Granarolo Dairy Case

Team 4
Collin, Jack, Jimmy, Kelly, Dom, and Julia
 The company being analyzed and discussed for potential partnership is the Granarolo

Group. The Granarolo Group is a company that produces dairy products, mainly in the region of

Bologna, Italy. The company has been around for years, but just recently has shown great steps

forward in the innovation of products and production which has sparked interest in this potential

partnership. The Granarolo Group is the first company in the world to make milk of their quality,

and that quality is Granarolo’s core competency. We will analyze the supply chain of the

Granarolo group and the report will culminate in our decision of whether or not we think it

would be beneficial to partner with them.

The Granarolo Group company is in the food industry and their leading products are

milk, cheese, butter, and yogurt. However, they also produce other products such as baby food,

gelato, cheese crisps and more. The Granarolo Group puts a lot of time and resources into trying

to expand their company to adapt to the ever-changing market. They are the only company in the

dairy market to create and put nineteen products on the market only in the course of two years.

They produced all of these new products because of the demand for their products is constantly

changing. Our tour guide mentioned that it is extremely difficult for them to try to predict the

demand especially with the sudden decline in the want for milk due to recent health trends such

as people becoming vegan. Therefore to balance their supply and demand, they expanded their

product mix. The company changed and innovative new products to fit the current needs and

wants of the customer to become responsive.

The Granarolo Group is pursuing a Sales and Operations Planning approach for short

term planning. With this approach, they communicate their goals throughout the supply chain.

Additionally, this company can face inventory problems with perishability. Since the majority of

their products contain dairy in them they will expire quickly. For instance, after the cows are
milked they need one day for production. After the 1 day of production the shelf life of fresh

milk is only 6 days while the extended shelf life is 30 days and the ultra high-temperature shelf

life is 90 days. Lastly, there will always be a demand for their products especially milk and

cheese so they will not become obsolete.

Granarolo’s supply chain network starts with its most critical step: sourcing raw

materials. Because Granarolo places quality first and foremost, they own all the farms that

produce the crops their cows eat to ensure standards are met. 80% of all the resources the cows

need to live are produced by Granarolo. The quality of the food consumed by the cows and the

milk they produce are directly correlated; therefore, it is critical all crops are organic, fresh, and

of the utmost quality. All farmers hold certificates that certify these requirements.

In addition to eating the best food available, the cows receive the best treatment possible.

Granarolo uses 90 different parameters to test the stress level, comfort, temperature, health, etc.

of their livestock. Although veterinarians make scheduled visits to their 600 farms for checkups,

all the farmers are trained the necessary skills to keep the cows healthy. Once the cows are

milked, the milk undergoes a series of tests to ensure fat percentage, protein, bacteria, and

somatic cell levels adhere to their quality standards and Italian law.

Keeping the cows healthy is critical for the next generation of cows as well because of

the delicate antibody system their cows have. Cows born and raised at one farm will vastly

improve the ability to maintain good health because they have the biological background to fight

local sicknesses. The antibodies greatly influence the taste and quality of the milk, thereby

making it one of the most critical factors in sourcing. This reason is also why Granarolo chooses

to breed livestock instead of buying from other companies. The risks buying livestock poses to

quality and health are too high to justify any sourcing price difference. Granarolo already
dominates the organic milk supply chain in Italy, with organic milk accounting for 10% of their

supply chain. Granarolo’s great control on the market can be credited to their excellent and

sustainable sourcing process which features generations of the healthiest cows producing the

finest milk.

Granarolo manufactures their own products and all the raw materials come from their

farms. The company goals are that animals are healthy and the company runs safely. The unique

thing about the company is their organic product line. They feed all organic food to their cows to

produce organic milk products. They use a make to stock manufacturing practice. They

manufacture in their own factories, ship out products that are ready for customer pick up from

the store shelves. Three manufacturing process key metrics are cycle time, quality and efficiency.

The process of making fresh milk takes about 2 days. Cows make milk on the farms; tanks that

hold the milk will arrive at the farms to the production place where is 10 km away from the

farms. They will produce the milk immediately at midnight once it arrives at the production

place and ready on the truck in the morning. The truck will arrive at the stores around 11am.

In the factories, they use assembly line process. You can clearly see how milk is poured

into the bottles, logo is printed on the bottles and how they wrap the packages. Quality is the

basis that Granarolo competes for. They control the whole supply chain of milk to shelf and

adjust anytime to ensure quality. It is proactive quality strategy because they prevent any

problems of cows or their milk before they arrive. The company does not have that much

inventory because of the short-life of their products.

Granarolo Group utilizes a mixed supply chain and is vertically integrated. They pride

themselves in vertical integrated distribution because they want to control every aspect of their

product. Tommaso, an employee for Granarolo, explained that milk is a very delicate product
and only the Granarolo Group handles it because they want to be responsible. The milk needs to

be handled the proper way and also quickly because it has a short shelf life.

