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TECHNO-ECONOMICS OF DAIRY BUSINESS

TECHNO-ECONOMICS OF DAIRY BUSINESS “OPTIMIZING PROFITABILITY THROUGH QUALITY AND PRODUCTIVITY ENHANCEMENT “ PRESENTED BY Jaswant Singh Bhandair Mission Director INTERNATIONAL IMPROVEMENT MISSION REGD. OFFICE #53-A,SECTOR-18-A CHANDIGARH-160018 Email: ibiu_iim@yahoo.co.in

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TECHNO-ECONOMICS OF DAIRY BUSINESS

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  1. TECHNO-ECONOMICS OF DAIRY BUSINESS “OPTIMIZING PROFITABILITY THROUGH QUALITY AND PRODUCTIVITY ENHANCEMENT “ PRESENTED BY Jaswant Singh Bhandair Mission Director INTERNATIONAL IMPROVEMENT MISSION REGD. OFFICE #53-A,SECTOR-18-A CHANDIGARH-160018 Email: ibiu_iim@yahoo.co.in Tel:0172-2724872 Cell: 9815961853

  2. To procure raw milk without any adulteration, dilution or manipulation. Analyze raw mixed milk for exact % B.M. / C.M. and added water and find out its actual net worth. Process and market pure & safe pasteurized milk having shelf-life of more than 15 days. YES/NO YES/NO YES/NO Under Indian conditions, is it possible?

  3. Manage total milk handling costs (Procurement to Marketing) to keep the same below Rs.3.50/Liter. Increase purchase price of raw milk by Rs.1.00/liter, decrease consumer price by Rs. 1.00/liter and still attain net profit margin of more than 10% of turn over. Provide loss insurance cover for ethical dairy plants against hidden losses in dairy business. YES/NO YES/NO YES/NO Under Indian conditions, is it possible?

  4. ADULTERATION,DILUTION & MANIPULATIONS IN RAW MILK PURCHASE TRANSACTIONS {A.D.M.} MIDDLEMEN BETWEEN MILK PRODUCERS AND MILK PLANTS MIDDLEMEN BETWEEN COMPANIES AND CONSUMERS LACK OF TRANSPARENT BUSINESS MANAGEMENT /ACCOUNTING SYSTEM UNVIABLE INVESTMENTS & UNDESIRABLE OVERHEADS CORE ISSUES AFFECTING PROFITABILITY,PRODUCTIVITY AND QUALITY OF DAIRY PRODUCTS

  5. WIDE SPREAD SICKNESS AMONG DAIRY PLANTS. UNDETECTED HIDDEN LOSSES IN DAIRY BUSINESS. NO ONE IS OWNING RESPONSIBILITY AND ACCOUNTABILITY FOR SUCH LOSSES. DILUENTS/ADULTERANTS/RECYCLED MILK COMPONENTS ARE BEING PURCHASED AS RAW MILK CONTENTS. NET AMOUNTS OF MILK PAYMENTS RELEASED BY DAIRY PLANTS ARE NOT ACTUALLY REACHING MILK PRODUCERS. EVEN SUBSTANDARD RAW MILK/UNFIT FOR HUMAN CONSUMPTION IS BEING RECEIVED BY DAIRY PLANTS. BULK OF THE PASTEURIZED MILK/DAIRY PRODUCTS AVAILABLE IN INDIAN MARKETS NOT CONFORMING TO INTERNATIONAL QUALITY REQUIREMENTS. ALARMING SYMPTOMS THAT NEED PROFESSIONAL INTERVENTION ON S.O.S. BASIS

  6. 1. TECHNO-COMMERCIAL LIMITATIONS OF 60:40 TWO AXIS FORMULA FOR PURCHASING RAW MILK. UNRESOLVED PROBLEMS OF INDIAN DAIRY INDUSTRY

  7. 2. LARGE NUMBERS OF DAIRY PLANTS IN INDIA ARE SUFFERING LOSSES DESPITE HIGHER VISIBLE PROFITS. UNRESOLVED PROBLEMS OF INDIAN DAIRY INDUSTRY

