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

CRN - - CONTENTS - AMIT SINGH

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.

Sev­eral chal­lenges

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.

Collection cen­ters

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.

Chill­ing cen­ters

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.

Plant au­to­ma­tion

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.

Ad­vanced so­lu­tions

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.

Con­clu­sion

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.”

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