Outsourcing milk collection ?

2007-09-12 05:12
Sales manager

While visiting different countries, we have seen some trend to subcontract farm raw milk collection to external operators. We think this can be very counter productive for the dairies to achieve the maximum efficiency. Nowadays, we see differences in collection costs between the in-house and out-sourced process.

When milk collection is subcontracted by dairies, it is often to very small companies. Pricing is usually based on mileage and quantity of milk. Most of the time, collection route are fixed. These one or two man small companies can't work 24/24 seven days a week. So material amortisation is not the most efficient. They also don't get the best price when they buy a truck compared to a dairy that would be buying 10 at one time. When trucks are down, replacement is not always easy to set up. These people usually don't give the right feed back concerning milk cooling tanks status at the collection point. Productivity gains like operating time, pumping speed, hose length, fuel efficiency, mileage, ..., are difficult to channel back to the dairies.

At the opposite, when milk collection is directly managed by the dairies. There is a set time for any single operation which allows to track and negotiate productivity with employees. As farm milk production level vary through the year, collection routes are often recalculated in order to achieve the lowest mileage per litre possible. When dairies own the farm milk tanks, they also achieve lower maintenance costs as the driver can spot issues and report to the maintenance team. The truck maintenance may be subcontracted, in order to achieve lower costs and easier replacement. This tight cost control and management simply allows a better reactivity and efficiency.
This is also a very good tool when dairies compete for milk ...

Dernière modification par charriau (2008-08-15 09:16)