A

PROJECT REPORT

ON

STUDY ON THE DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT OF AMUL MILK

Summer Internship Report Submitted to the University Of Mumbai In

Partial fulfillment for the award of degree of Master Of

Management Studies (Marketing)

By

(Leroy Correia)

(08)

Batch: 2012-2014

For the summer Internship at,

Gujarat CO-operative Milk Marketing Federation Ltd.

VIVA INSTITUTE OF MANAGEMANT AND RESEARCH

(Affiliated to the University of Mumbai, Approved By AICTE New Delhi) INDIA

July 2013

Evaluation Report

Summer Internship 2012-2013

Basic Information

Name of the student: Leroy Correia

Academic Year and Roll No: 2012-2014 08

Name of the company: Gujarat CO-operative Milk Marketing Federation Ltd

Name of the Designation Of the Training Supervisor:

Area of training:

Special Project, if any:

Score card

Please rate The Following Attributes On A scale Of 01-05.

(01=Average, 02=good,03=Very Good ,04=excellent and 05=outstanding

Sr.No. Attributes score

1 Attendance 2 Punctuality 3 Attitude4 Performance 5 Imitative 6 Interpersonal skill 7 Diligence Level8 Subject Knowledge 9 Personal Grooming

10 Communication skillTotal Score(out of 50)

Special Remarks /Appreciation, if any: ---------------------------------------------------------------------------------------------------------------------------------------------------

Name &signature of Training Supervisor Official Seal of The Company

Date : place:

Evaluation of Dissertation

1. Name of the candidate : Leroy Correia

2. Seat Number : 08

3. Name/Code Of Subject :

4. Title of dissertation :

5. Evaluation :

Sr.No. Parameters Maximum Marks

Marks Awarded

1 Introduction 05

2 Literature Review and Problem Definition 05

3 Process Description 10

4 Project Profile 10

5 Findings & Conclusion 15

6 Learning Experience 05

Total 50

6. Name & Address of Evaluation:

7. Signature Of Evaluator with date :

8. Signature of the Head Of the Institution with seal:

Declaration

This Is Certify the Summer project titled “STUDY ON STUDY ON THE

DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT OF AMUL MILK ” at

Gujarat Co-operative Milk Marketing Federation Ltd., Kala Ghoda, Mumbai’’ is original work

and being submitted in partial fulfillment for the award the degree ,Master Of

Management studies of the University of Mumbai .This Summer Project Report Has

been Submitted Earlier Either To this university, or to any Affiliated college of this

university , or ,to any other university /institution for the fulfillment of the requirement

of MMS Course .

Date: ---------------------- ------------------------------ (Signature of student)

Place: --------------------- ------------------------------- (Name of the student )

Acknowledgement

This Is To Acknowledge To Something About Those People Who Have Cooperated Me To

Reach At The Edge Of My Training Work. I Wish To Place A Close Profound Indeptness

And Deep Sense Of Gratitude To Director Dr.Harish Kumar Purohit Sir (Project Guide),

Ms.Piyushi Sharma (Placement Advisor), Prof. Manmeet Barve (Faculty) And All

Professors For Providing And Guiding Me To Get Training In Amul Industry.

I Am Grateful To Respected Mr. Prakash Aute (In Charge- Amul Fresh Division)

Sanjay Patil (Jr.Sales Executive) Of Mumbai And Vishal D’souza (Executive Sales) In

Fresh Product Department.

I Am Highly Thankful To The Management Committee For Helping Me In My Project Work

By Providing Me All The Information Needed And Guided Me In Making The Report,

Directing And Helping Me Which Made The Process Very Easy And Educational. I Would

Also Like To Thank All Those People Who Have Knowingly And Unknowingly Helped Me

In My Report Making.

Date: ---------------------- ------------------------------ (Signature of student)

Place: --------------------- -------------------------------

(Name of the student)

INDEXSR.NO PARTICULARS

1 Executive summary

2 Introduction and history History Introduction to Indian dairy industry

3 Literature review & problem statement:- Literature review and problem statement Market size and growth Major players Packaging technology Regulatory framework Company profile Amul in abroad GCMMF Birth of Amul

Data processing & analysis:- Data analysis for retailers Data analysis for customers Process description Product mix of Amul Amul plant The channel network Procurement channel Anand Patten SMC and market logistic Amul parlor's Selection, motivation and evaluation of channel members Conflict and cooperation among channel members

4 Process description: Product information Sales and profit Distribution channel of Amul Transportation method Competitors analysis

6 Learing & findings and suggestions

7 Conclusion and bibliography

8 Appendix

EXECUTIVE SUMMARY

In today’s competitive world while entering in the market it is very necessary to have

good knowledge of the potential of a particular market. The growth of a company is

invariably determined not just by its strategy, but on how it responds to the challenges it

encounters. Over the decades AMUL has successfully countered several challenges that

have come its way with innovative responses and continuous improvement, which have

enabled it to remain stable and even convert some of these challenges into opportunities.

It is the culture of endurance that has accorded AMUL the insight and focus to deal with

the current economic environment. Drawing from its inner strength and beliefs, AMUL

responded by launching several initiatives across all its operations in various geographies

that are helping the group achieve growth even in current times. It is also this very

strategic culture that will propel AMUL to continue on its growth trajectory in years to

come.

The report provides a comprehensive insight into the company and also about the

company’s SWOT analysis. This report mainly studies in detail the various product mix

strategies of the company and also focuses on the segmentation of both company based

and industry based and helps in analysing the company’s competitive advantage and the

reason behind its success.

HISTORY

In early 1940’s a farmer in Kaira district, as elsewhere in India, derived his income almost

entirely from seasonal crops. The income from milk was paltry and could not be depended

upon. The main buyers were milk traders of Polson Ltd.-a privately owned company that

enjoyed monopoly for supply of milk from Kaira to the Government Milk Scheme Bombay.

The system leads to exploitation of poor and illiterate farmers by the private traders.

However, when the exploitation became intolerable, the farmers were frustrated. They

collectively appealed to Sardar Vallabhbhai Patel, who was a leading activist in the freedom

movement. Sardar Patel advised the farmers to sell the milk on their own by establishing a

cooperative union, instated of supplying milk to private traders. Sardar Patel sent the farmer

to Shri Morarji Dasai in order to gain his Co-operation and help. Shri Dasai held a meeting at

‘Samrkha’ village near Anand, on January 4, 1946. He advised the farmers to from a society

for collection of the milk.These village societies would collect the milk themselves and also

decided prices for that which would be profitable for them. The district union was also from

to collect the milk from such village cooperative societies and to sell them. It was also

resolved that the government should asked to buy milk from the union.

However, the government did not seem to help farmer by any means. It gave the negative

response by turning down the demand for the milk. To respond to this action of government,

farmer of Kaira district went on a milk strike. For 15 days not a single drop of milk was sold

to the traders. As a result the Bombay milk scheme was severely affected. The milk

commissioner of Bombay then visited Anand to assess the situation. Finely he decided to

fulfill the farmers demand.

