As we discovered in Part 1 of our series, there is not much manufacturing involved in the dairy industry, but instead many intricate systems for managing processing efforts. Because of these complexities, dairy supply chains face unique challenges, such as:

• Tight quality regulations
• Changing seasonal products
• Various packaging requirements, in alternate sizes and shapes
• Promotional packaging and bundling of products

Understanding the requirements and challenges specific to this industry is key to choosing a solution that can automate and streamline your processes.
 

 

• Co-Products and By-Product Planning and Reporting
  If a batch process produces a single output, the product is known as a “primary product.” If any process produces multiple outputs, then the products are called “co-products.” Similarly, a batch process may also produce unintended outputs along with primary or co-products; these products are known as “by-products,” which still have economical value.For example, raw milk processing can result in co-products such as skimmed milk with varying percentages of fat content and produce raw cream as a by-product.

• Mixed Mode Manufacturing
  Typical dairy processes involve at least two steps. Bulk production is typically the first step; this is when the raw materials or ingredients undergo physical or chemical changes, such transformations are irreversible. Process manufacturing is best suited for bulk production processes where multiple products are produced.The second step is filling the bulk as finished goods. This process always has single output products, and discrete manufacturing is best suited for the finished goods. There is also a need for mixed-mode manufacturing, where the process manufacturing method is used for bulk production and discrete mode is used for filling.

• Partial Batch Picking and Completions
  Production always happens in fixed batch sizes because of capacity constraints. As a result,  production planners may release work orders based on various demands and material availability calculations, but actual completions are driven by capacities of the machinery and resources involved, production lines that are available, etc. The solution should consider partial material picking, ad hoc material requests, fixed lot multiplier size of ingredients, etc., and allow for partial completions accordingly.

• Plan and release work orders based on the availability of raw materials
  Some main ingredients are available in abundance which the companies may process and store for later use. For example, milk can be converted to skimmed milk powder to enhance shelf life. Similarly, butter oil or raw cream extracted from raw milk can be stored for later use. Planners may decide to utilize the alternate ingredients when there is a scarcity of the main ingredient, or the cost of production is lower than conventional ingredients. The solution needs to involve maintaining an alternate bill of materials so that planners can select the recipes accordingly.

• Over completion and under completion functionality for bulk and finished goods
  Often, the bulk production process results in either overproduction or underproduction, as it involves chemical or thermal processes. The result is completions that may result in a gain or loss. If over-completions are reported where ingredients used remain the same, then there is a gain. If the ingredient usage is the same as the standard, but the output is less, then there is a loss due to under-completions. System solutions should define thresholds where completions don’t deviate from allowed units or percentages. The thresholds can be configured at the manufacturing plant level, item level, or work order level.

• Rework and transform functionality
  Dairy processes are subject to stringent quality checks and often require reprocessing based on quality rejections. Rework functionality offers the ability to consume previously produced bulk and report a new lot of the product which passes quality requirements. Similarly, transform functionality is used when the bulk can be subjected to further chemical processes before filling. For example, raw cream, which is produced as a by-product, can be further transformed into frozen cream, which has a longer shelf life. Oracle Manufacturing Cloud has built-in rework and transform flows that reduce the manual workarounds of inventory account alias transactions and sub-inventory transfer transactions.

• Plan and release material movements depending on individual batches
  The actual production area often has space constraints and requires material movement from Raw Material Store to WIP Store when actual production starts. Supply chain orchestration should allow planning of raw materials and ingredients by considering current stock in the production area and suggesting internal transfer requests from source sub inventory or inventory organizations. Out-of-the-box Oracle Supply Planning and Planning Central are robust planning engines that analyze the demand and current on-hand inventory and sub inventory levels and recommend relevant transfer requests.

• Grouping of transfer orders for internal movements based on individual departments
  There may be different treatments for each product, so the production lines may depend on the nature of the product. For example, some ultra-high treatment products are tetra packed and have a long shelf life, whereas juice products and fresh milk products have a short shelf life. The internal transfer requests may require the grouping of raw materials and packaging materials from the ingredient store to the WIP store for each of these production departments.

• Scaling of batches
  There may be situations where the batch or the work order quantity needs to be updated for various reasons. Changes to the output quantity would mean the ingredient quantity, resources, and completion time need to be re-calculated appropriately. This feature of updating all aspects of the batch is known as scaling. The production team has the flexibility of scaling based on batch quantity, primary output, or ingredient availability. The batch would be rescheduled automatically based on the changes.

• Material Reservation based on individual batches
  A typical plant layout consists of a storage warehouse for ingredients and packaging materials, different production areas depending on product types, and storage warehouses for finished goods, which may require cold storage. All of the different departments have to raise movement requests with the same ingredient store. As there may be common ingredients, the materials may have to be reserved based on the completion schedule to avoid shortages during actual production. Oracle Manufacturing has a native reservation feature that places hard allocation of the components to particular work order so that other work orders cannot consume the same lot.

  The number of business processes that are streamlined and simplified hold the key to a successful implementation.