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Feature
Data Processing for Dairies
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Monday, 18 January, 2010, 08 : 00 AM [IST]
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By Payal Agarwal
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An IT-based information solution can help SME milk collection centres optimise their performance and cut operational costs
India is one of the largest milk-producing countries in the world. A major contributor to the nation's GDP, the dairy industry is an economic stronghold for India. However, the Indian dairy industry, like other industries in India, has its shortcomings. These are largely due to the industry's fragmented structure, with most cooperatives in the country belonging to the small and medium sector.
Redundancies and inefficiencies are prevalent in the SMEs' supply chains. A surfeit of middlemen and lack of coordination along the supply chains result in supply chain fragmentation and quality discrepancies. At many critical links in the chain, unnecessary human intervention is common, increasing the possibility of errors and necessitating additional costs. Dairy cooperatives in India, particularly the SME players, need to optimise this factor to improve their bottomline.
Lack of coordination is another major issue with SMEs, especially visible during demand forecasting. Due to inefficient demand forecasting, the procured volume of milk could exceed the actual consumer demand by many tonnes. This creates milk storage problems, leading to wastage and quality depreciation. According to Gaurav Verma, MD, ARC Foods, "Because of inefficient demand forecasting practices, there is a huge demand and supply gap in the Indian dairy sector. Very often, production exceeds demand, leading to wastage."
The typical Indian dairy supply chain lacks promptness, hindering both large players as well as SMEs from achieving long-term sustainability. The dairy industry is in urgent need of an efficient IT-based system to collect, update and furnish data on a real-time basis. H Das, Professor, Agriculture and Food Engineering Department, OT Kharagpur, says, "The Indian dairy market has a multi-layered structure with a pyramid-like hierarchy. Its base is highly unorganised, comprising small dairies, rural milk producers, milkmen and vendors. During this technological era, an IT-based system is a must to consolidate the operations of the dairy cooperatives in the SME sector."
In this situation, Information and Communication Technologies (ICT) could be an effective solution for both large cooperatives and SMEs in the dairy sector. ICT involves technologies associated with data analysis and data transfer on a real-time basis. For Indian dairy SMEs, ICT systems have several potential applications-cash payment automation, automated milk collection, centralised systems monitoring and real-time networking across the supply chain links. Considering these benefits many Indian dairy companies are opting to implement ICT in their facilities.
How it Works
At cooperative milk collection units, farmers sell milk of different qualities and volumes. To maintain their unique identities, the farmers are provided with electronically coded plastic identity cards. These are dropped in a box which reads the identification numbers and transmits these to a computer, while the milk is emptied into a container placed over an electronic weighing machine. The machine displays the weight of the milk and simultaneously transfers this information to the computer. While the milk is carried to the dairy through a tube connected to the container, a sample of it is passed through an Electronic Milk Testing unit. Depending on the fat composition of the milk, the amount, rounded to the nearest rupee, is printed over a payslip and paid to the farmer. The balance due to the farmer is adjusted in future payments. This takes around 20 seconds, and involves minimal human intervention.
ICT Application - Key Points
Before implementing an ICT platform, there are certain key points which rural and SME cooperatives must consider. Some of these are discussed below.
• Rural dairy cooperatives and SME sector players need customised ICT platforms, for which prior assessment of their operation's mechanisms should be done.
• Initially, the SMEs should implement the custom-designed ICT system in a limited manner. The expansion plans for the system should be made progressively, taking into consideration the results obtained from the limited implementation.
• To effectively customise ICT platforms to individual needs, SMEs should work in coordination with the suppliers in the industry. Also, a pilot exercise for full-fledged implementation of the system could help SMEs achieve optimal results.
Milking the Benefits
ICT has several benefits for SME dairy cooperatives, farmers and customers. It minimises the payment time remarkably, saving around 10 minutes of the time spent when making payments through the manual mode. With 2500 milk collection centres and 400,000 daily suppliers, this works out to 180,000 man-days per month. It also enables quick and accurate measurements of milk quality and composition, thus reducing the chances of discrepancies while improving the quality.
Patanjali Rao Upadrasta, MD, Upadrasta Dairy Specialties Ltd, says, "Through ICT, SMEs can minimise the number of employees required and create a real-time accounting environment." The data for the accounts obtained according to the payments made to the farmers Moreover, the ICT software can maintain revenues and expenditures on a real-time basis, which minimises the chances of pilferage.
Indian dairy industry players, including SMEs, need to adopt an effective TJ-based solution such as ICT to manage their businesses. This will provide them pivotal business levers such as real-time data analysis am demand forecasting, helping them consolidate the supply chain and improve their revenues.
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