Milma

MILMA Kozhikode Dairy Operations Management An Analysis Group 3 Section C Aviraj (14/140) Ayushi Agarwal (14/141) Dr. Kripalsinh Rana (14/149) Sneha Maheshwary (14/179) Soumya Barik (14/180) Soumya Bhatia (14/181) Sudhansu Sekhar Sahu (14/182) Table of Contents Acknowledgement 3 Executive Summary 4 Introduction to MILMA 5 Production/Processing Facilities 6 Kozhikode Dairy Facts & Figures 7 Operations Strategy & Mission 7 Support Marketing Function 8 Quality Control 8 Outsourcing 8 Key Stakeholders/Actors 9 Plant Layout & Design 10 Milk Processing 11 1. Collection 11

2. Platform Tests 11 3. Receiving 12 4. Temporary Storage 12 5. Pasteurization 12 6. Storage 13 7. Packaging 13 8. Dispatch 13 Curd Manufacturing 14 Ice-Cream Making 14 Sambharam Making 14 Production Planning 15 Handling Peak Demand 15 Operating with Sluggish Demand 15 Concerns & Issues 16 Recent Initiatives 17 Key Learning & Recommendations 17 References 18 Appendix 19 Acknowledgement Interdependence is a higher value than Independence One of the most pleasant parts of writing a report is the opportunity to thank those who have contributed to it. This project report is a synergistic product of many minds. We are grateful to Indian Institute of Management Kozhikode for providing us an opportunity to prepare a project report under the operations management course of PGDM programme. First and foremost, we would like to thank the entire staff and management of MILMA for extending their support. We like to specifically thank Mr. Joju, Personnel Manager and Mr. Shaji Mon, Production & Maintenance Manager at MILMA, Kozhikode for taking out time from their busy schedules.

We owe our indebtedness to Mr. Sanjay Jharkaria, faculty member for providing his invaluable guidance, suggestions & encouragement. And last but not the least, its only when one makes a project report that one realizes the true power of Ms- Word, so thank you - Mr. Bill Gates and Microsoft corp. We look forward to your valuable suggestions regarding our project report. Thank you. Executive Summary Kerala Co-operative Milk Marketing Federation (KCMMF), popularly called MILMA was established in April, 1980 on the highly successful network model of Amul, to support Operation Flood in Kerala. The organization functions with a "three tier system" wherein, village co-operatives unite to form Regional Co-operative Milk Producers' Unions, which in turn constitute Milma. Milmas Kozhikode plant comes under the Malabar regional union. This report explains the working of the Kozhikode plant from an operations perspective. It analyses the various steps involved in processing of milk i.e. collection, storage, pasteurization, packaging, and dispatch. The plant manufactures ice-cream, curd as well as sambharam besides various kinds of milk. Being a perishable food industry with supply constraints, the diary maintains an effective production planning system and a network of sister organizations. Also, it is a government of Kerala undertaking and thus faces the challenges of operating under a bureaucracy too. The plant lays emphasis on maintaining adequate quality and safety standards such as the ones laid by HACCP and ISO9001. Farmers are the key stakeholders in the system followed by associate dairies and consumers. Entire operations and marketing strategy is developed keeping in mind the best interest of all groups. The report summarizes the concerns facing the sector in general and Milma in particular, recent initiatives taken, and recommendations for improved operations in future. Please note that photography was prohibited inside the plant. As such, only the pictures taken outside the factory area are being used in the report. Introduction to MILMA Kerala Co-operative Milk Marketing Federation (KCMMF), popularly called MILMA was established in April, 1980 with its Head Office at Thiruvananthapuram. Its main aim was successful implementation of the Operation Flood that was started by the National Dairy Development Board. The project demonstrated revolutionary institutional changes beginning with the establishment of an autonomous institution under the govt. of Kerala - the Kerala Livestock Development Board, and the formidable dairy cooperative system under the Kerala Cooperative Milk Marketing Federation (MILMA). As a result, milk production increased by over ten times and the per capita availability of milk increased by over 7 times. Besides supporting Operation Flood, the Objectives of the organization include: * Channelise 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

