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1. INTRODUCTION:
Seasonality in milk production is well known in the Indian dairy sector and is more pronounced for buffaloes. Such fluctuations in supply and demand result in fluctuations in prices (producer and consumer), thus subjecting milk producers and consumers to large variations in prices during a year. The procurement prices are marginally higher during the lean season compared with the flush period. The WPI of milk relative to the WPI of food articles and all commodities decreased during 1990s, which indicates increased production of milk and/or imports of dairy products in the postreforms era. Milk prices relative to milk input prices such as oil cakes, fodder, and cattle feed show that input prices have increased faster than milk prices in the 1990s. These trends in input prices indicate that increased milk production should come from productivity enhancement; otherwise, increases in costs will make milk and dairy products costly and unaffordable to the masses. Like nearly all developing countries, India exhibits co-existing

"organized" and "unorganized/informal" sectors for marketing of milk and dairy products. The organized or formal sector is relatively new in historical terms, and consists of Western-style dairy processing based on pasteurization, although adapted to the Indian market in terms of products. In some cases the traditional sector is quite well organized, with a complex net of market agents, with a variation in numbers of and roles of market intermediaries. The reasons underlying the existence of a large informal or traditional sector are the same as found in other countries: consumers are unwilling to pay the additional costs of pasteurization and packaging, and consumers often regard raw milk and traditional products obtained from reliable vendors as of better quality than formally processed dairy products. The dairy cooperatives comprise the single largest formal organization in terms of market share, and its share in total milk procurement has increased over a period of time and is further expected to rise in the future.
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2. INDIAN DAIRY INDUSTRY:

Milk production is the most important agricultural activity in the Indian agricultural sector. At the national level, around 17% of the total value of agricultural production is derived from this sector. Its importance is further highlighted if the closely linked other livestock (meat, poultry, wool and hair, etc.) sub-sectors (accounting for a further 8.3%) are also taken into consideration. The milk sector generates a high proportion of agricultural output, especially in the northern and western parts of the country. With industrialization and urbanization the supply of milk became a commercial industry with specialized breeds of milch animal being developed for dairy, as distinct from beef or draught animals. Initially more people were employed as milkers but it soon turned to mechanization with machines designed to do the milking. India derives nearly 33% of the gross Domestic product from agriculture and has 66% of economically active population, engaged in agriculture. The share of livestock product is estimated at 21% of total agriculture sector. The fact that dairying could play a more constructive role in promoting rural welfare and reducing poverty is increasingly being recognized. Milk production alone involves more than 70 million producers, each raising one or two cows/ buffaloes primarily for milk production. The dairy sector offers a good opportunity to entrepreneurs in India. India is a land of opportunity for those who are looking for new and expanding markets. Growth prospects in the dairy sector are very bright. Milk production in the country was stagnant during the 1950s and 1960s and per capita availability declined. With the help of the Operation
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Flood (OF) Program implementation in 1970 and other dairy development programs implemented by the State and Central governments gave: Increased demand driven by increased population. Higher incomes and urbanization. With tight controls on imports of dairy products Milk output increased substantially in the country. This evolution was accompanied by an even more marked improvement in milk yields. India has emerged today as the largest milk producer in the world, surpassing 80 million tons, and this success story of Indian milk production has been written primarily by millions of smallholder producers. The Operation Flood program was instrumental in creating strong linkages among millions of smallholder producers and urban consumers. Prior to Operation Flood, the link between the producer and consumer was completely missing. It is well known that all this happened under highly regulated domestic markets, where commercial imports and exports of almost all dairy products had been banned for most of the time, and processing activity had been controlled through licensing which favored cooperatives over private entrepreneurs. However, termination of licensing requirements for setting up milk processing and product manufacturing under the MMPO in 2002 made India's dairy industry arguably one of the most deregulated industries in the world. The unmanaged deregulation of the dairy industry combined with a rapid increase in demand (domestic as well as global) for milk and dairy products, and distortions in the world dairy markets, it is widely believed, would lead to economic and social problems. These developments (domestic and international) would influence the scale of operation in dairy sector and may lead to social-health-environmental problems. Milk production certainly would become concentrated on large farms and in peri-urban or urban areas as a result of deregulation, which could have major implications for smallholder dairy producers and larger

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goals

of

employment-led

economic

growth,

poverty

alleviation,

and

environmental sustainability.

3. HISTORY:
Milk producing animals have been domesticated for thousands of years. Initially they were part of the subsistence farming that nomads engaged in. As the community moved about the country so did their animals accompany them? Protecting and feeding the animals were a big part of the symbiotic relationship between the animal and the herder. Operation Flood was a rural development programme started by India's National Dairy Development Board (NDDB) in 1970. One of the largest of its kind, the programme objective was to create a nationwide milk grid. It resulted in making India is the largest producer of milk and milk products, and hence is also called the white revolution of India. It also helped reduce malpractices by milk traders and merchants. This revolution followed the Indian green revolution and helped in alleviating poverty and famine levels from their dangerous proportions in India during the era. Gujarat-based Amul (Kheida Milk Union Limited) was the engine behind the success of Operation Flood and in turn became a mega company based on the cooperative approach. Verghese Kurien (chairman of NDDB at that time), then 33, gave the professional management skills and necessary
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thrust to the cooperative, and is considered the architect of India's 'White Revolution' (Operation Flood). His work has been recognized by the award of a Padma Bhushan, the Ramon Magsaysay Award for Community Leadership, the Carnegie-Wateler World Peace Prize, and the World Food Prize Operation Flood has helped dairy farmers direct their own

