Milk Production Essay

1. Supply Chain can be defined as the created network between the different
companies, which produce, handle and distribute a type of product.
Importantly the supply chain consists of the steps taken to get a good service
from the supplier to the customer. It is crucial for many companies as it helps
to reduce the costs for the business company. (Investopedia n.d.)
In this assignment, I will be looking at the supply chain for milk, the challenges
within the supply chain and the improvements, which can benefit the supply
chain of milk.
Diagram 1: Supply Chain of Milk
Source: thediarysite.com
The diagram above explains the Supply chain of milk with the different stages
involved that includes Farmers, Cooperatives, Processors and the
Supermarkets.
Processing of Milk:
 Stage 1: The cows at the diary farm are milked for at least twice a day
and the milk is stored in a refrigerated silo for up to 2 days.
 Stage 2: The refrigerated tanker then collects the milk from the silo
located in the diary farm and transports the milk to a processing
factory.
 Stage 3: The processing factory pasteurizes the milk and is stored in
the refrigerated silos after processing again.
 Stage 4: The refrigerated milk is then transported in the refrigerated
tanker on road to the manufacturers of milk.

2.  Stage 5: The manufacturers produce different dairy products from the
milk and the milk is packaged and induced into pallets and into
refrigerated trucks.
 Stage 6: This is final stage where the milk pallets are transported in
refrigerated trucks to the supermarkets and retail outlets. Ex: Tesco,
ASDA, Sainsbury’s etc. (Right Moves n.d.)
Diagram 2: Traditional Supply Chain
Source: Mdcegypt.com
The diagram above explains the Traditional Supply of Management and its
important elements. This model is based on the push strategy where the
manufacturers usually produce the products and goods and pushed them
through the supply chain without receiving any proper information and
feedback about requirements of the product. Thus there was to lot of
difference and gap between demand and supply, which lead to wastage, and
shortage of the products (End Product). (CrackMBA n.d.)
The product fits completely well into the traditional supply chain management.
The supply chain in milk is started by the process of production, which is
started by the milking of cows in the first stage that includes the use of water
and grass. When we move on to the next stage where the milk is processed
by refrigeration, treatment processing and packaged into pallets in a
sustainable and efficient way. The next step or stage is where the milk in
pallets is transported in the refrigerated truck to the retailers. The final stage is
where the consumers or end customers buy the milk from the retailers or
distributors.
The key challenges within the supply chain of milk would be The Milk prices in
Retail Competition, Upstream Competition and Downstream Buyer power and
the Bargaining power in the supply chain. This explains that the bargaining
power of the competition between the processors and the individual
processors. Due to less importance to farmers, the processors have been
taking continuous advantage in the supply of milk to the distributors. So the

3. processors are using the bargaining power to the maximum in the supply
chain by ignoring the dairy farmers. The negotiation between the dairy
farmers and the processors also prove to be completely unnoticed as the
farmers are losing out on gaining capital and profits. The opportunity for the
farmers in the supply chain is very less compared to the processors and the
cooperatives. This has made many dairy farmers to stop giving the milk to the
processors and led to the exit of many farmers. As farmers produce the raw
milk, they should be able to gain the most profits but due to the price volatility
in a supply chain, this will lead to exit of many dairy farmers. This is one of the
most important challenges for the supply chain in milk. (DairyCo n.d.)
The potential area for development and improvements along the supply chain
would be to be more dependent on each other, which will result in efficiency
and effectiveness. All parts in the supply chain should be allowed to gain
continuous and respectable profits. The supply chain should also be
processed in a sustainable manner to reduce the wastage of milk and profits
matched to all the parts of the supply chain that includes dairy farmers,
processors and distributors. The supply chain should also be able to adopt
goals and strategy for the future as well. They should ensure the customer
demands and food security for the product.
List of References:
1. Investopedia (n.d.) Definition of Supply Chain [online] available from
http://www.investopedia.com/terms/s/supplychain.asp [n.d.]
2. Right Moves (n.d.) Processing of Milk [online] available from
http://rightmoves.tdtvictoria.org.au/activity5.htm [n.d.]
3. CrackMBA (n.d.) Traditional Vs New Supply Chain Models [online]
available from http://crackmba.com/traditional-vs-new-supply-chain-
models/ [n.d.]

4. 4. DairyCo (n.d.) Ensuring a Sustainable Dairy Supply chain [online]
available from
http://www.dairyco.org.uk/media/91674/ensuring_a_sustainable_dairy_
supply_chain_march_2009.pdf [n.d.]