The following essay is about the Milk Supply Chain, how milk is sourced as a ‘Raw Material’ and then the chain of events and actions that occur for the final product to reach the consumer. I have also included in some detail, Supply Chain Management concepts that are involved.
What is a Supply Chain?
The term Supply Chain began to appear in the 1980’s, however there is no set definition to capture the meaning of what a Supply Chain is. Below are a few examples of definitions
Slack et al (2013) define a supply chain as a "strand of linked operations".
Cox et al (1995) define supply chain as the functions within and outside a company that enable the value chain to make products and provide services to the customer.
Heizer and Render (2010) define SCM as the "management of activities that produce materials and services, transform them into intermediate goods and final products, and deliver them through a distribution system."
Table 1 below demonstrates how the milk Supply Chain includes all activities involved, changing inputs into outputs using an ‘input – transformation - output’ process (Slack et al, 2013). This begins at the 1st stage at a farm which includes pre-farm inputs, and then follows on to the processing of the milk at Dairies and then on to Packaging. This is done utilising a JIT approach for transport/logistics (Mindtools 2015) whereby it is then distributed to the retailer, and finally the sale of the milk to consumers (sustainablefoodsupply.co.uk, 2012).
Source: sustainablefoodsupply.co.uk (2012)
A typical Supply chain as shown in Table 2 shows the common activities/operations involved in a supply chain. However a Supply Chain can be complex as there are many elements interacting with one another. In the Supply Chain shown above each activity will have its own internal supply chain and processes that are equally essential to work robustly in ensuring the smooth operation of the overall Milk Supply Chain (Cox et al 1995)
Communication within the Milk Supply Chain.
Errors in Communication can have a Bullwhip effect which starts off small at the early stages of the Supply Chain Cycle but may have larger ramifications further along, therefore customer feedback at each stage of the Supply Chain (Slack, et al., 2013) is pivotal in preventing a ‘Bullwhip’ effect (Greasley, 2013) - See Table 2.
Effective communication can generate innovation and process efficiencies throughout individual operations of the Milk Supply Chain, which can generate cost benefits and also create a competitive advantage within the dairy industry
Table 2: Flow of Information Source: (Slack, et al, 2013)
Value Chain activity within the Milk Supply Chain
A process to generate value within an effective Supply Chain is Porter’s (1985) Value Chain Model (Table 3). The Value Chain Model looks at all the integrated functions involved. Porter’s view is that the Support activities involved and dependant processes can hold key drivers for greater efficiency, leading to better value of product, greater customer satisfaction and primarily, greater margins (Al-Mudimigh et al 2004).
Table 3: Porter’s Value Chain Source: (Business Set Free, 2013)
The Value Chain in effect.
Table 4 below shows how Arla a supplier of Dairy and milk products to the supermarket retail sector has applied the Value Chain theory. The objective is to modernise the Supply Chain through internal processes and innovation to create a sustainable competitor advantage. (Al-Mudimigh et al 2004).
Table 4: Value Chain in effect Source: International Journal of Production Economics
The Lean approach to Milk production.
The UK dairy industry collectively has a cost of £1.5bn in waste (Food Chain Centre 2009)