* Carryout activities for promoting production, procurement, processing and marketing of milk and milk products for economic development of the farming community * Build up a viable dairy industry in Kerala * Provide constant market and stable price to the dairy farmers for their produce MILMA is a network of: * 2,702 primary milk co-operative societies * 7.78 lakh farmers * Three Regional Co-operative Milk Producers' Union * Eleven Dairies * Thirteen Milk Chilling Centres * Two Cattle Feed Plants * One Milk Powder Plant * Established Training Centre * 5,200 retail outlets * Over 32,000 people working either directly or indirectly The organization functions with a "three tier system" wherein, at the village level local milk producers constitute Village Milk Co-operative Society. Village Co-operatives unite at the Regional level and form Regional Co-operative Milk Producers' Unions. These Unions are federated at the State level to form State Federation namely Kerala Co-operative Milk Marketing Federation( KCMMF). The chief associate bodies of MILMA include: * National Dairy Development Board NDDB started the Operation Flood project and funded the same in Kerala * Amul Being the inspiration for the development of a vast network of dairy co-operatives in Kerala, MILMA co-operatives are called "Anand Pattern Co-operative Societies" * Government of Kerala Dairy Development Department and Kerala Livestock Development Board, of the Government of Kerala laid the foundation of animal husbandry activities Production/Processing Facilities Malabar Regional Co-operative Milk Producers Union is one of the regional co-operatives under Milma. It operates 5 dairy processing facilities in Kozhikode, Kannur, Palakkad, Wayanad and

Kasaragod. There are also 4 milk chilling plants (MCPs) situated in Attappady, Nilambur, Pattambi and Mananthavady. Under the Malabar district, the 6 regions of operation are Kasargod, Kannur, Wayanad, Kozhikode, Malappuram and Palakkad. Thus, Kozhikode diary comes under the MRCMPU, which in total procures milk from 978 APCOS (Anand Pattern Societies) and markets its products through 3992 outlets. Kozhikode Dairy Facts & Figures * ISO 9001:2008 and HACCP certified plant * Average Daily Production * 1,50,000 litres milk * 15,000 litres curd * 500 litres ice-cream * 2000 litres Sambharam * Working Hours * 2 shifts of 8 hours each * 7:30 a.m. to 3:30 p.m. and 3:30 p.m. to 11:30 p.m. * Approximately 200 employees in the order of hierarchy depicted as follows: * As such, the Kozhikode plant maintains a judicious mix of people from both technical as well as diary operations background. Operations Strategy & Mission Kerala has a milk demand of 10.90 Lakh liters per day, whereas total domestic production amounts to 7.80 Lakh liters and the rest 3 Lakh liters is imported from Karnataka, Tamil Nadu and Maharashtra. Similarly, only 15000 litres is procured from local co-operatives by Milma Kozhikode, while the rest 1 lakh litre is imported from other sister diaries, milk federations of other states, especially Karnataka. In the light of above facts, the operations strategy can be understood on three front, namely: Support Marketing Function As such, the main objective of the operations function is to meet the requirements put forth by the marketing/sales department. All production activities with respect to capacity planning and overtime hours are undertaken in accordance with the forecasted demand. The shift ends only when the demand for the next day has been catered to fully. Quality Control

Being a food products industry, and above all a perishable product with short shelf life, quality as to fitness for consumption becomes important. Two aspects on which quality of milk can be assessed a are: One of the main objectives behind operation flood and further setting up Milma was to reduce the level of adulteration in milk and milk products. As such, the plant adheres to standards set by Bureau of Indian Standards (BIS) with respect to fat and SNF portion. Also, the Kozhikode plant is ISO 9001:2008 and HACCP certified, that reflects the organizations commitment towards quality. As such, the plant is subject to regular audit and inspection by third-parties, which is handled by the operations team. Also, the organization maintains a separate quality function, headed by a quality control officer who handles lab activities as well as onsite quality checks. Outsourcing The organization aims to correct inefficiencies and reduce cost simultaneously. Previously, overtime constituted a major head of expenditure. However, now Milma employs contractual labour for loading-unloading operations and campus cleaning activities. Third-party contractors make labour available on contract basis for duration of 6 months. Currently, around 30 contract workers are employed with Milma Kozhikode plant. This not only helps keep cost under control but also ensures focus on core-operations, especially with the recent surge in demand emanating from government scheme of providing free milk to school going children under the mid-day meal plan. Besides this, the plant also utilizes the services of tankers for distribution and sourcing hired on contractual basis. This saves the trouble of maintaining a tanker and truck fleet and handling driver concerns. Key Stakeholders/Actors Farmers: Milma is organized as a co-operative society of farmers on the model similar as Amul. Farmers are the producers of milk and the owners/shareholders of the co-operative as well. The Farmers are members of the APCOS (Anand Pattern C-operative Societies) and the Presidents of various APCOS form the General Body of the Regional Milk Unions, which constitute the KCMMF. The Kozhikode Milma plant comes under the Malabar Regional Union. As such, the co-operative body ensures not only the marketability of produce but also guarantee a fair price for the same. That said, Milma also provides various services to farmers at concessional prices such as: * Veterinary Services * Cattle Feed Plants * Embryo Transfer * Training & Orientation Sessions

