This document discusses the application of electronic enablers for supply chain management in the dairy industry. It begins with an overview of the global dairy industry and consumption trends. It then describes the upstream and downstream supply chain functions for milk, including collection from farms and processing into dairy products. It outlines key challenges for the dairy industry like seasonal fluctuations and changing consumer demands. The document discusses how radio-frequency identification (RFID) technology has been used for traceability by a large Finnish dairy cooperative. It provides an example case study of how Valio implemented RFID tagging of product carts to improve visibility and reduce errors in their supply chain.

1. Application of Electronic Enablers
for
Supply Chain Management
Case Study of Dairy Products
Pouria Ghaternabi
@PouriaGhatrenab

2. Agenda
 Industry overview
 Upstream Supply Chain
 Downstream Supply Chain
 Supply Chain Challenges
 Traceability
 Case Study
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3. Dairy Industry Overview
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1.4%0.2%
11.1%2.1 %
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4. Consumption
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5. Production
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6. Milk Supply Chain Functions
 Upstream Supply Chain
 Downstream Supply Chain
 Co-operatives
 Direct from Farm
 Dairy Boards
Milk Collection Sources
Small Cooperative
Direct Farm
Dairy Boards
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7. Upstream Supply Chain

8. Down Stream Supply Chain
Dairy Products
Processing
Plant
Retailers
Distribution
Center
Transportation
Labeling
Manufacturing
Packaging
Corrugated
Paper / Plastic
Company
Consumers
Materials Flow
Information Flow

9. Dairy Industry Challenges
Diverse Food categories
Price Deflation
Power shift in industry
• Milk & other goods
• Beverage to powder
• Solid to viscous
• Packaging: canned, bagged, boxed
• Low-margin business
• Customers demanding lower prices
• Power shifting from manufactures to
Retailers (Wal-mart, etc)
• Everyday low prices strategy
Need to deal with the
complexity and decreasing
prices
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10. Dairy Industry Challenges
Seasonal fluctuations
Changing quality of raw
materials.
• Farmers can produce as much or
as high a quality during certain
seasons of the summer
Consumer demands
changes based on
seasons.
• More ice cream in summer, less
in winter.
Need to control and efficiently
manage variances in the quality
and quantity of raw milk
collected
Lack of access to real-time data about
the milk can lead to inefficient raw
material utilization and inaccurate
demand planning and forecasting further
down the supply chain
@PouriaGhatrenabi

11. Dairy Industry Challenges
Changing consumer taste and
requirements (Mass customization)
Food safety and security
legislations
• Diverse population with differing tastes.
• Changing lifestyle (more health
conscience)
• Expect High Quality, availability, and
value.
• Contamination
• Bio-terrorism
• Traceability laws
Need to produce and deliver
increasingly diverse product lines
with differing labeling &
packaging requirements
Need to increase the integrity and
accountability of the supply chain.
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12. Traceability in the Dairy Industry
Widely deployed technology is electronic traceability systems such as ERP systems.
Bar-Codes, RFID tags and Computer produced labels are pervasive in the dairy foods
industry.
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13. Why Traceability is Important
 Improves efficiencies and effectiveness in the supply
chain process.
 Easy search and quick access in all systems involved
in the supply chain.
 Monitoring of product movement and information
relating to product quality.
 For product recall and withdrawal.
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14. RFID enabling supply chain of milk
from farm to store
IN THE FARM
 For identification of cows
 Enables automated calf feeding.
 It facilitates the use of automatic drafting
gates in some farms.
 Utilized to monitor the entrance and
departure of a cow from the milking parlor
and to record a cow’s milk production.
IN PRODUCTION PLANT
 Product Identification.
 Product Information and Contents.
 The manufacturer is able to track the
product through wireless radio
communication.
RFID
TAG
TRADITIO
NAL TAG
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15. RFID enabling supply chain of milk
from farm to store
IN THE FARM
 For identification of cows
 Enables automated calf feeding.
 It facilitates the use of automatic drafting gates in
some farms.
 Used to monitor a cow’s entrance and departure
from the milking parlor
 Used to record a cow’s milk production
IN PRODUCTION PLANT
 Product Identification.
 Product Information and Contents.
 The manufacturer is able to track the product
through wireless radio communication.
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16. Case Study:
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17. Valio
 A Finnish Producer of Dairy consumers
products
 Owned by 18 Finnish milk co-operatives
 Number 1 and market leader in Finland and
exporter to over 60 countries.
 Some of Valio’s products are Valio Zero
Lactose™ milk powder, spreads, cheese etc.
http://www.valio.com
@PouriaGhatrenabi

18. Shipment Process at Valio
 Milk is chilled, pasteurized, containerized
and placed on trolleys to fill
orders.(Automated robotics)
 Workers remove cart from conveyor line
to staging areas.
 Carts are loaded onto trucks.
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19. Challenges in supply chain
@Valio
 Shipment on to wrong trucks
 Shipment at wrong times
 Poor visibility of supply chain
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20. ‘‘Tag wheel’’ with built-in Passive
UHF tags
http://www.rfidjournal.com/articles/view?11179/
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21. RFID Reader Antennas
http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi

22. Tag wheel and antennae in
use
http://www.rfidjournal.com/articles/view?11179/@PouriaGhatrenabi

23. Benefits of RFID Technology
implementation at Valio
 End to end visibility
 Reduction of Errors in wrong shipments
 Software issues instant alerts via
warning lights, text and email in the
event of wrong loading or incorrect
time.
 Reduction in the amount of manual
labor.

24. Conclusion
 Dairy Industry is has a very complex product line
that is compounded by the products very short life
span.
 Retailers & Customers are forcing downward pricing
pressures on industry.
 Demand of dairy products is increasing world wide,
necessitating innovation in the supply chain.
 Industry is using latest technologies to manage the
supply chain and efficiently monitor products.
http://www.youtube.com/watch?v=tVNq_K6fyi8

25. References(1)
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from http://www.ifcndairy.org/: http://bit.ly/1broN3p
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http://bit.ly/1e3oD1U
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26. References(2)
 Business, C. (n.d.). Profitable growth and value creation in the
dairy industry A view from Deloitte and SAP Table of Contents.
 Kelepouris, T., Pramatari, K., & Doukidis, G. (2007). RFID-
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 Trevarthen, A., & Michael, K. (2008). The RFID-Enabled Dairy
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doi:10.1109/ICMB.2008.39
 Prater, E., Frazier, G. V., & Reyes, P. M. (2005). Future impacts
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27. THANK YOU