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Supply Chain Process Of A Dairy Product

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Question:

Discuss about the Supply Chain Process Of A Dairy Product.
 
 

Answer:

Introduction

Fox and Guinee (2013) stated that supply chain lead to the optimization of the business operations that maximizes the speed and efficacy of the delivery of products from manufacturer to the end-user. In this business report the supply chain process of a dairy product that is Cheese is taken into consideration. Moreover, proper explanation and evaluation of the supply chain process is also illustrated which is followed by the recommendation for the further improvement of supply chain and strategies. Lastly, an overall conclusion is also drawn based on the entire discussion.

Discussion: Justification of product selection

In Australia, dairy industry majorly associated with three major manufactured products streams- fresh dairy products, cheese and butter and milk products like- , wholemilk powder (WMP), butter milk powder (BMP) and skim milk powder (SMP) (Australian Dairy Industry 2017). It is also found that 28% of the dairy products streams are for fresh dairy and the butter milk and cheese products stream consumes 36% each (Australian Dairy Industry 2017).

Cheese is also considered as one of the major products for the Australian dairy industry and around 344,000 tons of cheese was produced in the year 2015-2016 (Australian Dairy Industry 2017). It is also found that nearly 45% of the cheese sale in Australia is done through supermarket chains (Dairyaustralia.com.au 2017). The report from Dairy Australia also shows that compared to 2014, the sales volume of cheese increased to 2.0% in 2015/16 but suffered a loss due to inappropriate supply chain management (Dairyaustralia.com.au 2017). The prime reason to select cheese is because cheese can be preserved for more days and the supply chain process can be expanded to attain more profitability. On the other hand, other dairy products cannot be preserved to such an extent and thus, the supply chain process cannot be expanded to supply the products to distant places.

Explanation of supply chain

The Margaret river dairy company processes the raw milk through pasteurization process, renneting cutting and scalding and pitching and draining (Bilgen and Celebi 2013). The salting process is then performed for the formulation of the cheese. The formulated cheese then proceeded further to the packaging and then taken to the manufacturing plant. Furthermore, from manufacturing plant the cheese products associates with supply chain through two modes- domestic and export. Margaret river dairy company’s supply chain is effective for domestic supply. Supplying the cheese and other milk products to Woolworths shows their effectiveness and customer also consumes their products more. However, the supply chain from cheese export suffered from disadvantage that material are not sent to other territories (Validi et al. 2014). Thus, the organization aims to supply their cheese products especially to Asian territory so that they can enhance their brand name and attain great profitability. Ayagg et al. (2013) highlighted that a dairy industry can handover their final cheese products to importers and exporters and they on the other hand provide the final goods to the food manufacturers.

The key stakeholders in this process are- the employee of the organization, who are involved in the process of the cheese formulation from milk, the transportation employee, liable for taking the cheese products to the manufacturing plant (Glover et al. 2014). The staffs in inventory are also plays a crucial role and are key stakeholders for maintaining the cheese and make them ready for export to other territories. Costa et al. (2013) furthermore depicts that supermarket chains and hospitality sectors are the major stakeholders of the dairy industry. These industry will them supply the cheese products to the end-customers of the host country.

 

Evaluation of the supply chain

The current supply chain suffers from three major issues. The SWOT analysis for the current supply chain process is as follows:

Strength

Weakness

Local supply chain system is accurate and delivery is on time always

The quality of the supplies material always met consumer’s expectation

Well positioned for effective export growth

Inefficient tracking system of the cheese products

Improper maintenance of the volatile climate conditions

Problem in establishing effective supplier/partner relationship management

Opportunity

Threat

Opportunity to include technology for developing traffic system

Development of the cheese storage system in transportation carriages

Establishing relationship with governing bodies for effective business partnerships

Huge financial resources for incorporating technology

 Inappropriate development of technology and inexperience staffs

Political problem may arise that interrupt business process.

