ERP Software for Dairy Manufacturers – Everything You Need to Know

Understanding the dairy supply chain

In 2022, the dairy market value was estimated to be USD 893 billion and is anticipated to grow to USD 1,243 billion by 2028. The dairy supply chain contains the entire process of milk production, from farms delivering milk and dairy products to consumers. It involves multiple steps, including milk collection, processing, packaging, storage, and distribution, adding value at each step.

Milk collection

The dairy supply chain started at the dairy farms, where cows are milked. The milk is collected at milk collection centres, and the quality (SNF and fat) of milk from individual farmers is checked. The milk is collected in the bulk milk coolers (BMC).

Transportation

Milk collected from multiple milk collecting centres is transported to the milk processing plants via BMC-equipped trucks. Before the milk is collected, the quality is checked for each truck.

Milk processing

Once the quality of the milk is confirmed to be good, it is processed. Milk undergoes various processes, including pasteurization, homogenization, and cream separation, to produce other dairy products (butter, cheese, clarified milk, etc.). Based on these processes, various milk types (full-cream, skimmed milk, and low-fat) are created.

Packaging

After processing, dairy products are packed in various forms, including bottles, cartons, or bags. Packaging plays a crucial part in maintaining freshness and preventing contamination.

Storage & distribution

Milk and other dairy products are stored in refrigerated facilities to maintain their product quality. The distribution networks then deliver the products to retailers, supermarkets, and consumers.

What is a dairy ERP?

A dairy ERP system is a software platform that helps dairy businesses manage and integrate their core processes. The core processes in dairy ERP include milk collection or procurement, processing, quality control, inventory management, finances and accounting, delivery management, and customer relationship management.

The ERP system is a centralized platform that consolidates your entire business data, enabling you to track any updated information in real-time. Milk, being a perishable item and a daily morning necessity for most households, requires proactive supply chain monitoring to ensure high-quality products. The dairy ERP system aims to provide real-time visibility and traceability, allowing for easy product recall in the event of an issue.

Challenges dairy businesses face without an ERP system

Using multiple software solutions or manually operating dairy businesses can be tedious, inefficient, effort-consuming, costly, and flawed. You may relate to the below-mentioned challenges if you are managing your business manually or through multiple systems. The challenges dairy businesses face without ERP are:

Inefficient production planning

It is impossible to manually track milk collection from multiple sources (farmers or cooperatives), making the process complex and error-prone. Manual data records can lead to misreporting quantities, quality inconsistencies, and processing delays. The lack of data centralization makes it difficult to align milk usage with the production needs, leading to overproduction or underutilization of resources.

Poor inventory management

Dairy products have shorter shelf lives, making efficient inventory management crucial. Manual inventory management makes tracking perishable products across multiple storage locations, leading to spoilage, waste, or stockouts. Inaccurate inventory data can hinder production planning and timely order fulfillment, impacting profits and customer satisfaction.

Limited supply chain visibility

Monitoring raw materials and finished products is impossible in the complex dairy supply chain with so many stakeholders (milk suppliers, cold logistics, retailers, and distributors). Manual management lacks transparency, leading to delays, increased delivery costs, and poor traceability during product recalls or quality audits.

Compliance and quality issues

The dairy industry is subject to strict and complex food safety and hygiene regulations. Maintaining inspection records, batch tracking, and quality checks manually is time-consuming and inconsistent.

Fragmented data and manual processes

Relying on fragmented systems or spreadsheets for production, finance, sales, and procurement results in data silos. The data is entered manually on multiple sheets or systems, leading to human errors, duplication, and wasted time.

Weak financial oversight

Manually tracking expenses, revenues, and profit margins is impossible. Bookkeeping and disconnected sales and purchase data can lead to delays and inaccurate financial reports. This makes it hard to manage cash flow, plan budgets, or identify cost-saving opportunities.

Inability to scale operations

Scaling your business operations, such as adding new products or expanding distribution channels, can become a bottleneck with manual systems. Managing higher-order volumes, more suppliers, or multiple plants without a centralized ERP system can result in operational chaos, missed selling opportunities, and poor customer service.

Ineffective customer & dealer management

Building and maintaining relationships with retailers, distributors, and end consumers is inefficient with a manual system. It is challenging to handle pricing, discounts, complaints, and delivery schedules, which result in customer dissatisfaction and business loss.

Lack of real-time insights and forecasting

It is impossible to track business operations when managing manually or without a centralized system. Businesses are unable to track real-time inventory levels, sales trends, and production output. This makes it hard to forecast demand, plan production cycles, or adjust to market shifts, resulting in overproduction, waste, or lost sales.

Features and functionalities of dairy ERP

Advanced ERP features and functionalities help B2B and B2C businesses simplify operations, increase efficiency, and improve customer satisfaction. They automate your entire dairy workflow from milk collection and processing to packaging and delivery. The features of the dairy ERP system are:

Production and planning

Production planning plays an important role in the dairy industry due to its perishable nature. A dairy ERP system streamlines the entire production lifecycle, from procurement to processing and packaging. You can plan production based on customer demand, inventory levels, and supply availability. The system also allows you to track milk intake from multiple sources, capturing essential quality parameters such as SNF and fat content. You can automate scheduling and real-time production monitoring.