development, placing control of the resources they create in their own hands. A National Milk Grid links milk producers throughout India with consumers in over 700 towns and cities, reducing seasonal and regional price variations while ensuring that the producer gets fair market prices in a transparent manner on a regular basis. The bedrock of Operation Flood has been village milk producers cooperatives, which procure milk and provide inputs and services, making modern management and technology available to members. Flood's objectives included:
Increase milk production. Increase rural incomes. Better prices for consumers.

Operation

3.1 OPERATION FLOOD IMPLEMENTATION: Phase - 1: Phase I (19701980) was financed by butter the through the planned the oil

the sale of skimmed milk powder and gifted by the European Union (then European World Economic Community) NDDB Food Programme.

programme and negotiated the details of EEC assistance.

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During its first phase, Operation Flood linked 18 of India's premier milk sheds with consumers in India's major metropolitan cities: Delhi, Mumbai, Kolkata and Chennai. Operation flood, also referred to as White Revolution is a gigantic project propounded by Government of India for developing dairy industry in the country. The Operation Flood 1 originally meant to be completed in 1975, actually the period of about nine years from 1970-79, at a total cost of Rs.116 corers. As start of operation Flood-1 in 1970 certain set of aims were kept in view for the implementation of the programmers. The objectives of commanding share of milk market and speed up development of dairy animals respectively hinter lands of rural areas with a view to increase both production and procurement.

Phase - 2: Operation Flood Phase II (19811985) increased the milksheds from 18 to 136; 290 urban markets expanded the outlets for milk. By the end of 1985, a self-sustaining system of 43,000 village cooperatives with 42.5 lakh milk producers were covered. Domestic milk powder production increased from 22,000 tons in the pre-project year to 1,40,000 tons by 1989, all of the increase coming from dairies set up under Operation Flood. In this way EEC gifts and World Bank loan helped promote self-reliance. Phase - 3: Phase III (19851996) enabled dairy cooperatives to expand and strengthen the infrastructure required to procure and market increasing volumes of milk. Veterinary first-aid health care services, feed and artificial insemination services for cooperative members were extended, along with intensified member education.
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Operation Flood's Phase III consolidated India's dairy cooperative movement, adding 30,000 new dairy cooperatives to the 42,000 existing societies organized during Phase II. Milksheds peaked to 173 in 1988-89 with the numbers of women members and Women's Dairy Cooperative Societies increasing significantly. Phase III gave increased emphasis to research and development in animal health and animal nutrition. Innovations like vaccine for Theileriosis, bypassing protein feed and urea-molasses mineral blocks, all contributed to the enhanced productivity of milch animals.
4. Changes in the demand and supply milk and dairy products:

Milk production is one of the most important enterprises in Indian agriculture and milk and dairy products are an essential staple food for the majority of the population, making a significant contribution to dietary intake and accounting for 15.7% of household expenditure on food. But the relation between the amount of milk produced in the India and consumer demand has not been that close in the past, as other factors have had a far greater influence.
5. OBJECT OF THE STUDY:

To apply the supply chain management concepts into dairy industries and understand the concepts of activity centres and costs. SCOPE OF THE STUDY: The scope of the study lies in finding out the supply chain management concepts in the dairy industry by studying each and every activity service centres separately, and finding out the key areas that, from there we can reduce cost of production of milk by improving operational

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efficiencies & rearranging the supply chain at each and every service centre. The present study, analysis, findings and suggestions proposed by the present researcher will be of immense use for future researcher with similar studies in dairy industry.

SIGNIFICANCE OF THE STUDY:

High quality products with quality support services both in terms of international standards and competitiveness have entered into our country. Customer satisfaction has emerged as the key differentiator and defining attribute. The study is very much significant because it brings out the detailed brief of supply chain management concepts in dairy industry. Every product survival depends upon 4ps Product, Place, Price, and Promotion. In the 4ps, one of the main factor is Price. This P is more Versatile in nature. According to this demand of the product vary. So, we are focusing on cost reduction at each and every activity centres. By this study we can use this information to evaluate dairy products

Milk Processing Chart:

Collection of Raw-Milk Electronic Milk Test

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Methyline Blue Reduction Test Purchasing and Standardizing Process

Separation Process

Quality Check

Packaging Process

Cold Storage

6. PRODUCTION PROCESS

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Fig. no. 2: Milk Production process flow

6. 1.

