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Improving Milk cooperative governance through ERP System

Authors:

Abstract

India is one of the highest milk producing country in the world. India has largest population of bovines. In India milk cooperative sector is well penetrated and well established then also India is facing deficiency of milk. India is net milk importer. Main reason behind this is milk cooperative and cattle farms are operating at very low efficiency and there is lack of governance. In this research paper through secondary study we have tried to explore how an ERP system can improve the corporate governance of milk cooperative. Here we have discuss the traditional way of operating milk cooperative and we have identify the areas in which milk cooperatives can implement ERP system to improve the milk cooperative governance.
Improving Milk cooperative governance through ERP
System
Ravi Jadawala[1], Dr. Satish Patel[2]
________________________________________________________________________________________________________
Abstract: India is one of the highest milk producing country in the world. India has largest population of bovines. In India milk
cooperative sector is well penetrated and well established then also India is facing deficiency of milk. India is net milk importer.
Main reason behind this is milk cooperative and cattle farms are operating at very low efficiency and there is lack of governance.
In this research paper through secondary study we have tried to explore how an ERP system can improve the corporate
governance of milk cooperative. Here we have discuss the traditional way of operating milk cooperative and we have identify the
areas in which milk cooperatives can implement ERP system to improve the milk cooperative governance.
Index Terms: Dairy ERP System, Milk cooperative governance
________________________________________________________________________________________________________
I. INTRODUCTION
India is undoubtedly the largest producing milk country of world. India has highest population of cow and buffalo. A Cattle
farming is one of the major industry in India. A huge number of populations have secondary income is from cattle rearing. Many
weak, landless farmer, women etc have their primary income from cattle farming.
Though India is number one milk producing country then also India is not able to meet its local milk demand. The average milk
production per cow and buffalo per year in India is too low. The cost of milk in India is too high. Indian cattle farm is working on
very low efficiency.
Dairy Industry has seen major issues at bottom of the pyramid. Milk cooperatives are functioning at very low efficiencies. Milk
cooperative have seen issue like lack of transparency in milk union, opportunistic management at milk union and wastage and
hygiene issue. To overcome these issues Milk cooperative should improve it governance by adopt better control mechanism
1
.
II. TRADITIONAL MILK COOPERATIVES OPERATION
2
Traditionally milk cooperatives operation can be divided into two parts one is Milk trading and second is providing input services.
Following are the different operations conduct by milk cooperatives.
Milk Trading
o Reception
o Testing milk sample
o Dispatch of milk to milk union
o Payment
o Accounts keeping
o Distribution of Profit
Input services
o Animal health coverage
o Breeding
o Supply of cattle feed
o Fodder development
o Extension services to producer members
Milk Trading
1
(Ravi Jadawala & Dr Satish Patel, 2017)
2
(Meenesh, 2014)
Reception of milk
Milk cooperative has network of milk collection center at each milk collection center number of milk producer each day
in the morning and evening brings milk in their own container. An employee at milk society takes the sample of milk and
conduct testing to identify the quality of milk. If milk quality is up to the mark he takes the weight and measurement of
milk and collect it in milk can or directly in to the cooler. Representative at milk society also take note of milk collected
in purchase register and note the purchase detail in milk producer card/pass book.
Testing of milk
Usually Gerber Centrifuge/Electronic Milk tester is used for the milk fat testing, first the society collect the milk samples
and then test this sample as per predefine procedure. After testing each sample results are recorded against the sample
number. This will avoid any biases and retain milk producer confidentiality.
After the milk collection is over, a final sample is drawn from total quantity of milk. This sample is tested for fat by
lactometer and all the reading is noted in the test register. All the accessories and equipment used for milk collection and
milk testing are cleaned thoroughly with detergent solution and warm water.
Dispatch of milk
All the milk cans are covered tightly with lids and the milk cans are loaded in the milk van / truck. On the schedule time
staff of the truck delivers takes the dispatch slip, fat details, letters from milk union, etc as indented by the society. This
is process done on time to avoid any delays. The staff also unloads the cleaned empty milk cans received from the dairy
plant for the use of the society for the next batch of milk collection.
If milk society has installed AMCU / Bulk Cooler, the milk tanker from chilling centre comes once or twice in a day as
per requirement to lift the chilled milk from milk collections center.
Payment for the milk
The milk union depending upon the policy it adopts on pricing decides the price of the milk. Quality and quantity form
the basis for the payment. Normally a price chart or ready reckoned is prepared and supplied by the union to the
societies. The society pays the pourers daily/weekly/after every ten days as per the decision of the managing committee.