Thus their cooperative unions were forced at village and district level to collect and sell milk

on a cooperative basis, without the intervention of government. Mr. Verghese Kurien had

main interest in establishing union who was supported by Shri Tribhuvandas Patel who

convinced farmers in forming the cooperative unions at thevillage level. ‘The Kaira District

Co-operative Milk Producers’ Union’ was thus established in Anand and was registered

formally under section 10 of Bombay Act VII of 1925 on December 14, 1946. Since then

farmers are selling all the milk in Anand through cooperative union. In 1955 it was

commonly decided the sell milk under the brand name ‘Amul’

At the initial stage only 250 liters of milk was collected everyday. But with the

growing awareness of the benefits of the co-operative-ness the collection of milk increased.

Today Amul collect 50, 00,000 liters of milk everyday. As the milk is perishable commodity

it became difficult to preserve milk for a longer period. Besides when the milk was to be

collected from the far places there was a fear of spoiling of milk. To over come this problem

the union thought to develop the chilling unit at various junctions, which would collect the

milk and could chill so as preserve it a for a longer period. Thus, today Amul has more than

168 chilling centers in various villages. Milk is collected from almost 1097 societies.      

With the financial help from UNICEF, assistance from the government of New

Zealand under the Colombo plan, of Rs. 50 million for factory to manufactory milk powder

and butter. Dr. Rajendara Prasad, the president of India laid the foundation on November 50,

1954. Shri Pandit Jawaharlal Nehru, the prim minister of India declared it open at Amul dairy

on November 20, 1955.

A plant to manufacture balanced cattle feed was formally commissioned on October

31, 1964 by Shri Lalbahadur Shastri, the Prime Minister of India. At the request of the

government of India, a new dairy with a capacity to manufacture 40 tons of milk powder and

20 tons of butter a day was completed in 1963. This was meant to meet the requirement of

India’s defense forces. The dairy was declared open by ShriMorarji Desai in April, 1965. in

1974, the Kaira Union setup a plant to manufacture high-protein weaning food, chocolate and

malted food at Mogar, about 8 km south of Anand.

 In September, 1981, the second cattle feed plant at ‘Kanjari’ were started. The

succesion of the co-generation project on September 11, 1985, marked a milestone on the

energy front when two gas turbine generators of 1.5 MW each based on natural gas, were

commissioned. On October 31, 1992, Dr. V. Kurien chairman, National Dairy Development

Board, laid the foundation of Kaira Union’s third dairy with a processing capacity of 6.5 lakh

liters of milk a day. Work on the third dairy and cheese plant at ‘Khatraj’ with capacity for 20

Metric Ton of cheese per day, began in February, 1994. Also in 1994, Kaira Union put up

bread spread plant at ‘Mogar’ with the assistance from National Dairy Development Board.

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products

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

aims to provide remunerative returns to the farmers and also serve the interest of consumers

by providing quality products which are good value for money.

Members: 13 district cooperative milk producers'

Union

No. of Producer Members: 2.6 million

No. of Village Societies: 12,792

Total Milk handling capacity: 10.16 million litres per day

Milk collection 2.38 billion litres

Milk collection 6.5 million litres

Milk Drying Capacity: 594 Mts. per day

Cattle feed manufacturing Capacity: 2640 Mts per day

About Machinery

In AMUL – 3 production of powder, Butter and Milk are being done

continuously. These productions are done by latest machineries equipped with

computer system and it is handled by one technicians.

- The Milk pasteurizer machines belong to Alfa level company of Pune

- Powder plant machineries belong to L & T Larson and Turbo company of

India

- Butter production machineries belong to S.G.company of switrzland and

other

- Butter manufacturing production machineries belong to Simon Feres com.of

France

LITERATURE REVIEW & PROBLEM STATEMENT:-

ORGANISATION STRUCTURE OF AMUL

Board of Director

CHAIRMAN

MANAGING CHAIRMAN

GENERAL MANAGER

ASSISTANT GENERAL MANAGER

MANAGER

DEPUTY MANAGER

ASSISTANT MANAGER

SENIOR EXECUTIVE

SENIOR OFFICER

SENIOR ASSITANT

WORKERS

Grade ( Ato E)

.

INTRODUCTION TO THE INDIAN DAIRY INDUSTRY

 The world's biggest dairy producing country is growing fast and looking to become an

export powerhouse despite major quality problems...

A Note to our Readers: the following information on India's dairy sector is reproduced from

India Infoline.com. India is the world's largest milk producing country and is growing fast,

with an eye toward becoming a major dairy exporter. This article is helpful reading for

anyone interested better understanding.

CONSUMER HABITS AND PRACTICES

Milk has been an integral part of Indian food for centuries. The per capita availability

of milk in India has grown from 172 gm per person per day in 1972 to 182gm in 1992 and

203 gm in 1998-99.This is expected to increase to 212gms for 2008. However a large part of

the population cannot afford milk. At this per capita consumption it is below the world

average of 285 gm and even less than 220 gm recommended by the Nutritional Advisory

Committee of the Indian Council of Medical Research.

There are regional disparities in production and consumption also. The per capita availability

in the north is 278 gm, west 174 gm, south 148 gm and in the east only 93 gm per person per

day. This disparity is due to concentration of milk production in some pockets and high cost

of transportation. Also the output of milk in cereal growing areas is much higher than

elsewhere which can be attributed to abundant availability of fodder, crop residues, etc which

have a high food value for milky animals.

In India about 46 per cent of the total milk produced is consumed in liquid form and

47 per cent is converted into traditional products like cottage butter, ghee, paneer, khoya,

curd, malai, etc. Only 7 per cent of the milk goes into the production of western products like

milk powders, processed butter and processed cheese. The remaining 54% is utilized for

conversion to milk products. Among the milk products manufactured by the organized sector

some of the prominent ones are ghee, butter, cheese, ice creams, milk powders, malted milk

food, condensed milk infants foods etc. Of these ghee alone accounts for 85%.

It is estimated that around 20% of the total milk produced in the country is consumed

at producer-household level and remaining is marketed through various cooperatives, private

dairies and vendors. Also of the total produce more than 50% is procured by cooperatives

and other private dairies.

While for cooperatives of the total milk procured 60% is consumed in fluid form and rest is

used for manufacturing processed value added dairy products; for private dairies only 45% is

marketed in fluid form and rest is processed into value added dairy products like ghee,

makhan etc.

Still, several consumers in urban areas prefer to buy loose milk from vendors due to

the strong perception that loose milk is fresh. Also, the current level of processing and

packaging capacity limits the availability of packaged milk.

The preferred dairy animal in India is buffalo unlike the majority of the world market,

which is dominated by cow milk. As high as 98% of milk is produced in rural India, which

caters to 72% of the total population, whereas the urban sector with 28% population

consumes 56% of total milk produced. Even in urban India, as high as 83% of the consumed

milk comes from the unorganized traditional sector.

Presently only 12% of the milk market is represented by packaged and branded

pasteurized milk, valued at about Rs.8, 000 crores. Quality of milk sold by unorganized

sector however is inconsistent and so is the price across the season in local areas. Also these

vendors add water and caustic soda, which makes the milk unhygienic.

Market Size and Growth

Market size for milk (sold in loose/ packaged form) is estimated to be 36mn MT valued at

Rs470bn. The market is currently growing at round 4% pa in volume terms. The milk surplus

states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra

Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk products is concentrated in

these milk surplus States. The top 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh,

Rajasthan, Tamil Nadu and Gujarat together account for 58% of national production.

