Nowadays standing still means going backwards – this applies equally in the food industry, and particularly in the area of milk processing. Standardizing the entire supply chain is called for.

Regulation, Accuracy, and Price Pressure

The regulators nowadays impose ever more stringent hygiene regulations, which lead to producers having to redefine well-established processes, and sometimes make massive investments in infrastructure. An example of this is the supply of packaging material to the production line. A Swiss producer of milk products, for instance, had to invest a sum amounting to multimillions to add a new hygiene zone including sluices to the higher-quality production hygiene zone in order to meet new European guidelines.

Retailers are demanding increasingly efficient and more precise supply concepts which guarantee a very high degree of accuracy. This is in particular against the background of wanting to keep expensive manual operations in retail outlets to a minimum.

Last but not least, there is the market, which especially in Switzerland exerts a massive pressure on the price stability of individual milk products due to the entry of new competitors and the subsequent competitive struggle which this creates in a crowded market.

All these factors force milk-processors to optimize their own processes and, where appropriate, to automate them, so that successful economies can continue to be made. The decisive factor here is that the increase in efficiency does not end solely within the producer’s own four walls. It is definitely worth looking at the bigger picture.

Standardizing Containers From Producer to Shelf

A producer must therefore consider the question as to where efficiency can be achieved. The deciding factor here is looking at the logistics chain as a whole, from procurement through to sales to the end customer in shops. It should be noted that this involves managing many interfaces (Production, distribution centers, stores, consumers).

To optimize the flow in the system, as well as the consistent introduction of standards during pricing and the mutual exchange of information, we also see the use of standardized plastic containers for handling the corresponding products. A standard container makes automated handling easier in the suppliers’ and producers’ systems, as well as for any intermediate distribution platforms in the chain. Finally, it includes the individual shops in which, in an ideal world, the goods arriving can be placed straight from the transport unit onto the display without further handling (unpacking, assembly etc.).

Goods displayed in same container directly onto shelf

These concepts work very well for the major distributors in Switzerland. For example, the logistics chain between distributor and producer has for years been based on a standardized container concept. Although this brings many advantages, such as automated handling of the units in particular and optimized loading density on the transport, such a pool of containers does, however, also create challenges which have to be overcome if a chain is to be used efficiently.

Flow of Goods Inside Swiss Retailer and Its Supplier Companies:

Opportunities for optimization

• Hygiene is guaranteed because the containers are washable
• Automated handling is easy to implement at all stages of the process chain (production, warehousing, distribution)
• Resistance to damage compared with packing in cardboard boxes
• Handling in the shop is minimized. The product can be placed directly on the display without unpacking or re-packing being necessary

Challenges to be overcome

• Management of the container pool
• Transport of empties has to be taken into account in the logistics chain and assessed accordingly
• Introduction of standardization for all manufacturers
• Requirements for hygiene, traceability and ergonomics

Using the Swiss example with its two both major distributors, we can see an enormous potential for processes to be optimized in other countries based on this template. In Scandinavia, for instance, even the packaging has been re-dimensioned so that it fits into standard transport containers.

In optimizing a logistics concept, it is always necessary to ensure that the logistics chain starts at raw materials procurement and only ends at the sales counter, or in the customer’s purchasing vehicle, but not at the branch unloading ramp. A comprehensive overview is essential if costs are to be sustainably reduced.