Information Directing Delivery of TINE Lettmelk

This part shows how information is provided and used at sorts to transform the TINE Lettmelk as described in the previous part.

Negotiating production volume of the farm

The basis for producing and distributing TINE Lettmelk is that a more essential long-term planning is carried out. The amount of raw-milk produced at the dairy farm is regulated in accordance with government subsidy initiatives involving the following actors and type of information communicated, as shown in fig. 5.8 below:

Fig. 5.8 Negotiating production volume of the farm (Double-headed arrows indicate information exchange)

Dairy farmer Organisation

dept. at dairy TINE

Norwegian government

Production quotas

Farmer organisations Negotiations and agreement regarding

milk subsidies

Each year, the farmers’ organisations and the Norwegian Government negotiate an agreement regarding farm subsidies. The amount of these subsidies also regulates the total volume of raw-milk that is produced. This agreement represents the basis for calculating raw-milk process and production volumes at each farm producing raw-milk. At each dairy, the organisation department informs farmers helping them to produce in accordance with production quotas.

Production planning at the dairy

Production planning plays an important coordinating function by laying the grounds for carrying out sorts. This activity involves the following actors and types of information as shown in fig. 5.9 below:

Fig. 5.9 Production planning of Lettmelk

At the dairy, production of milk goods starts each morning based on a forecast. These forecasts are made using the MOVEX ERP system by logistics planning personnel working in the TINE Logistics department and are based on historical data that are adjusted for promotional campaigns, holidays, and market trends. The sales department receives orders after production has started. Around noon, the total demand of the day becomes apparent and production volume is adjusted so that the production of TINE Lettmelk meets the orders of that day.

Information about collecting raw-milk at the farm:

The main actors and types of information involved in collecting milk at the farm are shown in fig 5.10 below:

Dairy production

dept.

TINE Logistics dept.

Dairy sales dept.

WILAB production control

system MOVEX ERP

system Production

forecasts MOVEX ERP

system Sales orders

Fig. 5.10 Information about raw-milk collection at the farm

The truck driver follows a set transport route. Each farm is visited 3 times a week by the milk collection truck. This truck has an onboard computer that registers the milk collected at the farm facilities. The truck computer is also provided with information to be communicated to the farmers. It produces a receipt informing about the amount collected, quality assessment of the previous collection, and other handy reminders from the regional TINE dairy the farmer is affiliated with. The truck driver has a mobile phone that may be used to re-route the truck or provide last-minute information to the truck driver. The truck also has an on board compartment that stores trays of raw-milk samples. From each delivery, two samples are placed into small cups that have a bar-coded label attached produced by the truck computer. Once every second month, each farm also delivers a set of similar cups of samples, one from each producing cow, attached with labels produced by the truck computer and previously provided to the farmer. These samples are sent to the TINE livestock control department at Ås.

Ordering by the retailer:

The actors and types of information involved in ordering from a retailer are shown in fig. 5.11 below:

Fig. 5.11 Ordering TINE Lettmelk

The dairy sales department has representatives who every morning call up customers according to a phone list provided by the MOVEX ERP system.

TINE Øst supplies milk to various kinds of customers; HORECA (Hotel-Dairy sales

department Retailer

Order MOVEX ERP

system

TINE product

folder

Dairy Milk

farmer

Truck computer produced receipt Routing

schedule

restaurants-catering), small kiosks, and food-product retailers, for instance, are important customers. The food retailers expect the daily call from TINE at approximately the same time each day. Prior to this call, the retailer personnel must estimate the needed volume of TINE products to be delivered later that same day. This takes the staff at a large, full assortment supermarket about ½ - ¾ of an hour every morning. The retailer has a binder containing a product list that includes product presentations, names, and numerical product codes used to assist in the daily registering of the stock of TINE products.

The retailer orders TINE products through a manual process. TINE Lettmelk is one of about 250 products covered on the order list provided to each TINE customer. On the list, each product is indicated with a 4-digit product number, a text describing product name and type, including the size of the consumer packages, and the quantity of consumer packages in each distribution-level package which at this stage of the flow functions as a logistics unit. TINE Lettmelk is registered in units of blue plastic trays or roll-racks. During the daily morning phone conversation, the sales representative at TINE promotes products that according to statistics may be selling poorly, attempting to discuss reasons for this and also trying to sell a few extra units of each product. TINE Lettmelk is viewed as a simple and well-known product. Product queries or quality complaints regarding TINE Lettmelk are therefore rare; hence, TINE Lettmelk is, in fact, only discussed with respect to order volume.

Informing about delivery to retailers:

Informing about delivery of goods to the retailer involves the following actors and types of information as shown in fig. 5.12 below:

Fig.5.12 Informing about the delivery to the retailer

The MOVEX ERP system creates all the documents and labels needed to deliver Lettmelk to retailers. When orders from all the customers have been

Dairy

MOVEX ERP system:

• Picking list

• Transport labels

• Transport document

Retailer

MOVEX ERP system:

• Order list

• Invoice

received, the information system automatically creates picking lists that are used to load the various trucks. These lists are used by about 40 terminal workers at TINE Øst Dairy in Oslo to place the various products ordered by each customer at a designated location assigned to a specific truck. The information system also produces a transport document that is used by the truck driver. This document contains information concerning the time and date of the transport, how many roll-rack containers and other packaging forms are loaded, the destination of each of these packaging units, and the name of the supplier, a TINE dairy.

The driver uses this freight bill to deliver the packages according to a designated route. The number of locations on a route varies from 2-35, depending on the size of the orders. Visual discrepancies in product quality are written on the freight bill. A transport label containing only destination information used by the truck driver is attached to roll-rack containers holding an assortment of products. Roll-rack containers carrying only one product type are not provided with a label. The driver must pick up the quantities of entire roll-racks at a designated location in the terminal. The freight bill used by the driver contains the names and quantities of the different items that have been ordered and which of these are contained in the transport. The driver uses this document, together with the freight bill, to verify the goods in the transport. The dairy sends a monthly invoice to each of its retailers based on the order lists.

Informing about the product by the retailer

At the store, the retailer informs consumers about TINE Lettmelk, based on information received from TINE. This information exchange involves the following actors and types of information shown in fig. 5.13 below:

Fig. 5.13 Informing about TINE Lettmelk at the supermarket

Dairy Retailer Household

Order list, invoice

Label on shelf and product

In-store information system

A retailer representative receives the goods and signs the order document at the supermarket. The goods are then moved into the store display area. The truck driver returns a copy of the signed order to TINE Øst. The retailer has already registered the ordered amount in the store computer system, and now the delivery is verified. Later, the retailer receives an invoice for the delivered amount at regular intervals. When TINE Lettmelk is purchased, this is registered in the store computer system. Even though both orders and sales are registered in this system, it is not used to calculate the inventory of TINE Lettmelk. The retailer usually places TINE Lettmelk carried in the roll-rack containers behind a glass door of the store’s refrigeration compartment. The only information provided at the retailer’s to the customer regarding TINE Lettmelk is a label that reads “TINE Lettmelk” and the volume of the packaging, together with the price, and is located in the close vicinity of the compartment containing the products. At the store, the consumer selects the milk product, which is displayed together with other TINE and competing dairy products.