Milk production grew by a mere 1% pa between 1947 and 1970. Since the early 70's, under

Operation Flood, production growth increased significantly averaging over 5% pa.

About 75% of milk is consumed at the household level which is not a part of

commercial dairy industry. Loose milk has a larger market in India as it is perceived to be

fresh by most consumers. In reality however, it poses a higher risk of adulteration and

contamination.

The production of milk products, i.e. milk products including infant milk food, malted

food, condensed milk & cheese stood at 3.07 lakh MT in 2008. Production of milk powder

including infant milk-food has risen to 2.25 lakh MT in 2008, whereas that of malted food is

at 65000 MT. Cheese and condensed milk production stands at 5000 and 11000 MT

respectively in the same year.

Major Players

The packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-operative

Milk Marketing Federation (GCMMF) is the largest player. All other local dairy cooperatives

have their local brands (For e.g. Gokul, Warana in Maharashtra, Saras in Rajasthan, Verka in

Punjab, Vijaya in Andhra Pradesh, Aavin in Tamil Nadu, etc). Other private players include J

K Dairy, Heritage Foods, Indiana Dairy, Dairy Specialties, etc. Amrut Industries, once a

leading player in the sector has turned bankrupt and is facing liquidation.

Packaging Technology

Milk was initially sold door-to-door by the local milkman. When the dairy co-

operatives initially started marketing branded milk, it was sold in glass bottles sealed with

foil. Over the years, several developments in packaging media have taken place. In the early

80's, plastic pouches replaced the bottles. Plastic pouches made transportation and storage

very convenient, besides reducing costs. Milk packed in plastic pouches/bottles have a shelf

life of just 1-2 days, that too only if refrigerated. In 1996, Tetra Packs were introduced in

India. Tetra Packs are aseptic laminate packs made of aluminum, paper, board and plastic.

Milk stored in tetra packs

and treated under Ultra High Temperature (UHT) technique can be stored for four months

without refrigeration. Most of the dairy co-operatives in Andhra Pradesh, Tamil Nadu,

Punjab

and Rajasthan sell milk in tetra packs. However tetra packed milk is costlier by Rs5-7

compared to plastic pouches. In 2008-00 Nestle launched its UHT milk. Amul too relaunched

its Amul Taaza brand of UHT milk. The UHT milk market is expected to grow at a rate of

more than 10-12% in coming years.

Regulatory Framework

The dairy industry was de-licensed in 1991 with a view to encourage private

investment and flow of capital and new technology in the segment. Although de-licensing

attracted a large number of players, concerns on issues like excess capacity, sale of

contaminated/ substandard quality of milk etc induced the Government to promulgate the

MMPO (Milk and Milk Products Order) in 2008. Milk and Milk Products Order (MMPO)

regulates milk and milk products production in the country. The order requires no permission

for units handling less than 10,000 litres of liquid milk per day or milk solids up to 500 TPA.

MMPO prescribes State registration to plants producing between 10,000 to 75,000 litres of

milk per day or manufacturing milk products containing between 500 to 3,750 tones of milk

solids per year. Plants producing over 75,000 litres per day or more than 3,750 tones per year

of milk solids have to be registered with the Central Government. The stringent regulations,

government controls and licensing requirements for new capacities have restricted large

Indian and MNC players from making significant investments in this product category. Most

of the private sector players have restricted themselves to manufacture of value added milk

products like baby food, dairy whiteners, condensed milk etc.

All the milk products except malted foods are covered in the category of industries

for which foreign equity participation up to 51% is automatically allowed. Ice cream, which

was

earlier reserved for manufacturing in the small-scale sector, has now been de-reserved. As

such, no license is required for setting up of large-scale production facilities for manufacture

of ice cream.

Subsequent to de-canalization, exports of some milk based products are freely allowed

provided these units comply with the compulsory inspection requirements of concerned

agencies like: National Dairy Development Board, Export Inspection Council etc. Bureau of

Indian standards has prescribed the necessary standards for almost all milk-based products,

which are to be adhered to by the industry.

Proposal to Amend the MMPO

A proposal to raise the exemption limit for compulsory registration of dairy plants,

from the present 10,000 litres a day to 20,000 litres, is being considered by the Animal

Husbandry Department. The 75,000-litre limit is likely to be raised either to 100,000 litres or

125,000 litres in the amended order. The new order would also do away with the provision

for re-registration.

Penetration of milk products

Western table spreads such as butter, margarine and jams are not very popular in

India. All India penetration of butter/ margarine is only 4%. This is also largely represented

by urban areas, where penetration is higher at 9%. In rural areas, butter/ margarine have

penetrated in 2.1% of households only. The use of these products in the large metros is

higher, with penetration at 15%.

Penetration of cheese is almost nil in rural areas and negligible in the urban areas. Per capita

consumption even among the cheese-consuming households is a poor 2.4kg pa as compared

to over 20kg in USA. The lower penetration is due to peculiar food habits, relatively

expensive products and also non-availability in many parts of the country. Butter, margarine

and cheese products are mainly manufactured by organized sector.

Similarly, penetration of ghee is highest in medium sized towns at 37.2% compared to

31.7% in all urban areas and 21.3% in all rural areas. The all India penetration of ghee is

24.1%. In relative terms, penetration of ghee is significantly higher in North and West, which

are milk surplus regions. North accounts for 57% of ghee consumption and West for 23%,

South & East together account for the balance 20%. A large part of ghee is made at home and

by small/ cottage industry from milk. The relative share of branded products in this category

is very low at around 1-2%.

Milk powder and condensed milk have not been able to garner any significant

consumer acceptance in India as indicated by a very low 4.7% penetration. The penetration is

higher at

8.1% in urban areas and lower at 3.5% in rural areas. Within urban areas, it is relatively

higher in medium sized towns at 8.5% compared to 7.7% in large metros.

Export Potential

India has the potential to become one of the leading players in milk and milk product

exports. Location advantage: India is located amidst major milk deficit countries in Asia and

Africa. Major importers of milk and milk products are Bangladesh, China, Hong Kong,

Singapore, Thailand, Malaysia, Philippines, Japan, UAE, Oman and other gulf countries, all

located close to India.

The major export products: - The products of Amul is being exported in the 40 countries

of the world . Many of the products are now available in the U.S.A , Gulf countries and

Singapore. Amul products are being exported to the Singapore since last three decades .

undoubtedly , Amul is the preferred taste of Indians in the Gulf countries.

Low Cost of Production :

Milk production is scale insensitive and labour intensive. Due to low labour cost, cost of

production of milk is significantly lower in India.

Concerns in export competitiveness are Quality: Significant investment has to be

made in milk procurement, equipments, chilling and refrigeration facilities. Also, training has

to be imparted to improve the quality to bring it up to international standards.

Productivity: To have an exportable surplus in the long-term and also to maintain cost

competitiveness, it is imperative to improve productivity of Indian cattle.

There is a vast market for the export of traditional milk products such as ghee, paneer,

shrikhand, rasagulas and other ethnic sweets to the large number of Indians scattered all over

the world.

