Running head: AI AIN DAIRY FARMING

AI Ain Dairy Farming

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Introduction

Supply chain management is one of the most important practices to be done in a business
which has more than few outlets in operation. Supply chain management is important in
managing the dairy farming and products demand and supply. This is because the demands for
these products have been increasing more than the supply. Therefore there is a need for
increasing the production so as to meet the needs of the increasing demands. This is why the AI
in Diary production was introduced in 1981 to meet the demand for fresh milk (Balakrishnan,
2011). This assignment will be critically evaluating the role of supply chain management in AI
dairys farming and products demand and supply. The supply chain model that will be used for
this evaluation is that which follows the following sequence: from suppliers, manufacturer,
distributors, retailer, and to customers. The role of supply chain management in the companys
success has been discussed in the assignment along with some of the major challenges that the
company faced in addition to this the impact of the technology in the companys culture and in
the supply chain of the company has also been discussed in the assignment.
Question 1
Supply chain capability
Understanding the needs and demands of the market will help in improving the supply
chain capability of the dairy products. For instance, the UAE country has an increasing national
consumption of fresh milk. This is a good factor to improve the supply chain ability so that the
dairy farmers can be able to produce enough milk for the all the consumers. Therefore, there
should be high levels of safety right from the suppliers of milk; who are the farmers, to the
customers (Balakrishnan, 2011). The importance of having manufacturers and distributors in the

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supply chain is that they help in maintaining safety and quality production. On the contrary, the
customers will buy the product at a slightly higher price compared to buying the milk direct from
the farmers. The supply chain of dairy products in UAE has incorporated global technology
partners so as to ensure that quality and safe products reach the consumers. Buying the dairy
products direct from the farmers may not be safe all the time because they have not been
inspected. The supply chain helps in ensuring that there is a long-term commitment from farmers
so as to sustainably supply these products to UAEs consumers. Also, the packaging of milk is
done according to the target market. For example; 500, 200 and 150ml are for children and
bachelors while the l gallon and 2l are for families.
Outsourcing on supplying selection
During the summer season in UAE, the demand for milk slightly goes up because of the
hot temperatures. People increase the intake of cool milk during by 30-40%. However, during
this season, the cows in UAE produce less milk because the climate is not favorable. During this
season, UAE opts to outsource fresh milk from Kingdom of Saudi Arabia. Transportation is
usually done through land and milk is kept in refrigerated trucks so that it can reach its
destination in good condition (Muhammad, Akhter, & Ullah, 2014). The advantage of
outsourcing milk is that it will help the country meet the needs of the consumers. However, the
milk is usually expensive because of the cost of outsourcing and transporting it. This is a great
challenge for the supply in the chain in UAE because there is a great gap between summer and
winter seasons regarding pricing. The country can solve this problem through maximum
production during the winter season and store enough milk for the summer season so that the
outsourcing of milk can be minimal.

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Competition

Competition is an important factor that controls demand and supply of farm products, for
instance, when the competition is high, prices drop down, and many consumers buy the product.
On the other side, when there is no competition, the prices go up, and demand reduces because
consumers are not willing to pay more for the same product. To solve this problem, the AI has
been looking working hard to brand their products in the supermarket shelves so that they can be
able to meet the needs of the increasing demand for milk and other farm products. Also, it is
important for the country to promote the UAE farmers products instead of outsourcing the
products. Farmers will be motivated to invest in the farming business if their farm products are
given priority in the country (Martel & Klibi, 2016). Also, the government should give subsidies
to the milk production companies so that they can be able to reduce the cost of production and
compete favorably with other companies. Cheaper milk from other companies has been a source
of competition in UAE.
Inventory control and customer service
The supply chain should have good recording keeping so that the AI production of milk
can be able to understand how demand and supply fluctuate during different seasons. It is a
challenge to increase milk production in camels because they are more sensitive to the external
environment as compared to cows (Balakrishnan, Chapter., & Wollongong, 2012). Therefore, the
AI Ain Diary has continued to work with the British technology so as to increase milk production
in camels as well as in cows. Inventory control helps in monitoring the buying habits of
consumers. For instance, if consumers are buying more milk in hypermarkets than in retail
shops, then the supply chain need to adjust and supply the hypermarkets with more milk. The

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customer care services of the AI Ain Diary should have a good PR so as to attract more
customers in buying the products. Customer care involves the branding of the AI Ain milk
products and making them available to the supermarket shelves.
Technology adoption
The AI Ain Diary farm was started in 1981 through importing 200 Friesian cows. The
Friesian breed is good in milk production and can produce more milk compared to the local
breed. The imported cows were able to increase the milking cows to 500, hence more milk
production (Balakrishnan, 2011). The farm was able to give 7,600 UAE citizens shares with the
farm in 1996 because the AI technology had benefited the farm. AI Ain farm has been able to
work with other companies to incorporate technology in the milk production so as to meet the
demands for milk and its production. This technology has also been extended to camels. In 2011,
the farm had over 5,000 cows and 2,500 camels (Association, 2013). The disadvantage of the AI
technology is that it is expensive at the onset but once invested for a longer period; the results are
big. Also, some people are preserved and may not want to but the AI products because they feel
that they are not fit for human consumption. There should be enough creation of awareness so
that to build trust with the consumers.
The supply chain management in AI Ain Dairy Farm has been beneficial in improving the
supply of the farm products. The farm supplies milk for production and still gets milk from
farmers who are using the AI technology for milk production. The supply chain checks on the
consumer behaviors and adjusts accordingly so as to reach the targeted market for the farm
products. The AI Ain Diary has been a success because of the adoption if the AI technology and
using an efficient supply chain so as to reach the consumers.

