Consistent products from inconsistent materials
Commodity markets have an array of unique challenges virtually by definition. In Ireland, where most large-scale milk processors are owned by cooperatives like Dairygold, the organization’s owners are also its raw material suppliers. Dairygold’s mandate, therefore, is to maximize the value that can be given back to owner-suppliers for every liter of milk they produce.
But whereas consumer demand for the end product – be it cheese, milk powders or some other dairy derivative – may remain relatively constant over the course of the year, raw materials vary greatly both in quantity and composition. The dairy business is extremely weather dependent; in winter, cows are housed indoors and feed primarily on silage, whereas in the summer months they can graze on fresh grass outside. With weather conditions in Ireland being so varied, changeable and unpredictable, the window for cows grazing on pastureland is also changeable. Couple that with different feed types, breeding and lactation cycles, and it is easy to understand how such factors can have an impact on the milk’s chemical and nutritional content – protein, fat, lactose, somatic cells, vitamins, minerals, etc. Unlike other industries, variation in raw materials is not always a quality issue to be rooted out, but rather a variable that can be anticipated and adjusted for.
“For every single supplier, we take samples of their milk and analyze for chemistry and microbial levels,” O’Mahony explains, adding that Dairygold collects milk from almost 3,000 farmers once or twice daily, 365 days a year. These samples are used to determine payment levels for milk suppliers, based on the quality of milk supplied. Testing occurs not only on milk from individual suppliers but also in aggregate as it is offloaded from the tanker where milk from multiple farms is mixed. Once the milk enters Dairygold’s fully enclosed, integrated processing systems, additional routine in-process sampling is used to generate additional test results that are then used as part of the milk standardization process; this ensures that there is very little variation in the chemical parameters of products leaving the business.
Adherence to strict quality controls ensures that every time a customer purchases a Dairygold product, they will find the product performs and tastes exactly the same regardless of the season in which it was produced. The key challenge, O’Mahony explains, is to understand both historical trends and current conditions from a seasonality perspective and to manage the volume of raw material stock on hand at any given time. Furthermore, there is a predictive element to understanding and projecting future conditions. All of this, he says, must be undertaken while also working within the same set of quality standards that Dairygold’s customers have come to expect.
And therein lies the challenge: to produce consistent products every single time from inconsistent raw materials, sourced daily from thousands of suppliers, each with differing levels of constituents, that will change depending on the time of the year and will be impacted by the ever-changeable weather conditions In Ireland. “That’s why the dairy industry is a very dynamic environment. It’s a very complex, and at times unusual business,” O’Mahony says, and one where data analytics can be extraordinarily powerful.