From farm to store

Blurb:

“The warehouse requirement as well as transportation requirement demands strict temperature maintenance because of the perishable nature of the product. From a producer end to the processing unit, the usual lag time is around 4 to 8 hours depending upon the distance. It does not take more than 4 to 5 hours from the processing unit to reach the retail points for Delhi-NCR and 6 to 7 hours for Uttaranchal /Haryana.” RS Dixit, CMD, RSD Group, Gopaljee Dairy Foods Pvt Ltd

According to a report by US Department of Agriculture, India’s milk output is expected to touch 121.5 million tonne in 2011. While the demand for milk has been growing by about six million tonne a year, the annual incremental production over the past 10 years has been 3.5 million tonne.

Milk procurement and storage

Dairy industry sources its requirement of liquid milk mainly from local farmers, dairy co-operatives and producer institutions. It is necessary to procure milk twice a day to ensure quality milk procurement. The value chain connects the rural milk producers to the end consumers through transportation at different stages of intermediary processing, viz, chilling units, processing units, storage units and retail stores. In order to maintain freshness, this milk is chilled and then transported to the warehouse in insulated milk tankers by road and by rail.

Generally the dairy products are only stored for a short time to comply with quarantine and maximum cold storage period requirements until quality assurance releases the goods for sale.

“The warehouse requirement as well as transportation requirement demands strict temperature maintenance because of the perishable nature of the product. From a producer end to the processing unit, the usual lag time is around 4 to 8 hours depending upon the distance. It does not take more than 4 to 5 hours from the processing unit to reach the retail points for Delhi-NCR and 6 to 7 hours for Uttaranchal /Haryana”, says, RS Dixit - CMD - RSD Group - Gopaljee Dairy Foods Pvt. Ltd.

Fresh milk management is a key issue in dairy industry. The dairy products mainly consist of fresh products which are highly perishable such as fresh milk, and it needs to reach the retail point early in the morning. Apart from procurement cost, the cost of transport is also a major concern for dairy industry.

In recent time, we have seen consistent increase in fresh liquid milk price. Joining the league are the brands like Mother Dairy and Amul which increase prices frequently. The reason is increase in milk procurement price due to rise in input costs like cattle feed, fodder and cost of transportation.

Dairy product is a difficult business because of short shelf life and complex logistics. And that’s a major reason why the sector is largely dominated by home-grown firms like Amul and Mother Dairy.

Quality assurance

At laboratory, the milk is tested for adulterations and quality at the time of collection from the farmers. The milk in the tankers is first checked for quality and freshness and then unloaded into huge insulated stainless steel storage tanks. The milk quality is checked repeatedly after each processing phase and the temperature is judiciously maintained less than 5° celsius always.

Before the milk leaves the plant for the delivery or distribution outlets, the milk is tested again. Being a perishable product, milk needs refrigeration at each point of handling and storage. The warehousing ought to be refrigerated one where the temperature needs to be maintained below 4° celsius. The long distance transportation is managed through refrigerated containers and the short distances through insulated containers, which maintain the temperature of the product.

To ensure milk freshness, the collection and distribution points are always chosen such that the travel time between them is always less than 36 hours. A final quality check of the milk is also made at the retail shop itself. This ensures that milk reaching the customers is of the same quality as dispatched from the dairy producer.

The distribution network

The Gujarat Co-operative Milk Marketing Federation (GCMMF) that markets the brand Amul has its products available in over 500,000 retail outlets across India through its network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products. All GCMMF branches engage in route scheduling and have dedicated vehicle operations.

Mother Dairy, a wholly owned subsidiary of National Dairy Development Board (NDDB) of India, has over 820 milk distribution outlets in the National Capital Region. It has recently rolled out SAP implementation to link its 11 plants, 45 distributors, 16 packaging locations to track and monitor movement of its products. Mother Dairy with 79 tankers in the morning and 75 tankers in the evening bring in milk from the regional collection centres. After collection the same tankers are utilised for the delivery of the processed milk to the vendors and outlets.

Talking about Gopaljee’s distribution network, Dixit says, “We are at present operating at around 6000 villages across western UP, Haryana and Uttaranchal through establishment of about 40 milk chilling centres along with 30 odd bulk milk coolers.”

Third party logistics services

Generally dairy manufacturers depend on 3PL parties for their logistic needs. These needs include logistic of milk collection, distribution of dairy products, sale of the products through dealers and retail stores, some veterinary services, etc. Even though these functions are performed by 3PL parties, the dairy manufacturers need to retain control and assure quality and timely deliveries, especially for perishable items such as fresh milk. 

When asked about the complication related to dairy logistic, Dixit replies, “We do not regard the logistics of milk and fresh milk products as complicated. Rather we see them as challenges and opportunities to improve our efficiency and commitment in providing consumer services.” He further says that the company suffers negligible loss in revenue due to logistic issues.

Just-in-time delivery to improve ROI

The spoiled or soured milk is returned to the retailer by customers; who further return it to the dairy manufacturer. The milk spoilage is generally caused by the plant failure such as refrigeration machinery, switchboards or reticulation. The milk can also get spoiled during transportation and packaging. 

In the case of milk retailers, they are increasingly interested in just-in-time deliveries, so that they can reduce their own storage costs. Just-in-time inventory strategy also improves dealers’ return on investment (ROI). “The strong technical competency and standardised production process ensures that there is minimum handling loses. The service backup systems available restrict milk to go sour”, says Dixit.

Better technology to spruce up quality

The technological development in dairy industry will facilitate long distance movement of fresh products and make it possible for the consumers to have quality options. With the road infrastructure development taking place and the available technologies, it would not be difficult to operate pan India distribution.

“The emerging technologies like GIS will certainly going to improve the efficiency of operation while the product is on the move.  The introduction of new technology towards cost effective refrigeration system and better road connectivity in the rural areas will be the boon towards addressing the issues of logistics in Indian Dairy Industry, thereby ensuring value for money for the consumer”, concluded Dixit.