How the dairy industry can build a resilient supply chain

ARTICLE | February 14, 2023

Authored by RSM US LLP

A resilient dairy supply chain is one that can withstand disruptions and continue operating at or near capacity despite challenges. Dairy products are an essential part of many people’s diets, and a supply chain disruption can have serious consequences for consumers. Given the disruption the world has gone through in the past few years, and the uncertainty that still lies ahead, companies have increased their focus on how to build more resilient supply chains.

Dairy end-to-end supply chains

As consumer preferences have changed in recent years, the dairy industry has been affected. One major issue is the oversupply of milk, which has led to decreased prices for farmers. This is largely due to increased production efficiency and those ever-evolving consumer preferences. The extended dairy supply chain starting at the farmer and progressing to the processor, distributor, retailer and finally the consumer needs to be able to withstand disruptions and continue to operate at capacity while following the tenants of quality and food safety.

These additional challenges to an already complex industry emphasize why having visibility into the full supply chain in real time is critical. Companies need to be able to act quickly—and in a proactive manner—if a disruption arises. This is where technology can fill a current void. Technology can help capture data as it is generated, connect the data in a centralized view to create real-time visibility, and generate both warnings as well as automate actions to quickly address identified problems.

Microsoft’s newly introduced Supply Chain Platform is meeting those needs. It connects data from different parties in the supply chain to create a centralized control center. Built on top of the Power Platform, a rich framework allows you to create custom workflows, reporting views and integrations to your existing systems.

Safe supply chains

When we talk about a safe supply chain, a multitude of areas come to mind. In addition to food safety—which we will address later in this series—these include:

• Are we safe from an inventory perspective?
• Are we safe from a technology perspective?
• Are we set up to handle any supply chain disruptions?

Considering the first question, it is no longer a safe strategy to rely on tribal knowledge and how things have always been done. It is imperative that dairy companies utilize technology to capture data from within their organization and utilize it to support the demand planning process in order to have enough inventory and capacity available in case of a disruption. In the dairy industry, there is a balancing act to avoid having too much or not enough inventory. Inventory visibility allows the dairy industry to react and provide effective communication when a disruption does occur.

Utilizing a modern enterprise resource planning platform like Microsoft’s Dynamics 365 Finance & Supply Chain or Business Central allows companies to store, analyze and process inventory data to plan for appropriate inventory quantities. Beyond those benefits, powerful machine learning and artificial intelligence-based tools can use ERP system data to better predict what the future holds and identify potential blind spots your organization can address to keep the supply chain moving.

As new technologies are introduced to support the business, connecting with new producers and vendors and allowing for remote access, cyber security is becoming a major topic. Bad actors traditionally have primarily focused on other industries, but are finding new opportunities as many dairy companies step into the technology world after a lag in investments in that space.

Utilizing a cloud-first strategy based on Microsoft’s infrastructure ensures that your data and applications are protected 24/7 by teams that focus solely on staying a step ahead of potential disrupters. In addition, with the unique suite of solutions Microsoft brings to the table, you can interact with customers, suppliers and employees in an integrated, secure and frictionless way at any stage of the engagement cycle.

Increasing your resiliency

Over the years we have partnered with numerous companies in the dairy industry to advise them on their transformation strategy, help them implement solutions and provide management for the long term. Can you confidently answer the following questions:

• Are you a resilient part of today’s supply chain?
• Are there areas where you know you have room to grow but are not sure where to start?
• Are you lacking the visibility to see what is going on in your internal supply chain?

If you need help answering any of these questions, reach out to us and we can show you how we can help you become more resilient and be ready for the next disruption.