Operations Management Project Report MILMA “The goodness Kerala wakes up to”
Kerala Co-operative Milk Marketing Federation
Group 5 Section A Aniruddh Phukan (007) Asif Shaikh (018) Meera Baby (038) Sidharth Ramachandran (048) Sonam Bhargava (051) Varun Murali (057)
Date : 08/12/2010
Executive Summary Since its set up in 1990, the Malabar Regional Co-operative Milk Producer's Unions Limited (MRCMPU) has seen tremendous growth. This is evident in the number of dairy and milk chilling plants that the union owns today. Another proof of its success is the market share of MRCMPU in th
retail milk segment. It ranks 9 in India in this segment and is the leader in the state of Kerala covering 47% of the population and 45% of the geographical area. Milk being a perishable good, operations management strategy is of prime importance for any player in this sector. Operations management define the cost that the organization incurs and its subsequent profitability. Along with this, processes for compliance with the regulatory environment for ingredient and nutrition content, quality control and variety of products are vital for the success in the dairy sector. With this in mind, MILMA to us represented a great learning opportunity about the processes and organization in the dairy sector. This report details an overview of MILMA, its growth over the last few years, objectives and the process management that is followed. In order to have a better understanding of the operations, we visited the MILMA factory at Kunnamangalam. A major part of the processes have been learning from this visit. On the basis of our study of the organization and processes, we have also tried to put forward a few recommendations that we thought could augment its c urrent position.
Table of Contents Introduction ............................................................................................................................................ 4 MILMA – Growth Story ........................................................................................................................... 4 MILMA – Fact Sheet ............................................................................................................................ 4 MILMA – Mission and Objectives ........................................................................................................... 5 Objectives ........................................................................................................................................... 5 Range Of Products from MILMA Dairy.................................................................................................... 5 Operations Overview .............................................................................................................................. 7 Raw Materials Procurement ............................................................................................................... 7 Milk Collection and Storage at the Plant ............................................................................................ 8 Pasteurization Process ...................................................................................................................... 10 Homogenization................................................................................................................................ 11 Packaging Operations ....................................................................................................................... 12 Storage and Distribution ................................................................................................................... 14 Other Milma Products....................................................................................................................... 18 Operations strategy .............................................................................................................................. 18 Efficient Supply Chain ....................................................................................................................... 19 Support to Farmers and Co-operatives............................................................................................. 19 Wide-spread Sales and Distribution Network................................................................................... 20 Production of standardized and high-quality milk products ............................................................ 20 Optimized Milk Products Mix to enhance sales................................................................................ 21 Cost Reduction Strategy.................................................................................................................... 21 Analysis and Learning............................................................................................................................ 22 Recommendations ................................................................................................................................ 22 Appendix ............................................................................................................................................... 25 References ............................................................................................................................................ 28
Introduction In order to create a nationwide milk grid, National Dairy Development Board launched Operation Flood in 1970. It was responsible for the White Revolution in India, making India the largest producer of milk and milk products in the world. Following the success of Operation Flood, the Kerala Cooperative Milk Marketing Federation (KCMMF) or Milma, ‘the milkman of Kerala’ as it is popularly known started its operation in 1980 with its head office at Thiruvananthapuram.
MILMA – Growth Story Malabar Regional Co-operative Milk Producers’ Union (MRCMPU) Limited is a Union of more than 1000 village level dairy co-operative societies located in the six northern districts of Kerala State in South India and it is owned by the dairy farmers who are members of each affiliated society and who live in the area of operation of these societies. The societies function on the pattern of the societies affiliated to the world famous Anand Milk Union Ltd. (AMUL) at Anand (Gujarat), India and hence are also known as Anand Pattern Co-op Societies or “APCOS”. The union was registered in 1989 and has been functioning since Jan, 1990. Until April 1993, the organisation was governed by an Administrative Committee constituted by the Government. However, today it is governed by an elected board of directors. Before the formation of MRCMPU, the Kannur and Palakkad Dairies were managed by KCMMF. Kozhikode, Malappuram and Wayanad milk Unions were functioning in the area of operation of MRCMPU. MRCMPU took over Kannur and Palakkad dairies from KCMMF in 1990 and the three district milk unions were merged with MRCMPU in the same year. The area of operation of MRCMPU Ltd. comprises of the six revenue districts of North Kerala, viz Kasaragod, Kannur, Wayanad, Kozhikode, Malappuram and Palakkad. Since the six districts included in the area of operation of MRCMPU Ltd. were not included in the Operation Flood, initial funding for the project on a part-loan and part-grant basis was provided by the Government of Switzerland through the Swiss Agency for Development and Cooperation (SDC).Over time with MILMA’s growth, the SDC withdrew from the scene allowing the organization to grow and develop independently. The Union is affiliated to the state level apex body-Kerala Co-operative Milk Marketing Federation Ltd (Operating under the trade name MILMA) along with its sister Unions at Ernakulam and Thiruvananthapuram. The head office of the Union is located at Peringolam under Kunnamangalam post office near Kozhikode.