  8. 3. MANY COMMERCIAL DAIRY PLANTS ARE HANDLING RAW MILK DILUTED WITH 30 to 40% ADDED WATER. UNRESOLVED PROBLEMS OF INDIAN DAIRY INDUSTRY

  9. 4. CONSUMERS IN INDIA ARE REQUIRED TO BOIL PASTEURIZED MILK BEFORE CONSUMPTION. UNRESOLVED PROBLEMS OF INDIAN DAIRY INDUSTRY

  10. 5. OUR MARKETS ARE FLOODED WITH SUBSTANDARD PASTEURIZED MILK AND ADULTERATED DAIRY PRODUCTS. UNRESOLVED PROBLEMS OF INDIAN DAIRY INDUSTRY

  11. TECHNO-COMMERCIAL AUDIT OF OVERALL BUSINESS OPERATIONS OF UNVIABLE AND LOW PROFITS MAKING DAIRY PLANTS BY COMPETENT PROFESSIONAL INSTITUTION. IMPLEMENTING “PARTHA” BASED DAIRY BUSINESS MANAGEMENT/ACCOUNTING SYSTEM TO ELIMINATE UNDETECTED HIDDEN LOSSES IN DAIRY BUSINESS. INTRODUCING “MANAGEMENT FOR RESULTS” AND PERFORMANCE LINKED EVALUATION AND REMUNERATION SYSTEM FOR PROFESSIONAL MANAGERS TO ENSURE PROPER ACCOUNTABILITY/ RESPONSIBILITY FOR THEIR PERFORMANCE RESULTS. POSSIBLE SOLUTIONS FOR UNRESOLVED TECHNO-COMMERCIAL PROBLEMS OF INDIAN DAIRY INDUSTRY

  12. “APNI DAIRY “ PRODUCER TO PLANT MILK PROCUREMENT SYSTEM (P TO P). “COMPANY TO CONSUMER” DIRECT MARKETING (C TO C). COMPULSARY THIRD PARTY QUALITY CERTIFICATION FOR PASTEURIZED MILK/DAIRY PRODUCTS BY INTERNATIONALLY ACCREDITED INSTITUTION. POSSIBLE SOLUTIONS FOR UNRESOLVED TECHNO-COMMERCIAL PROBLEMS OF INDIAN DAIRY INDUSTRY

  13. PROFITABILITY OF DAIRY BUSINESS {PASTEURIZED MILK PRODUCED WITH 50% B.M.+50% C.M..} ASSUMING BASIC PRICE for 6.50% Fat & 8.80% Buffalo Milk=Rs.13.00/Kg. CORRESPONDING PRICE for 3.50% Fat & 8.50% Cow Milk =Rs 9.1666/Kg. COST of 50 Kg.s. Buffalo milk=Rs650 Cost of 50 Kgs. Cow milk=Rs 458.333 COST of Mixed Milk (50%B.M & 50% C.M)= Rs 1108 ( Fat 5.00% & S.N.F. 8.65%) VALUE OF MILK SOLIDS EXTRACTED=Rs. (0.50x110)+(0.15x62.87)=Rs.0.64 /Kg. BASIC COST= (Standardized milk)=Rs.(11.08-0.64)=Rs.10.44/Kg BASIC COST(standardized milk) Rs. 10.77/Liter (10.44x1.032=Rs.10.77/Liter) COST OF STANDARDIZED MILK 4.50% Fat & 8.50% S.N.F.)=Rs 10.77/Liter ASSUMING HANDLING COST{Milk procurement to Marketing}=Rs.4.00/Liter TOTAL COST=Rs.(10.77+4.00+)=Rs.14.77/ Liter SELLING PRICE(standardized milk)=Rs.19/Liter NET PROFIT=Rs.{19-14.77)=Rs.4.23/Liter PROFIT OPPORTUNITY PER YEAR(1LLPD)=Rs. {1x4.23x365}=Rs15,43,95,000 ) >Rs.15CRORES OR 22% of TURNOVER

