Distribution Channel AMUL

DISTRIBUTION CHANNEL OF AMUL

A PROJECT REPORT ON


2012-13 1


A PROJECT REPORT ON

“DISTRIBUTION CHANNEL OF AMUL”

SUBMITTED BY

“___________”

FOR THE DEGREE OF

THE BACHELOR OF MANAGEMENT STUDIES

UNDER THE GUIDANCE OF

“MISS _____________”

___________ COLLEGE OF COMMERCE AND ECONOMICS

_________, MUMBAI – 4000____

ACADEMIC YEAR 2010 - 2011

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DECLARATION

I, ___________, OF THE _________ COLLEGE OF COMMERCE AND

ECONOMICS, ___________( E ) , HEREBY DECLARE THAT I HAVE

COMPLETED THE PROJECT ENTITLED “DISTRIBUTION CHANNEL OF AMUL”

IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE THIRD YEAR

OF THE BACHELOR OF MANAGEMENT STUDIES COURSE FOR THE

ACADEMIC YEAR 2012-2013

I FURTHER DECLARE THAT INFORMATION SUBMITTED BY ME IS TRUE

AND ORIGINAL TO THE BEST OF MY KNOWLEDGE.

DATED: _________

Name of the student

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CERTIFICATE

I MISS ______________ HEREBY CERTIFY THAT ROSHANI PAREKH

_________________ STUDYING IN TYBMS AT ______COLLEGE OF COMMERCE

AND ECONOMICS, __________, HAS COMPLETED A PROJECT ON

“DISTRIBUTION CHANNEL OF AMUL” IN THE ACADEMIC YEAR 2012-2013

UNDER MY GUIDANCE.

I FURTHER CERTIFY THAT THE INFORMATION SUBMITTED IS TRUE AND

ORIGINAL TO THE BEST OF MY KNOWLEDGE.

DATED:

Place:

Name of the guide

Examiner’s Sign &Date PROJECT GUIDE

_____________________

College Seal PRINCIPAL

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ACKNOWLEDEGEMENT

I EXPRESS MY SINCERE THANKS TO MISS ______________FOR HER

VALUABLE GUIDANCE IN DOING THIS PROJECT.

I WISH TO TAKE THE OPPORTUNITY TO EXPRESS MY DEEP SENCE OF

GRATITUDE TO PRINCIPAL ___________________________ AND PROF. (Mr.)

________________________ FOR THEIR INVALUABLE GUIDANCE AND

SUPPORT IN THIS ENDEAVOUR. THEY HAVE BEEN A CONSTANT SOURCE

OF INSPIRATION.

FINALLY IT IS THE FOREMOST DUTY TO THANK ALL MY RESPONDENTS,

FAMILY & FRIENDS WHO HAVE HELPED ME DIRECTLY OR INDIRECTLY IN

COMPLETING MY FIELD WORK, WITHOUT WHICH THIS PROJECT WOULD

NOT HAVE BEEN SUCCESSFUL.

Name of the student

2012-13 5


TABLE OF CONTENTS

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CHAPTER 1

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1.1 EXECUTIVE SUMMARY

Imagine going for a morning walk in the wee hours to a park, making a brief stop-

over and coming back home with a belly-full of tasty flavored milk and hot pizza

topped with cheese! Defeats the purpose of the walk, but may make you feel on top of

the world.

Now, imagine the CEO of a dairy company saying, “Ours is not a food company, it is

an IT company in the food business. The most efficient way of building links between

milk producers and consumers so as to provide the best returns for both is through IT

and innovation.”

Or better still, imagine a cooperative movement that has delivered a Rs. 2746 crore

turnover and has been planning actively to take it up to the 10000 crore mark.

Amul India limited, and its team of energetic professionals have planned to take on

HLL in ice-creams, Cadbury in chocolates, and NDDB in a verbal duel to uphold the

cooperative movement. On top of all this, set up a retailing network that would be the

toast of the town.

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CHAPTER 2

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2.1 AMUL STORY

Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative

movement in India. It is a brand name managed by an apex cooperative organisation,

Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is

jointly owned by some 2.8 million milk producers in Gujarat, India.

AMUL is based in Anand, Gujarat and has been a sterling example of a co-operative

organization's success in the long term. It is one of the best examples of co-operative

achievement in the developing economy. "Anyone who has seen ... the dairy

cooperatives in the state of Gujarat, especially the highly successful one known as

AMUL, will naturally wonder what combination of influences and incentives is

needed to multiply such a model a thousand times over in developing regions

everywhere." The Amul Pattern has established itself as a uniquely appropriate

model for rural development. Amul has spurred the White Revolution of India, which

has made India the largest producer of milk and milk products in the world. It is also

the world's biggest vegetarian cheese brand.

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). Currently Amul has 2.8 million

producer members with milk collection average of 10.16 million litres per day.

Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA,

Bangladesh, Australia, China, Singapore, Hong Kong and a few South African

countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has

fresh plans of flooding the Japanese markets. Other potential markets being

considered 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 Bhatol, chairman of the

Banaskantha Union, was elected chairman of GCMMF.

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http://en.wikipedia.org/wiki/Parthi_Bhatol

http://en.wikipedia.org/wiki/Dr_Verghese_Kurien

http://en.wikipedia.org/wiki/Sri_Lanka

http://en.wikipedia.org/wiki/Japanese_people

http://en.wikipedia.org/wiki/Africa

http://en.wikipedia.org/wiki/Hong_Kong

http://en.wikipedia.org/wiki/Singapore

http://en.wikipedia.org/wiki/China

http://en.wikipedia.org/wiki/Australia

http://en.wikipedia.org/wiki/Bangladesh

http://en.wikipedia.org/wiki/USA

http://en.wikipedia.org/wiki/UAE

http://en.wikipedia.org/wiki/Mauritius

http://en.wikipedia.org/wiki/White_Revolution_(India)

http://en.wikipedia.org/wiki/Gujarat

http://en.wikipedia.org/wiki/Anand,_Gujarat

http://en.wikipedia.org/wiki/Gujarat

http://en.wikipedia.org/wiki/Brand

http://en.wikipedia.org/wiki/India

http://en.wikipedia.org/wiki/Cooperative

http://en.wikipedia.org/wiki/Dairy


2.1.1 MASCOT

Since 1967 Amul products' mascot has been the very recognisable "Amul baby" (a

chubby butter girl usually dressed in polka dotted dress) showing up on hoardings and

product wrappers with the equally recognisable tagline Utterly Butterly Delicious

Amul.The mascot was first used for Amul butter. But in recent years in a second wave

of ad campaign for Amul products, she has also been used for other product like ghee

and milk.

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http://en.wikipedia.org/wiki/Milk

http://en.wikipedia.org/wiki/Ghee

http://en.wikipedia.org/wiki/Polka_dot

http://en.wikipedia.org/wiki/Mascot


2.2 EVOLUTION OF THE CO-OPERATIVE MOVEMENT

One of the most powerful co-operative movements originating from the birth state of

Mahatma Gandhi is responsible for the birth and growth of the popular FMCG brand-

AMUL. Before the cooperative movement began, middlemen who supplied milk to

the consumers were exploiting the dairy industry in the Kaira District. It began as a

response to this exploitation and put an end to it. It grew because it responded to the

farmers financially as well as with services. It has thrived because farmers who have a

stake in its success, own it. And because it has been managed by capable

professionals and strengthened by dedicated scientists, technologists and workers, it

has forged ahead. Today in India, there are 75,000 dairy cooperative societies, spread

all over the country with a membership of 10 million. The farmer in the village is now

assured of a better future thanks to these cooperatives. Recently one of the European

Embassies in Delhi requested Amul for information on the five biggest "companies"

in the dairy business. The first three are in the cooperative sector - The Gujarat

Cooperative Milk Marketing Federation (GCMMF), The Kaira District Cooperative

Milk Producers' Union Limited and The Mehsana District Cooperative Milk

Producers' Union. The Kaira District Cooperative is the second best in the country. It

helped to create GCMMF, the apex body of all cooperatives in Gujarat.

2.2.1 - THE HUMBLE BEGINNING

In the forties one firm - Polsons, dominated the dairy industry. Established by a rather

enterprising gentleman who discovered that Kaira District, of what was then Bombay

Presidency, produced a good deal of milk. He established a creamery and for a while

the name Polsons was synonymous with butter - much as Amul is today.

One of Polson's businesses was to supply milk to Bombay. As Kaira district was an

abundant source of the commodity, Polson was chosen to procure it from there. He in

turn, entered into an arrangement with a number of contractors who actually went to

the villages and collected the milk. Everyone was happy. Bombay received

reasonably good quality milk and Polson made a handsome profit. The contractors too

managed to earn large margins by over quoting the farmers. It was only the poor

farmers who were unhappy for it. They invested in the animal feed and fodder and

2012-13 12


they put in their labor. Yet, it was they who received the smallest share of the Bombay

consumers' rupee. The arrangement benefited everyone but them.

2.2.2 - THE FIRST STEP: FORMATION OF KAIRA UNION

Realizing that something needed to be done about the unequal balance of wealth, they

turned to Sardar Vallabhbhai Patel for advice. Sardar Patel knew that their only

chance of earning a decent income was when they themselves gained control over the

resources they created. He also knew that the cooperatives offered them the best

chance of gaining that control. So he advised them to stop selling milk to Polson and

form a cooperative of their own. In his opinion they were to own their own dairy unit.

He said, "Throw out Polson and his milk contractors". They followed his advice and

the Kaira District Cooperative Milk Producers' Union (AMUL) was born, in 1946. By

good fortune, they could get as Chairman - Shri Tribhuvandas Patel, an equally

remarkable man. He understood the concept of cooperation and he understood people.

His integrity was absolute. Because the farmers of Kaira district trusted and respected

Tribhuvandas Patel, the cooperative was able to pass through some very difficult

times and eventually become a model of cooperative dairying throughout the world.