Indian (traditional) Milk Products

There are a large variety of traditional Indian milk products such as

Makkhan - unsalted butter. Ghee - butter oil prepared by heat clarification, for longer shelf

life. Kheer - a sweet mix of boiled milk, sugar and rice. Basundi - milk and sugar boiled

down till it thickens. Rabri - sweetened cream. Dahi - a type of curd. Lassi - curd mixed with

water and sugar/ salt. Channa/Paneer - milk mixed with lactic acid to coagulate. Khoa -

evaporated milk, used as a base to produce sweet meats. The market for indigenous based

milk food products is difficult to estimate as most of these products are manufactured at

home or in small cottage industries catering to local areas.

Consumers while purchasing dairy products look for freshness, quality, taste and texture,

variety and convenience. Products like Dahi and sweets like Kheer, Basundi, Rabri are

perishable products with a shelf life of less than a day. These products are therefore

manufactured and sold by local milk and sweet shops. There are several such small shops

within the vicinity of residential areas. Consumer loyalty is built by consistent quality, taste

and freshness. There are several sweetmeat shops, which have built a strong brand franchise,

and have several branches located in various parts of a city.

Branding Of Traditional Milk Products

Among the traditional milk products, ghee is the only product, which is currently marketed,

in branded form. main ghee brands are Sagar, Milkman (Britannia), Amul (GCMMF), Aarey

(Mafco Ltd), Vijaya (AP Dairy Development Cooperative Federation), Verka ( Punjab Dairy

Cooperative), Everyday (Nestle) and Farm Fresh (Wockhardt).

With increasing urbanization and changing consumer preferences, there is possibility

of large scale manufacture of indigenous milk products also. The equipments in milk

manufacturing have versatility and can be adapted for several products. For instance,

equipments used to manufacture yogurt also can be adapted for large scale production of

Indian curd products (dahi and lassi). Significant research work has been done on dairy

equipments under the aegis of NDDB.

Mafco Limited sells Lassi under the Aarey brand and flavored milk under the Energee

franchise (in the Western region, mainly in Mumbai). Britannia has launched flavored milk in

various flavors in tetra packs.

GCMMF has also made a beginning in branding of other traditional milk products

with the launch of packaged Paneer under the Amul brand. It has also created a new umbrella

brand "Amul Mithaee", for a range of ethnic Indian sweets that are proposed to be launched

the first new product Amul Mithaee Gulabjamun has already been launched in major Indian

markets.

Western Milk Products

Western milk products such as butter, cheese, yogurt have gained popularity in the Indian

market only during the last few years. However consumption has been expanding with

increasing urbanization.

Butter

Most Indians prefer to use home made white butter (makkhan) for reasons of taste and

affordability. Most of the branded butter is sold in the towns and cities. The major brands are

Amul, Vijaya, Sagar, Nandini and Aarey. Amul is the leading national brand while the other

players have greater shares in their local markets. The latest entrant in the butter market has

been Britannia. Britannia has the advantages of a wide distribution reach and a strong brand

recall.

Priced at par with the Amul brand, it is expected to give stiff competition to the existing

players. In 2008-00 the butter production is estimated at 4 lakh MT of this only 45K MT is in

the white form used for table purposes rest all is in the yellow form.

COMPANY PROFILE

AMUL means "priceless" in Sanskrit. A quality control expert in Anand suggested the

brand name “Amul,” from the Sanskrit “Amoolya,” 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, Amul spray, 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. 25 billion in 2002). 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' organization and have a proven model for dairy development.

AMUL IN ABROAD

. 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 did not succeed, but now it has fresh plans entering the

Japanese markets [6]. Other potential markets being considered include Sri Lanka.

GCMMF

The Gujarat Cooperative Milk Marketing Federation Ltd, Anand (GCMMF) is the largest

food products marketing organization of India. It is the apex organization of the Dairy

Cooperatives of Gujarat. This State has been a pioneer in organizing dairy cooperatives and

our success has not only been emulated in India but serves as a model for rest of the World.

Over the last five and a half decades, Dairy Cooperatives in Gujarat have created an

economic network that links more than 2.8 million village milk producers with millions of

consumers in India and abroad through a cooperative system that includes 13,141 Village

Dairy Cooperative Societies (VDCS) at the village level, affiliated to 13 District Cooperative

Milk Producers’ Unions at the District level and GCMMF at the State level. These

cooperatives collect on an average 7.5 million litres of milk per day from their producer

members, more than 70% of whom are small, marginal farmers and landless labourers and

include a sizeable population of tribal folk and people belonging to the scheduled castes. The

turnover of GCMMF (AMUL) during 2008-09 was Rs. 67.11 billion. It markets the products,

produced by the district milk unions in 30 dairy plants, under the renowned AMUL brand

name. The combined processing capacity of these plants is 11.6 million litres per day, with

four dairy plants having processing capacity in excess of 1 million Litres per day. The

farmers of Gujarat own the largest state of the art dairy plant in Asia – Mother Dairy,

Gandhinagar, Gujarat – which can handle 2.5 million litres of milk per day and process 100

MTs of milk powder daily. During the last year, 3.1 billion litres of milk was collected by

Member Unions of GCMMF. Huge capacities for milk drying, product manufacture and

cattle feed. Ever since the movement was launched fifty-five years ago, Gujarat’s Dairy

Cooperatives have brought about a significant social and economic change to our rural

people. The Dairy Cooperatives have helped in ending the exploitation of farmers and

demonstrated that when our rural producers benefit, the community and nation benefits as

well.

GCMMF: An overview

Members: 13 district cooperative milk producers'

Union

No. of Producer Members: 2.9 million

No. of Village Societies: 15,322

Total Milk handling capacity: 13.07 million litres per day

Milk collection (Total - 2009-10): 3.32 billion litres

Milk collection (Daily Average

2009-10):

9.10 million litres

Milk Drying Capacity: 647 Mts. per day

Cattlefeed manufacturing

Capacity:

3740 Mts per day

BIRTH OF AMUL

The birth of Amul at Anand provided the impetus to the cooperative dairy movement in the

country. The Kaira District Cooperative Milk Producers’ Union Limited was registered on

December 14, 1946 as a response to exploitation of marginal milk producers by traders or

agents of existing dairies in the small town named Anand (in Kaira District of Gujarat). Milk

Producers had to travel long distances to deliver milk to the only dairy, the Polson Dairy in

Anand . Angered by the unfair and manipulative trade practices, the farmers of Kaira District

approached Sardar Vallabhbhai Patel (who later became the first Deputy Prime Minister and

Home Minister of free India) under the leadership of the local farmer leader Tribhuvandas

Patel. Sardar Patel advised the farmers to form a Cooperative and supply milk directly to the

Bombay Milk Scheme instead of selling it to Polson (who did the same but gave low prices

to the producers). He sent Morarji Desai (who later became Prime Minister of India) to

organize the farmers. In 1946, the farmers of the area went on a milk strike refusing to be

further oppressed. Thus the Kaira District Cooperative was established to collect and process

milk in the District of Kaira in 1946. Milk collection was also decentralized, as most

producers . were marginal farmers who were in a position to deliver 1-2 litres of milk per

day. Village level cooperatives were established to organize the marginal milk producers in

each of these villages. The Cooperative was further developed & managed by Dr. V Kurien

along with Shri H M Dalaya . in 1973, the Gujarat Co-operative Milk Marketing Federation

was established. The Kaira District Co-operative Milk Producers’ Union Ltd. which had

established the brand name AMUL in 1955 decided to hand over the brand name to GCMMF

(AMUL). With the creation of GCMMF (AMUL), we[who?] managed to eliminate

competition between Gujarat’s cooperatives while competing with the private sector as a

combined stronger force. GCMMF (AMUL) has ensured remunerative returns to the farmers

while providing consumers with products under the brand name AMUL.