MILMA – Fact Sheet MRCMPU has grown over the years in terms of capacity and infrastructure. Today it operates 4 dairy processing facilities in Kozhikode, Kannur, Palakkad and Kasaragod. It also has 5 milk chilling plants (MCPs) situated in Attappady, Pattambi, Nilambur, Meenangadi and Mananthavady along with a central products dairy. The installed capacities of various Dairies and Chilling Plants and their average procurement and sales are given below (LPD). MRCMPU enjoys the distinction of being the first dairy plant in Kerala to be ISO 9001-2004 certified. Refer Appendix for more facts around Milma
MILMA – Mission and Objectives Ever since its inception, MILMA’s primary aim has been inclusive growth. This can be seen the organization’s mission statement which says – ‘Farmer’s prosperity through consumer satisfaction’ Co-operation is the organization’s motto which is seen in the three tier structure followed. The tiers are organized at the village, regional and state level in the form of Village Milk Co-operative societies, Regional Co-operative Milk Producers Union and la Co-operative Milk Marketing Federation at the three levels respectively.
Objectives The objective of the Union is to carry out activities conducive to the socio-economic development of the dairy farmers. The primary objectives are as follows –
To channelize marketable surplus milk from the rural areas to urban deficit areas to maximize the returns to the producer and provide quality milk and milk products to the consumers. To carryout activities for promoting Production, Procurement, Processing and Marketing of milk and milk products for economic development of the farming community. To build up a viable dairy industry in the State. To provide constant market and stable price to the dairy farmers for their produce. (www.milma.com)
Range Of Products from MILMA Dairy Milma –Smart/ Toned Milk/ Homogenised Toned/ Rich Milk Milk is available in the above four variants. All the variants are vitamin A enriched with the statutory SNF content. These are available in packs of 500, 1000 and 5000 ml.
Skimmed Milk Manufactured by processing skimmed milk, it is avai lable in sachets of 200 and 500 ml.
Milma Sambharam (Butter Milk) A local delicacy in the southern part of India, it is prepared by flavouring milk with sambharam ingredients with a pungent taste. It is available in easy-to-use sachets of 200 ml.
Milma Ghee Contains 96.5 percent milk fat. Manufactured by melting fresh cream under hygienic conditions. It is available in packets varying from 100 gm to 15 kg.
Milma Peda A natural milk toffee manufactured by the heating and removal of a major portion of the water content of fresh milk and by the addition of sugar. Available in packs of 18 gm, 180 gm and 900 gm.
Milma Instant Palada Mix Palada Payasam is a traditional delicacy of Kerala, the preparation of which is laborious, time consuming and requires professional skill. It is made by concentrating high fat milk, rice granules and sugar. Milma has standardized its own large scale production process for the instant palada mix which is made available in dry powder form. Available in 200 gm packs. Milma Ice Cream The production facility is hygienic as per ISO 9000 and HACCP standards. It is the only ice-cream made from pure milk cream unlike private manufacturers who provide “Frozen desserts“, made from cheap vegetable fats in the guise of Ice – cream. These are available in multiple flavours and sizes. Milma Sip-up It is an ice- lolly made available in two varieties – Milk Sipup and Water Sip-up. Made by using pure milk, pasteurized water, sugar and permitted flavours.
Milma Plus (Flavoured Milk) Manufactured by addition of sugar and flavour to skimmed milk. The product is sterilized along with the glass container by heating to a high temperature in specialized ovens after which containers are stored in chilled condition in outlets. Available in 200 ml containers and in a variety of flavours. (www.milma.com)
Operations Overview
The plant layout is given below:
Figure 1 Plant layout of Milma Raw Materials Procurement Milma is a cooperative organization of farmers in Kerala who in turn are members of Anand Pattern Co-operative Societies (APCOS) spread throughout Kerala. Each society has a milk procurement centre where farmers take milk every day. Test for quality is done while collecting the milk itself and the farmers are paid according to the fat and SNF content of the milk. Farmers are also paid bonuses based on the quantity of milk contributed by them.
Figure 2: Milk procurement at a registered milk society early in the morning. Source: http://malabarmilma.com/milma_for_farmers.html
The procured milk is then sent to the district cooperative dairy union by trucks. The milk collection trucks from Milma collect milk twice a day – 7.30 AM and 4.30 PM. The Kozhikode Plant procures milk from two districts – Kozhikode and Malappuram and from 5 chilling centres located in Malabar region. Around 50,000 litres of milk are sourced from the co -operative societies and the rest 1,00,000 litres are sourced from other Milma dairies, Milma unions at Thiruvananthapuram and Kochi or from suppliers outside Kerala.