Collection of Raw Milk

Raw milk is collected from different co-operative societies of Gujarat. About 122000 liters of raw milk is collected per day. Before this milk is sent to the laboratory for testing the FAT & SNF proportion, the milk is separated from the raw milk. The milk is taken from the chilling centers to Ahmadabad with the help of trucks. After collecting the samples of milk, they are taken to the

laboratory ,where two types of tests are conducted. Electronic milk test Methyline blue reduction test

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6.1.1 Electronic Milk Test Before pasteurizing the milk the samples are taken to the laboratory. In the laboratory with the help of machine called electronic milk tester, the proportion of SNF & FAT is checked with phosphate solution. When the colour of the milk becomes yellow, it is sent for pasteurization. 6.1.2 Methyline blue reduction test Another test, which is taken in the laboratory, is called Methyline blue reduction test. This test is conducted for checking for how long the milk will remain fresh. To check this, 10 ml of milk is taken and 1 ml of methyline blue solution is added to it. It is then kept under water at 57-degree C. After one hour, if the solution losses its colour than it is called raw milk. If the solution remains the same even after 5 hours than it is considered as fresh milk, which remains constant for a long period of time. Table no 1: Proposition of FAT & SNF in Buffalo, Cow MILK Buffalo Cow SNF 9% 8.5% FAT 6% 4.5%

After laboratory gives green signal and confirming the raw milk at the reception dock is brought in to the house connected with the pump is sent to the milk processing plant. This is than chilled below 4 degree C. and then stored in milk silos. After that milk is processed this has two steps i.e. pasteurizing and standardizing.

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DAIRY SUPPLY CHAIN 6. 2.

Pasteurizing & standardizing

After collecting and checking and conducting laboratory tests, the pasteurizing process is conducted. To pasteurized the milk means to kill all the germs in the milk by a particular method which was invented by a scientist called James Pasteur and so the name pasteurization. In pasteurizing, the milk is first heated at 72 C to 76 C for 15 seconds and then it is immediately cooled below 4 C. By this method they destroy the pathogenic bacteria present in the raw milk. But if the right degree of temperature is not provided there are chances that the milk might still contain germs. After this process some milk goes to separator machine and remaining is proportionately sent for standardization. Standardization process is known such as it bifurcates the milk in 3 categories varying according to that FAT & SNF contents. The equipment named OSTA. Auto standardization adjusts the fat directly. The computer is just ordered whether gold or standard milk is to be rationed and the same will be received with appropriate contents. Ready Milk = Pasteurized + Standardized.

6.3. Separation process Separator machine separates two kinds of products, skimmed milk & cream, through channels. There are 100 disks fixed in separator machines, which revolve at 5000 rpm (revolution per minute). It is taken to the tanks, which has the capacity of 20000 litres. Whenever the milk is needed from the tank, it is tested in the laboratory and the deficit proportion fat is added by mixing cream. This process continues for 24 hours. 6.4 . Quality Check Pasteurized milk is sent for a quality check in the Quality Assurance laboratory of the dairy plant. Within 14 seconds FAT and SNF

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proportion is received regarding 30 lack litres of milk. The total investment put into the lab by the Dairy plant is of Rs. 6 crores.

6.5

. Packing Process After this the milk is sent for packing to the milk packing station in

the dairy plant. In the milk packaging station there are huge pipelines and behind each of them there is polyfill (form, fill and seal machine) machine from which the material to pack milk comes out. There are 12 such polyfill machines in the packaging station from which the materials to pack milk comes out. From each of these 12 machines 100 pouches are packed in one single minute. 6.6. Storage Then the milk is sent to the cold storage of the dairy where the milk is stored until it is dispatched. Here the milk is stored at temperature ranging from 5 C to 10 C, it is maintained with the help of exhaust fans having silicon chips. About 40000 litres of milk is dispatched from the cold storage of the dairy plant every day. The damaged pouches are kept a side and the milk is once again put to the tank.

Table no. 2: Composition of milk:

Particulars
water Proteins(mg) Fat carbohydrates

Cow
87.8 3.2 3.9 4.8

Buffalo
81.1 4.5 8.0 4.9

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7. MILK AND MILK BY PRODUCTS:

Fig. no. 3: Milk & Milk by-products flow diagram.

Source: Wikipedia

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7.1. MILK & MILK BYPRODUCTS CONTRIBUTION:

Milk production in India 105 million tones 46 % of milk produced is used as liquid milk (30% of this is used as packaged milk)
50 % of milk produced is used for making indigenous products as

ghee, dahi, paneer etc Remaining 4 % of milk produced is used as other products like milk powder, cheese etc
Percapita availability of milk in India (gms/day) 252. ***All values are in tonnes

Fig. no. 4: Estimated consumption pattern of milk & milk by-products in India
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Source: cifti agm 2005

7.2 GROWTH RATE OF DAIRY INDUSTRY:

Fig. no.5: Year wise growth rate of milk production in India

Growth rate dairy industry has been increased by 5.51%.

India produces about 13% to 14% of total world production. India has small farms 2 8 animals.

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Fig. no. 6: Year wise growth rate of per capita availability (gms/day) in India
**Source: Department of Animal Husbandry, Dairying & Fisheries, Ministry of Agriculture

Growth rate dairy industry has been increased by 3.6 %.

7.3 SWOT ANALYSIS OF INDIAN DAIRY INDUSTRY: Strengths:

Demand profile: Absolute optimistic. Margins: Higher, if we implement the supply chain concept to dairy.

Margins are higher in the packed milk.