DATA PROCESSING & ANALYSIS:-

Data Analysis For Retailers:-

1) Number of retailers stocking Amul milk.

Answer No. of Percentagerespondents

Yes 55 20%

No 114 80%

Yes 33%

Yes

No

No 67%

Interpretation:

• The above graph indicates that only 1/3rd of the retailers are selling Amul milk.

• It shows that Amul milk brand is not popular among the retailers.

2) Sizes of Amul milk packets retailers preferred to store.

(Out of 169 retailers only 55 were buying Amul milk.)

Answer No. ofrespondents

250ml 0

500 ml 32

1 Ltr 23

5 Ltr 0

5 Ltr 0

1 Ltr 23

500 ml 32

250ml 0

0 5 10 15 20 25 30 35

No. of respondents

Interpretation:

• The above graph shows that most of the retailers preferred to stored 500 ml and 1 Ltr

pouch of Amul milk as per the customer demand.

• In case of 5 Ltr. Pouch there was no customers demand.

• 250 ml pouches were not available to retailers.

3) Reasons for Amul milk not stored by retailers.

(Out of 169 retailers 114 were not buying Amul milk.)

AnswerNo. ofrespondents

Absence of packaging date 6

Low margin 75

No replacement for leakage 20

No distribution 13

No distribution 13

No replacement for20

leakage

Low margin 75

Absence of packaging6

date

0 10 20 30 40 50 60 70 80

No. of respondents

Interpretation:

• From above graph it is clear that half of the retailers were not satisfied with Amul

replacement and margin policy.

• Some retailers responded about absence of packaging date.

• Very less retailers complained about distribution network

4) Preference of retailer’s to milk brand.

BRANDS RESPONDENTS

Amul 15

Motherdairy 77

manali 45

Tabala milk 6

Others 26

Others 26

tabala 6

manali 45

motherdry 77

Amul 15

0 10 20 30 40 50 60 70 80 90

RESPODENT.

Interpretation:

• The above graph shows that the motherdairy is most preferable brand in all.

• Some retailers also prefers tabala and others brands.

5) Sources from where retailers get Amul milk

(Out of 169 retailers only 55 were buying Amul milk.)

Answer No. of Percentagerespondents

Distributors 52 95 %

Other suppliers 3 5 %

Interpretation:

• Almost all retailers said that they purchased milk from Amul distributors.

6) Retailer’s satisfaction with Amul distributor.

(Out of 169 retailers only 55 were buying Amul milk)

Answer No. of PercentageRespondents

Yes 34 62 %

No 21 38 %

No 38%

Yes

Yes No

62%

Interpretation:

• Graph shows that most of the retailers were satisfied with the service provided by the

Amul distributors.

7) Awareness among retailers about different Sales Promotional activities for Amul milk.

(Out of 169 retailers only 55 were buying Amul milk.)

Activities Aware Not aware

Price off 37 18

Free samples 13 42

Credit facility 16 39

Advertisement 49 6

P-O-P Displays 41 14

Coupons 50 5

60

6 55018 14

4042 39

3049 50

20 413710 1613

0

Price off Free samples Credit facility Advertisement P-O-P CouponsDisplays

Aware Not aware

Interpretation:

• The graph shows that retailers were aware about the sales promotion activity that Amul

carried out, but some respondents were unaware about various activities.

• Most of the retailers were aware about advertisement and coupons scheme during festivals.

• Credit facility and free samples were not provided to single retailers.

8) Interest of retailers in wholesale distribution of Amul milk.

Answer No. of Percentagerespondents

Yes 27 16 %

No 142 84 %

Yes 16%

Yes

No

No 84%

Interpretation:

• Graph represents the interest of the retailers to start Amul milk distribution .The questions

asked to increase the retail coverage.

• Most of the retailers were not interested.

• Only 16% of the retailers were ready to start Amul distribution.

9) Awareness among retailers for Amul Parlor (APO) and its benefits.

(Out of 169 retailers only 118were questioned as they had large store.)

Answer No. of Percentagerespondents

Yes 70 59 %

No 48 41 %

No 41%

Yes

No

Yes 59%

Interpretation:

• APO is the outlet where you get Amul milk and milk products and it helps to increase the

market share. This question asked to the retailers who were strong enough in capital.

• From graph it can be interpreted that the awareness about APO is very low.

10) Interest of retailers in opening an Amul Parlor (APO).

(Out of 169 retailers only 118 were questioned as they had large store.)

Answer No. of Percentagerespondents

Yes 15 13 %

. No 103 87 %

Yes13%

Yes

No

No 87%

Interpretation:

• The graph represent that very less number of retailers were interested to start APO.

11) Consumer’s expectation from Amul milk.

(Out of 169 retailers only 55 were buying Amul milk.)

ATTRIBUTE RESPONDENTS

Good quality 7

Clear packaging date 23

Availability 25

Availability 25

Clear packaging date 23

Good quality 7

0 5 10 15 20 25 30

RESPODENT

Interpretation:

• The question asked to the retailers where the Amul milk is being sale, and tried to collect

feedback of customers about Amul milk.

• More customers were having complaints about the clear date of packaging and availability.

• Some customers were not happy with quality of milk.

12) Ratings from retailers for attributes of Amul milk.

(Out of 169 retailers only 55 were questioned as they buying Amul milk.)

AttributeBrand

Quality Availability Packaging MarginRatingimage

Very good 37 48 34 5 0

Good 13 7 15 2 0

Average 5 0 0 48 0

Bad 0 0 6 0 0

Very bad 0 0 0 0 55

Total 55 55 55 55 55

600 0 0 0

50 5 7 6

130

40 15

30 4855

4820 37 34

102

0 5 0

Quality Brand image Availability Packaging Margin

Very good Good Average Bad Very bad

Interpretation:From the above graph it can be concluded that

• QUALITY: Most of the retailers were satisfied with Amul milk quality. • BRAND IMAGE: The graph shows that Amul is having good brand image. • AVAILABILITY: Most of the retailers were satisfied with the Amul milk distribution. • PACKAGING DATE: Most of the retailers were not satisfied about not printing of

packaging date and they were facing a problem regarding same. • MARGIN: All retailers were not satisfied with the margin policy given by Amul.

6.2 DATA ANALYSIS FOR CUSTOMERS:-

1) Number of customers purchasing Amul milk.

Answer No. of Percentagerespondents

Yes 30 32%

No 65 68%

Yes 32%

Yes

No

No 68%

Interpretation:

• The above graph indicates that only 32% of the customers are purchasing Amul milk.

• It shows that Amul milk brand is not popular among the customers.

2) Ratings from customers for attributes of Amul milk.

(Out of 95 customers only 30 were questioned as they buying Amul milk.)