The Kaira Union began with a clear goal, to ensure that its producer members

received the highest possible share of the consumers' rupee. This goal itself defined

their direction. The focus was on production by the masses, not mass production. By

the early 'sixties, the modest experiment in Kaira had not only become a success,

people began to recognize it as such. Farmers came from all parts of Gujarat to

learn.They went back to their own districts and started their own cooperatives. The

result - Together, the district milk producers unions of Gujarat owned the Gujarat

Cooperative Milk Marketing Federation, which markets the milk and milk products

manufactured by its owners. The Federation's turnover was over Rs. 1700 crore

making it the largest in the food industry.

In 1964, the then Prime Minister Shri Lal Bahadur Shastri came to inaugurate cattle

feed factory owned by Amul near Anand. Impressed by the cooperative's success, he

expressed his wish to "transplant the spirit of Anand in many other places". He

wanted the Anand model of dairy development replicated in other parts of the

country. With institutions owned by rural producers, which were sensitive to their

2012-13 13


needs and responsive to their demands, it was an ideal tool for progress. The National

Dairy Development Board was created in 1965 in response to this call.

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2.3 OPERATION FLOOD

The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the

Himalayas. Similar is the story of Amul, which inspired 'Operation Flood' and

heralded the 'White Revolution' in India. It began with two village cooperatives and

250 liters of milk per day, nothing but a trickle compared to the flood it has become

today. Today Amul collects , processes and distributes over a million liters of milk

and milk products per day, during the peak, on behalf of more than a thousand village

cooperatives owned by half a million-farmer members. Further, as Ganga-ma carries

the aspirations of generations for moksha, Amul too has become a symbol of the

aspirations of millions of farmers, creating a pattern of liberation and self-reliance for

every farmer to follow.

2.3.1 - THE START OF A REVOLUTION

The revolution started as awareness among the farmers that grew and matured into a

protest movement and the determination to liberate them. Over four decades ago, the

life of a farmer in Kaira District was very much like that of his counterpart anywhere

else in India. His income was derived almost entirely from seasonal crops. The

income from milch buffaloes was undependable. Private traders and middlemen

controlled the marketing and distribution system for the milk. As milk is perishable,

farmers were compelled to sell it for whatever they were offered. Often, they had to

sell cream and ghee at throwaway prices. In this situation, the one who gained was the

private trader. Gradually, the realization dawned on the farmers that the exploitation

by the trader could be checked only if marketed their milk themselves. In order to do

that they needed to form some sort of an organization. This realization is what led to

the establishment of the Kaira District Cooperative Milk Producers' Union

Limited (popularly known as Amul) that was formally registered on December 14,

1946.

The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June 1948.

An assured market proved a great incentive to the milk producers of the district. By

2012-13 15


the end of 1948, more than 400 farmers joined in more village societies, and the

quantity of milk handled by one Union increased from 250 to 5,000 liters a day.

2.3.2 - OBSTACLES: SPRINGBOARDS FOR SUCCESS

Each failure, each obstacle, each stumbling block can be turned into a success story.

In the early years, Amul had to face a number of problems. With every problem came

opportunity- a chance to turn a negative into a positive. Milk by-products and

supplementary yield, which suffered from the same lack of marketing and distribution

facilities, became encumbrance. Instead of being bogged down by their fate they were

used as stepping-stones for expansion. Backward integration of the process led the

cooperatives to advances in animal husbandry and veterinary practice.

2.3.3 - MILK BY PRODUCTS: AN EXCUSE TO EXPAND

The response to these provided stimulus for further growth. For example, as the

movement spread in the district, it was found that the Bombay Milk Scheme could not

absorb the extra milk collected by the Kaira Union in winter, when the production on

an average was 2.5 times more than in summer. Thus, even by 1953, the farmer-

members had no assured market for the extra milk produced in winter. They were

again forced to sell a large surplus at low rates to the middlemen. The remedy was to

set up a plant to process milk into products like butter and milk powder. A Rs 5

million plant to manufacture milk powder and butter was completed in 1955. In 1958,

the factory was expanded to manufacture sweetened condensed milk. Two years later,

a new wing was added for the manufacture of 2500 tons of roller-dried baby food and

600 tons of cheese per year, the former based on a formula developed with the

assistance of Central Food Technological Research Institute (CFTRI), Mysore. It was

the first time anywhere in the world that cheese or baby food was made from buffalo

milk on a large, commercial scale. Another milestone was the completion of a project

to manufacture balanced cattle feed. The plant was donated by OXFAM under the

Freedom from Hunger Campaign of the FAO.

To meet the requirement of milk powder for the Defense, the Kaira Union was asked

by the Government of India in 1963 to setup additional milk drying capacity. A new

2012-13 16


dairy capable of producing 40 tons of milk powder and 20 tons of butter a day was

speedily completed. It was declared open in 1965. The Mogar Complex where high

protein weaning food, chocolate and malted food are being made was another

initiative by Amul to ensure that while it fulfilled the social responsibility to meet the

demand for liquid milk, its members were not deprived of the benefits to be had from

the sale of high value-added products.

2.3.4 - CATTLE: FROM STUMBLING BLOCKS TO BUILDING BLOCKS

Traditionally dairying was a subsidiary occupation of the farmers of Kaira. However,

the contribution to the farmer's income was not as prominent as his attachment to

dairying as a tradition handed down from one generation to the next. The milk yield

from animals, which were maintained mainly on the by products of the farm, was

decidedly low. That together with the lack of facilities to market even the little

produced rendered the scientific practice of animal husbandry irrational as well as

unaffordable. The return on the investment as well as the prospects of being able to

market the product looked very bleak. It was a vicious cycle reinforced by generations

of beliefs.

The Kaira Union broke the cycle by not only taking upon themselves the

responsibility of collecting the marketable surplus of milk but also provided the

members with every provision needed to enhance production. Thus the Kaira Union

has full-fledged machinery geared to provide animal health care and breeding

facilities. As early as late fifties, the Union started making high quality buffalo semen.

Through village society workers artificial insemination service was made available to

the rural animal population. The Union started its mobile veterinary services to render

animal health care at the farmers' doorstep. Probably for the first time in the country,

veterinary first aid services, by trained personnel, were made available in the villages.

Fully qualified staff mans the Union’s 16 mobile veterinary dispensaries. All the

villages are visited bi-monthly, on a predetermined day, to provide animal health care.

A 24-hour Emergency Service is also available at a fee (Rs. 35 for members and Rs.

100 for non-members). All the mobile veterinary vans are equipped with Radio

Telephone.

2012-13 17


The Union runs a semen production center where it maintains high pedigreed Surti

buffalo bulls; Holstein Friesian bulls, Jersey bulls and 50 per cent crossbred bulls. The

semen obtained from these bulls is used for artificial breeding of buffaloes and cows

belonging to the farmer members of the district. The artificial insemination service

has become very popular because it regulates the frequency of calving in cows and

buffaloes thus reducing their dry period. Not only that, a balanced feed concentrate is

manufactured in the Union's Cattle Feed Plant and sold to the members through the

societies at cost price.

Impressive though its growth, the unique feature of the Amul sagas did not lie in the

extensive use of modern technology, nor the range of its products, not even the rapid

inroads it made into the market for dairy products. The essence of the Amul story lies

in the breakthrough it achieved in modernizing the subsistence economy of a sector

by organizing the rural producers in the areas.

2.3.5 - PEOPLE POWER: AMUL'S SECRET OF SUCCESS

The system succeeded mainly because it provides an assured market at remunerative

prices for producers' milk besides acting as a channel to market the production

enhancement package.

What's more, it does not disturb the agro-system of the farmers. It also enables the

consumer an access to high quality milk and milk products. Contrary to the traditional

system, when the profit of the business was cornered by the middlemen, the system

ensured that the profit goes to the participants for their socio-economic upliftment and

common good.

Looking back on the path traversed by Amul, the following features make it a pattern

and model for emulation elsewhere. Amul has been able to:

Produce an appropriate blend of the policy makers farmers board of management and

the professionals: each group appreciating its roles and limitations

Bring at the command of the rural milk producers the best of the technology and

harness its fruit for betterment

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Provide a support system to the milk producers without disturbing their agro-

economic systems

Plough back the profits, by prudent use of men, material and machines, in the rural

sector for the common good and betterment of the member producers and

Even though, growing with time and on scale, it has remained with the smallest

producer members. In that sense, Amul is an example par excellence, of an

intervention for rural change.

The Union looks after policy formulation, processing and marketing of milk,

provision of technical inputs to enhance milk yield of animals, the artificial

insemination service, veterinary care, better feeds and the like - all through the village

societies.

The village society also facilitates the implementation of various production

enhancement and member education programs undertaken by the Union. The staffs of

the village societies have been trained to undertake the veterinary first-aid and the

artificial insemination activities on their own.

2012-13 19


CHAPTER 3

2012-13 20


3.1 GCMMF: AN OVERVIEW

Gujarat Cooperative Milk Marketing Federation (GCMMF) is the India’s largest food

product marketing organization. It is a state level apex body of milk cooperatives in

Gujarat, which aims to provide remunerative returns to the farmers.

Members 12 district cooperative milk producers' Union

No. of Producer Members 2.36 million

No. of Village Societies 11,333

Total Milk handling capacity 6.9 million litres per day

Milk collection (Total – 2008-09) 2.81 billion litres

Milk collection (Daily Average 2008-09) 5.97 million litres

Milk Drying Capacity 511 metric Tons per day

Cattle feed manufacturing Capacity 2340 MTs per day

3.1.1 - ORGANIZATION STRUCTURE IS DIVIDED INTO TWO PARTS:

External Organization Structure

Internal Organization Structure

External Organization Structure

External Organization Structure is the organization structure that affects the

organization from the out side.

2012-13 21

State Level Marketing Federation

District Milk Product Union Ltd.

Village Milk Product Union Ltd.

Villagers Villagers

Villagers


As we know, GCMMF is unit of Gujarat Milk Marketing Federation, which is a co-

operative organization. The villagers of more than 10000 villages of Gujarat are the

bases of this structure. They all make village milk producers union, district level milk

producers union and then a state level marketing federation is established. The

structure is line relationship, which provides easy way to operation. It also provides

better communication between two stages.

