How digitalization helps the dairy business in scalability?

Every business wants to scale until the actual planning and strategizing begins. Scaling a dairy business is no different. 

Scalability in the dairy business is defined by the potential of the business to be profitable and efficient and expand irrespective of the market challenges.

In this article, we’ll discuss;

  1. What are the issues faced by the dairy business when scaling?
  2. How does digitalization help deal with these issues?
  3. What digital technologies be used to automate operations and scale up the business?


What are the issues faced by the dairy business when scaling?

The dairy business is also referred to as “morning needs services” where the customers want to get the order delivered in the morning or in the evening. 

Top 5 issues faced by dairy businesses

  • Order management – It is a hectic and tedious task to handle the new or modified order manually and may have a chance of human errors. Any error in order data can lead to a mismatch in the inventory and delivering the wrong orders to the wrong customers. This can also lead to wastage of stock.
  • Payment collection, and reconciliation- Collecting payments is one of the major issues faced by the dairy business. Manual payment collection can lead to delayed payments and result in negative cash flow. Lack of late payment reminders or missing paper invoices can lead to payment discrepancies.      
  • Calculating stock requirements manually- Manually calculating the future stock requirements is difficult and can result in missing out on stocks. Both insufficient stock and excess stock can lead to losses. Insufficient stock can lead to unfulfilled order demand and excess stock can lead to wastage of inventory.
  • Lack of live delivery status update- Dairy businesses and customers find it difficult to track the delivery person and delivery in real-time. A lack of real-time order status updates can reduce the customers’ experience. 
  • Issues in order dispatching- Managing and dispatching orders is a time-consuming process and is also exposed to manual errors. Manual management and dispatching require hiring extra staff which can increase operational costs. 

How do these issues impact the scalability of the business?

  • Low customer satisfaction score- The manual ordering process, rigid payment structure, and lack of transparency between the customers and the business can create customer disputes and decrease the CSAT of the business. Low CSAT, low customer retention, a high churn rate, and low customer lifetime value lead to weak brand reputation which definitely has a negative effect on the scalability of the business.  
  • Negative cash flow- Payment collection and reconciliation can be delayed due lack of late payment reminders. Limited payment options and manual cash collection can lead to delays in payments and result in negative cash flow and impact scalability.
  • Higher operation cost- When a business decides to scale up, funds and efficient business operations are the key factors. The high cost of deliveries, labor costs, and, manual data management are cost-ineffective. Higher operational costs can impact the business’s scalability plan. Inefficient business operations restrict business owners from sparing time for planning and strategizing in order to scale. 

How does digitalization help deal with these issues?

Digitalization brings all business operations from pen and paper into the systems. This removes manual task handling and allows the business to focus on planning and strategizing on the scalability of the business.  

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Features of digital technology that can help in the scalability of the dairy business

  • Auto-order management- Customers can place a new order or modify the existing order from the customer application. Any new order or subscription placed or modified will be auto-updated on the admin panel. This feature reduces the chances of human errors and allows accurate deliveries on time increasing the customer’s satisfaction scores. They can view the order summary and invoices increasing transparency and brand value. 
  • Business reports- Incorporating technology into the business generates automated business reports like- sales reports, stock forecasting, sales analytics, customer sentiments and analytics, and distribution and logistics. These reports help businesses in understanding the overall health of the business and plan strategies to scale up the business. 
  • Multiple payment options- Using technology in the business provide flexibility in payment options. It allows customers to make payments both online (credit card, debit card, payment gateways, and wallets) and via cash. Offering flexibility in making payments improves the positive cash flow. 
  • Route optimization- Digital technology optimizes the delivery route and creates the shortest delivery path. Route optimization not only is time-efficient but also makes deliveries cost-effective.  
  • Real-time order tracking- Integration of technology allows businesses and customers to track delivery persons. Real-time tracking allows customers to track their orders and contact delivery person in case of delayed deliveries. This increases the customer’s experience and CSAT. 

What digital technologies be used to automate operations and scale up the business?

Digital technology plays a crucial role in simplifying business operations and making them cost-effective. Digitalization has allowed businesses to plan and strategize for scaling up according to the precise business data generated by digital technology.   

Digital technologies can help in achieving scalability:

  • Automated order management system- The order management system is an automated platform that centralizes, tracks, and dispatches all orders. This streamlines the order management process and minimizes the chances of human errors. The system sends real-time order updates to the customers as their orders are packed, dispatched, and delivered.   
  • Automated payment management system- Automation in payment management offers customers flexible payment options ensuring positive cash flow. The system also helps in payment collection, recovery, and reconciliation.  
  • Route-optimization software- Route-optimization software optimizes the delivery route and creates an order delivery sequence according to which the order is delivered which reduces the turnaround time. This not only is time-efficient but also cost-effective as it cuts-off the fuel costs.  
  • Delivery management software- Delivery management software allows customers and business owners to track order deliveries in real-time. Customers and delivery persons are in direct contact and can communicate in case of delayed delivery due to any emergency.    
  • Automated reporting software- Reporting software auto-generates business reports like sales reports and analytics (monthly or yearly), customer sentiments and analytics, and stock forecasting reports. This helps businesses to plan their scalability strategies based on these reports. 

Digitalization has successfully been able to cut off the extra business operational costs and made them more efficient and productive. Being profitable, productive, and efficient even when the market is unsuited are the traits of successful scalability. 

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