Part 1: How to Recognize Opportunities for Innovation in a Connected Dairy Supply Chain

Jan 12, 2022 | Industry Insights

by: Hill Pratt, Senior Vice President, The goals for dairy supply chain innovation haven’t changed. It’s still about moving goods from the right source to the right destination – at the right time – on the correct carrier. Still, we’re looking for the VERY best way to minimize miles, costs, and rates, all while keeping the product, people, and assets that move them efficiently utilized. However, what is new is the heightened necessity of focusing on the entire supply chain as a single integrated system. The system consists of savvy people using business intelligence tools in a real-time transactional platform to make and execute smart opportunistic decisions within complex trading and transportation networks. Simple, right? Not so much. There are a vast number of intricate details and failure points spanning the entire process, including:

Gathering orders and raw material availability in real-time

Developing production plans and raw material requirements

Identifying and executing the best available contract and spot deals

Securing spot and contract hauling at the best possible price

Ensuring product is picked up and delivered on time

Settling weights and tests to pay haulers accurately

All these processes are opportunities to capture valuable historical data for subsequent benchmarking and potential improvement of every aspect of supply chain performance.

Challenges in Accessing and Harnessing Value from the Latest Technology

We are all paid to make things better, right? Cutting costs, utilizing assets, eliminating wasted time and people are all central to the mission. However, because the supply chain is such a complex, integrated system, improving one part of the system must be done in the context of its impact on and connection (or lack of) to every other moving part.
So, how can we make the system as a whole evolve as one? Clearly, technology plays a central role in collecting and appropriately sharing information in real-time internally and externally over the entire lifecycle of an order or movement. But is the most advanced technology always better? After all, we’ve all seen sophisticated point solutions beyond the first exciting project atrophy and, ultimately, end up abandoned.

Because the supply chain is such a complex, integrated system, improving one part of the system must be done in the context of its impact on and connection to every other moving part.

The issue is that these solutions sometimes don’t integrate with the rest of the supply chain system, or even infrequent use causes the high-level skills required to maximize them to deteriorate or never develop in the first place. So, if the most sophisticated supply chain tools can end up on the junk heap, how do we advance the supply chain as a complex, integrated system? For starters, we see ERPs as a big part of the solution for driving data and process integration. Nearly all dairy companies’ processes are deeply integrated with their spot and contract trading partners and haulers—each with their systems (ERPs). However, while valuable and necessary, ERPs can’t be seen as islands, but rather as nodes in an industry-wide network of intricate activity—which adds to the complexity of viewing the supply chain as a single system. So, how do we integrate our beloved ERPs to the external world while keeping processes efficient? How do we harness the power of advancing technology? How do we leverage external knowledge and use it to improve results? Additionally, how do we accurately assess the performance of our supply chains?
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This is part one of a two-part series.

Click on the button below to read part two on how to build a better dairy supply chain.