AttributeBrand

Quality Availability Packaging PriceRatingimage

Very good 18 25 16 5 6

Good 9 5 9 2 13

Average 3 0 0 15 11

Bad 0 0 5 8 0

Very bad 0 0 0 0 0

Total 30 30 30 30 30

35

30 0 0 0 0 03 5 5

259

0 8 11

20 9

1525

1513

10 18 165 2

650

Quality Brand image Availability Packaging Price

Very good Good Average Bad Very bad

Interpretation:From the above graph it can be concluded that

• QUALITY: Most of the customers were satisfied with Amul milk quality. • BRAND IMAGE: The graph shows that Amul is having good brand image. • AVAILABILITY: Most of the customers were satisfied with the Amul milk distribution. • PACKAGING DATE: Most of the customers were not satisfied about not printing of

packaging date and they were facing a problem regarding same. • PRICE: Some customers were not satisfied with the price given by Amul.

3) Preference of retailer’s to milk brand.

BRANDS RESPONDENTS

Amul 15

motherdairy 44

manali 11

tabala 8

Others 17

Others17

tabala8

manali11

motherdairy44

Amul15

0 5 10 15 20 25 30 35 40 45

.RESPODENTS

Interpretation:

• The above graph shows that the motherdairy is most preferable brand in all.

• Some customers also prefers tabala and others brands.

1. Data Analysis for Sales Promotion Activity:-

We carried sales promotion activity at two places of nallasopara city

1. Shri prastra

2. Apna nagar

Store name Sales(Ltr)

Initially Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7

Sai 0 10 5 5 5 5 5 5

Vaishali 0 15 15 15 15 15 15 15

New hanuman 5 20 15 15 15 15 15 15

Hanuman 15 30 25 25 25 25 25 25

Durga 5 10 10 8 8 8 8 8

Sales (Ltr)35

30 30

25 25 25 25 25 25 25sai

20 20vaishali

15 15 15 15 15 15 15 15 15 hanuman

10 108 8 8 8 8 8

newhanuman

5 5 5 5 5 5 5 5 Durga

0 0

initially Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7

Interpretation:

• Most of the retail outlets were not interested in Amul milk selling, but after launching coupons scheme, not only sales shoot up by considerable amount initially but also remain constant for next days.

• In case of Sai and Vaishali retail outlet they were not interested in Amul milk selling but now they are selling 20 Ltr of milk daily. And they said if response will remain same they will increase milk order.

PROCESS DESCRIPTION:

PRODUCT MIX OF AMUL

Breadspreads:

Amul Butter

Amul Lite Low Fat Breadspread

Cheese Range:

Amul Pasteurized Processed Cheddar Cheese

Amul Processed Cheese Spread

Amul Mozarella Cheese

Amul Emmental Cheese

Amul Gouda Cheese

Amul Malai Paneer (cottage cheese)

Utterly Delicious Pizza

Mithaee Range (Ethnic sweets):

Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

Amul Amrakhand

Amul Mithaee Gulabjamuns

Amul Mithaee Gulabjamun Mix

Amul Mithaee Kulfi Mix

UHT Milk Range:

Amul Taaza 3% fat Milk

Amul Gold 4.5% fat Milk

Amul Slim-n-Trim 0% fat milk

Amul Chocolate Milk

Amul Fresh Cream

Amul Snowcap Softy Mix

Pure Ghee:

Amul Pure Ghee

Sagar Pure Ghee

Infant Milk Range:

Amul Infant Milk Formula 1 (0-6 months)

Amul Infant Milk Formula 2 ( 6 months above)

Amulspray Infant Milk Food

Milk Powders:

Amul Full Cream Milk Powder

Amulya Dairy Whitener

Sagar Skimmed Milk Powder

Sagar Tea and Coffee Whitener

Sweetened Condensed Milk:

Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

Amul Taaza Toned Milk 3% fat

Amul Gold Full Cream Milk 6% fat

Amul Shakti Standardised Milk 3% fat

Amul Smart Double Toned Milk 1.5% fat

Curd Products:

Amul Masti Dahi (fresh curd)

Amul Butter Milk

Amul Icecreams:

Royal Treat Range (Rajbhog, Cappuchino, Chocochips, Butterscotch, Tutti Frutti)

Nut-o-mania range (Kaju Drakshi, Kesar Pista, Roasted Almond, Kesar Carnival,

Badshahi Badam Kulfi, Shista Pista Kulfi)

Utsav Range (Anjir, Roasted Almond)

Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose, Chocolate)

Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh Strawberry, Black

Currant)

Sundae Range (Mango, Black Currant, Chocolate, Strawberry)

Millennium Icecream (Cheese with Almonds, Dates with Honey)

Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam Kulfi, Shahi

Pista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi)

Cool Candies (Orange, Mango)

Cassatta

Tricone Cones (Butterscotch, Chocolate)

Megabite Almond Cone

Frostik - 3 layer chocolate Bar

Fundoo Range - exclusively for kids

SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango, Pineapple)

Chocolate & Confectionery:

Amul Milk Chocolate

Amul Fruit & Nut Chocolate

Amul Eclairs

Brown Beverage:

Nutramul Malted Milk Food

AMUL PLANTS

1. First plant is at ANAND, which engaged in the manufacturing of milk, butter, ghee,

milk powder, flavored milk and buttermilk.

2. Second plant is at MOGAR, which engaged in manufacturing chocolate, nutramul,

Amul Ganthia and Amul lite.

3. Third plant is at Kanjari, which produces cattelfeed.

4. Fourth plant is at Khatraj, which engaged in producing cheese.

THE CHANNEL NETWORK

Distribution

GCMMF

Head office

MU…1 MU...n

VCS…1 VCS…n

Village…1 Village…n

Procurement Channel (Upstream flow)

THE ANAND PATTERN

Distribution channel

First leg(from manufacturing units)

Downstream Channel, it is the distribution part of the supply chain, from the manufacturing

units to the retailers.

GCMMF

Head office

Depot...1 Depot...n

WD…1 WD…n

Retail…1Retail...n

Second leg

Third leg

Manufacturing

Downstream flow

• First leg of transport is from the manufacturing unit to the company depots. This is done

using 9 and 18 MT trucks any lesser quantity will be uneconomical to the company there for

is some time the quantity ordered is lesser then club loading is done which means that the

product ordered is supplied with some other products.

• Frozen food the temperature of these trucks is kept below -18˚C

• Dairy wet the temperature of these trucks is kept between 0-4˚C

• Second leg is from the depot to the WD’s, this transport is carried out in insulated 3 and 5

MT TATA 407’s here a permanent dispatch plan (PDP) is prepared where the distributor

plans out the quantity of various products to be ordered on a particular date.

• Third leg this is the flow of good from WD’s to retailers, a beat plan is prepared and

transportation is done on auto-rickshaws, rickshaws and bicycles.

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. All GCMMF branches engage in route scheduling and have

dedicated vehicle operations Depots with dry and cold warehouses to buffer inventory of the

entire range of products

Wholesale dealers carry inventory that is just adequate to take care of the transit time from

the branch warehouse to their premises. This just-in-time inventory strategy improves

dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and

have dedicated vehicle operations.

Policy regarding unsold/spoilt goods

• If product crosses the shelf life, the retailer bears the costs.

• If the product gets spoilt during the transportation or if there is any customer complaint,

Amul bears costs.

• Unsold goods are not returned to the manufacturer.

• No reverse logistics.