Availability of Raw material: Abundant. Presently, more than 80%

of milk produced is following into the unorganized sector, which requires proper channelization.
Flexibility of Product Mix: with the balancing equipment, we can

keep on adding to product line.

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DAIRY SUPPLY CHAIN Technical man power: technical human resources pool built over

last 30 years.

Weaknesses:
Perishability: Milk is a perishable product. Lack of Control of over yield: Theoretically, milk has got little

control over its yield.

Logistics of Procurement: Woes of bad roads and inadequate

transportation facility make milk procurement problematic.

Competition: With so many newcomers entering this industry,

competition is becoming tougher day by day.

Opportunities:
Export potential: Efforts to exploit export potential are already on.

Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT treaty, opportunities will increase tremendously for the export of agri-products in general and dairy products in particular.
Value Addition: Wide ranges of product items are available in the

market.

Threats:
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DAIRY SUPPLY CHAIN Milk vendors, the unorganized sector: Today milk vendors are

occupying the pride of place in the industry. Organized dissemination of information about the harm that they are doing to producers and consumers should see a steady decline in their importance.

The Indian dairy industry, following its delicensing, has been attracting a large number of entrepreneurs. Their success in dairying depends on factors such as an efficient yet economical procurement network, hygienic and costeffective processing facilities and innovativeness in the market place. All that needs to be done is: to innovate, convert products into commercially exploitable ideas.

8.

WHAT IS SUPPLY CHAIN?

A supply chain is the system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer.

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Fig. No. 7: Flow diagram of supply chain The black arrow represents the flow of materials and information and the gray arrow represents the flow of information and backhauls. The elements are (a) the initial supplier, (b) a supplier, (c) a manufacturer, (d) a customer, (e) the final customer.

8.2. SUPPLY CHAIN MANAGEMENT:

Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers. Supply Chain Management spans all movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption Supply Chain Management encompasses the planning and

management of all activities involved in sourcing, procurement, conversion, and logistics management activities. It also includes the crucial components of coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, Supply Chain Management integrates supply and demand management within and across companies. The primary objective of supply chain management is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory and labor. In theory, a supply chain seeks to match demand with supply and do so with the minimal inventory. Various aspects of optimizing the supply chain include liaising with suppliers to
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eliminate bottlenecks; sourcing strategically to strike a balance between lowest material cost and transportation, implementing JIT (Just In Time) techniques to optimize manufacturing flow; maintaining the right mix and location of factories and warehouses to serve customer markets, and using location/allocation, vehicle routing analysis, dynamic programming and, of course, traditional logistics optimization to maximize the efficiency of the distribution side. Supply chain management is a cross-function approach to manage the movement of raw materials into an organization, certain aspects of the internal processing of materials into finished goods, and then the movement of finished goods out of the organization toward the end-consumer. As organizations strive to focus on core competencies and becoming more flexible, they have reduced their ownership of raw materials sources and distribution channels. These functions are increasingly being outsourced to other entities that can perform the activities better or more cost effectively. The effect is to increase the number of organizations involved in satisfying customer demand, while reducing management control of daily logistics operations. The purpose of supply chain management is to improve trust and collaboration among supply chain partners, thus improving inventory visibility and improving inventory velocity. 8.2.1 STRATEGIC FUNCTION: Strategic network optimization, including the number, location, and size of warehousing, distribution centers, and facilities. Strategic partnership with suppliers, distributors, and customers, creating communication channels for critical information and operational improvements such as cross docking, direct shipping, and third-party logistics.

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Product life cycle management, so that new and existing products can be optimally integrated into the supply chain and capacity management. Information operations. Where-to-make and what-to-make-or-buy decisions. Aligning overall organizational strategy with supply strategy. 8.2.2. TACTICAL FUNCTIONS: Sourcing contracts and other purchasing decisions. Production decisions, including contracting, scheduling, and planning process definition. Inventory decisions, including quantity, location, and quality of inventory. Transportation strategy, including frequency, routes, and contracting. [Benchmarking] of all operations against competitors and Technology infrastructure, to support supply chain

implementation of best practices throughout the enterprise.

8.2.3. OPERATIONAL FUNCTIONS: Daily production and distribution planning, including all nodes in the supply chain. Production scheduling for each manufacturing facility in the supply chain (minute by minute).

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Demand planning and forecasting, coordinating the demand forecast of all customers and sharing the forecast with all suppliers. Sourcing planning, including current inventory and forecast demand, in collaboration with all suppliers. Inbound operations, including transportation from suppliers and receiving inventory. Production operations, including the consumption of materials and flow of finished goods. Outbound operations, including all fulfillment activities, warehousing and transportation to customers.

