Innovating supply chain for greater social impact

When COVID-19 hit the United States, optimizing the supply chain for many industries became increasingly more important — particularly as it relates to food and other necessary consumables. The dairy industry, for instance, was suddenly faced with a huge shift in business as restaurants shut down, schools were closed, and consumers were dining at home. Food banks were also overburdened as those who lost jobs or access to meal programs at schools were suddenly seeking assistance, and the need for prompt delivery of additional supplies as well as a switch in delivery locations became more vital.

With this sudden shift in the supply chain and the need for businesses to make an immediate pivot, the question then becomes, is there ever a good time to make a greater shift toward sustainable practices? For many companies, the sustainability conversation is quite often viewed as a trade-off between improving the environment versus seeing positive business results. In reality, however, most organizations who adopt more sustainable practices realize all of these benefits and more concurrently. 

To take a deeper dive into supply chain innovations, we turn our lens on the dairy industry. Marty McKinzie, Vice President of Industry Relations at Dairy MAX, is passionate about agriculture and works with farmers to help them share important innovations in dairy production. Sustainability has long been an integral part of the agriculture industry because farmers live and work in the same location and it is inherent for them to want to protect the environment beyond just being the right thing to do.  

Marty gives us incredible insight into sustainability in the dairy industry. Topics include:

• What are the current sustainability challenges dairy farmers face today?
• What are the main obstacles for creating a sustainable supply chain for dairy?
• How has new technology helped the dairy industry become more sustainable?
• What is the business benefit/value for dairy farmers that are more sustainable?
• What do you think it’s going to take for more dairy farms to make large investments in sustainability?

He identifies some of the key challenges which dairy farmers face as it involves adopting more sustainable practices — including technology, the perishability of products, packaging, logistics, and more. 

Watch the video or read the transcription below.

TRANSCRIPTION

Jennifer Wong: Hi everyone. My name is Jennifer Wong. I’m the head of sustainability at Convoy. In this interview series you’ll hear directly from leaders on how they’ve transformed corporate cultures, demonstrated material value, and position their companies as sustainability leaders. Today, we have Marty McKinzie, VP of Industry Relations at Dairy MAX. Marty is passionate about agriculture and has deep ties to dairy. Today, he works with dairy farmers to help them share improvements in dairy production and also tremendous gains in sustainability for dairy. Welcome, Marty. 

Marty McKinzie: Well, thank you, Jennifer. Appreciate the opportunity to be here with you. 

Jennifer: Yes, very excited to learn so much about the dairy world from you. For those that maybe are less familiar with the dairy industry, could you share the current sustainability challenges that dairy farmers face today? 

Marty: Absolutely, and I think it’s important to understand a little bit about the industry. You know, there are a little less than 40,000 dairy farmers in the US today. The, you know, the farms are very different from, you know, what we remember, maybe from our grandparents or what we’ve heard stories, our parents or great parents living on the farm and food production I think, in general is something that is a little bit removed, you know, from most people’s experience. And so, I think that creates a challenge in itself in just the general understanding about [2:00] production agriculture and some of the technologies that are used today. And I think it’s important that, you know, the acceptance of technology, you know, we have that in virtually every other part of our life. You know, we want the fastest computers, we want the newest phones, we want, you know, the trendiest vehicles and so technology plays an important role in all of those products, all of those things that we use and enjoy so I think it’s frustrating, certainly at times, to not have some of the same opportunities that other industries are afforded as it relates to, you know, trust and acceptance of technology and those things. Second, you know, I think its certainly what all industries face is the cost of implementing some of these practices in order to, you know, return on investment, the benefit that is afforded from using those things certainly has to be understood and appreciated from top to bottom. 

Jennifer: I see. And at Convoy, as we started to dive into sustainability and really highlight different stories around how companies or leaders are really thinking about making progress in their sustainability journeys, oftentimes it’s coming down to the supply chain. Where that’s a huge leverage to be able to be more sustainable as a company. What are some of the main obstacles for creating a supply chain for dairy? 