Other stakeholders in the system, as mentioned before, include: * National Dairy Development Board (NDDB) NDDB was founded in 1965 with the mission of promoting dairying as an occupation. It started the Operation Flood project and funded the same in Kerala. Presently it covers 1,33,349 Indian village dairy co-operatives that form 177 milk unions. As such 13.9 million farmers are members of these dairy cooperatives. * Amul Gujarat Cooperative Milk Marketing Federation (GCMMF), popularly known as Amul is India's largest food products marketing organisation with a turnover of around $1700 million. Based out of Anand in Gujarat, Amul is one of the best examples of co-operative success in developing world. Being the inspiration for the development of a vast network of dairy co-operatives in Kerala, MILMA co-operatives are called "Anand Pattern Co-operative Societies" i.e. APCOS. * Government of Kerala Dairy Development Department and Kerala Livestock Development Board (KLDB), both undertakings of the Government of Kerala laid the foundation of animal husbandry activities. Established in 1976 with the sole aim of evolving new breed of cattle suitable for the state under the Indo-Swiss collaboration project, KLDB has now come a long way in bringing latest technology and prosperity to this sector. * Consumers Milmas commitment towards quality and customer education is unwavering. Also, the fact that they operate on a demand led model makes customers truly the king. As such, the entire operations, distribution, and marketing strategy is built around the key stakeholders and aim to maximize the value addition to each of them. Plant Layout & Design Milma plant at Kozhikode utilizes a process type layout wherein only selected products, predominantly, milk is processed. The pictorial representation shows the flow of milk through various stages of production: As we can see, Milk enters from Plant Entrance and then goes to the Processing Hall via pipes after Quality check. The processed milk either goes to ice-cream/curd section or is packaged at the Pouch Filling section. From there, final goods are stored at the Cold Storage or Deep Freezer as per product needs. Finally, trays of milk/curd/ice-cream are taken to the dispatch section as demanded. To ensure quality and cleanliness, a separate tray washing area is earmarked near the entrance. Milk Processing Majority of the operations are concentrated on milk processing and the steps included in the process are as follows: 1. Collection

Milk is collected from local co-operative societies and carried to the plant in insulated tankers, which maintain the temperature of milk at 4 degree Celsius. Also, in times of shortage, milk is brought in from other sister dairies, unions, and outside Kerala states (in that order). Colour coding is employed to identify tankers plying on different routes. For instance, tankers collecting milk from local co-operatives are blue in colour. Also, depending on the distance between the diary and plant, either raw or pasteurized milk is brought in to meet the market demand. Currently, Milma outsources the task of milk collection to contractors who provide tankers as and when needed. This has freed the management from concerns regarding tanker maintenance and transport regulations. Milk collected from the diaries is brought into the plant starting 7:30 a.m. and lasts till 11:30 p.m. with a 2 hour break in the afternoon (i.e. 11:30 a.m. to 1:30 p.m.). Also, the organization employs contractual labour for the purpose of unloading milk containers from the tankers at the plant. 2. Platform Tests Once the milk containers are unloaded at the plant, trained staff conduct Organoleptic tests on it. This is a physical (manual) process to check the acidity of milk and ensures that the taste, smell, and sight of milk are acceptable. Milk has a natural acidity of 13-14% and any level beyond 14% is termed as developed acidity. Milk with the acceptable level of acidity is taken, while the rest is discarded, being unfit for human consumption. This test permits instant feedback and decision, while maintaining low cost. 3. Receiving Milk that passes through organoleptic tests is received by the plant and subject to further processing. The milk containers are taken to the quality testing unit over a conveyor belt for weighing and sampling. Sampling and weighing is done in order to ascertain the percentage of water, fat and solids in milk that determines the amount of payments made to individual suppliers/co-operatives. Milk consists of water (85-87%) and solids (13-15%). Solids are further classified into fat and solid not fat (SNF). The SNF portion dictates the specific gravity of milk, which usually stands at 1.03. The SNF portion is evaluated using a lactometer that measures the density of liquids, while the fat portion is measured via centrifugal separation. In this process, 10ml of the milk sample is mixed with 10ml of lactic acid and 99% concentrated sulphuric acid when the fat component separates itself from the water and SNFs. Depending upon the amount of solids and SNF, payments are made to the suppliers. The nature of the procedure demands batch processing as milk from a particular co-operative is tested at a time. 4. Temporary Storage