2012-13 22


Internal Organization Structure of Amul

A systematic & well-defined organizational structure plays a vital role & provides

accurate information to the top-level management. An organisation structure defines a

clear-cut line of authorities & responsibilities among the employees of GCMMF. The

Organisation structure of Amul is well-arranged structure. At a glance a person can

2012-13 23


completely come to know about the organization structure. Amul is leaded by the

director under him five branches viz. Factory, Marketing, Accounts, Purchase, Human

Resources Department.

Factory department has a separate general manager under him there are six braches

viz. Production, Stores, Distribution, Cold Storage, Quality, and Deep-freezing. This

department takes care of the factory work.

Marketing department has regional senior marketing manager and under him there is a

regional manager. This department takes care of the marketing aspects of Amul.

Accounts department takes care regarding accounts i.e. day-to-day work. Under the

accountant there is one clerk. Purchase department takes care regarding the purchase

of raw materials and many other things.

Sales Turnover Rs (million) US $ (in million)

1994-95 11140 355

1995-96 13790 400

1996-97 15540 450

1997-98 18840 455

1998-99 22192 493

1999-00 22185 493

2000-01 22588 500

2001-02 23365 500

2002-03 27457 575

2003-04 28941 616

2004-05 29225 672

2005-06 37736 850

2006-07 42778 1050

2007-08 52554 1325

2008-09 67113 1504

2012-13 24


3.2 ANAND PATTERN OF DEVELOPMENT

It began with two village co-operatives and 250 liters of milk per day -- anything but a

trickle compared to the flood it has become today. Today AMUL collects processes

and distributes over 9 lakh liters of milk per day during the peak on behalf of 962

village co-operatives owned by 5.42 lakh farmer members. AMUL has become the

sign and symbol of the aspirations of millions of farmers, and the pattern of liberation

and self-reliance for every farmer.

The Kheda District Co-operative Milk Producers' Union Limited (popularly known as

AMUL) was formally registered on December 14, 1946.

The Kheda Union began pasteurizing milk for the Bombay Milk Scheme in June

1948. An assured market proved a great incentive to the milk producers of the district.

By the end of 1948, more than 400 farmers joined in more village societies, and the

quantity of milk handled by the Union increased from 250 to 5000 litres a day. In the

early years, AMUL had to face a number of problems. The response to these provided

stimulus for further growth. For example, as the movement spread in the district, it

was found that the Bombay Milk Scheme could not absorb the extra milk collected by

the Kheda Union in winter, when the production on an average was 2.5 times the

summer. Thus, even by 1953, the farmer-members had no assured market for the extra

2012-13 25


milk produced in winter. They were again forced to sell a large surplus at low rates to

the middlemen.

The remedy was to set up a plant to process milk into products like butter and milk

powder. A Rs. 5 million plant to manufacture milk powder and butter was completed

in 1955. In 1958, the factory was expanded to manufacture sweetened condensed

milk. Two years later, a new wing was added for the manufacture of 2500 tons of

roller-dried baby food and 600 tons of cheese per year, the former based on a formula

developed with the assistance of Central Food Technological Research Institute

(CFTRI), Mysore.

It was the first time anywhere in the world that cheese or baby food was made from

buffalo milk on a large, commercial scale. Another milestone was the completion of a

project to manufacture balanced cattle feed. The plant was donated by OXFAM under

the Freedom From Hunger Campaign of the FAO. To meet the requirement of milk

powder for the Defense, the Kheda Union was asked by the Government of India in

1963 to set-up additional milk drying capacity.

A new dairy capable of producing 40 tons of milk powder and 20 tons of butter a day

was speedily completed. It was declared open in 1965. The Mogar Complex where

high protein weaning food, chocolate and malted food are being made was another

initiative by AMUL to ensure that while it fulfilled the social responsibility to meet

the demand for liquid milk, its members were not deprived of the benefits to be had

from the sale of high value-added products. The Mogar complex also started

manufacturing Amullite a substitute for butter in 1994. Amul has also set up a new

Dairy Plant to handle 6.5 lakh liters per day with facilities to produce 60 tonnes of

powder and 70 tonnes of butter in a highly automated plant. It has recently set up a 20

MT Cheese plant at Khatraj near Memdabad.

Impressive though its growth, the unique feature of the AMUL sagas did not lie in the

extensive use of modern technology, nor the range of its products, nor even the rapid

inroads it made into the market for dairy products. The essence of the AMUL story

2012-13 26

http://www.fao.org/


lies in the breakthrough it achieved in modernizing the subsistence economy of a

sector by organizing the rural producers in the area.

True, traditionally dairying was a subsidiary occupation of the farmers of Kheda.

However, the contribution to the farmer's income was not as prominent as his

attachment to dairying as a tradition handed down from one generation to the next.

Low milk yield of animals maintained on the by-products of the farm, together with

lack of facilities to market even the little produced, turned the decision to invest in

scientific practice of animal husbandry and nutrition, decidedly irrational; the return

on the investment as well as the prospects of being able to market the product looked

very bleak indeed.

Since its inception, the Kheda Union also believed that the responsibility to collect the

marketable surplus of milk should be coupled with the provision of making the

production enhancement inputs reach the members. The Kheda Union has thus a full-

fledged machinery to provide animal health care and breeding facilities. As early as

late fifties, the Union started making high quality buffalo semen and the artificial

insemination service available to the rural animal population through the village

society workers. The Union started its mobile veterinary services to render animal

health care at the door steps of the farmers. Probably for the first time in the country,

the veterinary first aid service was made available in the villages through trained

village-society workers.

2012-13 27


The Union's 16 mobile veterinary dispensaries have fully qualified staff. All the

villages are visited bi-monthly on a pre-determined day, to provide animal health care.

A 24-hour Emergency Service is also available at a fee (Rs.35 for members and

Rs.100 for non-members). All the mobile veterinary vans are equipped with Radio

Telephones.

The Union runs a semen production centre where it maintains high pedigreed Surti

buffalo bulls, Holstein Fresian bulls, Jersey bulls and 50 per cent cross-bred bulls to

cater to the need of semen for artificial breeding of buffaloes and cows belonging to

the farmer members of the district. Artificial insemination service has become very

popular and effective because it regulates the frequency of calving in cows and

buffaloes and thus reduces their dry period. A balanced feed concentrate is

manufactured in the Union's Cattle Feed Plant and sold to the members through the

societies at cost price.

The system succeeded mainly because it provides an assured market at remunerative

prices for producers' milk, besides acting as a channel to market the production

enhancement package; and does not disturb the agro-system of the farmers. It also

enables the consumer an access to high quality milk and milk products. Contrary to

the traditional system, when the profit of the business was cornered by the

middlemen, the system ensured that the profit goes to the participants for their socio-

economic upliftment and common good. The Union looks after policy formulation,

processing and marketing of milk and provision of technical inputs to enhance milk

2012-13 28


yield of animals: artificial insemination service, veterinary care, better feeds and the

like, all through the village societies.

The village society also facilitates the implementation of various production

enhancement, and member education programmers undertaken by the Union. The

staffs of the village societies have been trained to undertake the veterinary first-aid

and the artificial insemination activities on their own.

2012-13 29


CHAPTER 4

2012-13 30


4.1 AMUL – THE COMMERCIAL BRAND

AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit

"Amoolya," was suggested by a quality control expert in Anand. Variants, all

meaning "priceless", are found in several Indian languages. Amul products have been

in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee,

Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream,

Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India.

(Turnover: Rs. 37.74 billion in 2005-06). Today Amul is a symbol of many things. Of

high-quality products sold at reasonable prices. Of the genesis of a vast co-operative

network. Of the triumph of indigenous technology. Of the marketing savvy of a

farmers' organisation. And of a proven model for dairy development.

4.1 – PRODUCT RANGE

Bread Spreads

Amul Butter

Utterly Butterly

Delicious

Amul Lite

Low fat, low

Cholesterol Bread

Spread

Delicious Table

Margarine

The Delicious way

to eat healthy

Amulya Dairy

Whitener

The Richest, Purest

Dairy Whitener

2012-13 31

http://www.amul.com/bread-lite.html

http://www.amul.com/bread-butter.html

http://www.amul.com/bread-lite.html

http://www.amul.com/bread-delicious.html

http://www.amul.com/powder-dairy.html


Powder Milk

Amul Spray

Infant Milk

Food

Still, Mother's Milk

is Best for your

baby

Amul Instant

Full Cream

Milk Powder

A dairy in your

home

Sagar Skimmed

Milk Powder

Which is especially

useful for diet

preparations or for

use by people on

low calorie and

high protein diet.

Sagar Tea

Coffee Whitener

Fresh Milk

Amul Fresh Milk

This is the most

hygienic milk

available in the

market. Pasteurised

in state-of-the-art

processing plants

and pouch-packed

for convenience.

Amul Gold Milk

2012-13 32

http://www.amul.com/fresh-gold.html

http://www.amul.com/fresh-fmilk.html

http://www.amul.com/powder-coffee.html


http://www.amul.com/powder-skimmilk.html


http://www.amul.com/powder-milkfood.html

http://www.amul.com/powder-milkpowder.html



http://www.amul.com/fresh-fmilk.html

http://www.amul.com/fresh-gold.html


Amul Taaza

Double Toned

Milk

Amul Lite Slim

and Trim Milk

Amul Fresh

Cream

Amul Kool

Chocolate Milk

Amul Kool

Flavoured

Bottled Milk

Amul Kool

Flavoured Tetra

Pack

Amul Shakti

Toned Milk

Amul Masti

Spiced

Buttermilk

Amul introduces the

Best Thirst

Quenching Drink

Amul cheese

Amul Pasteurised

Processed Cheese

100% Vegetarian

Cheese made from

microbial rennet

Amul Cheese

Spreads

Tasty Cheese

Spreads in 3 great

flavours.

2012-13 33

http://www.amul.com/cheese-spreads.html


http://www.amul.com/cheese-cheddar.html


http://www.amul.com/fresh-masti.html



http://www.amul.com/fresh-shakti.html


http://www.amul.com/fresh-flavouredpack.html



http://www.amul.com/fresh-flavoured.html



http://www.amul.com/fresh-chocolate.html


http://www.amul.com/fresh-cream.html


http://www.amul.com/fresh-slim.html


http://www.amul.com/fresh-tazza.html














Amul Emmental

Cheese

The Great Swiss

Cheese from Amul,

has a sweet-dry

flavour and hazelnut

aroma

Amul Pizza

Mozzarella

Cheese

Pizza cheese...makes

great tasting pizzas!