Milk Collection and Storage at the Plant Once the trucks arrive at the plant, the milk is first checked for quality and then moved to the storage units. A manual checking is done by observing and smelling the milk brought in to ensure that it is not in a spoiled state. Further quality tests are done to ensure that milk is free of contamination from physical, chemical or bacterial sources.
Figure 3: Milk arrival for processing
Lactometer reading to check the density of the milk
Measurement of SNF (Solid Non-fats)
Centrifugal seperation
Gerber method to seperate milk fats from protein by adding sulphuric acid
Chilling process to arrest further bacterial growth
Milk transferred to storage tanks
Chilling process is done to arrest any further growth of bacteria in the milk. Also, the milk will get spoiled if it stays in room temperature for more than 4-5 hours. Hence after the different tests, milk is dumped into a 1000 litres vessel from where it is sent to chillers through pumping. In one ho ur, 1000 litres of milk is chilled. The chilled milk is transferred to the insulated stainless steel storage tanks known as silos. The plant currently has around 5 silos, four with capacity of 30000 litres and one with capacity of 40000 litres. Total fat and SNF composition of the stored milk is calculated.
Figure 4: Silos for storing milk
Pasteurization Process o
In the pasteurizer unit, milk is heated to a temperature of 72.5 C (although theoretically the o temperature is 72.2 C, it is heated slightly higher to ensure that the pasteurization occurs) and is o . held to 16 seconds. Then, it is immediately cooled to 5 C There are two pasteurizers currently operating at the plant with processing capacities of 12000 litres of milk per hour and 10000 litres of milk per hour each. If the pasteurizers are alternately used, then the total milk processing capacity of the plant is limited to 11000 *16 = 1,76,000 litres / day (2 shifts => 16 hours). Since the current market demand is around 1.5 lakh litres of milk per day, the plant operates well below its capacity. However, in case the demand increases in the near future, the bottleneck of the plant is the pasteurizer and the capacity of the existing pasteurizers can be increased by adding more coils to the pasteurizer.
Regenerati Chilled milk at O
4 C
Regenerati
No
on unit (heat to 40
Fat >
on 2 (heat
Homogeni
3%
to 40 – 50
zation
O
C)
O
– 50 C)
No Yes
Yes Cream
Ghee
Homogeniz
separator
production
ation (Reduce globule size from 20 to 2 microns
Storage
Heat at
tank
72.5 C
O
The separation of fat is done because there are standards regarding the amount of permissible fat in the milk. These are:
Toned milk – Not less than 3% fat and 8% SNF
Double toned milk – Not less than 1.5% fat and 9% SNF
Any quantity of fat above this quantity is removed and used for preparation of ghee.
Homogenization Homogenization is a mechanical treatment that reduces the size of the globules from 20 microns to 2 microns. It aids in better digestion of milk. Homogenized milk also helps deal with an unwanted result of pasteurization sometimes in which the white cells and bacteria collect on the bottom of the milk, forming a thick layer. When homogenization is done, this bottom layer is mixed through the milk. This milk is also longer lasting and hence can be transported higher distances. There is also a Flow Diversion Device which is used to transfer back the milk back to the pasteurizer O
in case the temperature falls below 68 C at any point of time. This is done using a 3 way Flow O
Diversion Valve which opens forward only if the temperature of the milk is above 72 C.
Figure 5 Pasteurizer
Standards
Fat
specified
Content
Toned Milk
3.0
8.6
0.153
5.30
-ve
Double-Toned
1.8
9.0
0.153
5.30
-ve
4.5
8.8
0.153
5.30
-ve
0.5
8.5
0.153
5.30
-ve
SNF
Lactic Acid
MBRT
Phosphates
(hrs)
Milk Standardized Milk Skimmed Milk
Standards used by Milma for milk products Packaging Operations
Packaging is done using 4 separate packaging machines with processing capacity 40 packets per minute which are run in parallel and hence the rate of packaging is 160 packets per minute. The different packet sizes supported are 500 ml, 1 litre and 5 litres.
Figure 6 Packaging of milk
Figure 7 Performance of packaging machinery
Storage and Distribution Once the packaging is done, the milk packets are collected in plastic trays which O
automatically move towards a cold storage unit which is kept at temperature of 4-6 C. The distribution trucks waiting at open space despatch dock start leaving the plant around 1.30 PM to distribute it to the retailers. The distribution is insulated to maintain the temperature. For regular routes, the distribution is done twice a day and for the routes with more demand, distribution is done thrice a day. Random samplings are regularly done before transportation to ensure fat content, SNF and for checking if poisonous materials like Arsenic are present.
Figure 8 Milk distribution trucks at the despatch dock
Figure 9 Insulated containers in the despatch truck
Figure 10 - Product Process Overview
Figure 11 Process Overview
