Application of Electronic Enablers for

Supply Chain Management Case Study of Dairy Products

Pouria Ghaternabi@PouriaGhatrenab

Agenda Industry overview Upstream Supply Chain Downstream Supply Chain Supply Chain Challenges Traceability Case Study

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Dairy Industry Overview

85%

1.4%0.2%

11.1%2.1 %

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Consumption

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Production

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Milk Supply Chain Functions

Upstream Supply Chain Downstream Supply Chain

Co-operatives Direct from Farm

Dairy Boards

Milk Collection Sources

Small CooperativeDirect FarmDairy Boards

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Upstream Supply Chain

Down Stream Supply Chain

Dairy Products

Processing Plant

Retailers Distribution Center

Transportation

Labeling Manufacturin

gPackaging

Corrugated Paper / Plastic

Company

ConsumersMaterials Flow

Information Flow

Dairy Industry ChallengesDiverse Food categories

Price Deflation

Power shift in industry

• Milk & other goods• Beverage to powder• Solid to viscous• Packaging: canned, bagged, boxed

• Low-margin business• Customers demanding lower prices

• Power shifting from manufactures to Retailers (Wal-mart, etc)

• Everyday low prices strategy

Need to deal with the complexity and

decreasing prices

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Dairy Industry ChallengesSeasonal fluctuations

Changing quality of raw materials.• Farmers can produce as much or

as high a quality during certain seasons of the summer

Consumer demands changes based on seasons. • More ice cream in summer, less

in winter.

Need to control and efficiently manage

variances in the quality and quantity of raw milk

collected

Lack of access to real-time data about the milk can lead to inefficient raw material utilization and inaccurate

demand planning and forecasting further down the supply chain

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Dairy Industry ChallengesChanging consumer taste and requirements (Mass customization)

Food safety and security legislations

• Diverse population with differing tastes.• Changing lifestyle (more health

conscience)• Expect High Quality, availability, and

value.

• Contamination• Bio-terrorism• Traceability laws

Need to produce and deliver increasingly diverse product lines

with differing labeling & packaging requirements

Need to increase the integrity and accountability of the supply chain.

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Traceability in the Dairy Industry

Widely deployed technology is electronic traceability systems such as ERP systems. Bar-Codes, RFID tags and Computer produced labels are pervasive in the dairy foods industry.

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Why Traceability is Important

Improves efficiencies and effectiveness in the supply chain process.

Easy search and quick access in all systems involved in the supply chain.

Monitoring of product movement and information relating to product quality.

For product recall and withdrawal.

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RFID enabling supply chain of milk from farm to store

IN THE FARM For identification of cows Enables automated calf feeding. It facilitates the use of automatic drafting

gates in some farms. Utilized to monitor the entrance and

departure of a cow from the milking parlor and to record a cow’s milk production.

IN PRODUCTION PLANT Product Identification. Product Information and Contents. The manufacturer is able to track the

product through wireless radio communication.

RFID TAG

TRADITIONAL TAG

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RFID enabling supply chain of milk from farm to store

IN THE FARM For identification of cows Enables automated calf feeding. It facilitates the use of automatic drafting

gates in some farms. Used to monitor a cow’s entrance and

departure from the milking parlor Used to record a cow’s milk production

IN PRODUCTION PLANT Product Identification. Product Information and Contents. The manufacturer is able to track the

product through wireless radio communication.@PouriaGhatrenabi

Case Study:

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Valio A Finnish Producer of Dairy consumers

products Owned by 18 Finnish milk co-operatives Number 1 and market leader in Finland and

exporter to over 60 countries. Some of Valio’s products are Valio Zero

Lactose™ milk powder, spreads, cheese etc.

http://www.valio.com

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Shipment Process at Valio Milk is chilled, pasteurized,

containerized and placed on trolleys to fill orders.(Automated robotics)

Workers remove cart from conveyor line to staging areas.

Carts are loaded onto trucks.@PouriaGhatrenabi

Challenges in supply chain @Valio

Shipment on to wrong trucks

Shipment at wrong times

Poor visibility of supply chain

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‘‘Tag wheel’’ with built-in Passive UHF tags

http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi

RFID Reader Antennas

http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi

Tag wheel and antennae in use

http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi

Benefits of RFID Technology implementation at Valio

End to end visibility Reduction of Errors in wrong

shipments Software issues instant alerts via

warning lights, text and email in the event of wrong loading or incorrect time.

Reduction in the amount of manual labor.

Conclusion Dairy Industry is has a very complex product

line that is compounded by the products very short life span.

Retailers & Customers are forcing downward pricing pressures on industry.

Demand of dairy products is increasing world wide, necessitating innovation in the supply chain.

Industry is using latest technologies to manage the supply chain and efficiently monitor products.

http://www.youtube.com/watch?v=tVNq_K6fyi8

References(1)

Canadian Dairy Information Center. (2013, 10 10). Canadian Dairy Trade Balance. Retrieved from Canadian Dairy Information Centre: http://bit.ly/1c481HO

Economic Research Service. (2005). United States Department of Agriculture. Retrieved from http://www.ers.usda.gov/Data/InternationalFoodDemand

Faye, B., & Loiseau, G. (2002). Sources of Contamination in Dairy Supply Chains and Approaches to Quality Control. Food Safety Management in Developing Countries. Montpellier.

Gerosa, S., & Skoet, J. (2012, 02). Milk availability: trends in production and demand and medium term outlook. Retrieved from www.fao.org/economic/esa

IFCN Dairy Research Center. (2011, 05). IFCN World Dairy Map 2011. Retrieved from http://www.ifcndairy.org/: http://bit.ly/1broN3p

List of dairy products. (2014). Retrieved from Wikipedia, the free encyclopedia: http://bit.ly/1e3oD1U

(2005). Profitable growth and value creation in the dairy industry, A view from Deloitte and SAP. Deloitte Touche Tohmatsu.

Spiegel, M. v., Fels-Klerx, H. v., & Marvin, H. (2012). Effects of climate change on food safety hazards in the dairy production chain. Food Research International, 201-208. Retrieved from www.elsevier.com/locate/foodres 

References(2)

Business, C. (n.d.). Profitable growth and value creation in the dairy industry A view from Deloitte and SAP Table of Contents.

Kelepouris, T., Pramatari, K., & Doukidis, G. (2007). RFID-enabled traceability in the food supply chain. Industrial Management & Data Systems, 107(2), 183–200. doi:10.1108/02635570710723804

Trevarthen, A., & Michael, K. (2008). The RFID-Enabled Dairy Farm: Towards Total Farm Management. 2008 7th International Conference on Mobile Business, 241–250. doi:10.1109/ICMB.2008.39

Prater, E., Frazier, G. V., & Reyes, P. M. (2005). Future impacts of RFID on e-supply chains in grocery retailing. Supply Chain Management: An International Journal, 10(2), 134–142. doi:10.1108/13598540510589205

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