Gouda Cheese

For Cooking

Amul / Sagar Pure

Ghee

Made from fresh

cream. Has typical

rich aroma and

granular texture. An

ethnic product made

by diaries with

decades of experience.

Cooking Butter

Amul Malai

Paneer

Ready to cook paneer

to make your favourite

recipes!

Utterly Delicious

Pizza

2012-13 34

http://www.amul.com/cooking-pizza.html


http://www.amul.com/cooking-paneer.html


http://www.amul.com/cooking-butter.html

http://www.amul.com/cooking-sagar.html


http://www.amul.com/cheese-gouda.html

http://www.amul.com/cheese-mozzarella.html



http://www.amul.com/cheese-emmental.html




http://www.amul.com/cheese-gouda.html


http://www.amul.com/cooking-butter.html




Mithai Mate

Sweetened Condensed

Milk - Free flowing

and smooth texture.

White to creamy color

with a pleasant taste.

Masti Dahi

Health Drink

Nutramul

Malted Milk Food

made from malt

extract has the

highest protein

content among all

the brown beverage

powders sold in

India.

Amul Shakti

Health Food

Drink

Available in Kesar-

Almond and

Chocolate flavours.

Desserts

Amul Ice Creams

Premium Ice Cream

made in various

varieties and flavours

with dry fruits and

nuts.

Amul Shrikhand

A delicious treat,

anytime.

2012-13 35

http://www.amul.com/desserts-shrikhand.html

http://www.amul.com/desserts-icecream.html

http://www.amul.com/health-toned.html



http://www.amul.com/healthy-nutramul.html

http://www.amul.com/cooking-mastidahi.html

http://www.amul.com/cooking-mithai.html

http://www.amul.com/cooking-mithai.html

http://www.amul.com/cooking-mastidahi.html

http://www.amul.com/healthy-nutramul.html


http://www.amul.com/desserts-icecream.html

http://www.amul.com/desserts-shrikhand.html


Amul Mithaee

Gulab Jamuns

Pure Khoya Gulab

Jamums...best served

piping hot.

Gulab Jamun Mix

Amul Chocolates

The perfect gift for

someone you love.

Amul Lassee

Amul Basundi

2012-13 36

http://www.amul.com/desserts-basundi.html

http://www.amul.com/desserts-lassee.html

http://www.amul.com/desserts-chocolates.html

http://www.amul.com/desserts-jamunmix.html

http://www.amul.com/desserts-gulabjamun.html



http://www.amul.com/desserts-jamunmix.html

http://www.amul.com/desserts-chocolates.html

http://www.amul.com/desserts-lassee.html

http://www.amul.com/desserts-basundi.html


4.2 BCG MATRIX

The BCG Growth-Share Matrix is a portfolio planning model.. It is based on the

observation that a company's business units can be classified into four categories

based on combinations of market growth and market share relative to the largest

competitor, hence the name "growth-share". Market growth serves as a proxy for

industry attractiveness, and relative market share serves as a proxy for competitive

advantage. The growth-share matrix thus maps the business unit positions within

these two important determinants of profitability.

4.2.1 BCG GROWTH-SHARE MATRIX

This framework assumes that an increase in relative market share will result in an

increase in the generation of cash. This assumption often is true because of the

experience curve; increased relative market share implies that the firm is moving

forward on the experience curve relative to its competitors, thus developing a cost

advantage. A second assumption is that a growing market requires investment in

assets to increase capacity and therefore results in the consumption of cash. Thus the

position of a business on the growth-share matrix provides an indication of its cash

generation and its cash consumption.

It is observed that the cash required by rapidly growing business units could be

obtained from the firm's other business units that were at a more mature stage and

generating significant cash. By investing to become the market share leader in a

rapidly growing market, the business unit could move along the experience curve and

develop a cost advantage. From this reasoning, the BCG Growth-Share Matrix was

born.

Here, we shall consider the products of GCMMF (Amul India). The products to be

placed in the BCG matrix for the study are, Amul Butter, Amul Ice – cream, Amul

Kool and Amul Chocolates.

2012-13 37

http://www.netmba.com/strategy/experience-curve/


THE FOUR CATEGORIES ARE:

Question marks - Question marks are growing rapidly and thus consume large

amounts of cash, but because they have low market shares they do not generate much

cash. The result is a large net cash comsumption. A question mark (also known as a

"problem child") has the potential to gain market share and become a star, and

eventually a cash cow when the market growth slows. If the question mark does not

succeed in becoming the market leader, then after perhaps years of cash consumption

it will degenerate into a dog when the market growth declines. Question marks must

be analyzed carefully in order to determine whether they are worth the investment

required to grow market share.

For Amul brand, Amul Kool and Amul Chocolates are a perfect example of a

Question mark product or a problem child. Question marks business are wait and

watch business. Amul kool and the chocolates.are businesses the company entered

because it felt that both these product category have high growth potential.

Stars - Stars generate large amounts of cash because of their strong relative market

share, but also consume large amounts of cash because of their high growth rate;

therefore the cash in each direction approximately nets out. If a star can maintain its

large market share, it will become a cash cow when the market growth rate declines.

The portfolio of a diversified company always should have stars that will become the

next cash cows and ensure future cash generation.

Amul Ice – cream, is a star generating huge amounts of cash for the company. No

doubts it demands huge amount of investments as well but at the same time has

enormous growth rate. It has still maintained its large market share in competition

with other large brands like ‘Kwality Walls Ice – cream’ and ‘Dullops’ etc. It has

earned very high returns compared to its investments and continues to be so. The

company hopes to cash on this product in future.

Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that

is greater than the market growth rate, and thus generate more cash than they

consume. Such business units should be "milked", extracting the profits and investing

as little cash as possible. Cash cows provide the cash required to turn question marks

2012-13 38


into market leaders, to cover the administrative costs of the company, to fund research

and development, to service the corporate debt, and to pay dividends to shareholders.

Because the cash cow generates a relatively stable cash flow, its value can be

determined with reasonable accuracy by calculating the present value of its cash

stream using a discounted cash flow analysis.

Amul Butter is one of the unbeatable product in the product profile of the company. It

is primarily their most successful product with hardly any competitors in the market.

The pricing of this product is absolutely strategic so as to avoid further competitors

from entering this segment of the product consumers. The advertisements and

billboards of this product is major contributor to the sales. It is the oldest in the

market and hence still enjoys the First Mover Advantage, as per the law of marketing.

This product has been a thorough cash cow from the beginning since it gave huge

returns with lowest investments which made it easy for the company to plough those

profits for other products, i.e the Question Mark and the Star segments.

Dogs - Dogs have low market share and a low growth rate and thus neither generate

nor consume a large amount of cash. However, dogs are cash traps because of the

money tied up in a business that has little potential. Such businesses are candidates for

divestiture.

The unfortunate product for any company is when it enters the Dog segment. The

most unsuccessful product for the company has been Amul – Ready to eat Pizza. The

company had to call off the product from its list of products. Inspite of all the

marketing strategies the company undertook to make this product a success it proved

to be futile. Somehow, the company could not induce the idea of ready –to-eat pizza

in the minds of the consumers. With tough competitors like ‘Pizza Hut’ and ‘Dominos

Pizza’ it was wise for them to withdraw the product from the market to avoid further

losses for the company

2012-13 39


4.3 SWOT ANALYSIS

4.3.1 - STRENGTHS

Demand profile : Absolutely optimistic. Milk being a necessity product, the

demand will stay and the sales at GCMMF are bound to increase over a period of

time.

Margins: Quite reasonable, even on packed liquid milk. The margins are enough to

limit the entry of potential entrants.

Flexibility of product mix : Tremendous. With balancing equipment, GCMMF

has kept adding a wide array of products to its product line.

Availability of raw material: Abundant. Presently, more than 80 per cent of

milk produced is flowing into the unorganized sector, which requires proper

channelization. Amul & GCMMF have leveraged this and has got itself a strong base

of suppliers who provide them milk throughout the year. Large number of dairy

plants in public and cooperative sectors besides several others coming

up in the private sector would result in competition. Because of this the

end consumer would benefit and a good product mix would emerge.

Technical manpower : Professionally trained, technical human resource pool,

built over last 30 years is the strength that GCMMF has. The employees of GCCMF

are highly recognized in the industry and have earned name for themselves as well as

the federation.

Enhanced Milk Production: Increase in the milk production with

consequently increased availability of milk processing has led to

increase in consumption and faster access to the consumers through

effective distribution. The technology is brought from Denmark and the

production of milk has benefited from that.

2012-13 40


Transportation: The transportation facilities and the easy availability

of the special trucks have provided a boost. Cold refrigerated trucks are

there in place and the warehouses also have the cold storage facilities

that facilitate the transportation.

Vast resources: Country has vast natural resources which offer

immense potential growth and development for dairying. Moreover the

financial resources available with the federation are immense and the

reputation is such that in case of any further requirements, it can

approach any institution and raise any form of capital.

Increasing purchase power and changing tastes of the consumers:

The purchasing power of the residents is increasing. As a result a lot of

products are being consumed. Moreover, the consuming habits are

changing. As a result, the demand for products such as butter and

cheese is increasing at a very rapid rate.

4.3.2 WEAKNESSES

Perishability: Pasteurization has overcome this weakness partially. UHT gives

milk long life. Still perishability is there at the milk vendors end. This does result in

loss of some production. But Amul Dairy is taking steps to store milk at the vendors

end. Surely, many new processes will follow to improve milk quality and extend its

shelf life.

Lack of control over yield : Theoretically, there is little control over milk yield.

A lot depends upon the monsoon in the country. This is because of the quality of

cattle feed that would be available will not have the required nutritional content. Steps

are taken to provide awareness regarding these and the penetration of quality feed is

being increased. Moreover, increased awareness of developments like embryo

transplant, artificial insemination and properly managed animal husbandry practices,

coupled with higher income to rural milk producers should automatically lead to

improvement in milk yields.