SCM AND MARKET LOGISTICS

THE BUSINESS MODEL

The strategy, design and practices in AMUL’s network are strongly driven by the objective

of establishing and operating an efficient supply chain from milk production and

procurement to product delivery to customers. Management of this network is built around

two key elements –

1. Coordination of the diverse elements of the network and

2. Use of appropriate technology that includes product, process and information technology and

managerial practices and systems.

Simultaneous Development of Suppliers and Customers: From the very early stages of

the formation of AMUL, the cooperative realized that sustained growth for the long-term was

contingent on matching supply and demand. 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.

For the long-term, the Unions followed a multipronged strategy of education and support.

Only part of the surplus generated by the Unions is paid to the members in the form of

dividends. A substantial part of this surplus is used for activities that promote growth of milk

supply and improve yields. These include provision of veterinary services, support for cold

storage facilities at the village societies etc. In parallel, the Unions have put in place a

number of initiatives to help educate the members.

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. Marketing efforts (including

brand development) were assumed by GCMMF. All other activities were entrusted to third

party service providers. These include logistics of milk collection, distribution of dairy

products, sale of products through dealers and retail stores, some veterinary services etc.

Coordination for Competitiveness

Robust coordination is one of the key reasons for the success of operations involving such an

extensive network of producers and distributors at GCMMF. Some interesting mechanisms

exist for coordinating the supply chain at GCMMF. These range from ensuring fair share

allocation of benefits to various stakeholders in the chain to coordinated planning of

production and distribution. More importantly, the reason for setting up of this cooperative is

not amiss to anyone in this large network organization. Employees, third part service

providers, and distributors are constantly reminded that they work for the farmers and the

entire network strives to provide the best returns to the farmers, the real owners of the

cooperative. It may be r emembered that coordination mechanisms have to link the

lives and activities of 2.12 million small suppliers and 0.5 million retailers!

There appear to be two critical mechanisms of coordination that ensure that decision making

is coherent and that the farmers gain the most from this effort.

These mechanisms are:

Inter-locking Control: - The objective for developing such an inter-locking control

mechanism is to ensure that the interest of the farmer is always kept at the top of the agenda

through its representatives who constitute the Boards of different entities that comprise the

supply chain. This form of direct representation also ensures that professional managers and

farmers work together as a team to strengthen the cooperative. This helps in coordinating

decisions across different entities as well as speeding both the flow of information to the

respective constituents and decisions.

Coordination Agency: Unique Role of Federation:- In addition to being the marketing and

distribution arm of the Unions, GCMMF plays the role of a coordinator to the entire network

within the State – coordinating procurement requirements with other Federations (in other

states), determining the best production allocation for its product mix from amongst its

Unions, managing inter-dairy movements, etc. It works with two very clear objectives:

1. To ensure that all milk that the farmers produce gets sold in the market either as milk or as

value added products and

2. To ensure that milk is made available to increasingly large sections of the society at

affordable prices.

Supplier Enhancement and Network servicing:- Their objective is to ensure that

producers get maximum benefit and to resolve all their problems. They manage the

procurement of milk that comes via trucks & tankers from the VS’s. They negotiate annual

contracts with truckers, ensure availability of trucks for procurement, establish truck routes,

monitor truck movement and prevent stealing of milk while it is being transported.

Technology for Effectiveness:-

Technology or knowledge that was embodied in products, processes, and practices became

an important factor in delivering effectiveness to the network of cooperatives. One

distinguishing feature of AMUL (in comparison with other similar cooperatives globally) is

the large variety in their product mix. Most of its plants are state of art and automated.

AMUL’s innovations in the areas of energy conservation and recovery have also contributed

to reduction in cost of its operations. AMUL also indigenously developed a low cost process

for providing long shelf life to many of its perishable products.

The extent of IT usage includes a B2C ordering portal, an ERP based supply chain planning

system for the flow of material in the network, a net based dairy kiosk at some village

societies (for dissemination of dairy related information), automated milk collection stations

at village societies and a GIS based data network connecting villages societies to markets.

Milk collection information at more than 10,000 villages is available to all dairies (or

Unions) to enable them make faster decisions in terms of production & distribution planning,

and disease control in more than 6,700,000 animals. This is linked with information at all 45

distribution offices and 3900 distributors. This network is being extended to cover all related

field offices in the network. The GCMMF cyber store delivers AMUL products at the

doorsteps of the consumers in 125 cities across the country.

Now, going back to the supply chain of Amul, Amul has gone the e- commerce way. The 1st

initiatives taken for an ERP system was in ’94. Tata Consultancy Services was hired to

guide in

its implementation. The implementation project was named as Enterprise- wise Integrated

Application System (EIAS). Automatic Milk Collection System units (AMCUS) at village

societies

were installed in the first phase to automate milk producers logistics. Amul also connected its

zonal

offices, regional offices and member’s dairies through VSATs for seamless exchange of

information. Amul is also using Geographic Information Systems (GIS) for business

planning and

optimization of collection processes. Indian Institute of Management – Ahmedabad

supplemented

Amul’s IT strategy by providing an application software – Dairy Information System

Kiosk(DISK)

to facilitate data analysis and decision support in improving milk collection. There are plans

to

introduce features like Internet banking services and ATMs which will enable the milk

societies to

credit payments directly to the seller’s bank account. Distributors can place their orders on

the

website www.amul2b.com especially meant for accepting orders from stockists and

promoting

Amul’s products via e-commerce

TQM (Total quality management) at the grassroots has been a strong movement to develop

leadership, operational and strategic capabilities in the entire network – farmers, village

cooperatives, dairy plants, distributors and wholesalers and retailers. Key elements of this

TQM movement have been:

Friday Departmental Meetings : Each Friday, at a prescribed time, everyone in the network

(from the farmers to the carry & forwarding agents) joins their respective departmental

meeting to discuss quality initiatives and share policy related information.

Training for Transformational Leadership so that individuals are able to control their

thoughts, feelings and behavior and take more responsibility in one’s life and surrounding

environment.

Application of Hoshin Kanri principles to bring about a bottom-up setting of objectives –

aligning policies for effective management of Unions & village societies on hand with those

of channel member on the other hand. ISO/HACCP certification was obtained for all the

Unions and each village society is in the process of obtaining the same.

Training for farmers and their families emphasizing the need for good health care for not

only cattle during its pregnancy and feeding but also for expecting and feeding mothers and

the whole family. This effort has brought about a significant social change towards such

issues in villages that have cooperative milk societies.

Retail Census: GCMMF undertakes a census of all retail outlets (over 500,000) to evaluate

customer perceptions and distribution efficacy of their network. This is being done by

wholesalers in their respective territories at their own cost. This information is used for

policy deployment exercise.

THE NETWORK

Milk is procured from the villages and collected at Village Cooperative Societies (VCS),

from there the milk is taken to manufacturing units where the milk is processed into various

products.

The products are then transporters to the company Depots located in various parts of the

country. The products are then sent to Wholesale Distributors (WD) and from there to the

retailers.

