Amul Dairy Project

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Project Report:Amul Dairy

From:Vipul Vyas

Sub: Resource and valuechain


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Introduction:

THE TASTE OF INDIA, AMUL comes from the Sanskrit word Amoolya,

means priceless. It was suggested by a quality control expert in Anandand it was chosen because it was a perfect acronym for Anand MilkUnion Limited . AMUL was formed under the dairy cooperativemovement in Indiain 1946.

Gujarat Cooperative Milk Marketing Federation (GCMMF) isIndia's largest food products marketing organisation. It is a state levelapex body of milk cooperatives in Gujarat which aims to provideremunerative returns to the farmers and also serve the interest ofconsumers by providing quality products which are good value formoney. AMUL is the brand under this organization.


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Amul is the largest food brand in India and world's Largest Pouched Milk

Brand with an annual turnover of US $1050 million (2006-07). CurrentlyAmul has 2.6 million producer members with milk collection average of10.16 million litres per day. Besides India, Amul has entered overseasmarkets such as Mauritius, UAE, USA, Bangladesh, Australia, China,

Singapore, Hong Kong and a few South African countries. Its bid toenter Japanese market in 1994 had not succeeded, but now it has freshplans of

flooding the Japanese markets .Other potential markets beingconsidered include Sri Lanka.

Dr Verghese Kurien, former chairman of the GCMMF, is recognised as

the man behind the success of Amul. On 10 Aug 2006 Parthi G Bhatol,chairman of the Banaskantha Union, was elected chairman of GCMMF.

1.Discuss Amul's Umbrella Branding and Distributionnetwork strategy.

An umbrella brand is a brand that covers diverse kinds of products which are moreor less related. It applies also to any company that is identified only by its brandand history. It is contrasted with individual branding in which each product in a

portfolio is given a unique identity and brand name.


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Amul has high brand equity and umbrella branding of Amul has helped the

company in bigger sense. Amulss brand name has helped its other brands also like

Mitahi made, Amul Ice creams, chocolates, Amul Kool etc. So umbrella Brand,

Amul is used to build and offer value to customers in bigger sense. In literal sense,

a company has high brand equity if it has multi dimensions. Amul has explored

various available opportunities to reach to mass customers. It has opened acommunity on public forums like orkut, sponsored events like Amul voice of India

etc. The brand value of Amul will surely help company to maintain the status of

largest food brand in India at least for sometime in future.

Amuls strategy of using umbrella branding has really paid off. Amuls

advertising and marketing spend has never exceeded 1% of its revenues.

Amuls creativesin the form of billboards or the Taste of India campaignhave

always managed to evoke a larger-than-life brand feel, consistency and spirit of

Indian culture in a contemporary way.

Distribution Network

Consumers expect marketers to deliver products in the locations and forms they

require. To meet expectations of such demanding consumers, alignments of our


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four Distribution Highways of Fresh, Chilled, Frozen and Ambient products were

already made by introducing Project DIL. Subsequently, a major initiative was

taken to enhance distribution network to smaller towns. About 1200 distributors in

small towns across India were added during this initiative. Today about 3000

Distributors ensure availability of our products across India, whether it is in Leh orLakshadweep, in Kutch or Arunachal. Simultaneously, to augment fresh milk

distribution in various markets of India, approximately 1400 exclusive Milk

Distributors have been inducted.

Distribution Process

Company

Dealer Franchisee

Wholesaler

Retailer

Shopkeeper

Consumers

GCMMFs Supply Chain

***Source: IIM(A), Working Paper No. 2002-05-06

AMUL has the largest cold chain network in India (i.e. 18000 refrigerators) as

compared to any other company. The chemical components of milk are water, SNF

and solids. Milk is very perishable product so it has to be consumed within 24

hours. In order to avoid wastage AMUL converts the milk in to SNF and milk


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solids by evaporating the water, which comprises up to 60-70% of milk contents.

This is possible only if the distribution channel right from the producer to the

consumer is well organized. It will be surprising to know that AMUL makes even

the Sarpanch to eat pizza i.e. it supplies pizzas even to rural market.

Last year, theye divided the retail market into 14 specific segments to achieve

further distribution efficiency. This year our focus was on inducting distributors

having expertise in servicing such specific market segments. This initiative is

yielding results by way of ensuring wider availability of our product range.

