Managing Supply chain efficiently and effectively is always a prime focus for organizations across the globe.Managing perishable foods supply chain like Dairy products is much more complex.
Customers are now more concerned with the quality and food safety, and it is forcing dairy companies to maintain better end to end traceability from raw material to finished product. Also there is an overall impetus to increase process efficiencies, reduce cost, and ensure compliance with food regulations over the whole supply chain.
Today I would discuss the supply chain challenges of Dairy industry and how SAP can help to overcome those challenges.
Dairy Industry Challenges
- Increase in milk production cost : Higher cost of maintaining animals in diary
- Food regulation on the elapsed time for which unprocessed milk can remain in inventory and lack of superior cold-storage transport
- Increasing retailers’ power and negotiating for lower prices.
- Managing inventory level efficiently and avoiding out of stock situations to ensure customer retention.
- Complex and frequently-changing payment conditions based on quantity and quality characteristics of milk
- Limited supply chain visibility due to number of isolated application systems landscape
- Stringent government regulations on food safety, financial reporting , and bioterrorism threat
- Continuous innovation to maintain the position in market
- Expanding customer base demands flexible and unified IT platform
How SAP can help
- Collaborative planning and improve visibility across extended supply chain ensures efficient management of inventory level ,which brings down the working capital , and avoids out of stock situation.
- Improve yield and reduce waste : Supports shelf life based picking and distribution.
- Instant top-down and bottom -up traceability. Track and trace product at all stages of production, processing , and distribution.
- Improved purchasing operational tasks with automatic vendor evaluation (based on price, delivery, and quality), management of contacts and scheduling agreements, automatic invoicing etc.
- Backward price determination of purchase orders : The price is calculated after the goods receipt postings based on the characteristic values (for instance , fat, protein contents etc) of the goods receipt batch
- Enhance operational efficiency: Single integrated system enables dynamic information from procurement, production, quality, sales and other departments.
- Supports end to end business functions: Procure to pay , plan to produce , order to cash , and Finance.
- Quicker Accounting and end of period closing process.
- Consolidating and reporting KPIs like gross profit, operating cost, net profit, forecasting accuracy , production schedule adherence, order fulfillment rate etc.