  14. PROFITABILITY OF DAIRY BUSINESS {PASTEURIZED MILK PREPARED FROM BUFFALO MILK} • Dairy plants selling pasteurized milk must earn net profit of > 20% of Turnover. • Assuming annual average basic price of raw milk as Rs.13.00/Kg. (6.5%/8.8%) or Rs. 200/Kg. Fat (Rs. 120 /Kg Fat & Rs. 59.09/ Kg. SNF) total solids=15.30% • Milk collection/processing/packing /marketing cost for efficiently managed dairy plant will not normally exceed Rs.4.00/Kg. (including processing losses) • Cost of Pasteurized standardized milk (4.50% Fat and 8.50% SNF)=Rs.10.42/Kg. • Total Cost would thus work out to Rs. (13.00-(2.40-0.17727)+4.00)=Rs.14.42/ Kg. Total cost = Rs{(10.42 + 4.00}x1.032=Rs. 14.88/Liter • {(6.5-4.5)x 120=Rs.2.40} (8.8-8.5)x 59.09=Rs.0.17727/ Kg • Retail consumer price for pasteurized standardized milk=Rs.19.00/Liter • As such there is clear net profit margin of {19.00-14.88)=Rs. 4.12/Liter} • Dairy company handling one Lac Liters milk per day would thus make annual net profit of more than Rs. 15 crores. (>20% of turn over) {100000x4.12x365=Rs.15,03,80,000} • provided there are no hidden losses.

  15. TECHNO-ECONOMICS OF COW MILK V/S BUFFALO MILK Assumed Rate=Rs.13.00/KG or Rs120.00/Kg fat & 59.090909/Kg SNF (Buffalo Milk) Rs. 100/Kg. Fat & Rs. 66.6666/Kg. SNF (Cow Milk) Let us presume that we purchase 100Kgs. B.M. & 100Kgs. C.M. SNF:Fat ratio of standard buffalo milk (8.8/6.5)= 1.3538461 SNF:Fat ratio of standard cow milk (8.5/3.5)= 2.4285714 Cost of B.M.(6.5% & 8.8%)=(6.5x120+8.80x59.0909)=Rs.12.9999/Kg. Cost of C.M.(3.5% &8.5%)=(3.50x100+8.50x63.3333)=Rs.9.1666/Kg. Total cost of 200Kgs. (B.M.+C.M.)=Rs.(1299.99+916.66)=2216.66 (A) Total mixed milk(B.M.+C.M.)=10Kgs Fat +17.30Kgs. S.N.F. Cost of mixed milk=10x120+17.30x59.090909=Rs.2222.2727257 (B) Difference between B & A: Rs.(2222.2727257-2216.66)/200 =Rs.(5.6127257)/200=Rs.0.0280636285/Kg. * Cow milk as such is not relatively expensive but It is dilution and manipulation that makes it costlier for the purchaser due to undetected hidden loss.

  16. Category % Quantity Fat% S.N.F% Fat Kgs. S.N.F.Kgs Buffalo Milk 69 69000 6.76 8.62 4664.40 5947.80 Cow Milk 31 31000 3.90 7.88 1209.00 2442.80 Mixed Milk 100 100000 5.89 8.40 5890.00 8400.00 Amount paid as milk payment: Rs. 945000 {@Rs.9.45/Kg} Rs.160/Kg. Fat Purchase rate for Buffalo Milk (6.50% Fat & 8.80% S.N.F.) Rs. 80/Kg Fat & Rs. 60/Kg. S.N.F Purchase rate for Cow Milk 3.50% Fat & 8.50% S.N.F) Milk purchased by this organization is diluted and manipulated in such a way to causehidden loss of Rs.2.40/Kg to the purchaser that remains undetected with conventional milk purchase system and calculations. 1. Assume that all the buffaloes and cows available in the milk shed area from where this milk is procured by the said institution are milked without any dilution with water and kept in separate tanks. Now if cow milk and Buffalo milk contained in these tanks is mixed in the indicated ratio 31% C.M. & 69% B.M or any other ratio proportion we can not produce mixed milk containing 5.89% Fat & 8.40% S.N.F. 2. Take 100 Kg.s Buffalo milk containing 6.50% Fat & 9.27% S.N.F. Add 10.357 Kgs water in to this milk You will get diluted mixed milk containing 5.89% Fat & 8.40% S.N.F. SAWAL SAU CRORE KA (CASE STUDY)