2012-13 41


Logistics of procurement : Woes of bad roads and inadequate transportation

facility make milk procurement problematic. All these factors lead to perishability of

the procured milk. But with the overall economic improvement in India, these

problems would also get solved.

Erratic power supply : The erratic power supply would cause harm in the

processing of milk.

Underdeveloped systems : There still exist underdeveloped raw milk

collection systems in some parts of the country. However steps are

being taken such as setting up of cold storage points at key collection

centers to combat the situation.

Lack of proper implementation : Dairy development programmes have not

been fully implemented as per the needs of the region in different agro-climatic zones.

Infrastructure: The infrastructure that is available is not up to the current world

standards. Also lack of infrastructure for offering dairy business management

programmes to the trained personnel is creating a hindrance.

4.3.3 OPPORTUNITIES

"Failure is never final, and success never ending”. Dr Kurien bears out this

statement perfectly. He entered the industry when there were only threats. He met

failure head-on, and now he clearly is an example of ‘never ending success’! If dairy

entrepreneurs are looking for opportunities in India, the following areas must be

tapped:

Competition: With so many newcomers entering this industry, competition is

becoming tougher day by day. But then competition has to be faced as a ground

reality. The market is large enough for many to carve out their niche. Moreover due to

competition, there is a chance to better serve the market with innovative products.

2012-13 42


Value addition : There is a phenomenal scope for innovations in product

development, packaging and presentation. Given below are potential areas of value

addition:

Steps should be taken to introduce value-added products like shrikhand , ice

creams, paneer, khoa , flavored milk, dairy sweets, etc. This will lead to a greater

presence and flexibility in the market place along with opportunities in the field of

brand building.

Addition of cultured products like yoghurt and cheese lend further strength - both in

terms of utilization of resources and presence in the market place.

Yet another aspect can be the addition of infant foods, geriatric foods and nutritional.

Export potential: Efforts to exploit export potential are already on. Amul is

exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new

GATT treaty, opportunities will increase tremendously for the export of agri-products

in general and dairy products in particular. There is a strong basis of cost efficiency,

which GCMMF can leverage in the world market.

Markets: The market for the traditional as wells as processed dairy products is

expanding both at the domestic and international front.

IT support: Software is now available for project formulation for dairy enterprise. It

has also computerized its production processes. Mother Dairy was the first fully

computerized dairy in India. In its Anand plant all products are processed

computerized, which does not have any hand touch during any stage of process.

4.3.4 THREATS

Milk vendors, the un-organized sector: Today milk vendors are occupying the

pride of place in the industry. Organized dissemination of information about the harm

that they are doing to producers and consumers should see a steady decline in their

importance.

2012-13 43


Infestation: There are increasing incidents of chemical contaminants as well as

residual antibiotics in milk.

Quality: The quality of the milk is found to be poor as compared to the international

standards. One of the reasons for these according to the EU and America is the

method of milching the milk. In these nations the milk is hands by the farmers owning

the cattle do milched with the help of machines, while in India.

Exploitation: The liberalization of the Dairy Industry is likely to be exploited by the

multinationals. They will be interested manufacturing the milk products, which yield

high profits. It will create milk shortage in the country adversely affecting the

consumers.

Subsidy by Western Nations: There have been incidences wherein the Western

nations subsidizing the dairy products by a few means like transportation. Because of

such reasons the final price of the product goes below the prices prevailing in the

Indian Market. Hence it proves a threat to GCMMF’s and other Indian dairy products.

Creation of Non Tariff Barriers by Developed Nations: The Developed Nations have

created Non Tariff Barriers related to Quality of the milk specifically. They want that

the milk be processed with potable Air and Water. They also want that the milching of

cattle be done with the help of machines. However this type if system is yet to evolve

in India. Because of these reasons they are reducing the market potential of Indian

made products, where GCMMF holds a lions share.

The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’

far outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are

fundamental and weaknesses and threats are transitory. Any investment idea

can do well only when you have three essential ingredients: entrepreneurship

(the ability to take risks), innovative approach (in product lines and marketing)

and values (of quality/ethics).

2012-13 44


4.4 MICHAEL PORTERS FIVE FORCES ANALYSIS

According to Porter (1980) a firm must be analyzed in relation to its industry. Factors

outside the industry tend to influence all the industry’s firms in the same way and are

thus not as important to study.

To a large extent, industry structure governs the strategies open to the firms. The

profitability and attractiveness of an industry is dependent of the level of competition.

Competition in an industry originates from industry structure and goes well beyond

the behavior of individual competitors.

According to Porter, each industry has a potential profitability and the profitability for

the firms is dependent on the competitive forces in the industry. Porter identifies five

competitive forces that derive from the ambition to obtain as large share of the

profitability as possible. The five forces are the foundation of the five-force model.

2012-13 45


4.4.1 PORTER’S FIVE-FORCE MODEL

The major competitors of the Amul dairy include:

The success of the national and local competitor’s brands includes effective

distribution system, advertising, good pricing policy etc. The factors ascribed by

porter are:

Threats of new entrants

Bargaining power of suppliers

Bargaining power of buyers

Rivalry among competitors

Threats from substitutes

2012-13 46

Milk Gayatri

Royal

Sardar

Uttam

Shreshtha

Ice Crean Vadilal

Havmor

Kwality Walls Max

Local & Regional players

Ghee Gayatri

Nestle

Milk Powder Nestle

Chocolate Nestle

Cadbury


These factors can be explained in context to GCMMF as below:

Threats of New Entrants

Economies of Scale: GCMMF enjoys economies of scale, which is difficult to match

by any other competitor. It is because of this reason that no regional competitor has

grown to a national level.

Cost and Resource advantages: Amul dairy is co-operative society. That means

“cooperation among competitive” is the fundamental principle. Amul dairy is

managed under the norms of GCMMF and market the products under the brand name

‘Amul’, which has a very good reputation at domestic and international level. Here,

the raw material procurement is very difficult for the new entrants. Consequently

Capital requirement is also high. Still new entrants are emerging such as domestic and

international players. So the threats of new entrants are moderate.

Brand Preferences and Consumer Loyalty: There is an immense level of Brand

Preference of Amul in the minds of the people. The level of preference specifically in

the liquid milk sector is that they would go to other retailer if the retailer does not

have milk.

Access to Distribution Channels: The distribution channel of GCMMF is a very

planned and perfect one. For any new entrant to enter it would be a very difficult task.

For GCMMF the result is years of hard work and its investment in its employees as

well as at different levels in the distribution network.

Inability to match the technology and specialized know-how of firms already in

the industry: The technology used by Amul is imported from Denmark. It is a state

of art technology. To get this technology in India, a firm would require a huge amount

of resources.

Capital Requirements: The total investment required in the industry is huge and is a

decision worth considering even for MNC’s. The investment decisions cover the

2012-13 47


processing costs as well as the marketing costs. To compete with the brand Amul in

India is difficult as Amul is synonymous to Quality.

Bargaining Power of Supplier

The objective of Amul dairy is not profiting. As it is a part of co-operative society, it

runs for the benefit of farmers those are the suppliers of milk and users of milk

products. According the concept of the cooperative society supplier has bargaining

power to have a good return on his or her supply. However, supplier has limited rights

to bargain with the cooperative society because it is made and run for the sake of mass

and not for individual benefit. But it is made sure that the supplier gets his fair share

of return.

There is appropriate bargaining power of the supplier. In olden days there were not

any kind of cooperative societies as the farmer was exploited. But, nowadays the

farmer’s rights are protected under the cooperative rules and regulations, which

ultimately results in moderate power of bargaining from the supplier.

Bargaining Power of Buyers

Cost of switching to competitor brands: The switching of brands is seen very much

in products such as ice cream, curd, milk powders, milk additives etc. but it can be

seen comparatively less in liquid milk category. Even if the buyers shift to the other

brands of milk, the value that they get is less than they would get from consuming

Amul.

Large no. of buyers: Milk is a necessity product and hence is a mass product. It has

a considerable share of the rupee spent by any Indian. Moreover the buyers are spread

evenly over the country and do not have any bargaining power.

Rivalry among competitors

2012-13 48


Demand for the product: The demand of the products of GCMMF is increasing at a

very healthy rate. To stand against the rivalry GCMMF is coming with a wide range

of products.

Nature of Competitors: In different business category GCMMF faces competition

from different players. In the Milk powder category it faces competition from

Cadbury & Nestle, in the chocolate category also I faces competition from Cadbury &

Nestle. While in the ice cream market it faces competition from Kwality Walls Max

and Havmor. In butter and chesses it faces competition from Britannia. Moreover in

almost all categories there is presence of local retailers and processors and milk

vendors. Rivalry intensifies as each of the competitors has different lines and this

would in turn depend on the importance the line holds for the competitor.

Mergers and Acquisitions: As such in the industry there are no mergers or

acquisitions. However if any MNC wishes to enter through this route then the

competition might be severe.

Threats of Substitute

Availability of attractive priced substitutes: Different substitutes are available for

different category of products. There is ample availability of low priced substitutes

from local vendors and retailers. This is a front where GCMMF is still finding hard to

combat.

Satisfaction level of substitutes: Customers do consider these products as equal on

quality if not better then the products of GCMMF. Hence the rate of customers

switching to the substitutes is very high. Moreover the buyers also can switch to the

customers easily without any hurdles.

Not immediate substitutes: Distant substitutes are present in many of the categories

of business of GCMMF. For example in the Masti Buttermilk category it faces

competition from cold drinks and ice cream.

2012-13 49


These 5 forces interact among themselves at different degrees over a period of time.

Moreover it will get intense or loosen up depending upon the moves of its

competitors, buyers, suppliers, etc. However GCMMF has been able to outperform on

almost all fronts excluding a few lines of business.

2012-13 50


CHAPTER 5

2012-13 51


5.1 PRODUCTION

Explosion of the production technology and changes in technical field is going to

bring out revolution in the industry sector which eventually gives stand to study and

favors the come backing subject i.e. production and management.

Production and operation management is planning, organizing, staffing, directing and

controlling of all the production system those portion of organization that convert

inputs into products and services. In general production system takes raw material,

personnel, machines, buildings and other resources and produce products and

services.

