Milking new opportunities
Being the largest producer of milk in the world, India’s organized dairy sector is thriving and over the last few years, the sector has been investing significantly in IT
Being the largest producer of milk in the world, India’s organized dairy sector is thriving, and over the last few years, the sector has been investing significantly in IT
India has emerged as the largest milk producer in the world with an annual production of 125 million tons, accounting for over 15 percent of the global output. Says Sunil Sharma, VP, Sales & Operations, India & Saarc, Cyberoam, “According to the Investor Relations Society (IRS), the size of the Indian dairy industry is expected to double to ` 840,000 crore by 2020 on the back of growing demand and rising disposable incomes.” IRS pegs the dairy segment at ` 420,000 crore now and growing at a CAGR of 15-17 percent.
The Center as well as several state governments have realized the potential of dairy and are enabling modern infrastructure to attract investments. Many state governments have allocated funds to automate dairies.
With this, the uptake of IT is going up in dairies. A major factor driving IT adoption in this segment is the need for ISO 22000 certification which necessitates the implementation of adequate controls to avoid foodborne hazards.
Additionally, growing FDI in the dairy and food processing segments is boosting IT uptake. According to Bloomberg, foreign companies announced $15.6 billion worth of acquisitions in India last year, up from $11 billion in 2012.
The dairy segment is driven by milk cooperatives in India. These cooperatives enable milk to be collected from farmers, standardized for hygiene, and sold to downstream processors seeking reliable and sustainable sources of milk.
However, dairies face challenges in supply chain management. Manoj Yadav, DGM, IT, Namaste India Foods, a Kanpur-based dairy, explains. “Supply chain and logistics are particularly important in the Indian market because the warm climate makes our customers very sensitive to shelf-life. That’s why it is critical for us to get our products on to the shelves as soon as possible. With the increasing competition, most of the dairy players are opting for robust and integrated solutions.”
Other challenges include adequate and timely payments to vendors and farmers, adulteration, siphoning of milk, and maintaining loyalty among farmers and vendors. Not surprising then, dairy players have started taking IT seriously to improve their processes.
A major challenge at the milk collection level is about farmers complaining of exploitation. “Farmers feel cheated due to nontransparency in the quality and quantity measurements of milk which lead to less than adequate payments. Payment delay is also a big grudge,” says Sanjeev Latkar, Director, DSK Milkotronics, a Pune-based solutions provider who offers solutions for the dairy segment.
Dairies are now opting for an automated milk collection system (AMCS), an integrated system with PC, printer, milk analyzer, electronic churner, electronic weighing scale, UPS and dairy management software. Says Latkar, “AMCS is enabling dairy companies to fetch all the milk collection data in real-time and transfer payments directly to the farmers’ bank accounts. Timely payment is a big benefit that induces loyalty.”
AMCS enables automated measurements of the quality and quantity of milk, generates receipts for farmers, and updates the data in real time at the data center through GPRS connectivity. “The most important part is the dairy management software which integrates the collection point to the ERP at the plant level,” informs Pune-based Anirudh Shrotriya, Director, Shro Systems.
DSK Milkotronics has an installed base of 9,500 AMCS at 27 district milk unions in Maharashtra, eight district milk federations in Karnataka, 22 district milk collection units of Parag Dairy in UP, 36 chilling centers of Heinz, and the milk collection centers of Creamline Dairy in Andhra Pradesh.
The company also offers a mobile PC solution, Mobiliz, for automated milk collection. “In many cases milk collection has to be done at doorsteps. Mobiliz is an affordable and
“Automated milk collection provides dairies with real-time milk data and generate receipts. Timely payment is a big benefit that induces loyalty among farmers” SANJEEV LATKAR Director, DSK Milkotronics
mobile PC solution best suited for door-step collection, with a 7-inch screen and GPRS connectivity,” says Latkar.
The quantity and quality of milk received at chilling centers is again checked through AMCS and fed into the dairy management system. This system then ensures that the stored milk is maintained at a temperature below 4 degrees Celsius.
“Chilling is quite important for the longevity of the milk during storage and transportation, hence companies are looking for automated solutions that raise the alarm whenever there is any change in temperature,” says Shrotriya.
Dairy players are therefore adopting solutions such as a bulk milk cooler data logger which generates an alarm in case the milk’s temperature rises above 4 degree Celsius, or there is a power supply disruption, or there is a change in volume.
Checks in logistics
Dairy players are adopting advanced technologies for the transportation of milk from collection centers to chilling centers, dairy plants and finally to dealers. “Milk and milk products are perishable goods, hence time management is critical,” points out Sandeep Jain, Director, Aryan Computers & Peripherals, Kanpur. “At the same time, the siphoning of milk and adulteration by mixing water are troubling issues. So dairy players are adopting GPRS-based vehicle tracking systems (VTSs).”
A VTS enables the maintenance of logs of transportation time, stops, timings of stops, etc. The solution also offers reports of the volume and quality of milk carried, with sensors for temperature and volume alerts, and lid openings. “VTS gives real time visibility into the location of the vehicle and a report of the activities done on the collection route,” says Vivek Gupta, CEO, Marg Software Solutions, Lucknow.
Marg implemented VTS in 100 milk tankers of Parag Dairy and in the tankers of Amrit Dhara Dairy in Bahraich, UP.
Dairy companies are opting for integrated ERP solutions.
“The ERP solution gives end-to-end process visibility into the quality, quantity and price of the milk we procure from farmers,” affirms Arvind Murarka, Head, IT, Amrit Feeds, which recently implemented SAP ERP. “In fact, we are now able to increase the frequency of payments to suppliers from a fortnightly
“A cloud-based ERP solution is critical at places like Kanpur where companies face a lot of power outages and don’t have in-house facilities to manage IT” SANDEEP JAIN Director, Aryan Computers & Peripherals
basis to a daily basis, providing greater confidence to the supplier community.”
Even mid-size and small companies are opting for the cloud model of ERP. “A cloud-based solution is very beneficial for mid-size dairies as it offers a pay-as-yougo model and the flexibility and scalability required to manage growing requirements. It is also critical at places like Kanpur where companies face a lot of power outages and don’t have adequate in-house facilities to manage IT,” explains Jain.
Aryan implemented an Exacta ERP solution on IBM SmartCloud for Namaste. The project also includes offering data backup recovery solutions and services to the company.
“Overall, it is now easy for dairy plant owners to produce daily figures of exactly how much milk has been collected, the rate at which it has been collected, as well as the fat content and the quality of each batch. The improved data visibility and data quality from the cloud ERP solution helps senior management to make informed business decisions,” informs MS Swaminathan, VP, CPG, Life Sciences, Manufacturing, Transportation and Logistics Business Unit, ITC Infotech.
Many discerning customers are also opting for advanced solutions such as CRM and BI. Comments Gupta, “Dairy players are looking for solutions to manage all stakeholders including vendors and dealers. Besides visibility into the transactions with dealers, CRM offers a mechanism to get feedback on the products from the dealer network.”
Marg has implemented its CRM module for Parag Dairy and is currently doing POCs in various dairies in UP.
While ERP packages offer a basic level of analytics, large dairy companies are adopting sophisticated BI solutions for market and customer analysis.
According to the Department of Animal Husbandry & Dairy, there are around 20,000 dairies spread across the country. While IT penetration is relatively low compared to other verticals, the industry size itself implies a large opportunity.
Concludes Latkar, “Dairy is definitely a segment to go for because it has immense potential. Since not many IT solution providers are present in this space, early entrants will certainly get good margins and an ample business pipeline.”