The role of distributors in our business process has never been more diverse or

more important, as it is today. As a matter of fact, we consider our Distributor to be

the real Marketing Manager of our organization. To enhance business

performance of our Distributors, a workshop on Marketing and Sales Managementwas designed in collaboration with a premier business school. The objective of the

entire initiative was to upgrade the knowledge of our Distributors in terms of

contemporary Business Management Practices, so that they can perform well not

only as our business partner but also as Marketing Managers. During the year, 659

Distributors have undergone this programme in 39 locations. Cold Storage is an

extremely essential component in the Federations distribution process.

Unfortunately, availability of efficient cold storage facilities is grossly inadequate

in our country. To cope up with the increasing need of suitable cold stores closer to

our markets, we have continued our endeavour of creating the Federations owncold stores this year in various locations across the country. We now own 24 state-

of- the art cold rooms of different sizes.

To get an exposure to our cooperative structure, our culture as well as operational

systems and processes, every year we invite our distributors, major retailers and

other business partners to Anand, for Amul Yatra. So far, about 7000 Distributors

and other business partners have participated in this Amul Yatra.

Over recent years, the Federation has successfully introduced new product lines.

This year, in order to leverage their distribution network strengths, to optimize

market supervision expenditures, to achieve increasing efficiency while keeping the

distribution infrastructure lean, focused and productive, the Federation

amalgamated its different distribution networks. Today, they operate an efficient


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distribution infrastructure consisting of 46 sales offices, catering to 3,000

distributors and five lac retailers. Almost every Federation stockist has visited

Anand to participate in a unique programme called 'Amul Yatra'. During this

programme, stockists are exposed to the Federation Philosophy, the culture of

Cooperation, as well as operational Systems and Processes. The Federation has alsoinvited distributor's salesmen from all over the country to Anand for a training

program focused on the Federation's philosophy and developing their selling skills.

2. How do you spell out the importance of establishing theBest Practices by Amul to have competitive advantage?

Amul has Competitive sustainable advantage (CSA) over its competitors. Amuls

CSA lies in its procurement part ,the ability to collect 447,000 litres of milk every

day from 2.12 million farmers ,convert them into goods worth Rs 6 crore and


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distribute them to 5,00,000 retailers across country ,is not easy. No other dairy in

India has such a sustainable procurement network.

Managing the large scale supply chain of Amul which begins from milk producer

and ends with supply to customer from retailer is very critical job. It requires lot of

dedication and hard work from all members of the corporation and also distributors

and retailers across country It is not that Amul had a successful campaign, many of its ads backfired. One ad

meant to target Marathi segment during Ganpati festival had to be removed underpolitical pressure. In another incident on advertisement in which Amul girl was

wearing Gandhi cap had to be again removed. In one another incident Amul had

aired an ad portraying Hussain as Heroine addiction, for this Amul was taken to

court.

Most of Amuls communication is based on latest happenings in the country. That

is why its ads are termed different from what is that of its nearest rival, Mother

dairy. Most of Mother dairy ads are directly targeted to children where as Amuls

ad are on current affairs, in which adults are also involved. The key to retaining their competitive advantage lies in keeping focused on the

basic business principles:

Be Customer-Driven

Adapt quickly to the changing environment.

Anticipate change and act today to meet tomorrow's challenges.

The Federation has invested substantially over the last few years in improving

the quality of its products and services, keeping in mind the emerging

challenges of globalization. In recognition of its achievements in QualityManagement Initiatives.

Their core business is marketing branded food products to household

consumers. Their success has been grounded in two strengths :-

Distribution network, serving more than five lac retail outlets.

Superior product quality - 'Value for money'

The key to maintaining these two competitive advantages rests on their ability

to attract and retain the very best manpower. In this age of intensive

competition, only dedicated and committed professionals can successfully

manage their business.


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3. What is the role and importance of Technology and E-Initiatives by GCMMF?


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Amul assigned the ERP software development project named as Enterprise-

wide integrated application system (EIAS), on a turnkey basis to Tata

Consultancy Services. At present, the EIAS system covers a plethora of

operations like market planning, advertising and promotion, distribution

network planning, stock control, sales and accounting, budgetary control,

quality control management and co-operative service management. Amul has

also connected all its zonal offices, regional offices and members dairies

through VSATs for seamless exchange of information.

