Consumer Goods, Retail

For the Love of Milk

Anyone who leads one of Europe’s largest dairy enterprises will need to balance a trifecta of producer, retailer, and consumer interests. The company will require a strong structure in every respect. One based on quality. With no room for compromise.

 01/2024

Where it counts: For the meeting with Porsche Consulting Magazine, Ingo Müller, CEO of DMK Deutsches Milchkontor GmbH, proposed a shopping trip to a Bremen supermarket.Porsche Consulting/Marco Prosch

Ingo Müller peers at the trans­par­ent pack­ag­ing on the prod­uct in his hand. “This cheese is so fresh it looks like it was sliced just five min­utes ago,” he remarks. Dressed in jeans and a hood­ie, he stands in front of the long, glass-cov­ered, refrig­er­at­ed shelves of a mod­ern Rewe super­mar­ket in the Mühlen dis­trict of the north­ern Ger­man city of Bre­men. We’re not far from the North Sea coast­line. The Hanseat­ic city is sur­round­ed by flat, fer­tile land with lush fields on which cows are hap­pi­ly graz­ing. This is noth­ing new to Müller, who grew up on his par­ents‘ farm. And loved it. He has always been fond of cows, and they of him. Today, Müller is the CEO of one of Europe’s largest dairy enter­pris­es — “for the love of milk,” he says. And out of sol­i­dar­i­ty with farm­ers. Some 4,700 mem­ber farms are the joint own­ers of the coop­er­a­tive enter­prise known as DMK Deutsches Milchkon­tor GmbH, and Mil­ram is the best-known brand of this spe­cial­ized food producer.

A meet­ing with Porsche Con­sult­ing Mag­a­zine? That’s fine with Müller. “But let’s meet where the prod­ucts are: at a store instead of the air­port office. Prefer­ably early in the morn­ing.” He arrives in a superb mood, full of ener­gy, and with­out a trace of exec­u­tive pos­tur­ing. He rolls up his sleeves and fills his shop­ping cart for the magazine’s pho­tog­ra­ph­er. Fruit, veg­eta­bles, and dairy prod­ucts of his own make, of course. He prompt­ly shows off an inno­va­tion: “The new cov­ers of our yogurt con­tain­ers are thin­ner and stronger than what we had before,” he says.

The CEO

Ingo Müller: Of Ice Cream and Farms

How do retailers present our products to customers? That’s what interests Ingo Müller. And chatting with a cashier can bring new insights.Porsche Consulting/Marco Prosch
Ingo Müller was born in 1972 and grew up on a farm leased by his parents in Wesermarsch County in northern Germany (Lower Saxony). He has always been passionate about agriculture. As a 12-year-old he joined his father on a tractor at a demonstration against milk quotas, and at 14 he participated in the dairy’s general assembly. After training as a dairy specialist at Milchwerk Botterbloom in Strückhausen, which later became part of DMK Deutsches Milchkontor GmbH, he studied milk and dairy management. “I was convinced that the dairy industry also needs people who understand and advocate for agriculture,” he says. During his initial training he worked for the dairy’s ice cream department as well as his parents’ farm. Müller, who enjoys barbecuing in his spare time, became DMK’s head of quality management in the late 1990s, then a plant manager, and in 2016 the CEO of Germany’s largest cooperative dairy enterprise.

“Quality is non-negotiable”

Müller is curi­ous. As the spokesper­son for the man­age­ment board, he wants to know about the qual­i­ty of his company’s and his com­peti­tors’ retail prod­ucts. What items are new on the shelves? Is his company’s pack­ag­ing the most recy­clable? Can the pre­sen­ta­tion be improved? Germany’s largest dairy coop­er­a­tive embraces qual­i­ty — in all areas of the com­pa­ny from pro­duc­tion, pro­cess­ing, stor­age, and trans­port to how the prod­ucts are dis­played in the refrig­er­at­ed cases of retail shops. As he puts it, “What’s on the shelves is what counts. Qual­i­ty is non-negotiable.”