Marty: That is a great question and I think, you know, first off its important to understand that the perishability of our product is a huge challenge but when you look at the nutrients that are [4:00] provided through dairy products, nonessential nutrients that are extremely important to growth and development throughout all stages of life, 3 out of the 4 nutrients concerns identified by the dietary guidelines for Americans are provided in dairy products as well and extremely important from a nutritive standpoint that dairy brings to the table. You know, obstacles certainly in the supply chain have revealed themselves more readily over the last 3 to 4 months through COVID-19 and some of the challenges that that has created. You know, our processing facilities and the makeup of our processing lines is very efficient. You know, and its not cheap to set those up so whenever there are, you know, supply chain issues as a result of a market or operation shift from the norm, it really creates a probably because we’ve got the packaging, the size of packaging, logistics as far as shipping and handling, all very very refined and there’s virtually no waste under normal circumstances so there’s not, you know, there’s not a lot of opportunity there to shift quickly whenever things change. And the perishability is factor in that, the packaging when restaurants and food service facilities were closed and many people were dining from home, cooking at home, you know, there was a huge increase in retail dairy sales at the grocery level but most of those items are packaged, you know, for home consumption. Eight-ounce packages of grated cheese, a gallon of milk, [6:00] you know, just very different from what you would have in a restaurant sized container or something that would be used in food service. So, I know that that, you know, that doesn’t speak to the day to day needs as it relates to the supply chain but I think it’s very top of mind for the dairy industry because of the recent challenges and we certainly don’t want any waste regardless of the circumstance. And so, I think that has really opened a lot of people’s eyes and I think innovation is needed, both at the production side, at the processing level and with packaging and transportation as well. So, I think there’s a lot of opportunity and I think there’s going to be a shift moving forward that’s going to put a greater focus on those things. 

Jennifer: Right. And that’s actually how Convoy and Dairy MAX kind of came to. The partnership came to light when we were able to team up and find a new way to bring Borden dairy milk to those in need through the mobile food distribution side instead of just the traditional supply chain of going from the dairy processor, to the food bank, and then to the mobile food distribution site. So, I mean there’s so many opportunities in a time of crisis, people are getting creative to really think about new ways to kind of deliver the products that they typically were moving previously. 

Marty: Absolutely and that’s been a huge benefit to the industry and to people in general, and I am certainly glad we were able to partner and do that. 

Jennifer: Right. So one thing that you’ve mentioned a few times is technology and that’s something I can certainly relate to where Convoy is using technology is using technology to really [8:00] bring more efficiencies to the trucking industry but I’m curious to hear more about technology in the lens of your world. Could you share an example of how technology has helped dairy become more sustainable? 

Marty: Absolutely, you know, water usage is extremely important. Renewable energy is something that I think is growing in all aspects of our lives and both of those are extremely important to the dairy industry. You know, many people don’t realize that water is used multiple times before it finally reaches its end use and its interesting the way that that cycle works because often times, water is used 3 to 5 times on a dairy farm and so, you know, even though, you know, water use is certainly something that many people point to as being an issue and as we move forward, you know, aquifer levels and weather patterns are going to increasingly become a concern but the fact that water has that many uses on a dairy farm before it finally ultimately goes back to water, the next feed crop or the dairy animal is exciting. Because the water is first used to cool the milk, its then recycled and reused in sanitation, from sanitation it’s often used as a flush or for washing down the barn and outside equipment, things like that, its collected in a lagoon and then from the lagoon [10:00] it’s used to water the crops, and so that’s just a typical example. Oftentimes there’s one or two other steps that may be included but what I just commented on is the typical cycle on every single dairy farm basically, so that’s important. We have dairy farms that, you know, are improving as the economy allows, updating their lighting, updating the fixtures on the farm that are more energy efficient as well. Coolidge practices are another example. You know, feed production is a very resource intensive part of a dairy farm and it’s extremely important as the nutrients and energy for the cow are really the foundation for the quality milk production that we have. So, looking at ways to improve our efficiency and our use as it relates to producing those feed stocks is important. Whether it’s using GPS technology on our tractors and equipment to make sure that we’re targeting the areas and really being the most efficient with the delivery of our seed, or our fertilizer, or the things that go into production of the crop is extremely important. And those are just a few examples, Jennifer, that I think highlight some of things. Many people don’t really think about the diversity that a dairy farmer has to have. I mean, they’re a little bit of an accountant, they’re a little bit of a mechanic, they’re a little bit of a veterinarian, they’re a little bit of just about everything. They have HR involved with their employees and how they manage their business. You know, there’s just a lot of different hats that a dairy farmer wears that I don’t think the average person [12:00] really understands or considers in the day. 

Jennifer: You’re right. I had no idea that those were the different functions that a dairy producer would have to really think about to operate their business. When you’re kind of naming all of these examples of ways that dairy has become more sustainable over the years, I think there’s several key studies showing that different industries are trying to be more sustainable, but I think one thing that kind of other business leaders who have maybe not started their sustainability journey yet really want to know is kind of what the business impact, or value these different businesses are seeing when they’re able to focus on sustainability so that they don’t think it’s necessarily a trade off either to focus on improving the environment or seeing business results, but when you do focus on sustainability, you can actually see all of these benefits at the same time. Could you share a little bit more detail around the business benefit on focusing on sustainability as a dairy producer? 

