Challenges to Automating and Streamlining Business Processes in the Dairy Industry
A typical product portfolio for most dairy brands consists of milk, fermented milk, yogurt, cream, butter, cheese, custard, and ice cream. These dairy products may vary, depending on the geographical location of the company and certain cultural factors, and can easily have hundreds, if not thousands, of varieties across all locations. There is not much manufacturing involved in the dairy industry. What you will find, however, are intricate systems for managing processing efforts. These processing efforts generally utilize the following nodes or process technologies:
- Milk production: Herd management
- Bulk production: The bulk product is mass-produced in batches with similar composition, but not yet packaged for consumption
- Finished Goods Packaging: The bulk product is packaged in different sizes
- Reprocessing: the bulk product is reprocessed for quality issues
- Storage and Distribution: Warehousing and shipment of finished goods
Some integrated companies may own a herd of animals for milk production. Others might procure the milk from milk unions or federations and focus on upstream activity, such as active bulk production, or downstream activities, including packaging and distribution. Most companies will have in-house research and development, quality inspections, and packaging, but may rely on external partners for warehousing and distribution. Just like any other supply chain, 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 that the requirements and challenges in this industry are unique is key to choosing a solution that can automate and streamline your processes.
From Seasonality to Regulations
Let’s discuss some of the key challenges facing the dairy industry in more detail:
- Addressing regulations with lot generation, inventory, and genealogy
The nature of business in any food industry demands strict regulations. Any defects need to be traced back to a particular ingredient lot or bulk lots. This requires the ability to name batches before the start of production and later trace the usage of such lots. The lot traceability feature using Lot Genealogy helps in tracking and tracing at various levels in both upstream and downstream directions. - Planning for seasonal raw materials (seasonal BOM)
There may be some products that can be produced only during certain times of the year because of the seasonal fruits used in the recipes. Such products require planning and procurement of seasonal ingredients based on the forecasted demand. This requires a seasonal Bill Of Materials (BOM) to be defined with effectivity dates on seasonal ingredients so that planning suggests procurement accordingly. - Plan secondary packaging materials (alternate BOM)
Often bulk products are packed in different serving sizes or shapes. Such products require planning and procurement of the bottles or packaging material based on the forecasted demand. This requires an alternate BOM to be defined with all possible packaging variations so that planner can firm the work orders based on primary packaging or alternate packaging, and trigger procurement accordingly. - Multipack or promotional packs (promotional BOM)
Companies sometimes launch “promotional packs” or “family packs” to boost sales of individual finished goods or single packs. These packs are also sometimes known as “multipacks.” These packs may contain multiple units of the same finished goods or assorted products of different kinds. Production of single packs or multipacks may happen at different inventory organizations. There is a high degree of planning involved so that the single packs, primary packaging materials of single packs, and secondary packaging materials for multipacks can be calculated, and then movements and production can be handled. This requires a primary BOM to be defined for single packs and then a promotional BOM to be defined for multipacks
These are just some of the unique challenges facing the dairy industry. In Part 2 of our series, we will discuss some of the key requirements dairy manufacturers look for when selecting an IT solution and how the Oracle Cloud has set one dairy manufacturer up for success.
Inspirage understands the challenges global companies face with complex manufacturing processes. We can help your business achieve a sophisticated solution to address these needs. If you are unsure about moving to Oracle Cloud due to gaps between your business requirements and Oracle’s Cloud offering, it’s possible that we have already built a solution to bridge that gap. If not, we can customize something to fit. We will do the work behind the scenes, so you can focus on growing your business.
Please visit the Oracle Cloud Marketplace to see a complete listing of Inspirage Solutions.
As the Integrated Supply Chain Specialists, with recognition from Gartner, IDC, and winners of Oracle’s ERPM (Enterprise Resource Planning & Management) & Supply Chain Management Cloud Partner of the Year (Global) awards in recent years, Inspirage is uniquely qualified to be your success partner. Whether you are upgrading your on-prem system or have decided to move to the cloud where continuous improvement is built-in, our team is prepared to guide you on your transformational journey. Contact us to learn more.