9. METHODOLOGY:

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Fig. No. 8: PERT diagram for diary industry supply chain

9.1 Government policies & regulations:

Cattle Breeding Policy and Programme:

9.1.1 Prevention of Food Adulteration Act, 1954: This Act is the basic statute that is intended to protect the common consumer against the supply of adulterated food. This specifies different standards for various food articles. The standards are in terms of minimum quality levels intended for ensuring safety in the consumption of these food items and for safeguarding against harmful impurities and adulteration. The Central Committee for Food Standards, under the Directorate General of Health Services, Ministry of Health and Family Welfare, is responsible for the operation of this Act. The provisions of the Act are mandatory and contravention of the rules can lead to both fines and imprisonment. 9.1.2 Milk and Milk Product Order, 1992 Whereas the Central Government is of opinion that for maintaining and increasing the supply of liquid milk of the desired quality in interest of the general public, it is necessary to provide for regulating the production, supply and distribution of milk and milk product; Now, therefore, in exercise of the powers conferred by Section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government hereby makes the following Order, namely; _ Short title, extent and commencement: This order may be called the Milk and Milk Product Order, 1992. It extends to the whole of India. It shall come into force on the date of its publication in the Official

Gazette.

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9.1.2.1 Salient Features of the MMPO: Registrations for units handling up to 75,000 litres of milk per day are granted by the State Governments and units with more than 75,000 litres per day capacity are registered by the Central Registering Authority. The Certificate also specifies the milkshed area, which, under the order is defined as a geographical area demarcated by the Registering Authority for the collection of milk by the registered unit.
Maintenance of specified hygienic conditions in the premises where

milk and milk products are handled processed, manufactured or stored. The collection, transportation and processing of milk normally centres on the operations of a processing plant. The region from which the marketable surplus of milk production finds its way to a processing plant is called a 'milkshed'. The concept of milkshed areas is pivotal to the MMPO.

9.2 Breeding:
FACTS & FIGURES: (As per NDDB, India & TOI, India as on 20/07/06.)
No. of cows in India 200 millions No. of buffalos in India 100 millions. No. of milch cows 57 millions.

No. of milch buffalos 39 millions. Gestation period 9 months.

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India has a very rich reservoir of genetic diversity and possesses some of the best breeds of cattle and buffaloes in the world. The countrys population of 218.8 cattle accounts for 17% of the total world population of cattle. The best indigenous germ plasm of Milch, Draught and Dual purpose animals account for 22-25% of the Indian cattle population, while 7-10% of the Cattle population is cross-bred. Most of the indigenous breeds of cattle excel in draught capacity. The native livestock breeds exhibit a distinct superiority in utilizing poor quality feed and are adapted to withstand heat and show better resistance to tropical diseases 9.2.1 Breeding behavior: Males and females live in separate groups. They will merge in the beginning of the wet season for mating. The bulls can detect females in heat by their scent and find their camp. There is a period of foreplay before the actual mating takes place. This period is 1 to 3 days and allows the animals to get to know each other. The bull will not leave a female in estrus and he will not allow another bull to come near her. Only the most dominant bulls will mate.

9.3 Feeding:
Ninety-nine percent of the milk producing buffaloes are owned by small to medium land holding farmers and are merely a source of a small extra income. One or two buffaloes are a fairly common herd size. The buffaloes are managed under a so called backyard system. They are fed crop resides like wheat straw, paddy straw, sovers etc This diet is sometimes supplemented with grazing and/or fodder by the cut-and-carry-system and concentrates. bigger farms, all green fodder is produced at the farm and the buffaloes are fed a fairly balanced ration of green feed, concentrate and straw.

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The main diet for the buffalo is roughage such as grass, legumes and straw. The roughage can be fed either fresh as pasture or in a cut-and-carrysystem or conserved as hay or silage. The roughage is often complemented with grains, concentrate and agro-industrial by-products such as oil-seed cakes, sugar cane tops etc. The roughage should form the base of the feed ration and contribute to meet (at least) the total maintenance requirements. Grains and concentrate should be fed only to meet additional requirements such as growth, pregnancy and milk production. Too much non-fibrous feed will alter the rumen environment. In the long run this could lead to serious problems in feed digestion causing loss of appetite, weight loss and a drop in milk yield. This is especially important for animals under stress, such as high growth rate and high milk yield. The roughage should be of good quality, both nutritional and hygienic quality, this cannot be emphasized enough. 9.3.1 Voluntary intake: The definition of voluntary intake is the amount of feed an animal can eat per day. It is commonly expressed in kg of dry matter or in percent of live weight. After having considered the nutrient requirements of the animal and the feed stuff to be used the proper feeding regime can be calculated. However, one must take into consideration how much the animal can eat.

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Fig. no. 9: Factors affecting voluntary intake of feed A high producing lactating cow can eat more than a low producing. Similarly a growing heifer may eat more than a dry cow. feed intake decreases with high environmental temperature and humidity. A rough estimation of voluntary intake for a buffalo heifer is 2.2 to 2.5% of its live weight per day, if provided with a small portion of straw, a large portion of green feed and some concentrate. A milk producing buffalo should be able to consume good quality feed up to 3% of its live weight. A too high ratio of straw in the diet reduces voluntary intake. A protein content of less than 6% also reduces intake of that feed.