  17. Seller can now manipulate this diluted milk as mixture of 69% Buffalo milk containing 6.76 % Fat & 8.62% S.N.F. & 31% Cow milk containing 3.90% Fat & 7.88% S.N.F. on the milk billing record. Water used for dilution and manipulation thus becomes milk and gets hidden in the garb of 31% cow milk, resulting in hidden gain to the seller. In fact for producing mixed milk containing 5.89% Fat we need to mix 79.67% standard buffalo milk (6.50% Fat & 8.8% S.N.F.) & 20.33% cow milk containing 3.50% Fat & 8.50% S.N.F. Mixed milk thus produced would however contain 5.89% Fat & 8.73901% S.N.F valued at Rs.9.776540906/Kg. {Rs. 9.77/Kg.} Similarly if we mix 69% standard buffalo milk containing 6.50% Fat & 8.80% S.N.F) with 31% standard cow milk containing 3.50% Fat & 8.50% S.N.F. (Indicated % of Buffalo and cow milk as per milk bills). Mixed milk thus produced would contain 5.57% Fat & 8.707% S.N.F. valued at Rs. 9.44923/kg {Rs.9.45/Kg.} As per analysis carried out using Digital Analytical Technique (D.A.T.) developed by one of our Mission associate in Canada, milk purchaser suffered hidden loss of Rs. 2.40/Kg. in these purchase transactions. SAWAL SAU CRORE KA (CASE STUDY)

  18. Qty. Fat % Price S.N.F% Category 100 6.50 10.40 8.80 100% B.M 0.623459094 100 5.8901 9.776540906 8.73901 (20.33% + C.M +79.67% B.M) 0.326540906 100 5.89 9.45 8.40 0.0077 (Manipulated/diluted milk) 100 5.57 9.44923 8.707 (31.00% C.M +69.00% B.M.) 2.115925 100 3.50 7.333305 8.50 100% C.M HIDDEN LOSS IN MILK PURCHASE TRANSACTIONS: Rs.{(2.115925)+ (0.623459094-0.326540906)-(0.0077)} =Rs. {2.115925+0.29691888-0.0077} Rs.2.405143188 HIDDEN LOSS/YEAR @11.50 Lac Liters/Day =Rs. (11.50x365x2.405143188)=Rs.100,95,58,885 i.e.>Rs.100 Crores/Year SAWAL SAU CRORE KA (CASE STUDY)

  19. DO WE KNOW OUR HIDDEN LOSSES? Case Study-MFL-2 MILK PROCURMENT:750 (Lac Kgs.) PRICE PAID:14394 (Lac Rs.) COST OF MILK PER Kg.: 14394/750= Rs.19.20 /Kg. Or Rs.295.26/Kg. Fat As Per Weighted Average of actual milk purchase rates through out the year: Actual due payment=Rs.(6.50x230)=Rs.15.05/Kg. Or Rs. 230/Kg. Fat MILK HANDLED=1204(Lac Kgs.) {Raw milk+ Reconstituted milk) COST OF RAW MATERIALS =14470 (Lac Rs.) or Rs. 12.02/Kg. MILK HANDLING COST:3852 (Lac Rs.) or Rs.3.20/Kg. TOTAL COST: {14470+3852}=18322 (Lac Rs.) or = Rs. 15.22/ Kg. TOTAL REVENUE: 17437 (Lac Rs.) or Rs.{17437/1204}= Rs.14.48/Kg. NET PROFIT/LOSS per Kg.=Rs{15.22-14.48}=Rs.0.74/Kg Loss. NET PROFIT:530 Lac Rs (As Indicated on the balance sheet) or =Rs.0.44/Kg. (Profit) PARTHA PROFIT: Rs.3.50/Kg HIDDEN “PARTHA” PROFIT LOSS: Rs.(3.50+0.74)=Rs.4.24/Kg PARTHA PROFIT LOSS= Rs.15,47,60,.000/ Year {@1 Lac Kg./day