Each of Amuls offices is connected by e-mail and all of them send a daily

report on sales and inventory to the main system at Anand. Also, sales offices,

C&F points and wholesale distributors of GCMMF have been connected

through the Internet for timely exchange of information. The customised ERP

EIAS is designed in such a way that it can be plugged into various points of the

supply chain and external system. Moreover, the software is platformindependent and can work on any operating system. Amul is also in the process

of Web-enabling the entire supply chain so that it can capture key information

at the source, and use the same for decision-making. This would include the

likes of transporters, member-manufacturing units, oil packing stations,

suppliers, depots and the entire field force.

The federation has now integrated it's country-wide operations through

successful implementation of the "Enterprise-wide Integrated Application

System". They believe that introduction of similar integrated ERP systems attheir Member Unions will help them ensure that the IT revolution serves their

members better. The Federation is among the Top 100 IT Users in the country.

Currently, there are more than 3,000 computers installed in their village

societies, which support the Automated Milk Collection System. Their goal is to

install computers in all their village societies and to integrate them with their

respective unions. On the market side, their distributors have responded


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enthusiastically to their suggestion of computerizing their operations and getting

email connectivity for better communication with their sales offices. The

distributors can now place their orders on our internet website

www.Amulb2b.com. They continue to receive a good consumer response to

their website www.Amul.com which is noted for its distinct features likecyberstore for ice-cream and other milk products, cricket rankings and the

recently launched e-greetings site.

To strengthen business linkages with the business partners, GCMMF has

enhanced its Amul e-Groupware System by adding more features like e-

mailing the invoices and ledgers to business partners, announcing various

schemes online, calendar facility etc.

Video conferencing is rapidly gaining in popularity, which provides business

with the ability to meet and to work with others over a distance. For real time

communication, better brainstorming, knowledge sharing and informationgathering, we have installed and implemented Video conferencing System at

our Head Office, Zonal Offices and a few Sales Offices.

The world is moving towards virtual reality by creating virtual world on the

Internet. Our Federation has taken the initiatives towards virtual commerce by

creating an online virtual Amul Parlor in the Second Life, an online virtual

world. GCMMF has further advanced the use of Geographical Information

systems by implementing GIS based Sales Analytics solution across various

offices.

The history of Amul shows that it radically changed the way business was done

by eliminating the middleman and bringing the producer closer to the

consumerresulting in benefits for both. Incidentally, it was also one of the

first Indian companies to have a Web presence. Today, Amuls cyberstore

gifting service is capable of servicing consumers in more than 125 cities. Says

Hegde, We have also linked our distributors to our network and also

incorporated Web pages of top retailers in our site, amul.com, as part of our

B2B initiatives. Distributors can place their orders on the website,

amulb2b.com, especially meant for accepting orders from stockists and

promoting Amuls products via e-commerce. Currently, the company receives

queries from overseas agents for distributing its products in countries like the

US, Britain, New Zealand, Singapore and Thailand. As a result of the online

initiatives, today, Amul exports products worth around Rs 100 crore, to

countries in West Asia, Africa and the US. Amul has also launched sites like


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amulgreetings.com and amulkids.com to extend the brand identity to kids and

teenagers who are its target market for its ice-cream and chocolates products.

Also, as a strategy, Amul has a customer feedback channel which uses e-mail

like [email protected] for cheese products and [email protected] for butter

products.

In addition, the organisations corporate intranet site contains all the companys

updates including policies, procedures, functional role and responsibilities of

each person in the organisation. Another example that puts Amul in a league of

its own, is its recruitment policy. For instance, for any new requirement in

different functional areas, candidates have to compulsorily undergo a computer

literacy test, where the minimum passing mark is 80 percent. Explains Vyas,

Our main emphasis is to increase competency at the end user level with the

help of IT. All our employees have undergone computer training according tothe departmental needs so that they can take charge of their responsibilities in

an effective way at the respective supply points.

Amuls success in leveraging IT to its advantage lies in the simple fact that the

organisation has a clear IT vision. For example, after a top-level domain co-

operative was made available, Amul embraced it with gusto. Hegde says that by

developing the Amul.coop Web portal, the organisation will be in a position to

communicate with other similar co-operative movements. As co-operatives can

interact with each other with similar organisations sharing this domain,knowledge can be shared on a pro-active basis, which can lead to further

productivity benefits.

While it has always been argued that investments related to information

technology made in rural India are a disaster, the case of Amul proves that

where there is a will, there is a way. From catchy billboards to being a e-

commerce success story, Amul is truly rural Indias flag-bearer in the IT

revolution.

Amul Dairy Project

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