The core of production system is its conversion subsystem where in workers; raw

materials are used to convert inputs into products and services. This production

department is at heart of the firm, as it is able to produce low cost products and

superior quality in timely manners.

Thus, there arises enormous need of giving due importance to this department as a

whole and a strong concrete base being foundation pillars of a manufacturing

organization, if the intention is to succeed domestically and globally.

5.1.1 CO OPERATIVE MILK PRODUCING SOCIETIES IN GUJARAT

Following are the cooperatives that function under GCMMF.

Ahmedabad Dist Coop Milk Producers’ Union Ltd, Ahmedabad. Soc: 433, Mems:

52,428. Av Milk Proc: 90,000 lpd.

Banaskantha Dist Coop Milk Producers’ Union Ltd, Palanpur. Soc: 1,130, Mems:

97,251. Av Milk Proc: 295,000 lpd.

Baroda Dist Coop Milk Producers’ Union Ltd, Baroda. Soc: 783, Mems: 156,691.

Av Milk Proc: 225,000 lpd.

Bharuch Dist Coop Milk Producers’ Union Ltd, Bharuch. Soc: 289, Mems:

37,900. Av Milk Proc: 38,000 lpd.

Bhavnagar Dist Coop Milk Producers’ Union Ltd, Bhavnagar. Soc: 190, Mems:

25,532. Av Milk Proc: 23,000 lpd.

2012-13 52


Gandhinagar Dist Coop Milk Producers’ Union Ltd, Gandhinagar. Soc: 56,

Mems: 13,000. Av Milk Proc: 46,500 lpd.

Junagadh Dist Coop Milk Producers’ Union Ltd, Junagadh. Soc: 400, Mems:

41,500. Av Milk Proc: 73,000 lpd.

Kaira Dist Coop Milk Producers’ Union Ltd, Amul Dairy, Anand. Soc: 943,


Kutch Dist Coop Milk Producers’ Union Ltd, Kutch Dairy, Madhapar. Av Milk

Proc: 25,000 lpd.

Mehsana Dist Coop Milk Producers’ Union Ltd, Dudhsagar Dairy, Mehsana. Soc:

1,020, Mems: 292,800. Av Milk Proc: 704,402 lpd.

Panchmahal Dist Coop Milk Producers’ Union Ltd, Godhra. Soc: 1,133, Mems:

126,510. Av Milk Proc: 112,000 lpd.

Rajkot Dist Coop Milk Producers’ Union Ltd, Rajkot. Soc: 193, Mems: 29,620.

Av Milk Proc: 50,000 lpd.

Sabarkantha Dist Coop Milk Producers’ Union Ltd, Sabar Dairy, Himatnagar.

Soc: 1,315, Mems: 200,482. Av Milk Proc: 322,346 lpd.

Surat Dist Coop Milk Producers’ Union Ltd, Sumul Dairy, Surat. Soc: 864,


Surendranagar Dist Coop Milk Producers’ Union Ltd, Surendranagar. Soc: 486,


Valsad Dist Coop Milk Producers’ Union Ltd, Vasudhara Dairy, Valsad. Soc:

348, Mems: 35,900. Av Milk Proc: 74,400 lpd.

5.1.2 - PLANT LAYOUT

Plant layout is the overall arrangement of the machine tools, handling equipments,

storeroom and other various accessories required for facilitating production in a

factory. These arrangements are pre-planned with the results that the building has

been constructed to fit a layout of a given process.

AMUL plant is indigenously worked out with facilitation of various production

processes and production of multi products under one plant. The total plot is nearly

about 2.27 kms. Separate buildings are provided with required arrangements of

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machine tools handling and computers connection through the control room to fit for

varying product-manufacturing departments.

The plant is engaged in producing milk, ice creams, milk powder and ghee. Entire

department is uniquely provided with facilities for the processing each product. There

are 4 production departments and packaging departments pertaining to each product

respectively.

Thus, plant layout encompasses all production and service facilities and provides for

the most effective utilization of the men, materials and machines constituting the

process. It is the master blue print of coordinating all operations.

A good layout results in elimination or minimization of accidents and hazards and

cost while increases the output. Thus a good layout specifically is observed to be

beneficial on the following grounds:

Efforts minimization

Fewer material handling will be provided manufacturing units cost will be lover

Bottlenecking of production will be eliminated

Total item in process will be less

Specialization of operations is facilitated

Less inspection will be required

Production control will be easier to achieve

Plant investment can be held to the necessary minimum

Plant and equipment obsolescence may be less

Wastage space will be eliminated

Thus, a true beneficiary is provided to the plant through good and sound planning for

plant layout.

5.1.3 - OPERATING ANALYSIS

Amul’s only source of raw material is Village Milk societies. Milk is brought from

such village milk societies every morning and evening. This milk is then sent to the

dairy plant. In the dairy plant the milk is processed i.e. it is made free from germs.

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5.1.4 - MILK PROCESSING

The entire process of milk can be divided into following steps:

Milk Processing Chart:

Collection of Raw-Milk

Electronic Milk Test

MethylineBlu Reduction Test

Purchasing And Standardizing Process

Separation Process

Quality Check

Packaging Process

Cold Storage

Steps in Production Process

1. Collection of Raw Milk

Raw milk is collected from different co-operative societies of Gujarat. About 122000

liters of raw milk is collected per day. Before this milk is sent to the laboratory for

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testing the ‘FAT & SNF’ proportion, the milk is separated from the raw milk. The

milk is taken from the chilling centers to Ahmedabad with the help of trucks.

After collecting the samples of milk, they are taken to the laboratory, where two types

of tests are conducted.

Electronic milk test

Methyline blue reduction test

Electronic Milk Test

Before pasteurizing the milk the samples are taken to the laboratory. In the laboratory

with the help of machine called electronic milk tester, the proportion of SNF & FAT

is checked with phosphate solution. When the colour of the milk becomes yellow, it is

sent for pasteurization.

Methyline Blue Reduction Test

Another test, which is taken in the laboratory, is called Methyline blue reduction test.

This test is conducted for checking for how long the milk will remain fresh. To check

this, 10 ml of milk is taken and 1 ml of methyline blue solution is added to it. It is

then kept under water at 57-degree C. After one hour, if the solution losses its colour

than it is called raw milk. If the solution remains the same even after 5 hours than it is

considered as fresh milk, which remains constant for a long period of time.

The dairy fixes the proportion of FAT & SAF.

MILK SNF FAT

Buffalo 9% 6%

Cow 8.5% 4.5%

After laboratory gives green signal and confirming the raw milk at the reception dock

is brought in to the house connected with the pump is sent to the milk processing

plant. This is than chilled below 4 degree C. and then stored in milk silos. After that

milk is processed this has two steps i.e. pasteurizing and standardizing.

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2. Pasteurizing & standardizing

After collecting and checking and conducting laboratory tests, the pasteurizing

process is conducted. To pasteurized the milk means to kill all the germs in the milk

by a particular method which was invented by a scientist called James Pasteur and so

the name pasteurization.

In pasteurizing, the milk is first heated at 72 C to 76 C for 15 seconds and then it is

immediately cooled below 4 C. By this method they destroy the pathogenic bacteria

present in the raw milk. But if the right degree of temperature is not provided there

are chances that the milk might still contain germs. After this process some milk goes

to separator machine and remaining is proportionately sent for standardization.

Standardization process is known such as it bifurcates the milk in 3 categories varying

according to that FAT & SNF contents. The equipment named OSTA. Auto

standardization adjusts the fat directly. The computer is just ordered whether gold or

standard milk is to be rationed and the same will be received with appropriate

contents.

Ready Milk = Pasteurized + Standardized.

3. Separation Process

Separator machine separates two kinds of products, skimmed milk & cream, through

channels. There are 100 disks fixed in separator machines, which revolve at 5000 rpm

(revolution per minute). It is taken to the tanks, which has the capacity of 20000 litres.

Whenever the milk is needed from the tank, it is tested in the laboratory and the

deficit proportion fat is added by mixing cream. This process continues for 24 hours.

4. Quality Check

Pasteurized milk is sent for a quality check in the Quality Assurance laboratory of the

dairy plant. Within 14 seconds FAT and SNF proportion is received regarding 30 lack

litres of milk. The total investment put into the lab by the Dairy plant is of Rs. 6

crores.

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This laboratory only checks and analyses the powder, milk and ghee. There is a

separate ice-cream analysing laboratory.

5. Packing Process

After this the milk is sent for packing to the milk packing station in the dairy plant. In

the milk packaging station there are huge pipelines and behind each of them there is

polyfill machine from which the material to pack milk comes out. There are 12 such

polyfill machines in the packaging station from which the materials to pack milk

comes out. From each of these 12 machines 100 pouches are packed in one single

minute.

6. Storage

Then the milk is sent to the cold storage of the dairy where the milk is stored until it is

dispatched. Here the milk is stored at temperature ranging from 5 C to 10 C, it is

maintained with the help of exhaust fans having silicon chips. About 40000 litres of

milk is dispatched from the cold storage of the dairy plant everyday. The damaged

pouches are kept a side and the milk is once again put to the tank.

7. Milk Powder

For converting milk powder first of all water content is evaporated in condensing

plant. By this process they get condensed milk, it is used as a raw material. There

after the milk is sent to the drying plant. The spray drying plant is huge in size with a

height of 70 feet. The plant is divided into many floors to enable easy use of the plant.

First of all the raw material i.e. condensed milk is put into the first floor of the plant

along with air at 200 C. By this process the remaining water, which the condensed

milk might have retained is also evaporated and milk comes as powder but this is not

the last stage.

This powder is again put in to a machine called milk calendaria, where it is turned in

to real milk powder. Its capacity is 1000 litres per 15 minutes. Then again this milk

powder is put into a Dense Waise Vessel. Here the lumps are removed and uniform

milk powder is sent up.

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After processing the powder is sent for quality checking at quality assurance

laboratory. After the quality confirms, this milk powder is differentiated, by adding

different flavors to them like elaichi, chocolate & sugar free milk powder. Thereafter

they are packed in tins and boxes. Afterwards it is stored at storage department.

5.2 DISTRIBUTION NETWORK

Distribution Network

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Most producers work with marketing intermediaries to bring their products to market.