  20. Price actually reaching the milk producers is much less than milk payment released by the institutions purchasing milk thus discouraging commercial production of microbiologically safe pure milk. As per case study-3 relating to a dairy institution in North India, cost of total milk purchased by it during the year remained Rs.15.67/Kg. {Rs. 241/Kg. Fat} {9060/578=Rs.15.67/Kg.} when as per annual weighted average of milk purchase rates during corresponding period works out to below Rs.200/Kg. Fat or Rs.13.00/Kg.{ for 6.5% Fat & 8.80% S.N.F} NET AMOUNTS OF MILK PAYMENTS RELEASED BY DAIRY PLANTS NOT REACHING MILK PRODUCERS

  21. DILUTION OF RAW MILK WITH WATER Normally we feel that added water in milk does not benefit the seller or harm the buyer so long we pay the price of milk after testing FAT and SNF in milk but actually it is not so. • 30%ADDITION OF WATER IN MILK • Reduces its contribution by Rs.0.52 per KG. • Increases handling /processing cost by Rs.0.23/KG (@ 10% dilution) • Adversely effects Fat/S.N.F. test results • Helps the seller to manipulate SNF:FAT ratio to his advantage • Helps unethical/unorganized traders to dominate organized sector • Badly effects microbiological quality of raw milk/ dairy products .

  22. MANIPULATIONS IN COMPOSITION OF MILK IMPACT OF MODIFYING SNF:FAT RATIO • Declared price of milk is subject to specified % of FAT and SNF {(8.80/6.5=1.3538461for B.M) and ( 8.50/3.50=2.4285714 for C.M.) • Change of FAT or SNF disturbing specified ratio can decrease real worth of milk that does not reflect on milk billing calculations • Cost of milk being paid appears logical and reasonable as per arithmetical calculations but causes heavy loss to buyer. • Purchasing diluted/adulterated/manipulated milk from traders is major reason for heavy losses to dairy plants.

  23. DILUTION OF RAW MILK WITH WATER • 30%ADDITION OF WATER IN MILK • Reduces its contribution by Rs. 0.52 per KG. • Assumptions: Rate=Rs.13.00/KG (Fat=Rs120/KG & S.N.F.=59.090909/KG) • Assumed realization=Fat=Rs130/KG & SNF=Rs.110/KG) • Cost of milk (5x120+6.76923x59.090909)=Rs.9.999999/KG. 9.9999x1.30=Rs.12..999 Worth of water content=12.9999-9.9999=Rs.3.00/Kg. • Revenue=(5x130+6.76923x110)=13.946153/KG. • 13.946153x1.30=Rs.18.13 { For undiluted Milk of standard composition} • Contribution=(Revenue-Cost)=13.946153-13.00=Rs.0.946153/KG. • 0.946153/1.30=Rs.0.7281 • Cost of Standard milk=Rs(6.50x120+8.80x59.090909)=Rs. 12.999999/KG. • Revenue= (6.50x130+8.80x110)=Rs. 17.25/KG. • Contribution=(Revenue-Cost)= Rs.(17.25-12.99999)=Rs.4.25/KG. • Loss of Contribution=Rs.(4.25-3.00)-0.7281=Rs.0.52219/Kg. • Impact on profitability/year:Rs. (1x0.52219x365)= • Rs 1,90,59,935 @ 1 Lac liters/day