Dr. Marcus Krapp (left) is DMK’s Global Head of Quality. Together with Ingo Müller he has made the dairy company’s quality strategy an important part of its Vision 2030.Porsche Consulting/Marco Prosch

Müller’s col­league Dr. Mar­cus Krapp is respon­si­ble for over­all qual­i­ty at DMK. Glob­al Head of Qual­i­ty is his offi­cial title. Müller asked him to meet us at the super­mar­ket too. “Our cus­tomers’ sat­is­fac­tion is our high­est pri­or­i­ty,” says Dr. Krapp. “We always want to meet their expec­ta­tions for our prod­ucts.” DMK has there­fore drawn up a qual­i­ty strat­e­gy as part of its Vision 2030. In doing so, the coop­er­a­tive solicit­ed advice and guid­ance from a spe­cial­ized team at Porsche Con­sult­ing.

“Our quality strategy strengthens an entrepreneurial approach that promotes a preventive management system for assessing risks,” says Dr. Marcus Krapp, Global Head of Quality.Porsche Consulting/Marco Prosch

Farm­ers feed the pop­u­la­tion. Sta­tis­tics show that a sin­gle farmer in Ger­many pro­vides food for an aver­age of 139 peo­ple. That fig­ure has tripled since 1960. One food prod­uct that has always played a key role is milk. How­ev­er, con­sumer behav­ior and pur­chas­ing pat­terns have changed over the past decades. The spot­light now is on con­ve­nience. Cus­tomers seek ease and sim­plic­i­ty in their lives, ready-to-use items in small amounts and pack­ages. “But that con­flicts with the idea of sus­tain­abil­i­ty,” observes Müller. “And sus­tain­abil­i­ty is play­ing a big role right now in dis­cus­sions about food. A lot more will be hap­pen­ing with pack­ag­ing in the future.”

Is food too cheap?

It seems bizarre to accuse the entire farm­ing sec­tor of being harm­ful to the cli­mate. “For one thing, farm­ers are aware of their respon­si­bil­i­ty for the envi­ron­ment,” says Müller. “More­over, they are the ones who pro­duce the ‘means of life’ (the lit­er­al mean­ing of the Ger­man word for ‘food’).” A sec­ond source of ten­sion is the split between strug­gling to keep food prices down while desir­ing high lev­els of food qual­i­ty. By way of back­ground: in the 1950s and 1960s, res­i­dents of the Fed­er­al Repub­lic of Ger­many had to spend about 50 per­cent of their income on food, where­as today that fig­ure is only around 10 per­cent. “And qual­i­ty has risen at the same time. We’ve never had such high-grade and healthy food prod­ucts in our shops as we do today,” says Müller. “These improve­ments have to be paid for. Qual­i­ty has its price. That applies to organ­ic prod­ucts as well. If it’s no longer prof­itable to pro­duce them, or if most of the pop­u­la­tion isn’t will­ing to pay extra for them, then farm­ers won’t be invest­ing in them anymore.”

As the head of a coop­er­a­tive food-pro­duc­ing enter­prise, Müller also finds him­self nav­i­gat­ing the cross-cur­rents of con­ven­tion­al dairy prod­ucts ver­sus vegan alter­na­tives. Con­sumer eat­ing habits have changed. The per­cent­age of peo­ple who are flex­i­tar­i­an, pri­or­i­tize plant prod­ucts, or are entire­ly vegan will con­tin­ue to rise by 2030. “As food pro­duc­ers we can’t say that’s a bad idea and we won’t go along with it,” says Müller. Quite the oppo­site, in fact: the dairy has the nec­es­sary exper­tise for alter­na­tive prod­ucts as well. In the long term, the aim is for farm­ers to be able to par­tic­i­pate in inno­va­tions as raw mate­r­i­al sup­pli­ers. But it is also clear,” Müller remarks, “that we are a dairy and will remain so.”