9.4 Lactation:
The onset of lactation is with the birth of the calf. The initial yield is a reliable indicator of the animals genetic potential. The highest yield is
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reached after five to six weeks of lactation and maintained for some weeks. Thereafter the yield decreases until the end of lactation. The lactation ends as the dry period starts. In buffaloes, the highest milk yield is seen in the fourth lactation where after it declines. The shape of the lactation curve depends on factors such as feed, management, milking frequency, diseases among others. The optimum lactation length in the Murrah has been reported to be 262 to 295 days. 9.4.1 Factors affecting lactation and milk yield: Lactation and milk yield depend on both genetic and non-genetic factors. The genetic influence is due to species, breed, and individual. The non-genetic factors are management, amount and quality of feed and skill of the farmer to detect heat and illnesses. Factors which are outside the farmers control such as climate, temperature, humidity etc. also influence lactation and milk yield. Feeding is the most important factor for increasing and sustaining the milk yield. Sufficient amount of energy, protein, minerals and water must be provided in order to achieve maximum yield. Calving interval is closely related to lactation length and milk yield. The longer the calving interval, the longer the lactation and the higher the lactation yield. However, total life time yield will be substantially less comparing with a buffalo with short calving intervals. Milking frequency affects both total milk and fat yield. A study using Murrah buffaloes showed that 31% more milk and 26% more butter fat resulted from milking three times per day as compared to twice a day.
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9.5 Milching:
Milching is predominantly done twice

a day by hand. Very few buffalo Co-operative society collects farmers have so far commenced the milk from each and every house in a village and sends machine milking, although the number is to industry increasing. Larger farms, such as university and governmental farms contribute little to the total milk production of India. However, the yield per buffalo is higher than in other production systems.

10.1 STAGE 1:

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Industry Collects the milk from societies and process the raw milk and distribute the packaged milk or otherwise dairy makes milk by products

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Fig. no. 11: Flow diagram of dairy supply chain Fig. no. 11 clearly explains the supply chain in dairy industry. In the supply side of the supply chain are farmers, who are the major suppliers for the dairy industry and at the same time customer side of a supply chain deals with directly consumers & retailers. In the middle of the supply chain we have processing of milk. In the stage 1 we can see how the supply chain works and detailed study of each and individual activity centres. Components of supply chain of a dairy industry: 1. Supplier (farmers). 2. Transportation (collection of milk from different villages). 3. Manufacturing (Processing centre). 4. Distribution channels (Wholesalers, Co-operative stores). 5. Selling Stores (retailers).

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Suppliers:
In a country like India where milk production is "by the masses" rather than by "mass production", smallholder dairy farmers occupy special significance in dairy development. The more than 50 million small, marginal, and landless households participating in varying degrees in milk production must be strengthened to enable them to produce clean milk efficiently and effectively. Dairying being a relatively scale neutral activity when opportunity costs of labor are low, animal rearing assumes particular importance in the context of small, marginal, and landless households for whom animal rearing ensures nutrition, fluid cash, and sustainable employment, as well as a means to increase inflation-resistant assets. Furthermore, gains from dairying may be distributed more equitably than crop production, since landholding is not a prerequisite to dairy production where feeds can be bought or bartered for manure or labor. Of course, much more is desired in this direction, since the constraints facing this category of households are not comprehended properly, or attempts to redress the problems are not taken up properly. The cost of raw milk plays a major role in the cost of production of milk. Around 66.66% of total cost is only by raw milk production.

Transportation:
Milk now moves well over 12500 lm right across the country through rail and road linking deficit areas with the surplus areas and in meeting the rising demand of urban consumers. The programme now covers 170 milk sheds (catchment areas) and organized marketing of milk has been extended to 525 towns in the country. This involved provision of animal health care services and development of procurement, processing and transport facilities.

Manufacturing (Processing):
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Raw milk is brought to the dairy plant, it is then graded, weighed, and sampled. The butterfat content determines the price paid the farmer. Processing of raw milk starts with clarification or separation, using centrifuges. The clarification process removes impurities like blood cells from the milk that will be sold as whole milk (milk containing all of its butterfat). Separation process removes butterfat as well as impurities from milk. Skim milk is produced when all the butterfat is removed from the raw milk. Dairy cows are milked 2 or 3 times a day. Most dairy farms use milking machines. Milk is then pasteurized to kill harmful bacteria. Milk with butterfat is then homogenized to prevent the butterfat from separating from the milk. Processed milk is then chilled in a cooler and then placed in sterile containers. Processed milk is then packed individually in containers, which are usually plastic bottles or paper cartons, are put on moving racks and pass under machine that will automatically fills and seals them.

Distribution channels:
Distribution of milk is the last or final stage of the market milk industry. Others are preparatory to placing the product into the hands of the consumer. The quality of the product alone will not assure its wide distribution, which should be planned and executed intelligently. Distribution facilities consist of;

The physical equipment and personnel required for transporting the product from the milk storage rooms to the consumer/retailer. Sales promotion personnel. Advertising.

A successful distribution programme requires;

A product of high quality. An attractive package. Neat and courteous route salesmen.

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Efficient use of men and equipment. Effective advertising. Due to highly changeable temperatures during most seasons and the

lack of refrigeration facilities at the average customers home in India the milk has to be distributed twice daily. Viz., morning and evening. In cold countries, one-time delivery is usual. Unsold milk presents a problem of economic disposal. Under tropical conditions, as in India, the returned milk should not be sent again for sale as liquid milk since exposure to high temperatures during its inward and outward journeys subject it to quality deterioration and hence may cause consumer complaints. The unsold milk can be given for separation or utilized for preparation of dahi, etc.

