Keeping a Grip on Milk

Automated warehousing ensures fresh dairy

Automated warehousing ensures fresh dairy

Offering shopping convenience is an excellent asset for any retailer, but it can cause quite a headache for those involved in the supply chain. In his recent blog post, my colleague Patrick Seibel looked at Coca-Cola to highlight what it means having to deal with empowered shoppers. When it comes to products like milk, cream and yoghurt, staple food items of billions of consumers, things are no less complicated. In the Liquid Dairy business, the impact of market dynamics on the industry’s supply chain generates huge intralogistics challenges of their own.

Let’s try to better understand which forces are affecting which topics in this industry. The graphics in this article depict the major factors shaping the supply chain: market dynamics, intralogistics challenges, the intralogistics solution providers, and warehousing & distribution for FMCG. The second graphic elaborates more in detail on market dynamics. Even though the graphics do not show all ramifications, it becomes easily clear that there are lots of relationships working in many directions.

Major forces impacting the liquid dairy business supply chain

Major forces impacting the liquid dairy business supply chain


If You Fight Shy of Complexity Keep Fingers Off

To illustrate the inherent complexity, let’s look at the market dynamics force that is shown in more detail in the graphic below. Here are some examples of how direct relationships impact the supply chain:

  1. Society requires food safety which calls for integrated product traceability from farmer to consumer. As a consequence, data driven challenges arise: sufficient granularity in traceability data requires batches as small as possible in order to recall them in case of quality problems.
  2. Ever-growing consumer choice resulting from food manufacturers expanding their product offering leads to strong SKU proliferation. This sets new standards for system capabilities.
  3. In the area of outlets, retailers’ shop layouts are determining the method to deliver the goods, asking, for example, for sequencing during loading. This adds to the complexity of material handling.

Another of countless examples for the high degree of complexity can be found within the intralogistics challenges force. To comply with global standards like BRC, retailers are auditing their food producers frequently on many aspects. These include respecting HACCP and general hygienic rules, among other things. Obviously, this doesn’t make the processes landscape any simpler.

The market dynamics force in more detail

The market dynamics force in more detail

One general insight cannot be overlooked: tomorrow’s order fulfilment systems will require much more advanced capabilities – making them at the same time more complex. Therefore it is of increased importance that solution providers of automated and mechanized intralogistics systems rely on proven industry concepts for product storage & retrieval as well as for order preparation. More complex systems will in turn ask for higher investments. Given the strong focus on ROI, dairy processors are likely to opt for an early involvement of solution providers offering consulting capabilities.

Think of Integrating, Concentrating and Automating

A nice example of a promising approach for fresh dairy products is the integrated solution chosen by a leading Norwegian dairy manufacturer and distributor. The company decided to realize a brand-new main DC in the Oslo area in order to concentrate its logistics operations. Besides concentrating the operations of different sites, logistics processes are highly automated assuring maximum output capacity. This is achieved via store-friendly loaded trolleys that by the way provide the highest operational safety.

Dealing with products as sensitive as milk and getting delighted consumers every day is a demanding task. Market dynamics factors such as customer satisfaction, price pressure, brand protection, and supply chains with higher complexity, imply having to deliver exceptional performance on a sustained basis. Therefore, dairy processors pursuing competitive advantage are bound to continuously invest in state-of-the-art technology to support their operations, and for both production and intralogistics. They will have to think about forces and their mutual relationships more often than they might wish. The average consumer, however, will continue to pick her favourite milk, cream and yoghurt from an ever richer choice without wasting a single thought on any kind of relationship graphics.

Leave a Reply

Your email address will not be published. Required fields are marked *

*


*

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>