessly to a computer.

At Capitol Land and Livestock, the ID number is stored locally in a spreadsheet, along with other information the company has about the animal. The spreadsheet is then sent on a disk to Schwertner's business partners--in this case, the companies he supplies. In the new model, all of Schwertner's data will be transmitted by modem to a database running at a third-party vendor or an industry association, where it will be joined over time by information collected by a series of owners using a variety of tools: radio-frequency identification (RFID) readers, handheld and laptop computers, electronic weigh scales, scanners that read drug-container labels--even a gadget that performs ultrasounds to determine how much fat an animal carries.

As the animal moves down the manufacturing chain, both new and past owners will be able to check that database, using the Internet, for relevant chunks of its biography. At the top, ranchers can find out how much weight an animal gained at each stage of production and how much red meat it rendered at the packing plant--information they'll use to make decisions about culling, grazing, and breeding. At the bottom, packing-plant workers can check for things like needles that may have broken off in a calf's flank or drugs that have not had time to pass through its system. Even retailers will eventually be able to contribute, noting, for example, whether a slab of meat received from the packing plant broke down into 9 steaks or 16.

Large ranchers have been collecting some of this data for years, scribbling it in notebooks as animals are weighed, checked for pregnancy, or given injections, and then keying it into herd-management programs back in their offices. But recording which heifer bred with which bull tells them nothing about the quality of the porterhouse that resulted from that union. Using data on a calf's development fed back into the system by subsequent owners, however, ranchers can decide whether to breed two specific animals again or whether to sell the bull and put the cow out to pasture. The information can also help ranchers, feedlots, and packers identify the best and worst among their suppliers--information they weigh when deciding who receives the favor of their business.

"This technology has shown us that preconceived ideas we've had about cattle are completely wrong," says Schwertner. "For example, the industry has for a long time thought that if you had a group of cattle that all came from the same rancher, that looked alike and had the same genetics, they should all perform similarly. Not true. And now that we know that, we don't have to go out and pay more for one-ranch cattle anymore. We know what we buy at the auctions is just as good."

Such performance data--whether it is used to improve product quality, locate the source of defects, or choose the best suppliers--is important to any number of industries. Food production is the most obvious: in a situation like last year's hepatitis scare, strawberry producers could have used such a system to quickly determine at what stage the fruit became contaminated. Forestry companies have an interest as well. The industry is trying to build a market for certified wood products, and in order to prove that finished goods have been grown and harvested in ecologically sound ways, they must be able to leave a trail of digital bread crumbs from landowner to retailer. Applications even extend as far afield as the high-tech industry, where PC manufacturers that buy from circuit-board assemblers and other small companies could keep glitches to a minimum by noting the conditions of each component's manufacture and determining at what stage of production problems crept in.

Leigh Buchanan is an editor at large for Inc. Magazine. A former editor at Harvard Business Review and founding editor of WebMaster magazine, she writes regular columns on leadership and workplace culture. @LeighEBuchanan