Portrait

The DMK Group

The DMK Group employs around 6,600 people. It is Germany’s largest dairy cooperative and one of the top 20 companies in the sector. It processes 6.3 billion kilograms of milk a year for industrial, wholesale, and retail customers, and in 2022 posted sales of 5.5 billion euros. The cooperative has about 4,700 member farms. Its motto — “We sustainably supply millions of people with high-quality food” — stands for quality, diversity, and innovation. The product range includes cheese, dairy, baby food, ice cream, and ingredients for items such as pizza cheese and chocolate bar fillings. DMK’s brands include Milram, Oldenburger, Uniekaas, Alete bewusst, and Humana, which enjoy high consumer confidence in both Germany and abroad and give the Group its strong profile in domestic as well as selected target markets around the globe. One of the company’s goals is to constantly adapt its product range to the needs of consumers and clients. DMK therefore continuously invests in research and development to ensure that its innovative and successful products will continue to please customers in the future. DMK’s declared aim is to “make the most of our milk,” with the necessary steps outlined in its 2030 Vision. Fairness, innovation, and an entrepreneurial spirit are the core qualities inscribed in its values.

As CEO of the DMK Group, Müller there­fore needs to bal­ance dif­fer­ent inter­ests. He seeks to address the many and often con­flict­ing demands on his posi­tion by “com­mu­ni­cat­ing eye to eye.” As he explains, “Inter­act­ing with peo­ple as peo­ple, whether they’re clean­ing per­son­nel or com­pa­ny direc­tors — that’s what’s impor­tant to me. And I want feed­back. I want to hear if some­thing isn’t work­ing or if some­one finds some­thing dis­turb­ing.” This open ear for crit­i­cism is a qual­i­ty Müller also expects from his man­age­ment per­son­nel. “We’ve mod­i­fied our struc­tures to pro­mote this. When a qual­i­ty assur­ance engi­neer speaks up, for exam­ple, we’re now pay­ing the clos­est atten­tion.” Müller is con­vinced that this type of cor­po­rate cul­ture “enhances the qual­i­ty of our prod­ucts.” And that is the focus of the DMK Group’s vision for the future. “As food pro­duc­ers we bear a great respon­si­bil­i­ty. You can’t live up to that by fol­low­ing stan­dard oper­at­ing pro­ce­dures alone. Instead, every employ­ee has to like their work and be in a posi­tion to do their very best to improve qual­i­ty. And you’ll only achieve that if qual­i­ty is the top pri­or­i­ty through­out the entire com­pa­ny, if you deal with peo­ple on an equal foot­ing, and take them on board.” One exam­ple is DMK’s qual­i­ty strat­e­gy. “It strength­ens an entre­pre­neur­ial approach that pro­motes a pre­ven­tive man­age­ment sys­tem for assess­ing risks,” says Dr. Krapp. He has linked the strat­e­gy with a com­pre­hen­sive con­tin­u­ous improve­ment project that close­ly observes pro­duc­tion process­es and uses an array of sen­sors on machin­ery to gath­er even more rel­e­vant infor­ma­tion in real time about the milk, cheese, and curd.

Dr. Marcus Krapp sought advice for DMK’s quality strategy from Porsche Consulting partner Florian Haasis (left) and his team.Porsche Consulting/Marco Prosch
A flawless product display is also part of overall quality. Diana Manteufel-Siata (District Sales Manager Brand Retail) and Ingo Müller do a random check of refrigerated cases and discuss enhancements on the spot.Porsche Consulting/Marco Prosch
Question of principle: Pizza cheese from milk or plant alternatives? “As a dairy we have the expertise for both,” says Ingo Müller in conversation with consultant Florian Haasis (left).Porsche Consulting/Marco Prosch
Three men on a morning shopping trip: “Shopping should be fun,” says Ingo Müller, Dr. Marcus Krapp, and Florian Haasis on an early visit to Daniel Petrat’s Rewe supermarket in Bremen’s Mühlen district.Porsche Consulting/Marco Prosch