The marketing intermediaries make up a marketing channel also called distribution

cannel. Distribution channels are sets of interdependent organizations involved in the

process of making a product or service available for use or consumption.

The Head Office of GCMMF is located at Anand. The entire market is divided in 5

zones. The zonal offices are located at Ahmedabad, Mumbai, New Delhi, Kolkata and

Chennai. Moreover there are 49 Depots located across the country and GCMMF

caters to 13 Export markets.

A zero level of channel also called a direct marketing channel consists of a

manufacturer selling directly to the final customers. A one level channel; contains one

selling intermediary such as retailer to the final customers. A two level channel two

intermediaries are typically wholesaler and retailer. A three level channel are typically

wholesaler, retailer and jobber in between.

GCMMF has an excellent distribution. It is its distribution channel, which has made it

so popular. GCMMF’s products like milk and milk products are perishable. It

becomes that much important for them to have a good distribution.

5.2.2 DISTRIBUTION CHART

We can see from above figure that GCMMF distribution channel is simple and clear.

The products change hands for three times before it reaches to the final consumer.

First of all the products are stored at the Agents end who are mere facilitators in the

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Products

Agents

Wholesaler

Retailer

Consumer


network. Then the products are sold to wholesale dealers who then sell to retailers and

then the product finally reaches the consumers.

Amul Parlors

Amul has come out with a unique concept of Amul Parlours. They have classified

those under four types namely:

Center for excellence

On the Move

Amul Parlours

Amul Preferred Outlets

Center for Excellence: These Amul Parlours are specifically at a place, which has a

class of excellence of its own. We can find such parlors at the Infosys, IIMA, NID

Ahmedabad etc.

On the Move: These parlors are at the railway stations and at different state bus

depots across different cities.

Amul Parlours: These parlors can be seen at different gardens across different cities.

These are fully owned by Amul.

Amul Preferred Outlets: These are the private shops that keep the entire of product

range of Amul. They also agree not to keep any competitor brands in the outlets. They

can keep other brands that are in the non-competitor category.

Amul has more than 200 such outlets right now. It wants to have 1,00,000 parlors by

the end of the year 2010.

5.2.3 - MANAGING COMPETITION

The Indian market is dominated by a large number of small local and regional players.

There are an estimated 150 manufacturers in the organized segment, which accounts

for 30-35% of sales and about 1000 units in the unorganized segments of the market.

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In the organized segment the significant brands are Kwality Walls , Vadilal, Amul,

Havmor, Mother dairy and Baskins & Robbins. GCMMF is facing very tough

competition from both in and outside India.

Amul combats competition from its competitors by providing quality products at a

price which its customers value. Along with good quality products and reasonable

price the packaging is also very good. Most of its products are available in many

flavors. Excellent advertising backs its products and helps GCMMF (AMUL) to leave

its competitors a tough time. Also Amul has come out with Amul Parlours to cater to

various segments of customers. Amul has a very strong Brand Image in the Domestic

market. Many products are exported by GCMMF.

Exports: GCMMF is India's largest exporter of Dairy Products. It has been accorded a

"Trading House" status. GCMMF has received the APEDA Award from Government

of India for Excellence in Dairy Product Exports for the last 9 years.

The major export products are:

Consumer Packs

Amul Pure Ghee

Amul Butter

Amul Shrikhand

Amul Mithaee Gulabjamun

Nutramul Brown Beverage

Amulspray Infant Milk Food

Amul Cheese

Amul Malai Paneer

Amul UHT Milk (Long Life)

Amul Fresh Cream

Bulk Packs

Amul Skimmed Milk Powder

Amul Full Cream Milk Powder

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The products are exported to 18 countries namely, USA, Kuwait, Qatar, UAE,

Yemen, Bahrain, Muscat, Saudi Arabia, Tanzania, Madagascar, Sri Lanka, Singapore,

Nepal, Bangladesh, Nepal Thailand and Australia.

5.3 SUPPLY CHAIN FRAMEWORK

The supply chain of Amul can be described in the following steps:-

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Some 2.2 million farmers from 12 districts of Kaira (kheda), Sabar Kantha,

Baroda, Panchmahal, Rajkot, Bharuch, Mehsana, Banas Kantha, Surat,

Ahmedabad, Valsad and Gandhi nagar reach the milk collection centers every day

in the morning and afternoon to sell the milk their buffaloes have given in the

morning and in the noon

The total milk procurement in the last year 2002 was an average 47.32 l per day

where the peak the peak procurement touched a high of 62 l. All the milk

procurement centers are equipped with computers and electronic milk testers

(EMTs). EMTs ensure efficient testing and measurement of milk constituents. The

computers run the automatic milk collection system, which ensures immediate

preparation of milk payment bills, transparency of operations and greater

efficiency of milk collection.

The milk is then sent to chilling depots in each village of the member unions.

There are 10852 villages under GCMMF and each one has a village Cooperative

society. VDC also runs the automatic milk collection system.

The milk is then sent to the 12 member unions. All of them run an ultra modern

dairy that processes this raw material, which has traveled from faraway villages to

the district headquarters.

The various products made under the flagship of AMUL such as butter, milk

powder, cheese, dahi, ready made foods such as gulab jamun, pizza etc. Are

manufactured at these various plants and distributed through the various

distributors across the country and abroad through GCMMF.

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FARMERS2.2 million

VCS10675

MEMBER UNIONS

12 units


Fig: - The flow of materials and information at AMUL

One reason that Amul is the giant it is because it’s built on the back of a co-operative

movement. It encourages women and farmers to collect milk from their cows and pass

it on to them for a price. By managing milk supplies from the cattle farmer and

sending it straight to the factory, it’s been able to eliminate the middleman.

Complexity and dynamics of the supply chain make it very difficult to assess the

interaction effects.

Increased cooperation among network members has resulted in a number of changes

at all levels -- operational, tactical and strategic, and has led to the emergence of

practices and strategies for improving the chain's performance. Most prominent

among these include the following:

(i) Information sharing, often dynamically, to improve planning and execution.

Sharing of POS data is a classic example for minimizing the distortions due to bull-

whip effect and reducing perceived variability of demand by the partners in the chain.

Typically, information sharing extends to costs as well.

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GCMMF

700 Emp

DISTRIBUTORS3000+

RETAILERS500000+

END USERS


(ii) Focus on core competence of each player in the chain. The objective is to

ensure that each task is performed by the entity best suited for it. As a result, firms

have become willing partners in ceding control to a network partner for improving

performance. VMI in many industries is a direct result of such change in management

thinking. Similarly, the role of third parties for providing specific expertise such as

logistics has grown substantially with emphasis on supply chain.

(iii) Capacity improvement: It helps network partners in improving their capability

and making them competitive.

Milk procurement

Total milk procurement by our Member Unions during the year 2012-13 averaged

93.02 lakhs kilograms (9.30 million kgs) per day representing a growth of 6.68% over

87.19 lakhs kgs (8.7 million kgs) per day achieved during the year 2008-09. The

highest procurement as usual was recorded during January, 2012 at 122.5 lakhs kgs

per day

The distribution network

Amul products are available in over 500,000 retail outlets across India through its

network of over 3,500 distributors. There are 47 depots with dry and cold warehouses

to buffer inventory of the entire range of products.

GCMMF transacts on an advance demand draft basis from its wholesale dealers

instead of the cheque system adopted by other major FMCG companies. This practice

is consistent with GCMMF's philosophy of maintaining cash transactions throughout

the supply chain and it also minimizes dumping.

Managing third party service providers

Its core activity lay in milk processing and the production of dairy products and all

other activities such as logistics of milk collection, distribution of dairy products, sale

2012-13 66


of products through dealers and retail stores, provision of animal feed, and veterinary

services were entrusted to third parties.

5.4 PROBLEMS & ISSUES WITH SUPPLY CHAIN

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Managing this supply chain efficiently is critical as GCMMF's competitive

position is driven by low consumer prices supported by a low cost system.

In the past years the concept of just-in-time was not introduced, all GCMMF

branches were engaged in route scheduling and have dedicated vehicle operations.

Even though the cooperative was formed to bring together farmers, professional

managers and technocrats would be still required to manage the network

effectively and make it commercially viable.

It is worth noting that a number of third parties are not in the organized sector, and

many are not professionally managed with little regard for quality and service.

This is a particularly critical issue in the logistics and transport of a perishable

commodity where there are already weaknesses in the basic infrastructure.

Its network which consists of large number of members requires regular roll out

improvement programs and high implementation rate of these programs.

Having a strong supply chain is only the beginning, the remaining part includes

making consumer products that sell well and that the same consumers are able to

be impacted by marketing and advertising movements.

The organization was also suffering from the high middleman cost which was

tackled by managing milk supplies from the cattle farmer and sending it straight to

the factory.

Due to the perishable nature of the product, it has to invest in cold storage which

is an extra burden in distribution and warehousing.

At the time Amul was formed; consumers had limited purchasing power, and

modest consumption levels of milk and other dairy products. Thus Amul adopted

a low-cost price strategy to make its products affordable and attractive to

consumers by guaranteeing them value for money.

In addition to the weaknesses in the basic infrastructure, logistics and

transportation services are typically not professionally managed, with little regard

for quality and service.

GCMMF was one of the first FMCG (fast-moving consumer goods) firms in India

to employ Internet technologies to implement B2C commerce. Today customers

can order a variety of products through the Internet and be assured of timely

delivery with cash payment upon receipt. Another e-initiative underway is to

provide farmers access to information relating to markets, technology and best

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practices in the dairy industry through net enabled kiosks in the villages. GCMMF

has also implemented a Geographical Information System (GIS) at both ends of

the supply chain, i.e. milk collection as well as the marketing process.

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CHAPTER 6

6.1 RESEARCH OBJECTIVES

To study consumer perception towards brand AMUL

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6.2 SAMPLE SIZE

100 respondents

6.3 RESEARCH LIMITATION

Research is limited to 100 respondents

Research is limited to study of consumer perception only towards brand AMUL

6.4 DATA INTERPRETATION

AGE GROUP

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42 % respondents were of the age group 40 – 50

30 % respondents were of the age group 30-40



SEX

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61 % respondents were Male

39 % respondents were Female

OCCUPATION

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42 % respondents were salaried

21 % respondents were professional

8 % respondents were Proprietor

29 % respondents were Housewife

CONSUMPTION

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All the 100 respondents consume brand AMUL

BRAND IDENTIFICATION

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100 % respondents identified accurately as AMUL brands.

