German Dairy Cooperative Uses Smart Packaging to Tell Milk’s Story

Consumers want to know where the products they buy come from, especially during a pandemic. Dairy cooperative Schwarzwaldmilch has teamed up with SAP partner sine qua non and SAP Co-Innovation Lab to introduce smart packaging that tells customers about the journey its organic milk takes from farm to store.

Milk cartons tend to paint an idyllic picture of happy cows grazing on rolling hills of lush green grass. But how many people actually know which farm provides the milk they drink or how that milk got to the store? With smart packaging, the German dairy cooperative shares this information with its customers.

“Our customers aren’t only interested in where the milk they buy comes from, they want to know when it left the farm and when the cartons were filled,” says Andreas Schneider, managing director of Schwarzwaldmilch. “So, we contacted sine qua non and SAP Co-Innovation Lab to find a way of making this information accessible.”

More than 1,000 farms in and around Germany’s Black Forest supply Schwarzwaldmilch with unpasteurized milk that it then processes. “We’re mainly talking about small farms here with around 40 cows on average,” Schneider says.

Smart packaging enables Schwarzwaldmilch to tell its customers the story behind each carton of organic milk. Every carton is assigned its own digital ID that the customer can access by scanning a QR code on the lid. Any feedback they provide is then linked to a specific milk carton.

Creating Digital Twins

SAP partner sine qua non has years of experience in building solutions for the wine industry, and its YoY® solution, which runs on SAP Cloud Platform, forms the basis for Schwarzwaldmilch’s smart packaging.

“Around 80 percent of the bottles of sparkling wine that are filled in Germany come into contact with our software,” sine qua non’s Maximilian Moog shares. “We put our notion of food industry processes into developing YoY®. The result is a standardized cloud product that, in principle, any business looking to make its supply chain more transparent can use.”

Schwarzwaldmilch has printed a QR code on every carton of its organic milk since the fall of 2019. “By scanning the code with a smartphone, customers can find out when the milk was collected from the farm, which farm provided the milk, how big that farm is and how many animals it has, and when the carton of milk they bought was filled and transported to the store,” explains Moog.

The smart packaging draws on digital twin technology. “We create a digital copy of every carton of milk,” says Moog. That is what sets YoY® apart from the competition. All the relevant parameters from every stage in the food production process can then be automatically captured on SAP Cloud Platform.

The digital twins created for Schwarzwaldmilch incorporate the data from automated milking machines, milk tankers, manufacturing equipment, and SAP ERP. They also feature printer data to match this information to the QR code on the packaging.

“That is a vital step for sustainable and long-term success at Schwarzwaldmilch,” says Schneider. “Being open with our customers is key to securing their continued trust.”

Secure, Transparent Supply Chains in Times of COVID-19

“YoY® can provide transparency in the supply chain for other, more complex consumer goods, too,” Moog says. “It can connect to other technologies as well: Internet of Things (IoT) components become relevant if we look at muesli or vegan energy drinks, for example. And the sensitive data from around the world that is collected during the production of fair-trade products, for instance, could be saved to a blockchain using YoY®.”

Since the scandal in the meat processing industry in Germany a few months ago, the demand for transparency in the food industry has become greater than ever. “For weeks now, businesses not only from Germany but from across Europe and even Australia have been sending us inquiries,” adds Moog.  YoY® could be the answer they are looking for because it is suitable for companies of all sizes and revenue levels.

Moog describes working with SAP Co-Innovation Lab as a great experience. “The experts there recognized and seized on the potential of YoY® right away. They supported us and gave us access to their infrastructure free of charge for an extended period of time so that we could build the product. Since Schwarzwaldmilch was our first customer, it would have been extremely costly for us to set up the infrastructure ourselves. SAP Co-Innovation Lab made this project possible.”

“Schwarzwaldmilch was a pilot,” says Hans-Heinrich Siemers from SAP Co-Innovation Lab. “Now it opens the door to new opportunities, from regional to international projects. In the beginning, you can’t always predict how successful a solution will be. But that’s where SAP Co-Innovation Lab comes in: its purpose is to tread new paths with our partners and customers, bringing together the best that they and SAP have to offer to give projects like this a chance.”

The story doesn’t end here. “One of the most important tasks for us at SAP at the moment is finding a way to help our customers get back on track as quickly as possible now that the economy is slowly firing back up,” says Siemers. “When supply chains collapsed earlier this year because of border closures due to COVID-19, many of our customers were affected. YoY® can help here, too.”

sine qua non is currently working closely with SAP Logistics Business Network on making a complete overview of the supply chain available in YoY® in real time. It would then be possible to realign processes and supply chains a lot sooner and with more automation.

“We began working with SAP on this solution long before the pandemic started, and then we won our first customer,” says Moog. “COVID-19 and the resulting difficulties in transnational supply chains as well as the scandals in the meat processing industry have confirmed to us that we weren’t building a castle in the air; we have a solution that can address relevant problems and challenges in the food industry.”