SAP Dairy Management by msg
SAP Dairy Management by msg supports dairy companies from raw milk reception and component-based planning through production control, yield and loss analysis, cheese maturation, and activity-based costing. The solution helps companies manage volatile raw materials, seasonal supply, multi-stage production processes, and product-specific profitability within an integrated SAP environment.
SAP Dairy Management by msg for SAP S/4HANA – Overview
Raw Material Planning is a core planning process in the dairy industry, where incoming milk and dairy raw materials are managed not only by quantity but also by their underlying components such as fat, protein and other solids.
Within this process, planners compare available raw material supply with production requirements across plants, product groups and time horizons, while considering planned deliveries, opening and closing stock, purchases, sales, stock transfers and by-product generation.
In contrast to simple volume-based planning, Dairy Raw Material Planning is characterized by its component-driven logic, meaning that the same quantity of milk can have different operational and economic value depending on its composition.
SAP Dairy Management by msg supports this complexity by helping companies balance push and pull flows, redirect raw materials between plants and create a transparent basis for decisions that improve utilization, reduce short-term transports and avoid component mismatches.
Production in SAP Dairy Management by msg covers the operational transformation of raw milk into semi-finished and finished dairy products, such as cream, skim milk, yogurt, butter, milk powder and cheese.
This process is especially demanding because dairy manufacturing often involves several interdependent processing steps, including separation, pasteurization, ultrafiltration, standardization and maturation-related preparation. In contrast to conventional manufacturing, dairy production must continuously reflect changing raw material composition and track how valuable components move through the process.
SAP Dairy Management by msg supports this with raw material balancing, component mass balancing and yield, gain and loss analysis, allowing production and controlling teams to compare target and actual values, identify hidden losses and understand where material efficiency can be improved. This creates a consistent operational view from production confirmation through raw material balance, post-processing and period-end component posting.
Activity-Based Costing is a key controlling process in dairy production, where the true cost of a product depends on more than the raw material consumed. Energy, labor, machinery, production resources, cleaning steps, storage activities and indirect production processes all contribute to the final cost and margin of each product.
Within SAP Dairy Management by msg, Activity-Based Costing helps model these direct and indirect activities and allocate them to products, processes and cost objects with a higher level of granularity. In contrast to broad overhead allocation, this approach makes the relationship between activities and costs more transparent, helping dairy companies understand which products, production versions or process steps are driving cost.
The result is a stronger basis for planned and actual cost analysis, contribution margin evaluation, product portfolio decisions and profitability improvement across complex dairy operations.
Affinage manages cheese maturation as a controlled production and value-development process rather than a simple storage activity. During the aging process, cheese products may remain in maturation areas for weeks or months, while their weight, quality characteristics, condition and commercial value continue to change. This makes the process highly time-dependent and requires accurate visibility of batches, locations, aging stages and expected losses.
SAP Dairy Management by msg supports affinage by helping companies track aging materials, monitor maturation progress, adjust batch valuation and reflect value appreciation during the aging process instead of only at the beginning or end.
In contrast to standard inventory management, affinage provides a dairy-specific view of how maturing products develop over time, supporting better stock handling, planning accuracy, quality decisions and financial transparency for cheese operations.
Milk Collection and Payment covers the upstream process of collecting raw milk from farms, transporting it to the dairy, receiving it at the plant, analyzing its quality and settling producers based on measurable characteristics. In this process, raw milk is not only purchased as a quantity but also evaluated according to parameters such as fat, protein, cell count and other quality or contract-relevant values.
This makes payment complex, because fair remuneration depends on linking collection data, samples, laboratory results, deliveries and pricing rules in one consistent process.
SAP Dairy Management by msg supports this by connecting milk collection, reception, quality management and settlement activities, helping companies reduce manual effort, improve traceability from farm to factory and calculate producer payments transparently.
In contrast to disconnected collection and billing systems, the integrated approach creates a reliable data basis for planning, payment, reporting and profitability in raw milk procurement.
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Key benefits:
- Increased efficiency: reduce costs by optimizing production and logistics
- Better decision-making: improve data analysis and reporting
- End-to-end visibility: increase operational transparency for all business users
- Compliance & food safety: support compliance reporting and product traceability