Case Annexure 1

Case Annexure 1

DAKSHIN KANNADA MILK UNION COOPERATIVE SOCIETY

Manipal

Report as Annexure to the DKMUL Case:

Expansion, Quality and Rural Welfare:

The Balanced Trade-off

Report done in association with Core Group I-2 (Batch 2005-07)

SUBMITTED BY :

Abhishek Sinha

PGP Batch 2005-07

T.A. Pai Management Institute, Manipal.

Mission Statement:

(Originally in Kannada)

Our primary mission is to ensure the financial, social, professional and overall development of the member farmers of the co-operative. We strive to provide the best facilities within our capacity in order to derive milk and maximize its quality and quantity. We also aim to be the number one milk producer at the national level to supply to our customers the highest quality milk and milk products.

Values:

􀂾 High Quality

􀂾 Sense of belonging

􀂾 Hard Work

􀂾 Co-operation

􀂾 Transparency and equality

􀂾 Mutual Respect

􀂾 Honesty

􀂾 Discipline

􀂾 Efficiency in work

Departments:

1. Plant: The plant consists of the buildings, machines and the processes where the milk are collected, processed, standardized and packaged. It consists of numerous machines and equipment which carries out the processes which the raw milk undergoes before it is packed.

2. Store: The store keeps a stock of all products other than milk produced by the plant. These include Mysore Pak, Peda, Curd, Ghee, Lassi, Butter Milk etc.

3. Procurement and Input: This is the department responsible for the procurement of raw milk from the rural milk producers. The main areas which DKMUCS, Manipal covers for raw milk procurement is the Udupi districts. There is an average procurement of 40000 Liters/day.

4. Quality Control: The department of Quality Control plays a major role in this co-operative in view of the extremely high standards of hygiene and cleanliness maintained by the administration. There are high-level quality checks carried out at different stages to ensure that the end consumer gets the best quality milk.

5. Administration and Human Resource: This department looks after the day to day administrative issues of the workers and also is responsible for payment of employees, recruitment, training and promotions.

6. Finance: The Finance department manages the funds; it keeps a track of all the monetary transactions of the Milk Co-operative. It also handles and manages the procurement prices and the sale prices of the milk and milk products.

7. Marketing: The Marketing department, at Mangalore is solely responsible for the marketing of all milk and milk products of DKMUCS under the brand name of Nandini. All advertising, distribution, communication with the vendors, and complaint management is handled by the Marketing department. A new internal initiative “Marketing Abhiyana” has also been started which aims to spread marketing awareness across all departments.

8. Purchasing: The Purchasing Department coordinates with the Procurement and Input Department in order to purchase the milk from the member farmers. It also purchases all milk related raw materials, equipment and spare parts, stationery etc.

9. MIS: The Management Information System, which was one of the earliest steps taken towards the modernization of the co-operative in 1995, is the pride of DKMUCS. It helps in preparation of bills, raw material, sales figures, maintenance of personnel accounts and dealer accounts.

Quality Standards:

Quality Standards and Processes being undertaken by the Co-operative:

􀂾 TQM: Total Quality Management

􀂾 CMP: Clean Milk Production

􀂾 TEM: Total Energy Management

􀂾 T&HRD: Training and HR Development

􀂾 WM: Water Management

􀂾 ISO: International Organization for Standardization

􀂾 HACCP: Hazard Analysis Critical Control Points

􀂾 EMA: Environmental Management Analysis

Executive Hierarchy

Processes and Operations:

A. Supply Chain and Logistics

The supply chain consists of the following links:

1. Milk Producers,

2. Collection Agents,

3. Manufacturing and Processing Facility,

4. Distribution Channels,

5. Retail Outlets.

Appendix 1

The performance of numerous local rural milk producers and the plant’s relationship with these producers determines the supply and inward flow of milk in terms of quality and quantity of milk for the unit. The collection process is split into two tiers: Level 1 and Level 2.

The basic milk producers, who are at Tier 1, come daily and submit their daily milk produce to the nearest local milk collection centers which are the Tier 2. Collection agents administer the collection centers. Transport teams consisting of vans and other vehicles collect the raw milk in milk cans and transport it to the Manipal plant. The performance of the distribution channel determines the outward flow of product. In the case of the Manipal unit, the distribution of the finished products is outsourced. Hence, the logistics of transport of finished milk packets and other milk products to the Retail Outlets and Nandini Milk Booths largely depends on the efficiency of the outsourced transport contractors.