  24. “APNI DAIRY” MILK PURCHASE SYSTEM Mission designed farmer friendly system for Purchasing pure milk directly from actual milk producers without any dilution, manipulation and hidden losses. SALIENT FEATURES: Remunerative for milk producers. Profitable for the dairy plants. Transparent milk purchase transactions without any hidden losses. POSSIBLE SOLUTIONS FOR MILK PROCUREMENT

  25. Eliminate all middlemen in milk purchase system in a phased manner. Purchase only pure milk without any dilution or manipulations. POSSIBLE SOLUTIONS FOR MILK PROCUREMENT

  26. ELIMINATE SHORTCUT SOLUTIONS FOR MILK PROCUREMENT I Free from all kinds of dilution/adulteration/preservatives: (Nominal penalties for adulterants/dilution are being imposed) II Total solids>15.3% for B.M. & >12 for C.M. : {Milk with solids as low as 10% is being accepted) III S.N.F :FAT Ratio strictly as per formula standards for B.M & C.M (Milk with any S.N.F/Fat ratio is being accepted) IV C.L.R. For B.M=29 C.L.R. For C.M=30 {Milk with C.L.R. as low as 15 is being accepted} V Sodium ions<400/ C.M & <450 For B.M. {Milk with sodium ions as high as 1200 is being accepted} VI M.B.R. time for raw milk in summer>30 minutes and >1 hour in winter (No Consideration) VII { Score for Organoleptic Test: >9/10 ( Scale 1;!0} (No consideration) POSSIBLE SOLUTIONS FOR MILK PROCUREMENT

  27. Introduce transparent value management system based on “Marwari” concept of business management “PARTHA” designed by our Mission associates called “DAIRY BUSINESS MANAGEMENT SYSTEM” {D.B.M.S.} that works like a never failing tool in the hands of professional mangers in controlling hidden losses and optimizing overall profitability of dairy business. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS

  28. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS {D.B.M.S} Based on infrastructure and resources available with the organization projected “PARTHA” plan can be drafted by the management. This document should be based on raw material inputs, product mix ,projected expenditure/ revenue account, contribution per unit and anticipated annual profits.

  29. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS “PARTHA” BASED” PROFITABILITY STATEMENT Conventional profitability statement or balance sheet is neither cost specific nor related to output of prime performance parameters. Total expenditure against each head for each department with specified “PARTHA” norms should be compiled, monitored and analyzed at regular intervals.

  30. DAIRY BUSINESS MANAGEMENT SYSTEM {DBMS} ANALYZING PROFIT & LOSS STATEMENT TYPICAL DAILY PROFIT & LOSS STATEMENT {Basis 100 kg.) S.NO DESCRIPTION AMOUNT (Rs.) S.NO REVENUE AMOUNT(Rs.) I Purchase price of milk (6.5%/8.8%) 1300 I Sale of standardized milk 800 II Overhead cost on milk procurement 100 II Sale of toned milk 400 III Processing cost including packing 100 III Sale of double toned milk 500 IV Cost of utilities and maintenance 50 IV Sale of skimmed milk 100 VI Marketing and Miscl. costs 150 V Sale of other products 150 TOTAL EXPENDITURE 1700 TOTAL REVENUE 1950 Assuming total expenses as Rs 1700/100 Kg. Assuming net realization from Pasteurized milk/products as Rs. 1950/100 Kg. Actual Daily Profit/100Kg.=Rs.{1950-1700}= Rs.250 “PARTHA” PROFIT/100Kg. =Rs{ 2100-(1300+400)}=Rs.400. {As Per Specified norms} LOSS AGAINST PROJECTED“PARTHA PROFIT = Rs. (400-250=Rs.150/100Kg. PARTHA PROFIT OPPORTUNITY LOSS/DAY @1 Lac Kg./Day= Rs1,50,000