The relevant entries are made in the Card/Pass Book of the members and the registers of the society.
Milk union generally pays the price of milk so procured from societies through bank advice on a regular interval i.e.
weekly, every ten days as the case may be. This frequency is generally not changed and is same for all the societies.
Accounting
There is a set of a standard registers, most of which are to be completed daily. The others are completed as and when any
transaction takes place. It is the responsibility of the concerned staff of the society to complete the records on time and
regular basis. All the records are to be countersigned by the Secretary/ Chairman as per the decisions of the society and
as required under the provisions of bye-laws. The registers and formats are designed in such a way that they reflect the
volume of business and financial standing of the society at any given time.
A society appoints a local person as an internal auditor who audits the transactions made by the society on regular basis.
The society prepares its monthly accounts statement for the managing committee meeting and also other accounts
statements on quarterly basis. The annual accounts are prepared for statutory audit.
Cleanliness
Milk is a highly perishable commodity. In order to have increase the shelve life raw milk and to avoid spoilage from
contamination milk society maintains cleanliness through various like cleaning of the utensils, hygiene habit of staff,
disinfecting equipments, accessories and building.
Milk sale
The cooperative managing committee is authorized to fix the quantity and price of milk that to be sold locally. The
general fat in the milk, local demand etc. determines the price of milk. The price can be varies from season to season.
Distribution of profit
Other than daily milk purchase payment, the society at the end of the year distributes dividend on paid up share capital.
The major portion of society’s income is paid in the form of bonus to the milk producers proportionate to the value of
milk supplied by them during the year.
Inputs Services
Apart from milk trading milk cooperative has other important work is to provide consultation to the milk producers regarding
milk production enhancement activities. Generally the initial investment is done by milk unions and services are provided to the
members of cooperative at no profit no loss basis. The cooperative also provide other input services like
o Artificial Insemination (AI)
o Veterinary First Aid (VFA)
o Sell semen doses
o Sell veterinary medicine
o Sell cattle feed, fodder seed to the milk producers on cost
o Cattle insurance and other group insurance schemes
III. MILK COOPERATIVE AND ERP IMPLEMENTATION
3
Dairy industry in India is passing through a challenging phase. In dairy it is difficult to manage the all kind of resources. It is next
to impossible to manage the milk procurement and distribution supply chain without any central system. In order to manages all
this aspects it is important to implement a central system that can manage all the resources and supply chain of dairy industry.
Milk cooperative activity
Use of ERP system
Reception of milk, Testing milk sample
ERP system used in recording milk quantity at the time of
procurement along with the milk procedure name
Society can record detailed test sample results central system
Through ERP system society can end e receipts, SMS and
print the passbooks
From ERP system milk cooperative society can audit the
historical procurement data
Dispatch of milk to milk union
ERP system can create and user can print detail procurement
report
ERP system can helps in recording truck loading and truck
dispatch time and also report this to milk union and dairies
ERP system helps societies to get exect time of milk
delivery
ERP system helps in tracking milk vas routes through GPS
Payment
ERP help is remitting payment through payment gateway.
Hassel free payment history maintenance
Accounts and book keeping
Easy to insert accounts related data
Easy to retrieved Accounting data
ERP can auto generate reports like P&L, general ledger etc.
Auditor can easy search historical accounting data. This ahs
reduce fraud and improved transparency
Distribution of Profit
Based on stored data ERP system can generate milk
producer wise dividend report. And also help in auto
remitting.
3
(Satish Patel & Rajiv Patel, 2018)
Input Services
ERP system can track all king of input service.
EPR can managing inventory of vaccines, Cattle feed and
semen
Reception of milk, testing milk sample
In traditional procurement process milk collection, milk sampling, milk sample testing, registration, book keeping and payments
all this task are executed independently. Due to no centralized system there is no synergy among the procurement process.
ERP can help milk cooperatives in merging multiple procurement tasks in one. Implementing ERP and automated milk collection
system will helps in merging multiple tasks. Milk producer bring milk to society her they have to fill the collection vessel. At
same point a representative will test the milk quality and system will automatically note weight and quality of milk. Instantly all
the details related to milk is noted in system and milk producer get e-recipe or representative will print the passbook.
Dispatch of milk to milk union
After milk collection society can take a print of procurement details and also note the truck loading and dispatch time in system.
This will help milk union and dairies in tracking milk vans. ERP give tight control on whole dispatch process
Milk societies can record the truck loading, truck dispatch time. After milk van get dispatched milk societies can track milk van
route with the help of GPS system. This can avoid any malpractices of driver. After truck reached its destination milk union and
dairies can record in central system this data can be accessible by milk societies.ERP can help in avoiding malpractices and
reduce the possibility of theft and delay of milk deliveries.
