The Indian Dairy Industry Calls for Action
In 2010, Aavin, the Indian milk producer’s federation based in Tamil Nadu recognized its need for technology and turned to SAP for technical support with organizational and accounting problems. India has currently one of the fastest growing economies worldwide, leading to a growing population and increasing demand for food supply. Experts have, indeed, estimated the country’s need for dairy up to 200 m tons of milk by 2021. In the last years, however, the national dairy industry has struggled with technical and logistic challenges, employing numerous, poorly connected farmers without a unified paying-system or fixed quality-standards. Moreover, the flawed administrative software caused data discrepancies and inaccuracies. Other than lowering work efficiency, these problems lead to high administrative maintenance costs.
Needless to say, demands for help were heard from different sides of the producer’s union when SAP stepped in to find a solution through a co-innovative Design Thinking approach. A research project was initiated, in order to gain a thorough understanding of the struggles and needs of all involved parties, as well as to map out technology solutions to enable and optimize the supply process. The main goal was to create a common and smoothly operating work flow. <Links to other SAP Design Services related projects>
Close on the Dairy Farmers’ Heels
One of the main issues impeding the work process was that the recording of data concerning the dairy farmers and their submissions was either insufficient or lacking. The inconsistency was accompanied by organizational complications which arose from different working practices, quality standards and the lack of a consistent paying system. SAP’s involvement, thus, contained several tasks. First, a thorough understanding of the supply process as well as the different farmers’ problems and needs was required. For this task, Puneet Gupta, SAP’s project lead in the case set out to the different supplying regions with a research team. They accompanied rural farmers in their daily work life and hosted Design Thinking workshops to learn about their experience. The aim was to find out who their producers actually were, what issues they faced and what they expected of their contract relationship. In the second step, the dairy workers received briefings regarding the technical applications and their contract conditions. Also, they were instructed on the supply management process and their tasks in order to create common working practices. In a last step, the findings were analyzed and transferred into the choice of the appropriate SAP software systems and the design of required applications.
Milking the Cashcows
Taking the requirements into account which were found in the research process, SAP HANA was implemented for Aavin in order to enable real-time business and optimize working processes with all involved parties. Since the technology allowed harmonized actions and a functional standard across the organization, it equally smoothed processes and increased efficiency. For example, it helped the management to react faster to demand and supply changes and enabled a significant increase in the market share. In a similar way, logistic processes could be handled more precise and efficient, due to exact whereabouts of the goods and warehouses. Lastly, the information on the collection of milk and its quality could directly be checked by the Union and issues in the supply chain were detected earlier which enabled a fast response.
Besides the technological improvements, yet, there were tangible benefits for the farmers: Their loans were immediately and securely transferred to their individual bank accounts. Further, the sessions helped to reduce scepticism and established a long term trust relationship with the individual milk farmers. The workshops also served to transfer background knowledge around the dairy business and included education about transport and animal husbandry.
Aavin is committed to the welfare of its 20 lakh milk producers. The pilot is a step towards their financial inclusion.– Mr. TK Ramachandran, Managing Director, TN milk producers co-operative Federation LTD