How a Tech-Enabled Cold Supply Chain can help drive Efficiency in the Dairy and Milk Products Industry

By: Swarup Bose, Founder, and CEO, Celsius | Friday, 07 April 2023

Swarup Bose, Founder and CEO, Celcius, is a seasoned professional, with over 16 years of experience in Cold chain logistics. He is passionate about digitizing the cold chain in India and envisions Celcius as the nation’s biggest network of cold chain vehicles and warehouses that can cater to the smallest businesses in the remotest cities.

The Indian dairy sector currently accounts for 23% of global milk production, and is one of the largest, globally. Over the past decade the sector has grown from 146.32 million tonnes in 2014-15 to 209.96 million tonnes in 2020-21, registering a CAGR of 6.2 percent, while contributing 5% to the national economy and directly supporting more than 8 crore farmers. However, the sector has its own challenges.

Currently, 60% surplus milk is being handled by the unorganised sector (milkmen), while the remaining 40% is procured by the organised sector comprising dairy co-operatives and private companies. This is in stark difference to the developed countries, where up to 90% surplus milk is handled through the organised sector. Due to being unorganised, the sector has been slow on tech adoption which has been affecting the quality and quantity of milk, and amounting to a lot of wastage.

According to a report by the Chambers of Commerce and Industry of India (Assocham) and MRSS, about 3% of the milk produced (roughly 6.3 million tonnes) is wasted annually. The volume of wastage, coupled with an increasing demand for dairy products, may hamper India’s plan to produce about 300 million tonnes of milk by 2024 and become one of the largest dairy exporters in the world.

One of the key areas for handling wastage and ensuring consistent quality of milk and milk products, is access to a sophisticated, tech enabled cold supply chain. With unprecedented rise in summer temperatures and the unpredictable weather changes across various parts of the country, the need for a robust cold supply chain with effective and seamless temperature control, is the need of the hour. Some of the key challenges that are impacting the sector and can be solved through an effective, tech enabled cold supply chain infrastructure include:

Lack of immediate cold storage solution: Considering the unorganised nature of the sector, milk producers and farmers are largely forced to distribute the milk immediately or sell it to co-operatives as they do not have access to cold storage solutions. Most of the time, they are dependent on co-operatives to buy it at meagre prices or to helplessly see it go to waste.

Inconsistent storage and transportation temperatures: Even after the milk and dairy products are sold off, the distribution channel is seldom seamless and the products are subjected to varying temperatures, as they change hands.

Inefficient last mile delivery infrastructure: Even after they have reached the main distribution center, the lack of temperature controlled last mile deliveries further leads to reduced quality of the product by the time it reaches the end consumer.

Poor hygiene and lack of accountability: Given the vulnerable nature of milk, which can be a rich medium for bacterial growth and can easily get spoilt or coagulated due to contamination, effective hygiene and safe handling of the product is mandatory, which may not always happen in uncontrolled or unorganised supply chains

Given the above challenges, it is imperative that the supply chain infrastructure for milk and milk products addresses these and also helps farmers and dairy businesses to cut losses and expand market reach. Listed here are some befits of adopting a tech enabled cold supply chain network:

Efficient and consistent storage environment:

Tech enabled cold storage solutions leveraging AI and ML linked systems that make it possible to create and monitor temperature-controlled storage environments for dairy and dairy products and help maintain the ideal temperature and humidity. This ensures effective monitoring and helps maintain the integrity of the chain and identify potential weaknesses. Cold storage facilities equipped with remote monitoring systems can also help communicate logs and events to businesses. IoT provides live data about product temperature and location, facilitating better analysis and decision-making.

Effective transportation and last mile deliveries

Efficient distribution is an inseparable part of the cold supply chain infrastructure and tech enabled reefer vehicles go a long way in facilitating smooth transportation and last mile distribution of dairy products. Dedicated micro-warehouses and a robust fleet of reefer vehicles with live tracking and tracing, allow end-to-end visibility, helping verify if the products are being transported at the right temperatures and making it to the destination on time, without damages or distress.

Dedicated reefer vehicles for last mile deliveries could also be a gamechanger for the dairy industry. When equipped with AI, ML, IoT devices, and blockchain-based smart contracts, reefer vehicles can offer a near fail-safe delivery option to end-consumers.

Enhanced product quality and shelf life

Much of the quality of milk and dairy products’ quality and shelf life are compromised by the time they reach the market or the end consumer. As a result, farmers incur heavy losses as the products become unfit for consumption caused due to temperature fluctuations and contamination. A technology-driven supply chain promotes consistent temperature monitoring, real time updates, live tracking and hygienic handling and storage environment that helps in enhanced quality and shelf life, irrespective of the time and distance. Additionally, a robust cold supply chain that facilitates improved delivery routes and better demand forecasts will also ensure efficient and effective distribution of milk and dairy products.

Access to newer markets

While inefficient cold supply chain infrastructure translates into milk and dairy products being delivered only to nearest markets, it leads to unequal distribution and forces farmers and dairy producers to compromise on costs to avoid wastage. An efficient cold supply chain that utilizes intermodal transport and advanced technology ensures milk and dairy products can be transported through longer distances without being affected by changing atmospheric conditions. Additionally, with solar powered cold storages and efficient reefer vehicles, farmers can confidently tap into new markets, ensuring not only an increase in revenue but also enhanced customer satisfaction.

With the increasing demand for A2 and farm fed/farm raised milk from pastures that is devoid of artificially supported milk production, it has become increasingly important that supportive, state-of-the-art cold supply chain infrastructure is made accessible for the dairy industry. This will not only help preserve the product quality and shelf life but also help control the logistic costs, and cut down wastage. Even as India gears up to be a global leader in dairy exports, it is vital that an effective, tech enabled cold supply chain network is in place to ensure we meet global standards of product quality, at competitive logistic costs.