  31. DAIRY BUSINESS MANAGEMENT SYSTEM {DBMS} INTRODUCING PARTHA IN DAIRY BUSINESS(MILK PROC.) Norms can be fixed in consultation with concerned staff bench marking with the best in the country. CREATING NORMS AFFECTING PARTHA {MILK PROC.} PRIME PERFORMANCE PARAMETERS: NORMS I Quantity of milk procured (Kg/day) As per specified targets II Quality of milk procured ( A-1/A-2/A-3) 100%A- 1 III Landed cost of milk (Rs. /Kg.) As per specified targets EXPENSE RELATED PARAMETERS: Rs./Kg. 1 Basic cost of milk:(As per competitive market rates) 13.00 2 Milk handling charges (Village level milk collection): 0.350 3 Milk transportation expenses ( VLC to MCC): 0.113

  32. DAIRY BUSINESS MANAGEMENT SYSTEM {DBMS} INTRODUCING PARTHA IN DAIRY BUSINESS (MILK PROC.) 4 Milk transportation expenses from MCC to Dairy plant per Kg.milk: 0.200 5 Tester expenses/Kg. milk ; 0.024 6 Milk chilling charges/ Kg.milk: 0.100 7 Maintenance expenses / Kg. Milk: 0.003 8 Manpower cost /Kg. Milk: 0.058 9 Cost of testing chemicals (Sulphuric acid) /Kg.milk: 0.012 10 Cost of testing chemicals ( Amyl alcohol) /Kg. Milk: 0.021 11 Cost of detergents/ cleaning & sanitizing agents /Kg. Milk: 0.003 12 Total milk procurement overhead expenses: 0.884 Landed cost of milk {As per specified Norms} 13.884 If the cost exceeds these norms then reasons for such increase in cost can be easily investigated for initiating immediate corrective measures Based on these norms and using PARTHA as effective business management tool, efforts must be made to upgrade performance level on continual basis.

  33. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS Close monitoring and effective corrective action for all deviations noticed in the “PARTHA” statement is the key for managing profitability of dairy business operations. All departments must record all below norms performance entries in red ink so as to high light areas that need prompt attention of top management and all concerned.

  34. NORMS FOR MONITORING UTILIZATION OF KEY RESOURCES Specify norms for consumption and effective utilization of key resources for each functional activity. Provide live demonstration that specified norms are achievable under field conditions. Monitor and control deviationswith immediate corrective actions. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS

  35. COMPANY TO CONSUMER DIRECT MARKETING When less educated dairy farmers can be associated directly with dairy plants through formal or informal societies for eliminating middlemen between milk producers and dairy plants then quality conscious urban consumers who already know how to demand value for their money can also be persuaded to form consumer welfare groups for reducing marketing and allied expenses. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS

  36. CONTINUOUS IMPROVEMENT PROGRAM Closely monitored system that involves one and all in the organization for making improvements on continual basis would go in a long way to optimize performance results relating to profitability, productivity and quality of dairy products. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS

  37. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS SYSTEMS APPROCH FOR OPTIMIZING PERFORMANCE RESULTS • Specifications for products and self certification procedures: • Documented procedures for accepting/rejecting material inputs: • Norms for monitoring utilization efficiency of key resources • Waste control measures and system for disposal of waste materials: • Lubrication, preventive and corrective maintenance of machinery: • Inventory control and purchase ofmaterials at Competitive rates: • Maintenance of Campus and Security Systems: • Compliance of Statutory regulations: • Optimum utilization of human resources:

  38. POSSIBLE SOLUTIONS FOR DAIRY BUSINESS {SUMMARY OF MISSION RECOMMENDATIONS} • USE DIGITAL ANALYTICAL TECHNIQUE TO PROCURE RAW MILK WITHOUT A.D.M. • INTRODUCE “APNI DAIRY” MILK PROCUREMENT SYSTEM • APPLY “PARTHA” BASED DAIRY BUSINESS MANAGEMENT AND MONITORING SYSTEM • INTRODUCE “COMPANY TO CONSUMER “DIRECT MARKETING • IMPLEMENT CONTINUOUS IMPROVEMENT PLAN

  39. THANKS FOR YOUR TIME YES/NO

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