Granarolo Group owns their own trucking logistics domestically. Trucks transport 30,000

liters of milk each to one of their 15 production facilities in Italy for it to be transformed into

other dairy products. The company also owns seven production plants worldwide but,

transportation and raw materials are outsourced. In total, 70 trucks collect 18,000 tons of milk a

day from 600 different Italian farms. When the finished product is ready to be shipped out, it is

shipped direct by truck to Italian point of sales .

It is important that domestic orders are transported by truck because dairy products need

quick delivery before it spoils. Around 720 trucks distribute the Granarolo products to 50,000

Italian point of sales. International orders are usually shipped out through water and sometimes

air logistics due to longer shelf life. Granarolo Group’s channels of distribution mostly include

68% domestic retailers and distributors. They have been wanting to increase internationally but

at a slow rate because of the dairy laws and taxes in different countries.

Granarolo tries to limit the return process of goods in the supply chain because if the milk

does not meet quality standards, there is no way to integrate it back into the supply chain to be

used again. To limit waste, Granarolo emphasizes quality of their goods to ensure as little milk is

wasted as possible. However, Granarolo does use recycled plastic to package its milk and is

moving progressively towards more recycled packaging. On the tour, we learned that the

company uses 25% recycled containers and plan on moving to 50% in the coming months.

The design of their products is not conducive to returns and exchanges because it is food

it is perishable. Some of the types of milk have only six days to be sold and are shipped from the

farm the day they are gathered from the cows. Others can last up to three months on the shelves
before being opened, but once opened they still only have a shelf life of about a week making

returns impossible.

Granarolo values a sustainable supply chain as well, when we visited the cow farm we

learned that they use organic feed for the cows food and minimize the waste by being as organic

and as possible and using minimal processed cow feed. The main feed we saw today was a

mixture of hay which is harvested on the farm and other nutrients to keep the animals healthy.

Granarolo also has a strong presence in the community with their project where they

deliver breast milk for free from mothers to prematurely born babies. It is their way to give back

to the community and our guide described it as ‘social sustainability’ to help develop and

maintain a strong community. They also have a system set up to inform mothers when their milk

was used by a baby through a texting system.

The Famiglia Prandini farm lacks an information system and social media presence;

however, incorporates technology in their operations in a unique way. At the farm, technology is

utilized to regulate the cows health. They wear electronic collars that transmits data to the

farmers every twenty minutes through a computer system to verify that their intestinal tracts are

working properly and that the cows are maintaining their health. These collars also determine the

exact time the female cows needs to be inseminated when in heat. With over 220 animals on the

farm the collars ensure each animal is being taken care of properly and that they produce the best

quality milk available. As another innovative step in milk production they have invested in a

robotic milking system, however they have been waiting for approval for the last five years. As

the largest milk supply chain in Italy investing in technology and resources will only give them a

competitive advantage compared to similar companies.

After the milk is produced it follows the supply chain down to the Granarolo
factory. Here technology is used to have the packaging process work at peak proficiency. At the

factory, Granarolo has labs to test the milk and work closely with the farm to avoid any issues.

There is an extensive control room monitoring all the equipment throughout the plant; everything

is automated and requires little human involvement. The machinery transports the milk into a

bottling station, followed by labeling and packaging. Even the forklift moving the pallets to the

shipping dock is self driving. There is an advanced information system in place to track the

entire process from packaging to where the products need to be delivered around Italy and

around the world.

Granarolo utilizes social media as a means of marketing to introduce their products to

potential customers. Granarolo has both facebook and instagram having a strong number of

followers for both. They also utilize the marketing aspects of social media as a way to send

sponsored posts to specific users. It seems that data is being collected and maintained by their

marketing department to reach customer interested in their many products. This is an important

aspect in a large company like Granarolo to ensure there is a constant demand for their products.

In conclusion, we have decided that it would be beneficial for our company to partner

with Granarolo. Firstly, their emphasis on quality of their products is something that we value as

well for our company, and would be ensured if working with Granarolo. Additionally, the

growth of Granarolo over the past couple of years has been impressive and consistent. They are

expanding to where they deliver and how much they can produce, and they seem like they would

be able to handle partnering with an American company seamlessly.

They also take extremely good care of their land and animals, and in today’s society that

is so important, not only to customers, but for the sake of the environment as well. Granarolo’s
farms also have advanced technology to monitor the health and the animals and their products

which makes maintaining quality easier.

Partnering with Granarolo would open up new regions and growth opportunities for

markets that are looking for quality dairy products. Granarolo is also a trustworthy company with

strong moral values, high quality products, and sustainable production.