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Use of information technology in Indian dairy sector
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Tuesday, 16 January, 2018, 08 : 00 AM [IST]
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Vijayabhasker Reddy
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The revolution in business caused by the Internet and its related technologies demonstrates that information systems and information technology are essential ingredients for the success of today’s internetworked business enterprise. The managers, entrepreneurs, and business professionals must learn how to use and manage a variety of information technologies to revitalise business processes, improve managerial decision making, and gain competitive advantages.
Being the world’s largest milk producer, it is essential to apply the ICT (Information and Communications Technology) platform to the dairy industry on a large scale. The Indian dairy sector is going through turbulence and this is mainly due to lack of non-application of the current trends such as the Business Intelligence (BI) and Business Analytics (BA) and Data Science in the ICT sector. Reasons that could be attributed to are size of the industry, scale of operations, and number of stakeholders and it is capital intensive.
The Indian dairy value chain can be majorly broken down into milk production consisting of large farms and the small and marginal farmers. It also covers collection and chilling of milk mainly done by the dairy cooperatives, small and medium enterprises (SMEs) as well as the large processors and companies. Another category is milk and milk products manufacture done majorly by cooperatives and large processors. Yet another is the retailing which includes the sale of milk, milk products and Indian milk sweet producers/sellers. Each of the chains especially the milk production and retailing has a large number of actors and the data is not well collated.
The use of ICT to streamline operations
Going by the above value chain breakup, application of ICT can be targeted thus:
First - The farmers, who need to know the management of their herd and the resources. Mobile technology and apps are developed and are being applied on the farms to manage genetics, manage reproductive cycles and the feeding practices. Some of the large processors and the cooperatives are actively helping the farmers in this space by using SMS-based input services.
Second - The collection system in India has started using the ICT platform well, especially in the organised sector. The weighment of milk, quality parameter checks and billing is automated and the farmers do know the price realisation for their milk. However plant automations which are highly Capex oriented are yet to come into this vertical of the value chain.
Third - Most of the processors have started to implement ERP-based (Enterprise Resource Planning) software in the manufacturing locations and sales locations. Some of the dairies have also started implementing SCADA (Supervisory Control And Data Acquisition) in the process automation. However the data points that are needed to get into the next phase of Data Science, BI and BA are yet to be implemented in most cases.
Fourth - Most important for any industry to succeed is to sell its products profitably to the consumers. This is a clear point where consumers decide the future of the company. Hence be it customers or consumers, it is pertinent to start tracking the buying patterns and consumption patterns.
Dairy industry is certainly investing in IT and its interest in automating process has increased manifold and this is mainly to improve processes and quality of the product and minimise manual intervention.
When it comes to dairy farming in India, most of the milk is produced by the small and marginal farmers with 2-5 cattle heads and hence the concept of ICT cannot be thought of. However Stellapps, a Chennai-based company, has developed innovative applications and tools leveraging Internet of Things (IoT), Big Data, Cloud, Mobility, and Data Analytics to improve Agri-supply chain parameters, including milk production, milk procurement, cold chain, animal insurance and farmer payments which is supported by the dairy company that is procuring milk from these farmers.
The large farms with over 100 cattle heads use automation in terms of herd management which consists of individual data of the animal, its breeding cycle, its heath, its feed consumption and conversion besides the productivity in terms of milk as well as waste that could be put to productive use in the form of gas and fertiliser. They have used robotics, automation and identification to manage the data.
On the processing side, considerable investments have been made by the dairy co-operatives and large-scale processors using the SCADA-based automation in the plants. These are also supported by the various inline/ online PLC (Programmable Logic Controller) modules of Rockwell automation and Siemens to name a few. Initially this kind of application was implemented in the milk powder processing plants and later on it got adopted into the milk processing sections and milk packing sections. Some of the equipment manufactured by MNCs such as Tetra Pak, GEA, and Alfa Laval have been incorporated with automation using pneumatic as well as PLC- based systems that have to be collaborated into the plans that the companies set to use. These are broadly referred to as operational technologies and need to communicate with the Internet technologies to optimise performances.
On the ERP, most co-operative owned and large- / medium-scale dairy processors have adopted one or the other management software. The options available in the market are plenty and it always depends on the management as to what their focus is on. For example if a dairy processor collects milk from farmers and sells milk in retail, his data points are many and there is complexity in the system and such operation will need a software that could support innumerable entries.
But when it comes to processors who buy milk from collectors and are into food ingredients business, their data points are limited and is not very complex and the amount of data to be processed is minimal and such dairies adopt for smaller and low cost packages.
To know how things have changed over a period of time, Dodla Dairy Ltd is a clear example. Initially they started with D-soft, an in-house software package developed to meet their needs in the 90s, when they first entered the business. This could take care of their requirements when their operations were small and had a few profit / cost centres to operate.
However when their business grew and their geographical footprint expanded in the country, D-soft was unable to provide the necessary information and MIS (Management Information System).
Then using the D-soft data, they migrated and built the platform on Microsoft Dynamix. This ERP was in operation until recently but then they realised that there were other integrations that they needed to do when they expanded their operations to overseas. They are currently implementing SAP (Systems, Applications and Products - a German offering) that could take the inputs from other locally developed software packages to handle other issues pertaining to collection / farmer data and sales / consumer data. This is a way to move when Capex is an issue as cost of the packages offered by different vendors vary from Rs 200,000 to Rs 30,000,000. Incidentally the Opex is also proportional to the cost of the software package implemented.
Companies that offer various ICT-based services directly or / and their resellers
SAP - Very prominent with the dairy industry in India, thanks to their earlier experience in the manufacturing sector
IBM - With its ability to modulate different softwares, has been catching up based on the cloud-based systems
Microsoft - Using their ability of reporting using their own Windows / Office-based programs
Oracle - Uses their database abilities well
Tally - Popular for small operations and easy to manage and maintain besides being economical
Baroda Dairy has implemented a software “Enterprise-wide Digitization” on Oracle platform with 9i to 11 G which covers all modules & work with about 1,500 data entry forms, 200 query forms, and about 2,000 various reports being generated to make the system successfully implement and facilitate latest technology.
Mother Dairy Delhi has gone a step forward by integrating operation technologies into IT and further is exploring the option of the IoT-based devices to get to a real-time data management and create dash boards that could help in minimising on the losses due to process failures / product failures.
When it comes to the consumers, they look for attributes such as quality, price and convenience. Consumers expectations today are - be able to shop anytime, anywhere. The use of digital technologies and data analytics is playing an important role in analysing purchasing behaviour to target consumers. Online grocery is growing and today’s consumers are constantly connected to their smartphones, a trend which retailers can take advantage of through mobile applications and advertising.
Retailers who learn how to effectively manage inventory levels significantly grow their profitability if they can ensure that inventory is always fresh, with improved storage technologies and the use of shelf sensors to monitor when items go out of stock in real-time to control the quality and shelf-life of products going forward.
The Internet, intranets and extranets, coupled with other information technologies such as the communication equipment and app-based mobility, can give the Indian dairy businesses a strategic technology platform that can support e-commerce and enterprise collaboration and be able to compete in global business environment.
(The author is a dairy management consultant)
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