The value of sustainable value chain in dairy industry : Dr K Rathnam
The need for dairy products in India has been on the rise in the last decade. This association has implied that more people use dairy and its byproducts to fulfill their day-to-day needs. Dr K Rathnam, the CEO of Milky Mist, shares his thoughts on the strategies that must be utilised to create a sustaining value chain in the dairy industry.
He states, “One of the major issues that needs resolution is logistics. This is because products are perishable in nature, and only proper supply chain management can resolve many market and quality related issues. While Milky Mist has been successful in resolving the problems to a large extent, not all dairy producers have been able to. This is because, while we look at dairy as a very big enterprise, the fact is, it is fragmented into smaller portions, spread unevenly across regions.”
Besides, major regulatory changes are also profoundly altering the operating environment, shifting advantage in many markets around India. The nation robustly needs a solution for the challenges posed by such situations and needs to create a powerful mix of competencies and discipline. K Rathnam states that in order to do so, it is vital to understand the market’s unique characteristics and supply and demand dynamics.
Looking at the problem from a global context, it can be argued that India is miles ahead with its record breaking milk production capacity, and exports products to countries all across the globe. However, it continues to face imbalance in demand with growth of several other value added segments such as plant-based milk, powered milk etc.
The CEO of Milky Mist explains, “The imbalance is not new, because certain trends have been coming and going for years. However, what we need to thrive for is finding a solution that sets every aspect right, from profitability to sustainability and more.”
Given the dairy industry’s specifications, the companies need to shift their nexus to two key strategies. First, they must deploy right table stakes in place: fine-tuned, optimised operations and efficiencies across the entire value chain. Additionally, they need a value-creating strategy to set themselves on a course to sustainable growth.
When operations are efficient and processes are optimised, the dairy industry is able to apply them across the entire value chain. This means everywhere from their upstream supply management, operations, and go-to-market approaches.
It is known that more than any other food commodity, dairy products are judged by their quality, which depends on a number of upstream factors including the feed given to cattle, the shelf life they possess, supply variability, and the cold-chain management. Products such as yogurt and cheese, which are bacteria based products, thus, need special care. If quality slips, it impacts both the revenue and the brand value.
A good upstream supply management thus enables in securing a reliable, high-quality supply cost effectively. This process is able to generate more valuable output and keep an eye on the intricacies of regulatory environment.
Dr K Rathnammilky mist states that Milky Mist has identified four approaches to control the costs and enhance productivity. This includes tactical improvement in plant operations; reducing business complexity by removing less profitable SKUs and standardising the ones that are similar; continuously reviewing the plant network and formulating new strategies; and amending procurement practises, including negotiation strategies, supplier management, country sourcing, and demand management.
When everything in the process gets aligned, the problems are naturally eliminated. Further, the reputation of the brand begins to reach new heights, and most importantly, smooth functioning ensures an increased revenue.