Last month, offices around the country closed their doors for the holidays. But across the co-op, members and employees kept working to pick up milk from farms and find processing outlets each day.
“The cows don’t stop milking, so we don’t stop running,” says Neha Shah, plant manager at Land O’Lakes’ Tulare plant in California. Tulare is considered a balancing facility, meaning that when buying partners have ebbs and flows in their production cycles, milk can be brought back to Tulare, where they’ll take it to process.
Between selling milk to partners and processing it into dairy products, we don’t just manage billions of pounds of milk, we provide a reliable outlet through seasonal fluctuations, adverse weather and during holidays where others take the day off. It’s a feat few companies can achieve, and many don’t have to.
For us, it’s one of our primary responsibilities as a cooperative -- providing market access and adding value to member milk production. Pulling it off takes incredible planning and preparation, constant maneuvering and unwavering dedication.
Symphony at the processing plant
Our Tulare plant possesses unique energy, history and heritage. “There’s a sense of pride when it comes to tenure,” Shah explains of the 100-plus-year-old plant. “We have employees who have been here over 40 years.”
Shah has spent her career in food manufacturing, mostly in operations. She loves the dynamics of large facilities. And Tulare is just that -- stretching 10 city blocks and processing millions of pounds of milk a day.
“I love that I work for a large-scale facility, but the big piece for me is the interaction with the entire site,” she says. “In a facility of that scale, it’s going to take all 400 people on-site to make it happen.”
This mighty team needs to collaborate especially closely given the complex, multi-step processes that happen at the plant. When milk enters the plant, there are a couple avenues for it: it can go into the evaporation and drying process to become powder, or it becomes fluid milk. In either path, cream is skimmed off the milk, that cream becomes butter and buttermilk, and the buttermilk is then dried and becomes powder.
Shah explains, “So when one entity comes in, we make several different products from it...it’s almost like you have a symphony, and different groups of instruments are playing at a time. You’re trying to essentially compose a piece out of it. Every step of our process is contingent on the success of the prior.” The more volume coming in, the more critical it is for the plant team to play in tune with each other. The Tulare plant runs all day, every day, which is not the case for many manufacturing facilities. The plant sees upticks when other facilities are closed for things like maintenance or holidays. Spring is the heaviest season of all, when spring flush -- the time of year when cows are producing at the highest levels -- brings on an excess of milk.
Shah’s team takes full advantage of any flexibility they have during relatively slower periods to inspect and improve processes and equipment. Shah says, “The last few months we’ve been getting all our equipment dialed in to prepare for the 2020 flush.”
She credits communication throughout the co-op as another factor to success: “On a daily basis we work with milk sourcing, transportation and demand planning.”
What ultimately connects Shah’s team to the members whose milk they process, is the process that happens before milk gets to Tulare.
Co-op sourcing connects members' milk to plants and partners
“It’s very rare to have any waste -- if it happens once a year, that’s too much,” says senior sourcing director Christian Edmiston.
Edmiston’s team sources about 13 billion pounds of milk annually from Land O’Lakes member-owners. About half of that goes to our own production facilities -- like Tulare -- and becomes butter, cheese, milk powder and other ingredients. The other half is sold to third-party partners: some large, well-known brands and other, smaller customers. The varying sizes and types of partners add a layer of complexity to the sourcing team’s job.
Edmiston says, “One customer, we sell them roughly 6 million pounds of milk daily -- you’re talking 120 trucks of milk a day. And then we have other customers who are a truck a day, or less, even. We work with them all. All those customers have varying ways they do business and different needs, and we try to be responsive to all of them.”
The sourcing team develops annual contracts with customers. But because of the nature of dairy, they can’t predict every transaction. Edmiston’s team plays a juggling game to balance Land O’Lakes’ and customer’s needs through high and low production periods.
The sourcing team faces dairy-specific challenges, like the spring flush that Shah and her team in Tulare experience. In the spring flush, when pasture conditions improve, every processing facility is full. Christmas and Thanksgiving require special planning, too, because customers take downtime during the holidays.
Says Edmiston, “Think about chocolate makers. They gear up really hard heading into Christmas. Then once Christmas happens, they let up, take a week or two off — and that doesn’t necessarily help us. We work with our customers to schedule that downtime, so it doesn’t hit when everybody else is going to be down, which helps us process all the milk we’re getting from farmers.”
Another element of complexity that sourcing must plan around: customers can decide whether or not they take product; they can even cancel planned orders.
“I can’t tell you how many times we have somebody new come in, and I always have to answer the question: Why don’t we just stop taking milk?” Edmiston says, “Farmers put in a lot of blood, sweat, and tears. And our job is to find a home for that milk regardless of what kind of headwinds we’re facing...we’re working for the farmers.”
The advantage of the co-op model is that we have a team dedicated to ensuring milk is sold and we have the partnerships with buyers.
“Relationships are really important in the dairy industry,” says Edmiston. “Our plant might be down today, but their plant might be down tomorrow. They’re going to lean on us, and we’re going to lean on them.”
Year-round, the milk supply team works every day, managing relationships with partners, monitoring inventory at Land O’Lakes production facilities and forecasting.
Of forecasting, Edmiston says, “Doing this in isolation is not going to end up in the best forecast. If we don’t get that right, and we get surprised, it causes us to have to scramble. We need to use all the information we’ve got.”
Forecasting requires special intel from producers, like their plans for the future that might affect production. Over the past few years, Land O’Lakes has worked to formalize this process and improve the way they connect with producers.
Production predictions that make it possible
“We put a program in place so we could have an open dialogue with our members to understand where they are today and their growth plans for the future,” says senior director of member relations Glenda Gehl.
Gehl’s member relations team ventures into all parts of the business to support members, including managing business risk, optimizing milk quality, navigating state inspections and providing a host of business development services. When it comes to the milk supply chain, member relations staff work with dairy producers to gauge expected production levels.
Gehl says, “We understood that our members hated milk hitting the ground. But our predictions for avoiding that were more haphazard, more of a grassroots effort.”
Gehl’s team would -- and still does -- work locally to keep a pulse on how much milk members plan on producing. However, the lack of a formal program made forecasting and planning difficult. This new program changed that.
“It’s definitely been a journey,” Gehl says. “Because as a co-op, we were all across the board on how we predicted how much milk each producer would have month in and month out. We needed to add some rigor to ensure we were doing it the same.”
Now, members and member relation staff participate in planning on a yearly basis, taking into account historical production data and future growth plans.
That consistency is key, because member relations must be able to clearly share estimates with other parts of the co-op. Gehl’s team works with the milk supply team, the receiving staff at plants and the transportation team to make sure the co-op balances and finds profitable homes for all milk.
Says Gehl, “It’s quite the collaborative and cross-functional group that needs to work together on that.” That may be an understatement.
The co-op mission is the engine
“If I had to start my career all over again, I would start here.” Shah reflects. “At other companies, you’re used to just ordering the raw materials you need and producing accordingly. You don’t need to think about everything -- and everyone -- along the way that affects the final product.”
Seasonality, shifting temperatures, feed, milk composition and partner fluctuations are just some of the countless variables in the milk supply chain. It’s no wonder it takes a cross-functional team of hundreds to accomplish the incredible feat of placing every drop of milk.
As a farmer-owned co-op, we understand the power of partnership in tackling complicated challenges. Our commitment to farmers fuels milk supply magic, and it reflects our grander mission: feeding human progress.
Says Shah, “Being a part of the co-op and actually seeing who your owners are -- versus a company with multiple shareholders -- it gives you a sense of appreciation. That’s where learning comes from.”