It starts on the farms

As mem­bers of the coop­er­a­tive, the farm­ers also place a pre­mi­um on qual­i­ty. As Krapp notes, “Our agri­cul­tur­al depart­ment main­tains close con­tact with our farm­ers. We offer work­shops, fur­ther train­ing, and infor­ma­tion. In the rare cases when qual­i­ty prob­lems arise, we go straight to the pro­duc­er to dis­cuss the caus­es and cor­rec­tive mea­sures.” He is quick to empha­size that since 2021, DMK has ben­e­fit­ed espe­cial­ly from Porsche Consulting’s expe­ri­ence and exper­tise in process and cost opti­miza­tion and in the fur­ther devel­op­ment of qual­i­ty man­age­ment sys­tems. “We have prof­it­ed from Porsche Consulting’s 25 years of expe­ri­ence in the food sec­tor. It gives us a bench­mark­ing frame­work that helps us improve all the more.” The experts at Porsche Con­sult­ing enjoy “absolute recog­ni­tion and respect” among DMK’s employ­ees. One rea­son for this, accord­ing to Krapp, “is that they don’t just pro­vide ideas in the­o­ry, but are also and espe­cial­ly involved in guid­ing the steps to put them into practice.”

With a view to the future, Müller has the fol­low­ing to say: “We want to keep pro­vid­ing out­stand­ing prod­ucts over both the short and long term, while also keep­ing an eye on pro­duc­tion costs. To do that, we have to keep think­ing about what else we can opti­mize, what we can do more effi­cient­ly, and what lab­o­ra­to­ry analy­ses we can run to get results that help us improve even more.” Müller makes sure that suc­cess in dif­fer­ent areas is mea­sured. “Cus­tomer sat­is­fac­tion has risen and our qual­i­ty costs have declined,” he notes. When the inter­view is over and we’re about to depart, he turns one last time and says, “Milk is my pas­sion — and has been so my entire life.”

COMMENTARY

“Quality doesn’t appear out of nowhere”

by Florian Haasis
Florian Haasis, a partner at Porsche Consulting, has many years of specialist experience in the food and packaging industries and in putting corporate strategies into practice.Porsche Consulting/Marco Prosch
Quality is essentially the sum of all properties. As used every day, the term is a prized designation for the merit of a particular product or service. Contracts are often awarded and goods often purchased on the basis of confidence in the provider’s quality assurances. But initial trust can quickly be lost if marketing superlatives like “top quality” are not followed up with consistently and comprehensively high-grade results. For companies that means the following: quality can only serve as a seal of approval if it is carefully cultivated and continuously developed—in all departments and by all employees. Speaking from my experience in practice, that will only work if individual quality standards are anchored in the company’s strategy. They need to be clearly formulated, strongly prioritized, communicated widely, and above all embraced on a daily basis by leadership personnel. As management consultants for a wide range of industries, it is clear to us that the best foundation for successful innovation is a comprehensive understanding of quality that is lived and embedded in all levels of a company’s operations. DMK Deutsches Milchkontor is an example of how innovation is a key driver of growth. Good management requires the ability to self-reflect, especially for companies with classic and often iconic products and services. This includes regular reexamination of established practices and a strong desire to continue improving, to address changing customer desires, and to consider disruptive ideas. That is how a promising climate of innovation arises. To bring innovations promptly and successfully onto the market, factors such as short authorization cycles and first-class value chains are crucial. The prerequisite here is a high standard of quality that underlies all fields of action. To produce innovative and superior-grade products, efficient processes and structures are needed: in procurement, production, transport—or in short, everywhere. As we go through an age of technological change, new methods and techniques offer unprecedented potential. Together with its clients, Porsche Consulting is pursuing a “future factory” approach to develop and implement use cases in order to optimize value chains rapidly and efficiently. The greatest increases in efficiency are coming from the interplay between digitalization and automation. Examples in the field of quality include future-oriented test planning based on artificial intelligence, and data compilation with the help of smart analytics. Quality is a driver of innovation and a seal of excellence. But it doesn’t appear out of nowhere. Quality has to be created anew and further developed every single day.
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