Payments
ERP system can help milk cooperative in remitting payments through payment gateways and keeping track of it. Milk producer
can track their payment detail from android application.
Accounts and book keeping
Accounting and book keeping are two most important activities of milk societies. ERP system can easily store all the financial
activities in its centralised database and accountants can easily insert and retrieve this data. Through ERP system milk cooperative
can generate general ledger, P&L statements etc from ERP very easily. Chartered accountant, Internal and external auditor can
easily retrieve and audit milk society accounting data from ERP. This has increased transparency, reduce frauds and improve
sustainably of milk societies.
Distribution of Profit
In milk cooperative all the members get the share of dividend from the yearly profit of milk cooperative society. Dividend
distributed based on the value of milk producer has supply to milk society. Society considers both quantity and fats of milk based
on this milk cooperative distributes dividend to its member. ERP can store and calculate dividend of each member and create
detail report on that. ERP can also communicate dividend detail to member through mobile app.
Input Services
Apart from major activities milk cooperative also work servies of artificial insamination, Veterinary doctor facilty, selling semen,
cattle feed, cattle vaccines etc. ERP system can help in maitaing purchase and sales details. ERP system also helps in managing
invetory and keeping records for future use.
IV. CONCLUSION
In above study we have discuss the traditional that tradition way of operative milk cooperative without any centralized
computer system ERP System
At present in India many milk cooperative societies are running in a traditional way. These cooperatives are working
at very low efficiency. There is lack of centralized control, Synergy and governance. All this lead to losses, washing
away member investment, mal practices etc. To overcome these Milk cooperative issues, a centralized ERP system
should be implemented.
Centralized ERP system can improve the control over Milk society, I reduces fraud and malpractices this eventfully
improve the trust member on society. ERP systems helps milk cooperative in developing, implementing and executing
good governance with appropriate control over the organisational activity.
V. REFERENCES
[1] Jadawala, Ravi & Patel, satish (2017), Challenges of Indian dairy industry. Indian journal of allpied research , 516.
[2] Meenesh. (2014, September 12). Dairy Cooperative Society, Milk Union, Milk Federation : Relations and Functions .
Retrieved 03 09, 2018, from Dairy Knowledge Portal: http://dairyknowledge.in/article/dairy-cooperative-society-milk-
union-milk-federation-relations-and-functions
[3] Patel, satish & Patel, Rajiv (2009 ), Effectiveness of Information Communication Technology in Integrated Rural
Development Management, NICM Bulletin, July-Sep, Page 11-19, ISSN : 2249-2275
AUTHOR:
[1] Ravi Jadawala Pursuing M.phil in Rural Management, Faculty of Management and Technology at Gujarat Vidhaypith
[2] Dr. Satish Patel, Assistant Professor, Dept. of Rural Management, Faculty of Management and Technology at Gujarat
Vidhyapith
Centralized
ERP at Milk
coopratives
Reception
of milk
Testing milk
sample
Dispatch of
milk to milk
union
Payments
Accounts
and book
keeping
Distribution
of Profit
Input
Services
Article
Full-text available
We have conducted academic research on ERP modules use in milk cooperatives. Our study was oriented around milk cooperatives and cattle farmers. Objective of study was to understand how ICT base ERP system can improve coordination between milk cooperative and cattle farmers. Based on study we have proposed ICT base ERP modules. We have conducted our research in four different district of Gujarat. We have collected primary data from cattle farmer as well as milk cooperatives. In this research paper we will discuss research details and also discuss proposed ERP modules.
Article
Full-text available
India is undoubtedly the largest milk producing country of world. India has highest population of cow and buffalo. Since Indian independence dairy industry is showing steady and robust growth rate of 3 percent. Sector has seen huge improvement in supply chain and milk processing facilities. Despite of robust growth, cattle farms has not adopted modernization and cattle farms are facing multiple challenges. In this article we have discuss different challenges of Indian dairy industry and we have tried to analyze challenges through frameworks like SWOTanalysis and Potter five force model.
Dairy Cooperative Society, Milk Union, Milk Federation : Relations and Functions
  • Meenesh
Meenesh. (2014, September 12). Dairy Cooperative Society, Milk Union, Milk Federation : Relations and Functions. Retrieved 03 09, 2018, from Dairy Knowledge Portal: http://dairyknowledge.in/article/dairy-cooperative-society-milkunion-milk-federation-relations-and-functions