Table 1: SWOT analysis of existing supply system

(Source: Created By Author)

Firstly, the tracking system of the cheese products is not efficient and this is the major reason the problem of theft and lack of timely delivery occurs. Secondly, due to volatile climate conditions, the state of cheese deteriorates; thus, the storage technology of the cheese products is also not appropriate. Thirdly, maintaining effective supplier/partner relationship management is another big challenge for Margaret river dairy company.

Recommendations

The three problems that is identified are- inefficient tracking system of the cheese products, improper maintenance of the volatile climate conditions and problem in establishing effective supplier/partner relationship management. In this case, the solutions that can be incorporated for improving the existing supply chain system are-

Incorporate new technology

In order to overcome the problem of theft and improper delivery, technology of RFID tags can be incorporated. All the cheese packages are entitled with a code and a tracking system that can be monitored through the inventory staffs so that the locations and progress of the products can be assessed continuously. Some of the benefits that can be attained through the implementation of this processes are- less manual work ensure accuracy in the business process, low cost of the products, improved visibility of the delivery process and enhanced planning.

Improving cheese storage system 

All the supply transportation carriages should be incorporated with cooling system so that the cheese products can overcome the climate transitions and fresh products can be supplied to other nations. Moreover, automation technology for controlling the temperature of the cheese can also be incorporated.

Following all the governing legislations

Margaret river dairy company should develop mutually agreed upon standards so that the concerned organization can establish an effective partnership with the governing bodies. This will help the organization to survive any kind of political disputes. Another advantage that the organization can attain by following all the legislations is the proper business ethics and an effective brand image in host country and this influences their consumer’s to use their products.  In addition to that all the mutually developed regulations establish great understanding among suppliers and the transportation of cheese products can be accomplished efficiently.

Conclusion

It is found that cheese is considered as one of the major products for the Australian dairy industry and nearly 45% of the cheese sale in Australia is done through supermarket chains. The major challenge the industry face is to transport the milk products outside their territory. Thus, three identified challenge of the supply chain are- outdated technology, cheese storage system while transportation and political issues of host nations. The solution that is suggested in this assessment are to incorporate RFID technology, improve cooling system and automatic temperature controlling system and  developing mutually developed legislation to establish effective partnership.

 

References

Australian Dairy Industry., 2017. IUF Dairy Division- Australian Dairy Industry. [online] Available at: https://www.iuf.org/sites/cms.iuf.org/files/Australian%20Dairy%20Industry [Accessed 18 Sep. 2017].

Aya?, Z., Samanlioglu, F. and Büyüközkan, G., 2013. A fuzzy QFD approach to determine supply chain management strategies in the dairy industry. Journal of Intelligent Manufacturing, 24(6), pp.1111-1122.

Bilgen, B. and Çelebi, Y., 2013. Integrated production scheduling and distribution planning in dairy supply chain by hybrid modelling. Annals of Operations Research, 211(1), pp.55-82.

Costa, C., Antonucci, F., Pallottino, F., Aguzzi, J., Sarriá, D. and Menesatti, P., 2013. A review on agri-food supply chain traceability by means of RFID technology. Food and Bioprocess Technology, 6(2), pp.353-366.

Dairyaustralia.com.au., 2017. Information on the production, sales, and trends for Australian manufactured cheeses.. [online] Available at: https://www.dairyaustralia.com.au/industry/production-and-sales/cheese [Accessed 18 Sep. 2017].

Fox, P.F. and Guinee, T.P., 2013. Cheese science and technology. Milk and dairy products in human nutrition: production, composition and health, pp.357-389.

Glover, J.L., Champion, D., Daniels, K.J. and Dainty, A.J.D., 2014. An Institutional Theory perspective on sustainable practices across the dairy supply chain. International Journal of Production Economics, 152, pp.102-111.

Validi, S., Bhattacharya, A. and Byrne, P.J., 2014. A case analysis of a sustainable food supply chain distribution system—A multi-objective approach. International Journal of Production Economics, 152, pp.71-87.

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