The milk is then put into an open tank, from where it is transferred via pipeline to a temporary storage tank. While transmission, a chilling process is executed that maintains the temperature of raw milk at 4 degree Celsius so as to arrest any further growth of bacteria. 5. Pasteurization This is the most critical and time taking process and the essence of milk processing. The organization owns 2 machines with a processing capacity of 12000 litres/hour and 10000 litres/hour. The pasteurization unit is attached with various ancillary parts such as homogenizer and cream separator. The pasteurization unit consists of various plates separating different sections and as the milk passes through these sections, the temperature is regulated. Following steps are involved in the process: I. 1st Regeneration i.e. heating of milk up to 45-50 degree Celsius II. Cream Separation i.e. removal of excess fat, if needed III. 2nd Regeneration i.e. repeated heating after removal of excess fat IV. Homogenization i.e. reducing the size of fat globules below 2 microns as an indicator of superior quality, if needed V. Heating session i.e. heating each and every milk particle upto 75 degree Celsius for 16 seconds VI. Chilling session i.e. cooling to 4 Degree Celsius This process destroys bacteria and ensures zero bacteria growth in future. Cream separation is done based on the needs of the variant being manufactured in a batch that may include: Variant | Minimum Fat Content | Minimum SNF Content | Toned | 3% | 8% | Double-Toned | 1.5% | 9% | Standardized | 4.5% | 8.5% | The excess fats, so retrieved, are sent to other plants manufacturing ghee and butter. The picture below is a graphical representation of the process: 6. Storage The pasteurized milk is then stored in aseptic silos under extremely hygienic conditions devoid of any human touch. The plant has 7 silos with a total capacity of 2 lakh litres for storage of different varieties of processed milk. These insulated silos maintain a temperature of 4 degree Celsius. 7. Packaging

The milk from the storage silos is then packed into plastic bags of 500ml, 1 litre and 5 litres. The packs are plakhed in plastic trays to be taken to the cold storage which maintains a temperature of 4-6 degree Celsius. The cold storage also warehouses other products such as curd and Sambharam. 4 packaging machines operate at the speed of 40 packets per minute that translate to 160 packets overall per minute. 8. Dispatch As and when required, packaged milk trays are taken to the loading/dispatch dock from the cold storage. The trays are loaded to the insulated trucks and sent to the dealers/agencies. Multiple outlets ensure that multiple trucks can be filled simultaneously. Trucks come twice a day (5.30 am and 5.30 pm) for regular routes and thrice a day for busy routes for distribution of milk. Curd Manufacturing Curd is manufactured from milk by two methods, namely: * Natural Method i.e. the unhygienic way of keeping milk at room temperature till it curdles * Aseptic Method i.e. the hygienic way of first freeing the milk of all natural bacteria and then inoculating bacteria into it in the required quantity Milma adopts the second method and follows the below mentioned steps: I. The pasteurized milk is first heated up to 90 degree Celsius, to ensure non-existence of any bacteria II. The heated milk is allowed to cool down to 35 degree Celsius under monitored environment that takes around 6 hours III. Bacteria culture,