Supply Chain Design for Australian Dairy Industry

The assignment content discusses the supply chain design of the Australian dairy industry, highlighting its strengths and weaknesses, opportunities and threats. The traditional supply chain model is analyzed, and recommendations are made to improve the supply chain by using SWOT analysis. The importance of farmers' welfare and minimizing milk souring are emphasized. The theories involved in milk supply chain design include Supply Chain Management principles.

Table of Contents
Introduction......................................................................................................................................2
Mapping the existing Supply Chain design of Australian Dairy Industry.......................................2
Evaluation of Supply Chain.............................................................................................................5
Logistic Process...........................................................................................................................5
In Collection............................................................................................................................5
Coordination:...........................................................................................................................6
Use of Information and technology.........................................................................................6
Recommendation.............................................................................................................................7
Strength....................................................................................................................................7
Weakness.................................................................................................................................7
Opportunities...........................................................................................................................8
Threats.....................................................................................................................................8
Theories...........................................................................................................................................8
Research Design and scale development.....................................................................................9
 Study of area and population................................................................................................9
 Sampling of data and collection...........................................................................................9
 Reliability Analysis..............................................................................................................9
 Scale Refinement..................................................................................................................9
Evidence:.........................................................................................................................................9
References......................................................................................................................................10

Supply Chain Management of Dairy
Industry
Introduction
S.P.M (Supply Chain Management) is the network in which raw materials are transformed into
usable good and then distributed to the customers with the help of distribution network.
Australian Milk industries have been going through advancement since 1990s. Country's milk
industries are currently third largest rural industry and around 40% is exported to over 100
countries. . Australia’s milk industry is undergoing Supply Chain revolution these days. These
changes mainly includes problems that include dairy problem (Mylan, 2015)
Mapping the existing Supply Chain design of Australian Dairy Industry
Milk suppliers and cattle farmer's supplies milk directly to the Milk Collection Center. From
collection center, milk is then sent to Milk chilling centers. Industry’s one of the values is the
contribution of advancements and improvements of all those farmers which are associated with
the industry. All Australian states are currently having dairy supplier to serve the local areas.
Victoria is the largest milk producer state in Australia because of it good climate and soil quality.
Season is major player in Australian Dairy where spring is said to be the best season.
Here is the Supply Chain design of Milk in Australia:

Figure 1 Australian Milk Supply Chain
In the diagram explains the study of Supply Chain of Milk Industry in Australia.
Stage 1: Cows in dairy farms are milked. They are milked two times a day and then they are sent
to collection center twice a day.

Stage 2: At collection center milk is filled in tankers. And the farmer is paid according to the
weight.
Stage 3: Takers bring milk from collection centers to a processing center where the chilling
process is carried out. And milk is packed in the packets.
Stage 4: After the packaging, milk is sent to open market. (Christopher, 2016)
Figure 2Traditional Supply Chain

Showing you above is the traditional supply chain and its elements. Milk industry follows the
same hierarchy too. This is a push model, means manufacturers produce the products and push
them to retailers without receiving any proper feedback and information about the requirements
of the products. The Same situation is there in milk industry to where milk is collected,
refrigerated and filled in pallets in an efficient and sustainable way. After that refrigerated van
delivers the milk to the customer via retails.
Main challenges for the supply chain of Australian Milk will be the prices in retail completion,
prices in upstream completion and downstream buyer power and also in bargaining power. Due
to less importance of farmers, continuous advantage by the processor in the supply chain is
gained. And these processing units are using the bargaining power in the supply chain by
ignoring the milk suppliers.
Evaluation of Supply Chain
Logistic Process:
In Collection: Millions of liters of milk is per day is collected from more than thousands of
farmers.

Coordination: Storing the milk, processing the milk and distribution of milk.
Supplier Logistic: This process includes the weighing of milk and determining the fat level.
After that price is calculated for the purchase. (Bosona, 2013)
Use of Information and technology
Fleurieu milk believes that use of IT will revolutionize the milk market. The company has
installed automated milk collectors at the collection centers. Fleurieu use data analysis software
for the utilization of milk and increasing the productivity.
Figure 4 shows you the automated milk processors.

Figure 3Automated Milk Collectors
This helps in improvement of delivery mechanism and transparency of business. Because of this
automated collector machine, Fleurieu is able to collect millions of liters of milk. It also helped
in a huge reduction in the processing time milk.
Recommendation:
Use of SWOT analysis to define the improvements needed in Australian’s Milk Supply Chain
Strength: Industry is currently having many processing units across the country and more
processing units need to be installed to improve Supply Chain design of the company. Current
situation of farmers are not too good they need to be care of, although cooperative societies are
helping in improvement of farmers.
Weakness: Cost of operation is very high because of low margins in the dairy sector. Australian
milk industry should learn from international milk market and then should maintain their

operation in the same manner. Industry completely violates climate. Also there are uncertainties
in policies which act as a weakness for Milk industry.
Opportunities: Proper management of risk while production. There is increase in demand from
Asian country.
Threats: Increase competition in the milk industry and price input. Climate change is already
acting as major threats.
Industry need to upgrade its Supply chain methods with the trending change in milk industry
worldwide. Installing more processing units in the western and southern part of Australia will
help in reducing the freight cost. Also, this will help the farmers of that region to develop
themselves. Industry should consider exporting their products to Gulf, the United States and
India. (Seuring, 2013)
Milk suppliers should be benefited with more price as they are not getting what they deserve and
this is the main problem in the milk industry. Minimization of milk souring by developing new
methods to prevent the milk from getting sour.
Theories: Theories involved in Milk supply chain design are same followed in Supply Chain
Management.

Research Design and scale development.
 Study of area and population
 Sampling of data and collection
 Reliability Analysis
 Scale Refinement
Evidence:
Milk products are found all around South Australia, as well as small selected stores in New
South Wales, Victoria, and Alice Springs.
Industry is currently producing millions of liters per week which is a good evidence of getting
popular in World Milk Industry as third largest milk suppliers.

References
Bosona. (2013). Food traceability as an integral part of logistics management in food and
agricultural supply chain. Food control, 32-48.
Christopher. (2016). Logistics & supply chain management. U.K: Pearson UK.
Mylan. (2015). Eco-innovation and retailers in milk, beef and bread chains: enriching
environmental supply chain management with insights from innovation studies. Journal
of Cleaner Production, 20-30.
Seuring. (2013). A review of modeling approaches for sustainable supply chain management.
Decision support systems, 1513-1520.