Process Description and Layout:

The processing of the milk is divided into the following steps:

1. Collection

2. Weighing and sampling

3. Testing

4. Chilling

5. Pasteurization

6. Homogenization

7. Storage

8. Packaging

The collection is done in a U-shaped conveyor belt system with a can opener, can tilter weighing machine, collection and can cleaning units. The U-shaped layout saves space and makes it simpler and more efficient for the seven workers working in Collection. This layout was identified by us as a Process Layout and the space saving of this layout enabled the existence of a spare collection conveyor unit, which can be used as a contingency in case the first system fails. (Refer Layout Figure 1)

The Testing is done by taking samples from each batch of milk coming from different collection centers. The samples then undergo a thorough Testing Procedure. The process consists of testing and measuring the Fat Content and SNF (Solid Not Fat) Ratio. The standards adopted by DKMUCS are a minimum of 3.5% Fat and 8.5% SNF. The instruments used to determine this are Butyrometer, Lactometer and Electronic Milk Tester. The SNF ratio is calculated by the formula:

SNF= (CLR/4) + 0.25 * Fat + 0.35

Where CLR= Corrected Lactometer Reading

The samples are numbered in order to identify the source collection center. Collection centers, which do not measure up to the quality standards are penalized severely and given suggestions and tips to improve the quality. The money is paid to the milk producers according to the fat content of the milk supplied.

Microbiological Testing is also carried out to find out the Microbial activity in the milk. This is mandatory as per the Prevention of Food Adulteration Act.

The milk after being weighed and tested is sent to the next stage of Chilling.

Chilling is carried out in the milk chiller where it is chilled by interfacing it with chilled water across a metal partition. The final temperature of the milk is in the range of 5-8 degrees.

Pasteurization is carried in Pasteurizer, in which milk is alternately heated and chilled to control the microbial count. The heat treatment is carried out at 72 degrees for about 15 seconds.

The next stage is Homogenization. Homogenization is used for preparation for toned milk. In this process, solid milk particles are broken down into small fat molecules of 10 to 20 micron size.

After this, the milk is said to be completely processed. The processed milk is then sent to the Storage tanks kept on an elevated platform. The storage tanks have a cumulative capacity of 45000 litres. These storage tanks are insulated and the temperature is maintained at 5 degrees.

Packaging is the last process of the plant. The machines used for packaging are semi-automatic working on the principle of hydraulic pressure. There are three different types of machines for three different types of milk, with the input directly connected to the storage tanks. The packaging process consists of filling the milk into the packets and the sealing of the packets. These packets are then manually transferred into the crates of various capacities, which is then sent into the cold storage. The delivery vans then take the packets for delivery to the retail outlets.

Appendix 2

Inventory Management:

The plant has a two-bin system of Inventory. Milk is stored at two places in different forms of processing at the plant. The first place is the storage tanks after the processing of the milk. Milk can be stored here for a limited period and this stage acts as a buffer between the processed milk and processed milk. The next place is the storage of the packaged milk in cold storage area before it is distributed. The inventory management of milk is limited to short periods of milk storage as it is a perishable item.

The pasteurizing process is handled by five workers per shift.

The packaging division employs thirteen workers in a single shift consisting of both contract as well as permanent employees.

Two permanent staff is employed in the biological laboratory for post processing testing.

Environmental Aspects

All the water that is used in the plant for washing purposes are treated and reused in the same process again. There are 5 stages in the water treatment process. These tanks for treatment are located just outside the main building.

Learning:-

1. We both have work experience of working in a profit making organization. But it was altogether a different learning experience while working with a co-operative society because its ultimate purpose was to serve its members after providing best quality products to its consumers.

2. In the modern era of cut throat competition, the quality of the product plays an important role in the success of the organization. Even small co-operatives like DKMUCS are implementing quality tools like TQM, CMP, TEM.

3. In the area of perishable items the degree of automation is very high in order to speed up the complete processing time and also in order to standardize the complete process to elevate the quality standards.

4. It was interesting to know that the co-operative society distributes its profit in the form of ‘price-difference’ to its members.

5. Organizations are giving more and more emphasis to the ‘marketing’ function and it is becoming a pervasive and universal function of the organization.

6. All the departments in the organization are interdependent on one another. So, it is decisive to have a proper communication between these departments.

7. Management of human resource is more critical than management of funds and other resources.