How do leading dairy companies optimise their logistics?
This is how leading dairy companies successfully focus on their transport logistics!
Dairy companies face many challenges. On the one hand, supplier relationships are under constant pressure as the price of raw materials is heavily influenced by international guidelines and regulations. On the other hand, their customers, mostly retailers, demand compliance with ecological standards (organic labelling) and traceability of ingredients in order to meet consumer demands. Milk is a perishable product and must be consumed fresh. In addition, supply and demand are subject to fluctuations and create additional complexity. Against this backdrop, dairy companies must continue to strengthen their market position by optimising their logistics processes.
Create efficient milk collection schedules!
The frequency and rhythm of milk collection usually depends on the dairy farmer’s daily delivery volume and the size of his tanks. Most farms favour a daily collection, every other day or every three days, depending on the requirements. Since demand tends to vary throughout the week, scheduled pick-up orders (or routes) for the coming days must be dynamically assigned to each dairy farm. In addition, product types are taken into account when matching supply and demand. This means that milk with a higher fat and protein content is preferably delivered to cheese plants rather than milk plants.
The industry’s leading dairy companies rely on powerful optimisation solutions to create efficient collection schedules. These tools provide schedules for forecasted and ad-hoc orders, taking into account the minimum and maximum demand of the plants. Collection orders are allocated to the correct plant and planned in efficient routes. To avoid expensive collection vehicles, some dairy companies deliver directly to a nearby plant (or cross-dock location), while larger and more cost-effective silo vehicles are used for long-distance transport. To maximise vehicle utilisation, collection vehicles are usually used in double shifts.
Optimising the distribution of dairy products through real-time feedback!
Finished dairy products are delivered to retailers and service providers with a defined frequency and delivery rhythm. Defining the delivery days, taking into account all customer requirements, is a challenge that becomes even more demanding if the daily routes are to remain efficient and appropriately bundled.
Optimising pallet or container loads is not only important for efficiency reasons, but also to reduce damage. In the rapidly evolving consumer goods industry, there is some flexibility to deliver a little more or less of some products. This can be used to design orders so that they can be optimised from a loading perspective. Although the execution of multi-drop tours can be outsourced to logistics service providers, the dairy company has control over the optimisation of routes and loads. In order to take the recipient’s time slots into account and gain insight into (loading) loading and waiting times, companies use real-time feedback from the trucks’ mobile data terminal to optimise and manage their transports.
Annual savings in transport costs in the millions!
Dairy companies usually also produce semi-finished products such as whey and cream. These have to be transported between plants and customers, such as large food manufacturers. This transport is carried out using chamber vehicles. In the first step, the demand in the various plants is compared with the available supply. The next step is to allocate the loads (predominantly) FTL to the (mixed/hybrid) fleet while reducing empty kilometres and complying with cleaning and contamination regulations. This also involves calculating whether a cleaning stop is more favourable than additional diversions kilometres for a permitted connecting product. The use of synergies between milk collection logistics and the transport of semi-finished products has enabled annual savings in transport costs amounting to millions.
How does it work? Learn from the industry leaders!
Major dairy companies such as Danone, Nestlé, Lactalis, FrieslandCampina and Fonterra have already implemented intelligent planning systems from ORTEC to optimise their transport operations. In addition to significant cost savings, these companies benefit from having more control over their transport logistics.
Here is a case from our customer Arla. For outbound transports, they have the ability to continuously update and communicate expected arrival times for their customers. With transparent arrival times, their customers can optimise their part of the supply chain. Insight into different transport scenarios using data analytics is also important to discuss the impact of changes in demand and supply, as well as to analyse the results of plant changeovers. This strategic/tactical planning approach provides general optimisation scenarios as a basis for operational, daily route planning. Adanced Analytics is exemplary for dairy and food production companies that want to optimise their logistics in this highly volatile industry.
Let’s talk!
Would you also like to know why our customers love ORTEC’s “Magic Button” in the entire planning process of their transport logistics and what it’s all about?
We would like to discuss your current requirements with you – what is already working well and what are your current wishes when it comes to improving processes in the entire shipping and transport process!
As a first step, please arrange a telephone appointment, we look forward to hearing your requirements!