PURCHASE

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21 % respondents purchase from Kirana store

56 % Respondents purchase from Dairy

13 % respondents purchase from Super market

20 % respondents purchase from Malls

FREQUENCY

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67 % respondents purchase once in a week

12 % respondents purchase Twice in a week

20 % respondents purchase once in month

REASONS FOR PURCHASE

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33 % respondent purchase as it is their daily requirement.

67 % respondent purchase as it is their household use requirement

TASTE AS A PURCHASE FACTOR

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23 % respondent says that taste act as a prime factor for purchase factor

PRODUCT TRUST AS A PURCHASE FACTOR

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36 % respondent says that product trust act as a prime factor for purchase.

HABITUAL CONSUMPTION AS A PURCHASE REASON

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10 % respondent says that habitual consumption act as a prime factor for purchase of

6.5 SURVEY FINDINGS

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Majority of the respondents were in the group of 40-50

Dairies were prime purchase of product.

Almost 3/4th respondent consume at least once in a week

Taste, Trust, Habitual are the prime reasons for consumption of the product

AMUL is the primary preference when compared to other brands

AMUL was primarily associated with household requirement

6.6 RECOMMENDATION

Trust has to be maintained through out as people are purchasing only due to trust

More retail outlets to be explored for Avaibility

Should be supplied as daily product like milk and news paper

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CHAPTER 7

7.1 OBSERVATION OF SCM ISSUES

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Following are the major issues analyzed with respect to the SCM of Amul:

Larger lead time:-

A number of third parties are not in the organized sector, and many are not

professionally managed with little regard for quality and service. Due to the old and

obsolete means of transportation, failure of machinery etc. leads the delay in reaching

to retailers and end users. In the past years the concept of just-in-time was not

introduced, all GCMMF branches were engaged in route scheduling and have

dedicated vehicle operations. Due to the perishable nature of the product, it has to

invest in cold storage which is an extra burden in distribution and warehousing. As a

result need of JIT were felt and the concept has introduced to avoid any kind of delay

and destruction of products. Introduction of just-in-time inventory strategy improves

dealers' return on investment (ROI).

Gap between demand and supply:-

Due to the unprofessional and inexperienced 3PL providers there is vast gap between

demand and supply. In the peak season, the company fails to satisfy the retailers’

demand on certain products. Since the lead time was high so company were unable to

get raw material on time and also were unable to produce final product to match with

the quantity demanded by retailers and consumers. Amul decided to focus on farmers

facing business processes such as supply, distribution and its own internal operations.

The main goals of the supply chain initiative were improving forecast accuracy to

match supply with demand, delivery performance to avoid stock-outs thereby creating

a dependable and reliable brand image without excessive spend. These steps were

taken to reduce dependency on cold storage.

SUPPLIERS:-

The member-suppliers were typically small and marginal farmers with severe

liquidity problems, illiterate and untrained. AMUL and other cooperative Unions

adopted a number of strategies to develop the supply of milk and assure steady

growth. First, for the short term, the procurement prices were set so as to provide fair

and reasonable return. Second, aware of the liquidity problems, cash payments for the

milk supply was made with minimum of delay.

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Managing Third Party Service Providers:

Well before the ideas of core competence and the role of third parties in managing the

supply chain were recognized and became fashionable, these concepts were practiced

by GCMMF and AMUL. From the beginning, it was recognized that the core activity

for the unions lay in processing of milk and production of dairy products.

Accordingly, the unions focused efforts on these activities and related technology

development. The marketing efforts (including brand development) were assumed by

GCMMF. All other activities were entrusted to third parties. These include logistics of

milk collection, Distribution of dairy products, sale of products through dealers and

retail stores, some veterinary services etc.

Some other issues found in its supply chain are as follows:-

It has excellent ability to anticipate the right type of product at the right time

through the years.

Amul is a cooperative where the milk suppliers are the shareholders. The owners

decide what they should pay themselves for the raw material they supply. A

unique situation where the owners of the company are also its largest vendors!

To implement their vision while retaining their focus on farmers, a hierarchical

network of cooperatives was developed, which today forms the robust supply

chain behind GCMMF's endeavors.

Introduction of just-in-time inventory strategy improves dealers' return on

investment (ROI).

In order to manage the network effectively and make it commercially viable

professional managers and technocrats were introduced.

The company has core competency in milk processing and the production of dairy

products and all other activities were entrusted to 3PLs

Infreight logistics solutions limited, Transport Corporation of India, Gammon

India ltd. are some of its main 3PL providers.

Amul was one of the first FMCG firms in India to employ Internet technologies to

implement B2C commerce. Today customers can order a variety of products through

the Internet and be assured of timely delivery with cash payment upon receipt. It has

2012-13 86


also implemented a Geographical Information System (GIS) at both ends of the

supply chain, i.e. milk collection as well as the marketing process.

7.2 RECOMMENDATION & SUGGESTION

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Amul should improve its distribution system, as it has already implemented on

ERP in the company, still due to in disciplined behavior of its distributors,

retailers suffers which ultimately affect the consumers.

We know that the time schedule of the distributors & their transportation system

cannot be capsuled, but they can reduce their errors. E.g. drive carefully to

prevent accidents.

Manpower should be more than 18 years of age. (in some of the areas, we have

observed small children engaged in loading & unloading the trays from the truck)

Before offering any extra benefits or schemes to their retailers, Amul should

aware them in advance, so that the incentives can be reached in the right hands at

right time. Otherwise distributors enjoy the benefits of retailers.

Codification of raw material should be done in an easily understand manner.

Reduce the solving time of the consumer/retailers’ complaints.

Payment to the milk suppliers should be made on time to ensure the proper inflow

of milk.

Amul should also launch certain schemes for households. It has schemes for

retailers but not for households. This section being the major user of milk and in

order to enter into a new area such starting schemes can be very helpful.

For refrigerated and frozen food distribution, a world class cold chain would help

in providing quality assurance to the consumers around the region.

Logistics and transportation services should be professionally managed to avoid

wastes.

Use of internet for exploring the unknown terrain.

Active customer feedback should be taken regularly for increasing product line.

Employees of GCMMF should involved actively in all activities of the member

unions.

Relationship with business associates like wholesaler should be made closer and

deeper.

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The company should take initiative to reduce transportation time from the depots

to the wholesale dealers, improvement in ROI of wholesale dealers,

implementation of Zero Stock Out through improved availability of products at

depots and also the implementation of Just-in-Time in finance to reduce the float.

Completely in tune with the ground reality an enquiry is initiated on the

organizational climate. This gave detail about the core competencies and most

importantly gave details about the handicaps and inadequacies.

Have recognized “change” as an essential factor governing business needs and

hence incorporates changes in every form at every stage. employees, suppliers and

distributors also “change ready” always

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CHAPTER 8

2012-13 90


8.1 CONCLUSION

Amul means different things to different people .

To a milk producer – A life enriching experience

To a consumer – Assurance of having wholesome milk

To a mother – A reliable source of nourishment for her child

To the country – Rural development and self reliance

Amul has given a new dimension to marketing. It showed that a democratically

owned and managed farmer organisation can successfully develop and sustain a

commercial product in a national market.By doing this Amul provided virtually

guaranteed marketing service to the milk producer at his door step. Amul has

displayed dynamic initiative at a time when its multinational competitors were merely

content to use depreciated machinery.

Following factors have given us the insight to conclude, why Amul is thriving with

success today:

Emphasis on Quality: All the products of Amul are of highest grade. Consumers

were very quick to perceive this and the sales success that followed reflected the

public’s stamp of approval.

Modern marketing: A good product alone cannot succeed unless backed by

innovative marketing, including packaging, price and promotion. Amul’s advertising

campaigns created a splash in the market that eventually led to a tidal wave that

rocked the competition.

Management: The judicious handling of people, recognition of performance and

encouragement for a good try has gone a long way to build a sound foundation of

people. All the basic components of management that is production, marketing,

finance and organisation behavior are nicely arrayed at Amul.

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The co-operative concept: The fundamental thesis underlying the Anand model is

that the rural producer must own and enjoy the assets they have helped to create. The

model has inspired the creation of hundreds of other Anand.

The system has succeeded mainly because of involvement of people on such a large

scale, providing assured market at remunerated prices for milk producers, enables the

consumers access to high quality milk and milk products, ploughing back the profit to

the members, part of the profit is used by the society for common good and

community development.

Amul has established itself as a uniquely appropriate model for rural development.

Amul has spurred the white revolution of India, which has made India the largest

producer of milk and milk products in the world. Amul products have been in use in

millions of homes since 1946. Today Amul is a symbol of many things like of high-

quality products sold at reasonable prices & the genesis of a vast co-operative

network. Its supply chain is easily one of the most complicated in the world. The

supply chain linking farmer-suppliers of milk with the millions of consumers. Amul

encourages women and farmers to collect milk from their cows and pass it on to them

for a price directly eliminating cost of middleman. Introduction of just-in-time

inventory strategy improves dealers' return on investment (ROI).Amul was one of the

first FMCG firms in India to employ Internet technologies to implement B2C

commerce. Today customers can order a variety of products through the Internet and

be assured of timely delivery with cash payment upon receipt. It has also implemented

a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk

collection as well as the marketing process.

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8.2 BIBLIOGRAPHY

Johnson Gerry, Scholes Kevan; “Exploring Corporate Strategy-Text and Cases”,

Sixth Edition, Prentice Hall of India Pvt. Ltd. 2004, pp 100-102,134,183.

Thompson Arthur A. Jr., Strickland J. A. III; “Strategic Management-Concepts

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WEBSITE VISITED

www.amul.coop

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BOOKS

White revoltion - Dr. Kurien

Management of Co-Operatives - Romeo S Mascarenhas

Management of Co-Operatives - Ramkison

Tapping of Rural India

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