Stores:
The parlors were a one stop shop for milk, butter, cheese, milk beverages, pizzas, and other products. It intended to follow the franchise route building upon its brand and quality. Every co-operative maintain its own stores across state wide. And co-operatives are giving milk at lower prices compare to privative industries, by this way they are sustaining competition with private players.

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Value chain of a dairy industry:

Fig. no. 12: Value chain of a Dairy industry

*Source:

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Fig. no. 13: Value chain of a Dairy industry 2

*Source:

10.2 STAGE 2: Price distribution at each centre:

Fig. no.14: Value addition for milk at each & every stage

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Fig. no 14 clearly explains about how the value addition in each and every activity centres, and how the variables are influences at each stage. By the above diagram we can find out procurement cost is the major contribution around 60% of the price of the product. By roughly we can see that the 32.8% of total price has been contributed by feed cost to animal. Then we have to transport the raw material which we collected through co-operative societies. For the collection of raw material we have to give 40ps to the co-operative society. And then transportation will take around 20ps (approximately). The total cost of the material it will cost us to reach to processing centre is Rs. 10.20. In the processing centre, we will process the raw material through pasteurization, homogenization, separation and churning processes. It will cost around Rs 0.80 for the fuel, wages, chemical and maintenance. In the power and fuel we made study on what is best possible alternative energy source for heating the milk. And finally we got that the power is the best source of energy. Coal and furnace gas is also best alternatives but due to smoke it not usefull in the dairy industry, because dairy products are high sensitive, it will grasp the smoke and smells like it. And maintenance also one of the main thing because if milk will mix with some other substances it will deteriorates the quality of milk. So in the processing centre we have carefully taken care of the maintenance. The cheapest possible way of packing is pouch packaging; it costs around 40ps for 1 liter of milk. But that milk has to be used within certain time. If we packing milk for high shell life then we have to use tetra package, it will costs around Rs 3-4 per liter package. We have to send this whole lot to the retailers. By that time we have to spend for distribution charges, and we have to pay for administration charges to staff those we are hired. We have to pay income tax at 35% on profit made. Totally we get a profit of Rs. 2 per one liter.
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Table no.3 is excel based program table, it will shows proportionate change in the value chain of a dairy industry. If we change the selling price it automatically changes the entire contribution in each and individual activity centre. And if we change single also it can change accordingly.

10.2.1 Proportionate change in price level at each centre:Tab. No 3: excel based computer program for value addition

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10.3. STAGE 3: Product mix of dairy products:

Table. No 4: product mix of different dairy products
VAR LTR % KGS pro cost sell cost C P
OVER ALL PROF

x1
4000

x2
3500

x3
1250 50 200 140 160 20 16

x4
875 35

x5
375 15

total amount
10000 100

13 16 3 2

12 14.5 2.5 1.5

27 30 3 2

8000
< 20000 within demand range

5250
< 15000 within demand range

3200
< 26700 within demand range

5580
< 21573 within demand range

750
< 20000 within demand range

22780

max profit RESUL T (QTY)

Product mix is a combination of products manufactured or traded by the same business house to reinforce their presence in the market, increase market share and increase the turnover for more profitability. Normally the product mix is within the synergy of other products for a medium size organization. However large groups of Industries may have diversified products within core competency. One of the realities of business is that most firms deal with multiproducts .This helps a firm diffuse its risk across different product groups/Also it enables the firm to appeal to a much larger group of customers or to different needs of the same customer group. Often dairy firms take decisions to change their product mix. These decisions are dictated by the above factors and also by the changes occurring in the market place. So, it is the changes or anticipated changes in
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the market place that motivates a firm to consider changes in its product mix.

In this study I am taking 5 different products liquid milk, low fat milk, peda & khova, cream (50% fat), and butter milk. I am taking the quantity of products according to the per capita consumption of products trend followed by the Indian consumers. The total procuring of raw material is 10000 liter per day. With this raw milk we distributed the milk among the value added products. If we are sticking with one product it makes very riskier one and if we are making value added products it makes less risky.

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11. CONCLUSION:

Companies are turning their attention to their inbound supply chain operations and realizing that there is a lot of money that can be saved. Technological innovations and competitive pressures have encouraged retailers and processors to improve supply chain management for agricultural products. This often requires more refined vertical coordination and inventory management between stages in the market channel. Inventory management in production agriculture, however, is a challenge because producers must set production well before they can determine actual demand. There were substantial improvements in on-farm milk handling practices that reduced losses from spoilage and contamination. By this study we can found out, how the value addition takes place in each and every activity centre. And at the same time we found out what are all the variables which can contribute at most in the final price of the product. The efficiency gains in handling milk from farm gate to processing plants were complimented by gains in milk quality that reduced losses and improved the productivity of processing dairy products.

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12.

BIBLIOGRAPHY:

National

dairy

development

authority

of

India

statistics:

www.nddb.org/statistics.html
A ready reckoner of a large number of facts and figures on almost all

conceivable aspects of significance need by dairymen to make them more effective. A compendium of trends and achievements dairy India 5th edition page no. 5-7.
Process standardization in dairy industry Indian journal of dairy

sciences volume.60 no.4 jul-aug 2007, pages no 15-19.

