Integrated Supply Chain: What’s in Store for Dairy Sector in 2022?
By Samarth Setia
Dairy is one industry that has undergone a 360-degree transformation over the decades and has changed from being a farm-only category to a farm-to-table-in-a-matter-of-a-few-hours business category.
This transformation has been possible because of the implementation of technology at every level from production to the last mile. Technology has been a key enabler in helping dairy businesses solve various challenges they face at every step of their supply chain.
An efficient and cost-effective supply chain is what changed the business dynamics within the dairy industry. From managing time, temperature, humidity, cost, distance, demand, forecasting, and packaging, all important decisions have been streamlined because of the supply chain solutions available for a gamut of dairy products.
Today dairy is not only about milk. Its milk and various byproducts like lactose-free milk, milk powder, flavored milk, yogurt and greek yogurt, cheese, butter, buttermilk, ice cream, whey, and many other items. These are all time-sensitive sources of food that need extra vigilance and timely transportation to ensure freshness and minimum spoilage.
Through various supply chain solutions, one thing that all farms have been able to achieve is efficient movement. These solutions in sync keep the milk moving either to the end consumer’s table or to another machine to be converted to value-added products.
Let us explore in detail the five ways in which integrated supply chain solutions have benefited the dairy industry and how it will continue to benefit in the coming months – giving it the boost for growth and expansion.
- Better visibility of a complex process
Dairy businesses have a complex and interconnected process that includes many stakeholders and involves various activities such as milk production, handling, storage, processing, packaging, transport, distribution, wholesale, retail sales, and so on. The entire process gets tracked and efficiently divided and managed through supply chain platforms, giving better visibility of the processes to relevant stakeholders.
- Remote and digital operations
Before the pandemic, dairy plants required several people to be physically present for various functions like – operating equipment, receiving deliveries, and executing other operations. However, post-COVID, the need to reduce the physical presence of a human being led to the digitization of the plants and their facilities. That brought in several benefits, like real-time monitoring of product movement, remote access to plant operations and remote troubleshooting, automated financial updates to books, and traceability of delivery channels. This not only reduced cost and time but also reduced operational risks.
- Predictability
Implementation of software and technology has also not only improved efficiency and supply chain traceability but also increased demand handling capabilities leading to better business prospects. By integrating supply chain management systems, farms have been successful in managing their logistics, financial strategies, and customer-service solutions better, along with supervising returns and waste better.
- Data and business intelligence
The dairy business is highly dependent on data, and traditionally, plants used to work on no data at all. With IoT and other tech-enabled supply chain platforms, analyzing the data in real-time has become possible. Despite the whole channel being complex coupled with changing geographical dynamics, climate change and shifting consumer behaviour, intelligent business analysis is helping farms and plants with innovative actionable intelligence. For example, downtime issues are getting fixed in real-time by plant supervisors, tracking of trends in sales and plant operations is helping prevent losses and repetition of work, saving time and money.
- Business scalability opportunity
Availability of data and subsequent analytics also allows scalability opportunities. Integrating a strong supply chain platform also ensures that byproducts of dairy products are getting used efficiently. For example, whey, which is a byproduct of cheese, is being used to make body-building products, in infant formulas and many other edible items. Earlier the same whey was either thrown away or was fed to the animals. That became an opportunity for additional revenue.
The dairy industry has come a long way from manually carrying and delivering milk in open vessels to providing ready-to-consume milk and milk products from neatly packed and sterilized bottles and tetra packs. With integrated supply chain platforms, dairy businesses from across the world have been able to save hundreds of millions of dollars just by data analysis. There is still a lot that can be achieved with the help of technology, and experts are predicting the use of artificial intelligence in the dairy business to achieve autonomous solutions. That will be a game-changer.
Is India’s dairy market ready for this change?
India is the world’s leading milk-producing country accounting for one-fifth of the global milk production. Despite the volume, the industry is highly unorganized. About 60% of the business is handled by the unorganized sector (milkmen) compared to western countries where almost 90% of the business is organized.
Due to this uneven ratio, technology advancements in the industry have also been minimal leading to high wastage and inconsistent quality & quantity of milk for many small farmers. According to research conducted by the Chambers of Commerce and Industry of India (Assocham) and MRSS estimates, about 3% of the milk produced gets wasted annually. While many are open to change and are adopting the new technologies, the ones who are yet to accept that ‘change is the only constant’ are falling behind. There is a definite need for a dynamic shift in the way dairy businesses happen in India.
The supply chain solutions available are tried and tested innovations that have delivered excellent results allowing organizations to respond effectively to unpredictability and to improve milk process optimization. Apart from achieving greater competitiveness, better customer service, and higher profitability, dairy businesses are also able to foster better relationships with their partners, vendors, and customers.
These are exciting times for the dairy industry.
(Samarth Setia, Co-Founder and CEO, Mr. Milkman (a Dairy.com Company and the views expressed in this article are his own)