Inventory management

ERP systems offer real-time visibility into raw materials, packaging items, and finished goods across warehouses and cold storage facilities. It empowers you to implement inventory management strategies such as FIFO (first-in, first-out) or LIFO (last-in, first-out), minimizing product spoilage. The system enables batch tracking, automates stock updates, and sends reorder alerts, ensuring that the products are always fresh and available without overstocking.

Supply chain management

The dairy supply chains involve various operations, such as milk collection, vendor procurement, cold storage logistics, and distribution. An ERP software integrates all these operations into a single platform, offering real-time visibility and enabling coordination between supply and demand. You can schedule milk collection routes, monitor transporter performance, and ensure timely deliveries. You can also track supplier deliveries, contract compliance, and inbound raw material.

Quality check

The dairy industry requires adherence to strict food safety regulations. Complying with these strict regulations needs quality checks at various points, such as during milk collection, production, and packaging. You need to record key test results, like fat/SNF levels, bacterial counts, temperature, and acidity. The system allows you to record these tests and proactively monitor them. It can automatically isolate non-compliant batches and generate non-conformance reports. Additionally, it also helps you maintain audit-ready documentation for certification, such as FSSAI, ISO, or HACCP.

Finance & accounting

A dairy ERP software integrates finance and accounting across procurement, production, inventory, and sales. This provides the finance team with a real-time view of business expenses and payments. It automates invoicing, payment collection, vendor payments, and expense tracking. The system can easily generate a profit and loss statement, balance sheets, and cash flow reports with accurate and up-to-date data.

Sales & distribution

Dairy products must be delivered quickly and efficiently. The system allows you to manage sales orders from retailers, wholesalers, and direct consumers. It supports dynamic pricing, promotional offers, and discount structures. You can assign delivery routes and schedules to the field agents with real-time tracking of dispatch and returned goods. Offering mobile access to the delivery person enables them to update order status and collect digital payments.

Benefits of implementing a dairy ERP into your business

The dairy ERP system’s comprehensive features and functionalities automate operational workflow and improve efficiency and customer satisfaction. The benefits of implementing a dairy ERP into your business are:

Increased  efficiency and quality

ERP software for dairy manufacturers automates manual tasks, including procurement, production, inventory, and sales, to enhance operational efficiency. Automation reduces human errors and accelerates decision-making, ensuring data integrity throughout the supply chain. The system enables you to incorporate quality checks at various points to ensure consistent product quality, resource allocation, and high-quality dairy products, improving customer satisfaction.

Complete visibility

Implementing an integrated ERP system provides full visibility into real-time data, from raw milk intake and inventory status to order tracking and financial performance. This transparency enables you to make timely, informed decisions. Gaining 360-degree operational visibility allows adjusting production volume, managing supplier performance, or evaluating product profitability, ensuring better control and coordination across various business departments.

Streamlined supply chain

The ERP system integrates your entire dairy supply chain into a single platform, streamlining collaboration between various supply chain stakeholders. It also assists you in planning milk procurement routes, efficient cold chain logistics, and timely deliveries of finished products. Reducing the communication gaps and synchronizing the workflow eliminates delays, lowers logistics costs, and ensures product freshness.

Guarantee food safety

Food safety is paramount for the dairy industry, and the ERP system ensures compliance with health and safety standards. Features, including quality checks, batch traceability, and automated record-keeping, allow you to monitor product safety at every step. The traceability functionality enables easy product recalls in case of quality issues. Readily available audit documents from the system can simplify regulatory compliance with bodies like FSSAI, ISO, or HACCP.

Scalability

The cloud-based enterprise resource planning system can adapt and accommodate a growing customer base, such as a product line or production unit. The system supports multi-location operations, diversified inventory, and increased order volumes without compromising performance or data accuracy. This enables you to grow your business faster while maintaining operational consistency and efficiency.

Cost control

Real-time visibility into operational expenses, material usage, labor, and logistics can provide better cost control. Automating procurement and inventory management reduces wastage and overstocking, while accurate production planning prevents costly overruns. You can track budgets, forecast spending, and identify areas for savings.

Partner with Master Software Solution for efficient dairy ERP implementation

Master Software Solutions is an IT service provider that offers ERP consulting services, including customizations, integrations, implementation, development, and migration from legacy systems for the dairy industry. We have experienced ERP professionals who work on ERP platforms such as Odoo and Microsoft Dynamics 365 to provide you with tailored solutions.

Odoo

Odoo is a comprehensive ERP system for small and medium-sized businesses to automate and streamline their operations. It consists of multiple business management applications, including purchase, inventory, sales, CRM, supply chain management, manufacturing, finance and accounting, quality checks, and delivery.

Microsoft Dynamics 365

Microsoft Dynamics 365 is an end-to-end platform for larger dairy enterprises to consolidate their operations, improving efficiency, productivity, and profitability while reducing overheads. It includes management modules such as inventory management, customer relationship management, supply chain management, manufacturing management, quality checks, and delivery.

TrakOp

TrakOp is a subscription-based scheduled delivery system for dairy startups to manage and track their orders, inventory, finances, delivery planning, route optimization, customer management, and reporting. This is our in-house product, specifically designed for dairy businesses that offer milk and dairy products as subscription products.

If you are a dairy business owner and want to implement ERP solutions in your business, schedule a call with us.