Valio milk goes digital

Net 2019,  2019-06-04

Finnish dairy and food producer Valio is putting in a lot of effort to digitalize the journey of their milk. Setting up the digital journey of milk from farms to store shelves starts off with the core questions: why, what ja how.

Valio milk goes digital

Every 20 minutes, there is a Valio container of dairy and other dairy products shipped out into the world. The logistics chain must be solid, and no hiccups are allowed in deliveries due to some glitch in the IT systems.

J Penttilä / Valio”Shelf availability is one of the key metrics for us. Whenever a customer is reaching for something on the shelf, it has to be a Valio cart they grab,” says Juha Penttilä (on the right), Director of production and logistics at Valio.

The data flow of Valio’s complex order-delivery process contains milk management as well as delivery, production and sales planning.

The milk management process steers the raw milk to factories and establishes the milk demand to prepare a production plan. The sales plan, in turn, serves as the basis for preparing stock delivery plans which then join in the same chain with the production plan. Customer orders, for their part, make their way from consumer demand assessment of central firms and the sales process to picking, distribution and transportation.

According to Penttilä, the data gathered from the entire delivery chain needs to be utilized and it needs to be established how each phase affects the sales.

”It is essential to understand which parts of the delivery process are worth digitalizing and automating. On the other hand, we need to recognize what is wisest to handle in some other way,” Penttilä points out.

"For example, it does not serve the purpose to digitalize how a shift’s production and packaging volumes in the plant fare against the objectives. We are still manually monitoring whether the production line’s efficiency is as expected."

First, ask why

Defining the digital journey of milk starts with establishing the objectives, that is, by asking why.

Business management has to define a target state, a goal that needs to be achieved. They need to answer the question why, in other words, to define the future models. Then, it is time to identify the capabilities required to reach the target state and answer the question what. Only then comes the how phase, the time to implement.

”It is easy to cut corners and only focus on the last phase, how, and start thinking about what single app or solution could solve the problem. Execution rarely tumbles on technology, but it is detrimental to ignore the why and what phases,” Juha Penttilä says.

For Valio, at the center of the why in digitalization projects are people and occupational wellness. ”Without them nothing moves forward,” Penttilä says.

Besides full commitment of people, the perfect Valio production and logistics delivery chain is safe, in other words, it contains no risks of accident. What it does contain is impeccable quality, zero wastage, high customer satisfaction, optimized costs and lead times that always adhere to plans.

Co-creation finds the ways

Answers to what can be found through co-creation.

”At best, co-creation is an excellent way to put together the heads of business management and IT staff.  The project at hand is mirrored in workshops against business objectives, finding answers and development areas. We are talking not so much about technology, but the issues and challenges relating to the entire process. Participants include dairy farmers and other people integrally involved in the project. At this point, IT specialists sit back and listen to the stories and only then set out to find the IT solutions that could solve the problems,” Juha Penttilä describes.

”This model works only when things actually happen in the wake of the co-creation sessions. Once the problems have been mapped out, solutions should be worked upon and then, after a sensible time, revisited. Not only after two years, but considerably sooner.”

The cow and milk truck digitalized

Although milk in itself is not digital, its digital journey begins with the cow. On the neck or leg of the cows there are sensors through which the milk production of an individual cow can be monitored and an exactly right amount of feed rationed. Also, the right timing of gestation is digitally monitored.

”The number of dairy farms has continually reduced, while the size of farms has increased and digitalization is gaining ground at a rapid pace. The milk trucks, too, are full of digital technology, allowing the farms to monitor the location of their trucks and have the data transferred in real time between the trucks and the dairy laboratories. Moreover, the trucks deliver information on the condition of the road network, sending reports to maintenance,” Juha Penttilä says.

Valio is a 114-year-old milk processor with 5,100 milk suppliers and 15 plants across Finland and one in Estonia and Russia each. Valio employs approximately 4,000 people, but combined, Valio and dairy farms employ as many as 30,000 people. With one of Finland’s most trusted and strongest brands, Valio is the domestic market leader in dairy products.

 
This story is based on Juha Penttilä’s presentation at Fujitsu World Tour in May 2019.

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Published in the Net Magazine 2019,  2019-06-04

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