Case Study Description of Supply Chain Optimization at Madurai Aavin Milk Dairy
The Madurai District Cooperative Milk Producers' Union Ltd. also known as Madurai Aavin Milk Dairy (MAMD) has been one of the largest dairies in the southern part of Tamil Nadu, India. One of the major activities in the MAMD's supply chain was to procure milk from the farmers and also to provide necessary technical input facility to them. The procurement was carried out by forming village-level milk producers' cooperative societies (MPCS). The supply of raw milk to MAMD from the farmers around Madurai is decreasing, whereas the demand is increasing. Several strategies are explored by Aavin to meet the demand for their main product, "premium milk". Aavin faces two challenges: 1. Forecasting the demand for premium milk and 2. Meeting the demand in an optimal manner that would maximize their profit.
Authors :: Unnikrishnan Dinesh Kumar, P. Arun Pandian, Nachiappan SP
Swot Analysis of "Supply Chain Optimization at Madurai Aavin Milk Dairy" written by Unnikrishnan Dinesh Kumar, P. Arun Pandian, Nachiappan SP includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Milk Aavin facing as an external strategic factors. Some of the topics covered in Supply Chain Optimization at Madurai Aavin Milk Dairy case study are - Strategic Management Strategies, Financial analysis, Market research, Supply chain and Finance & Accounting.
Some of the macro environment factors that can be used to understand the Supply Chain Optimization at Madurai Aavin Milk Dairy casestudy better are - – challanges to central banks by blockchain based private currencies, banking and financial system is disrupted by Bitcoin and other crypto currencies, technology disruption, increasing energy prices, there is increasing trade war between United States & China, wage bills are increasing, there is backlash against globalization,
increasing household debt because of falling income levels, supply chains are disrupted by pandemic , etc
Introduction to SWOT Analysis of Supply Chain Optimization at Madurai Aavin Milk Dairy
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Supply Chain Optimization at Madurai Aavin Milk Dairy case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Milk Aavin, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Milk Aavin operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Supply Chain Optimization at Madurai Aavin Milk Dairy can be done for the following purposes –
1. Strategic planning using facts provided in Supply Chain Optimization at Madurai Aavin Milk Dairy case study
2. Improving business portfolio management of Milk Aavin
3. Assessing feasibility of the new initiative in Finance & Accounting field.
4. Making a Finance & Accounting topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Milk Aavin
Strengths Supply Chain Optimization at Madurai Aavin Milk Dairy | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Milk Aavin in Supply Chain Optimization at Madurai Aavin Milk Dairy Harvard Business Review case study are -
Diverse revenue streams
– Milk Aavin is present in almost all the verticals within the industry. This has provided firm in Supply Chain Optimization at Madurai Aavin Milk Dairy case study a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Strong track record of project management
– Milk Aavin is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Learning organization
- Milk Aavin is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Milk Aavin is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Supply Chain Optimization at Madurai Aavin Milk Dairy Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Superior customer experience
– The customer experience strategy of Milk Aavin in the segment is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
High switching costs
– The high switching costs that Milk Aavin has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to lead change in Finance & Accounting field
– Milk Aavin is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Milk Aavin in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Digital Transformation in Finance & Accounting segment
- digital transformation varies from industry to industry. For Milk Aavin digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Milk Aavin has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Low bargaining power of suppliers
– Suppliers of Milk Aavin in the sector have low bargaining power. Supply Chain Optimization at Madurai Aavin Milk Dairy has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Milk Aavin to manage not only supply disruptions but also source products at highly competitive prices.
Sustainable margins compare to other players in Finance & Accounting industry
– Supply Chain Optimization at Madurai Aavin Milk Dairy firm has clearly differentiated products in the market place. This has enabled Milk Aavin to fetch slight price premium compare to the competitors in the Finance & Accounting industry. The sustainable margins have also helped Milk Aavin to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Milk Aavin has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Milk Aavin has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Effective Research and Development (R&D)
– Milk Aavin has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Supply Chain Optimization at Madurai Aavin Milk Dairy - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Organizational Resilience of Milk Aavin
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Milk Aavin does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Weaknesses Supply Chain Optimization at Madurai Aavin Milk Dairy | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Supply Chain Optimization at Madurai Aavin Milk Dairy are -
Aligning sales with marketing
– It come across in the case study Supply Chain Optimization at Madurai Aavin Milk Dairy that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Supply Chain Optimization at Madurai Aavin Milk Dairy can leverage the sales team experience to cultivate customer relationships as Milk Aavin is planning to shift buying processes online.