Marty: Sure, absolutely. You know, and I think that’s a great point, you know, dairy producers, dairy farmers forever have, just because it’s the right thing to do. I mean, dairy farmers, agricultural in general has long held the opinion that the place that they live, the place that they work is the most important thing and taking care of that, taking care of the land, taking care of the water, taking care of the air, taking care of their animals are all things that are very near and dear to their hearts. There’s a passion there within agriculture and the farming community that really runs deep because not only have they been passed down those things from their [14:00] parents, their grandparents, many times multiple generations, in agriculture, virtually every family is looking to continue that legacy and to pass those things on to their children as well. And so first and foremost I would say that it’s just the right thing to do and most dairy farmers have that opinion. You know, we’ve seen the dairy industry has been under a tremendous amount of stress over a number of reasons over the last 70 years. Economic stress, environmental stress, all of these have factored into, I think, the need for dairy farmers to become more efficient and they have. Increasingly, we have seen the efficiencies that have resulted in a tremendous benefit to sustainability just through the competitive nature of making more milk with less resources. A lot of that is driven by economics, you know, in order to survive, there’s basically three tiers to sustainability. You know, it’s the economy, its society, and it’s the environment. And, you know, being able to be successful in all three of those areas is really the definition of successful sustainability. And I think, you know, beyond doing the right thing as it relates to sustainability, a big big piece of that is increasing the level of trust that the consumer has in where their food comes from, and particularly from dairy products. And that is increasingly becoming, you know, a focus for the dairy industry is [16:00] trust at the consumer level because I think we often see that there is mistrust and there are questions, and there’s misunderstandings. And so we’ve worked really hard to try to provide the facts and provide a level of transparency so people can see some of those things that are occurring and how they, you know, how they ultimately affect the water, and the air, and the environment and things that are increasingly becoming relevant to the conversation. Longer term I think dairy farmers, dairy producers, are looking to benefit from an economic standpoint and oftentimes, you know, to implement some of these practices, they’re very costly. So, the timing of those things often plays a factor in their adoption but over time the hope is that there will be some economic incentive there as well. 

Jennifer: Right. And I think your mantra around really thinking about transparency to drive consumer trust is relatable across every industry in addition to dairy. 

Marty: Yes, I agree completely. We’re dealing with a very different consumer, a very different dynamic. The availability of information, both accurate information and inaccurate information has never been greater and that’s something that I think we’re all evolving with. 

Jennifer: That’s great. Well, Marty, as we wrap up, I just have one last question for you. What do you think it’s going to take for more dairy farms to make large investments in sustainability moving forward? 

Marty: Wow. You know, that’s interesting. I think, and I eluded to this early about [18:00] the impact our industry has had strides that we’ve made regarding sustainability at this point. You know, if you go back to roughly 1944, right after World War II, there were over 25 million dairy cows in the US. Today, there’s about 9.3 million dairy cows and we’re making more milk today, a substantial amount, more milk today than we did in 1944 with less feed, less water, less land usage than we ever have. Just in the last 10 years, there’s been a 19% reduction in greenhouse gas emissions. And that’s, again, that’s a combination of efficiencies that have been created in feed production and the use of land, and water use, and the cow. The dairy cow today is much better, much more efficient than what they have been in the past. Genetics and nutrition have played probably the largest role in the sustainability improvements within the industry. So, those are things, genetics and nutrition are something that every single dairy farm has improved upon over the last 70 to 75 years very easily. I think as far as the investments, back to your question, the investment going forward in sustainability is larger going to be economic driven I think because we have made the strides that we’ve made in improving and becoming more sustainable and I think we’re at a point now where for the next level of investment to be made, it’s going to have to be market driven, or there is potentially going to have to be programming or assistance made available to encourage some of the next level investment that maybe need to be made. You know, [20:00] the low hanging crew, the things that are, you know, easy to do, we’re certainly working on those things, continually working on those things as an industry, but in large part, we’ve come a long way already and I think that there’s still opportunity, but its going to take some technological advancement and some investment as you identified. 

Jennifer: Well, thank you so much for making time to give us a very deep dive into the dairy industry. I’ve personally learned so much more and I feel more informed as a consumer about dairy. But thank you again for joining us. 

Marty: Well, absolutely, Jennifer. Thank you for the opportunity. I really appreciate it. You know, our website, dairydiscoveryzone.com, is a great place also to find additional information about dairy. Good recipes and even an opportunity to explore some of our dairy farm families that we work with. 

Jennifer: Perfect, we’ll make a note of that as well. Thank you so much. 

Marty: Alright. Thank you, Jennifer. I appreciate it.