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Question 2
According to the provided case study there are likely to be few hindrances that the
company might face while expanding into the markets of Oman and nearby regions. Prior to
discussing the problems in detail it is important to understand that dairy products like milk are
highly perishable goods which are impacted in an adverse manner due to the temperature. The
following are some major constraints that the company is likely to face in the future while
planning to enter in the market of Oman and other nearby regional markets as per their strategy
given in the case study provided.
First, hindrance that the company will face while entering the market is that dairy
products are high in demand and hence the production of the milk needs to be regular. In the host
country of the company the camel milk is extremely popular however it is also important to meet
the demand with the supply which can turn out to be a huge challenge for the company. Lower
supply of the companys product will mean that the customer might need to change their
preference of brand and they can shift to use some other brands product. In UAE Emirates is the
major competitor for Al Ain Diary and hence can steal the customers of the company too. The
role of demand comes into the play during the initial weeks of Ramadan as at that time milk get
very popular in the Muslim community and sometimes it gets hard for dairy companies to meet
those demands.
Secondly, the milk is highly perishable product and temperature in Middle Eastern
countries is usually very high hence there is a very high chance of products to perish even before
it goes out in the hands of the final customers. It is necessary for Al Ain Diary to take special
care for maintaining the freshness of their products mainly in summer when the demand for the

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good goes high but the temperature at that time is also high so perishing of the products is also
likely to happen. As the safety is also important in the dairy products the company is left with no
option but to get rid of the perished goods. When the company will expand into the Oman the
situation might not change as the temperature is similar to that of the other places in the Middle
Eastern countries.
Thirdly, the major constraint for Al Ain Diary will be to keep the costs of the products
under control, as the company is currently not able to take care of all the requirements of their
demand as an outcome of which they import milk from various other sources however doing so
not only take a little bit of extra time but also costs more to the company as an outcome of which
the company is required to increase the cost of their products so as to remain profitable in the
market. When Al Ain Diary will expand in the market of Oman the requirement for dairy
products will rise even more hence it is likely for the company to import from the other sources
more often which will ultimately increase the cost of the products.
Lastly and most importantly the company is likely to face a major constraint, i.e. the
downstream of the economy. UAE might be one of the independent economies of the world but
still the country is no exception when it comes to economic crisis like recession or depression.
UAE market has faced various challenges in the early economic instability times as well. Last
time economic crisis hit the UAE the sales of Al Ain Diary got declined by percent which is a
considerable drop. When the company will enter the Omans market it is not necessary that the
people will be interested in their product as it might be a new brand for them.
Question 3

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Just like any other industry the technology has made a great impact on the dairy industry
as well. In the next few lines it is discussed as how the improve in technology has impacted the
performance of Al Ain Diary in UAE. First of all just like any other company Al Ain Diary has
used the improved technology so as to make their work a little easier and more improved. The
safety standards and health of the customers have improved due to introduction of technology in
Al Ain Diary. Due to the technology the supply chain management of demand has also improved
as the quality standards are high the customers are also demanding the product in high quantity
and so is the companys supply as due to technology the supply of the company has also
improved.
Secondly the improved technology adopted by Al Ain Diary has enabled the company to
increase the durability of the products and moreover the customers are satisfied in a more
accurate manner by the company after using the new technology. In the year 2011 the company
made major changes in the plant and machinery in order to change their milking system into
more like that of British milking system as an impact of this technology change helped the
company to meet the demand of the milk and related dairy products more quickly as the new
system is capable of milking camels and cows as well.
Thirdly Al Ain Diary has benefited a lot from the technology they have implemented in
their traditional system as there is a change in purchasing habits of the people in UAE, earlier
people in the country used to buy the milk and other dairy products from the small outlets
however with the improving infrastructure and facilities people have moved on to buy such
things from malls which is simply a demonstration of the absorbed technological use in the
purchasing habits of the people. Improved technology had made the storage of the stock easier
than before which means that Al Ain Diary is now able to store enough dairy products in a

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planned manner so as to meet the high demands on various occasions, mainly during the summer
time and Ramadan.
Conclusion
In order to manage the business like Al Ain Diary which has so many outlets in different
markets of the country it is important that the supply chain management shall be applied
appropriately. In the given assignment the case study of Al Ain Diary has been analyzed and few
facts about the companys current and potential future strategy have been discussed. Other than
the supply chain management various other factors have been discussed in different questions of
the assignment including the impacts of technology on the supply chain of the company and
some challenges that the company is likely to face while expanding the business in the new
markets.

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References
Association, I. R. (2013). Supply chain management: concepts, methodologies, tools, and
applications. Hershey, Pa.: IGI Global.
Balakrishnan, M. S. (2011). AI Ain Diary: managing demand and supply. Emerald Emerging
Markets Case Studies Collection, 1-10.
Balakrishnan, M. S., Chapter., A. o., & Wollongong, U. o. (2012). Actions and Insights : The
Middle East North Africa. Bingley: Emerald.
Martel, A., & Klibi, W. (2016). Designing value-creating supply chain networks. Cham:
Springer.
Muhammad, Z., Akhter, S. N., & Ullah, M. K. (2014). Dairy Supply Chain Management and
Critical Investigations on Dairy Informal Channel Partners in Pakistan. Journal of
Business and Management, 81-87.