Supply chain management in dairy industry by K. Venkata Subbaiah, K

Narayana Rao, K. Nookesh Babu.

Ruakura agresearch limited - Dairy supply chain model, impact of

changes in milk composition on supply chain performance available on online.

O. Montes de oca, C.K.G Dake, A.E. Dooley and D. Clark. -

A dairy

supply chain model of the New Zealand dairy industry available dairy india 7th edition page no 21-22
Article on technology helps dairies deliver: the dairy industry is

discovering that in order to make it in todays competitive market, you cant go it alone. (cold supply chain)-food logistics by loudin, Amanda on April 15, 2003.
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DAIRY SUPPLY CHAIN Akashagangas it tools for the Indian dairy industry-using it to increase

efficiency in rural dairy co-operatives by ajay sharma and akilesh yadav an USAID programme published on January 2009.
A mathematical optimization approach of lot sizing decision for

coordination of multiple milk collection centres, milk plant and multiple milk booths in an Indian dairy supply chain.
Manitra rakotoarisoa and ashok gulati - Article on Competitiveness

and trade potential of Indias dairy industry.

Abid A. Burki and Mustaq A. Khan. Article on Milk supply chain and

efficiency of smallholder dairy producers in Pakistan centre for management and economic research. Published in dairy management journal on 2002. Page no 8-10
International Cooperative Alliance (ICA). 1995. ICA News, No. 5/6,

1995.

Web

pages

accessed

at

http://www.ica.coop/ica/info/enprinciples.html Dyer, J.H. and Singh, H. (1998). The relational view: cooperative strategy and sources of interorganizational competitive advantage. Academy of Management Review, 23:4, 660-679.
Wilfred Candler and Nalini kumar INDIA: The dairy revolution the

impact of dairy development in India and the World Bank contribution published on 1998, Page no 48, table 7.1.
Edgar spreer milk and dairy product technology published on 2004

Page no 5-158.
J c lambart village milk processing FAO animal production and

health paper 69, book published in 1988; page no 3-6, 15-32.

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DAIRY SUPPLY CHAIN S. Vijayalakshmi, J. Sitaramaswamy and John De Boer Rationalization

of milk procurement, processing and marketing in southern India available online 29 march 2000 Published by Elsevier Science Ltd. Page no. 4-5.
DAIRY INDUSTRY Information on milk prices, factors affecting prices,

and dairy policy options GAO Report December 2004, page no. 2-8.

13.
TERMS: Dairy:

APPENDIX

A dairy is a facility for the extraction and processing of animal milk mostly from goats or cows, but also from buffalo, sheep, horses or camels for human consumption. Typically it is a farm (dairy farm) or section of a farm that is concerned with the production of milk, butter and cheese. Cream and butter:

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Today, milk is separated by large machines in bulk into cream and skim milk. The cream is processed to produce various consumer products, depending on its thickness, its suitability for culinary uses and consumer demand. Some cream is dried and powdered, some is condensed (by evaporation) mixed with varying amounts of sugar and canned. This is done by churning the cream until the fat globules coagulate and form a monolithic mass. This butter mass is washed and, sometimes, salted to improve keeping qualities. The residual buttermilk goes on to further processing. Skimmed milk: The product left after the cream is removed is called skim, or skimmed, milk. Reacting skim milk with rennet or with an acid makes casein curds from the milk solids in skim milk, with whey as a residual. To make a consumable liquid a portion of cream is returned to the skim milk to make low fat milk (semi-skimmed) for human consumption. By varying the amount of cream returned, producers can make a variety of low-fat milks to suit their local market. Other products, such as calcium, vitamin D, and flavouring, are also added to appeal to consumers.

Casein: Casein is the predominant phosphoprotein found in fresh milk. It has a very wide range of uses from being filler for human foods, such as in ice cream, to the manufacture of products such as fabric, adhesives, and plastics. Cheese:

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Cheese is another product made from milk. Whole milk is reacted to form curds that can be compressed, processed and stored to form cheese. Cheese has historically been an important way of "storing" milk over the year, and carrying over its nutritional value between prosperous years and fallow ones. It is a food product that, with bread and beer, dates back to prehistory in Middle Eastern and European cultures, and like them is subject to innumerable variety and local specificity. Ghee: Ghee is a clarified butter fat prepared from cow or buffalo milk. The largest ghee producing states are U.P, A.P, Punjab, Rajasthan, M.P, Bihar, Haryana etc. The production of ghee is higher in winter and lower in summer. Lassi: Lassi, also called chhas or matha, refers to desi buttermilk, which is the by-product obtained when churning curdled whole milk with crude indigenous devices for the production of desi butter (makkhan). It appears that 50-60kg. (ave.55kg) of lassi are producted for every kg of ghee. Lassi contains appreciable amounts of milk proteins and phospholipids. Homogenization: It is the process of breaking up the fat into smaller sizes so that it no longer separates from the milk.

Pasteurization: It is the process of heating liquid for the purpose of destroying viruses and harmful organism. It is different from sterilization because pasteurization only aims to reduce the number of bacteria

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