Lack of clear differentiation of Milk Aavin products
– To increase the profitability and margins on the products, Milk Aavin needs to provide more differentiated products than what it is currently offering in the marketplace.
High cash cycle compare to competitors
Milk Aavin has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Supply Chain Optimization at Madurai Aavin Milk Dairy, is just above the industry average. Milk Aavin needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
Interest costs
– Compare to the competition, Milk Aavin has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
Slow to strategic competitive environment developments
– As Supply Chain Optimization at Madurai Aavin Milk Dairy HBR case study mentions - Milk Aavin takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Slow decision making process
– As mentioned earlier in the report, Milk Aavin has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Milk Aavin even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Milk Aavin is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Supply Chain Optimization at Madurai Aavin Milk Dairy can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Workers concerns about automation
– As automation is fast increasing in the segment, Milk Aavin needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High dependence on star products
– The top 2 products and services of the firm as mentioned in the Supply Chain Optimization at Madurai Aavin Milk Dairy HBR case study still accounts for major business revenue. This dependence on star products in has resulted into insufficient focus on developing new products, even though Milk Aavin has relatively successful track record of launching new products.
Need for greater diversity
– Milk Aavin has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Supply Chain Optimization at Madurai Aavin Milk Dairy | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Supply Chain Optimization at Madurai Aavin Milk Dairy are -
Lowering marketing communication costs
– 5G expansion will open new opportunities for Milk Aavin in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Finance & Accounting segment, and it will provide faster access to the consumers.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Finance & Accounting industry, but it has also influenced the consumer preferences. Milk Aavin can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Leveraging digital technologies
– Milk Aavin can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Building a culture of innovation
– managers at Milk Aavin can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Finance & Accounting segment.
Buying journey improvements
– Milk Aavin can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Supply Chain Optimization at Madurai Aavin Milk Dairy suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Milk Aavin can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Supply Chain Optimization at Madurai Aavin Milk Dairy, to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Better consumer reach
– The expansion of the 5G network will help Milk Aavin to increase its market reach. Milk Aavin will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Milk Aavin to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Milk Aavin is facing challenges because of the dominance of functional experts in the organization. Supply Chain Optimization at Madurai Aavin Milk Dairy case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Milk Aavin can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Learning at scale
– Online learning technologies has now opened space for Milk Aavin to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Using analytics as competitive advantage
– Milk Aavin has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study Supply Chain Optimization at Madurai Aavin Milk Dairy - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Milk Aavin to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Manufacturing automation
– Milk Aavin can use the latest technology developments to improve its manufacturing and designing process in Finance & Accounting segment. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Threats Supply Chain Optimization at Madurai Aavin Milk Dairy External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Supply Chain Optimization at Madurai Aavin Milk Dairy are -
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Regulatory challenges
– Milk Aavin needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Finance & Accounting industry regulations.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Milk Aavin needs to understand the core reasons impacting the Finance & Accounting industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Milk Aavin will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Barriers of entry lowering
– As technology is more democratized, the barriers to entry in the industry are lowering. It can presents Milk Aavin with greater competitive threats in the near to medium future. Secondly it will also put downward pressure on pricing throughout the sector.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Milk Aavin can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study Supply Chain Optimization at Madurai Aavin Milk Dairy .
High dependence on third party suppliers
– Milk Aavin high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Milk Aavin in the Finance & Accounting sector and impact the bottomline of the organization.
Consumer confidence and its impact on Milk Aavin demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Milk Aavin business can come under increasing regulations regarding data privacy, data security, etc.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Supply Chain Optimization at Madurai Aavin Milk Dairy, Milk Aavin may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Finance & Accounting .
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Milk Aavin.
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Milk Aavin in the Finance & Accounting industry. The Finance & Accounting industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Weighted SWOT Analysis of Supply Chain Optimization at Madurai Aavin Milk Dairy Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Supply Chain Optimization at Madurai Aavin Milk Dairy needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Supply Chain Optimization at Madurai Aavin Milk Dairy is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Supply Chain Optimization at Madurai Aavin Milk Dairy is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Supply Chain Optimization at Madurai Aavin Milk Dairy is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Milk Aavin needs to make to build a sustainable competitive advantage.