THE FACT SHEET

Milk is procured twice a day from 2 million from Gujarat alone

The payment is made under twelve hours of procurement

There are 10000 village cooperative societies

There are 3600 wholesale distributors in the country

45 depots

The C&F agents are not fixed and are decided by the local company offices

There are aproxx. 4,50,000 retailers spread all over India

Total house hold consumers covered are 100,000

The milk procured per day is 5 million liters

Where the total capacity of operation is 7 million liters per day

The peak processing till date has been 6 million liters per day

These co operative societies are bound to supply there produce only to GCMMF

Amul products are available in over 500,000 retail outlets across India through its of over

3,500 distributors.

47 depots with dry and cold warehouses to buffer inventory of the entire range of products

AMUL PARLOURS (DIRECT DISTRIBUTION)

With products being highly perishable, the supply chain ought to have to maintain correct

temperature, humidity etc and the chain should move fast.

To reach out its consumers more directly and let them the total brand experience, Amul has

come up with Amul parlors. These are called “Utterly delicious parlors”. They have come up

in major cities like Ahmadabad, Bangalore, Baroda, Delhi, Mumbai, Hyderabad and Surat

already, and many more starting up real soon. Till date there are about 400 Amul parlors

across the country. These parlors are set at prominent locations such as campuses of Infosys,

Wipro, IIM-A, IIT-B, temples, Metros etc.

Amul has franchisee plans in regards of the Amul parlors. This might start pretty soon, since

the talk is almost at the end.

Facts

– 2300 Amul Parlors in 2007-08

– Goal of setting up 10,000 outlets by March 2010

Selection, Motivation & Evaluation of Channel Members

Selection:

The company takes into consideration a host of factors while selecting the channel members.

This is because GCMMF believes that selection of channel members is a long run decision &

the rest of the decision regarding the supply chain depends upon the efficiency & coverage

by the channel members. The following are the host of factors considered by the company in

selecting the channel members:

Authentication is required by the regarding the identity of the channel members, which

includes the name & address, photograph of the location.

Proof of solvency which requires name & address of the channel member’s bankers

Safety of the inventory, which means that the distributor/ dealer should get the stock of the

company insured.

Inventory or the perishable goods kept by the distributor/ dealer should be in good condition

which means a detail of storage space & Refrigeration facility is to be provided.

Refrigeration system should have deep freezers, cold room & walk in coolers.

Details of the delivery vehicle, which includes Light Commercial Vehicles, Matador, 3

Wheeler Van, Tricycle Van & Hand/Push cart. The number & model of each of the vehicle

needs to be furnished to the company.

GCMMF acknowledges the fact that it needs to be sensitive to the market demands. For this

it requires that a number of salesmen needs to be present on the field. The salesmen too are

divided into various categories like the Field salesmen & Counter salesmen. Also the details

of Clerical Staff & Mazdoors are to be provided. The technical competence of the salesmen

needs to be mentioned

Details of the product kept of other companies have to be provided. The annual sales of these

products too have to be mentioned. Also details of complementary products & product lines

need to be mentioned.

Dealers of the company must carry a good reputation. This is due to the fact that the

company believes reputation of the dealer affects the clientele.

Market coverage by the distributors needs to be defined which includes details of Geographic

coverage & Outlets per market area.

The company also requires the dealers to furnish any Advertising & Sales initiative

undertaken by them on behalf of the company.

Motivation of Channel Members

GCMMF strongly believes in maintaining a good relationship with the channel members so

that they are genuinely motivated to work for the company. Also if the channel members are

motivated, they can also initiate advertising & sales promotion schemes on behalf of the

company. However to keep the channel members motivated to work, the company has to

incur certain costs but the benefits of it are felt in the long run. The following are the

motivation programs run by the company:

Distributors

One of the main factors, which keep the distributors motivated, is the margin. Usually the

margins offered by the company are 8% & it is raised to 8.5%. Volume wise this comes out

to be a big figure since Amul’s product has a good demand in the market. However

compared to the other companies the margins are still lower since the new players in the

market offer a much higher margin. But the very fact that Amul’s products have good

demand in the market motivates the distributors to stock it.

Amul being a cooperative cannot afford to give heavy monetary incentives. Amul’s products

are considered to be value for money since the company does not believe in charging high

margins. In fact all monetary incentives are just the short run means to promote the

company’s product. In order to keep the Channel members motivated in the long run, Amul

builds on the concept of “Trade Marketing” which makes the dealers & the distributors

believe that the company’s products are worthy of being pushed in the market.

The company is organizing various Total Quality Management initiatives & workshops. Here

various counseling measures are undertaken by the company to improve the overall working

of the distribution network.

Vision and mission statement: the company cascades down the vision to the various channel

members, this is done through various events organized by the company at different locations

where the values of the company are made clear and enforced to the channel members. Also

the fact that Amul being a cooperative society cannot afford to spend exorbitantly on such

events therefore it has a very traditional way of organizing these get together which leaves an

impact on the members.

Amul yatras: this includes taking the channel members on a guided tour of the

manufacturing and procuring facilities in Gujarat. So that the channel members can have an

experience of the working of the company and can pick up some quality measures that can

help them to synchronize and improve their own functioning at various levels. This in turn

help the company to co ordinate the entire value chain, as the channel members understand

the various constraints and liberties the company goes through. The company has already got

the Rajiv Gandhi award for quality.

The Retailers

Trade schemes: these are undertaken by the company only for the hard selling items e.g. Ice

creams, flavored milk etc. for these the company raises the margins by 2%, also schemes like

good packaging incase of butter and cheese is undertaken by the company. However this is

only a short-term initiative to push the products of the company.

Glow boards: the company puts up glow boards at the retailer and pays the major portion of

the cost.

Schedule of the salesmen: they provide the retails with this schedule so the retailers can pre

estimate the quantities of the various products needed.

Infrastructure facilitation: the company facilitates the retailers to buy freezers and fridges

by formulating an easy payment program and a commitment to buy back the equipment at a

reasonable price when the value of the equipment has depreciated.

Evaluation of channel members

Beat plan: this plan is generated for the various product categories i.e. diary dry, diary wet,

Dhara and ice cream. A weekly schedule is prepared for various markets and the retailers the

turnover for each of the product is calculated for the wholesale dealers.

Cumulative performance: the performance of the dealers is averaged out over a period of

three years where a comparison is made of the present performance vis-à-vis the previous

ones.

Target versus achievement: the performance and the targets are compared and therefore the

gaps are identified which help in evaluating the WD and planning for the next year as well.

This is done for each of the product category.

Other criterion

o Details of the bank guaranty

o Photographs of the offices

o Details of the WD salesmen and the product lines he deals in

o The computerization facility available

o The storage space

o Refrigeration facility with photograph

o Details of the delivery vehicle with photograph

o Summary of the monthly potential sales of markets

o Summary of the product wise monthly sales potential of institutions

Conflicts And Co-Operation Among Channel Members

Conflicts

Ownership of assets: Previously the company used to give the cooling equipment on lease

to the retailers, when the company wanted the stuff back; the retailer disagreed to comply

and created issues of ownership.

Stocking issues: The company doesn’t want the retailers to stock the competing brand in the

company leased fridges, which at times s hard to manage as retailers tend to do it often.

Replacement of products: The deterioration in the product calls for fail in replacement by

the company this major issue of vertical conflict.

Credit policy: Compared to the market, the company’s credit period is less that specially

incase of institutional sales is very important.

Packaging: The channel members for easy storing demand a better quality of packaging.

Replenishment: The replenishment of the stocks is not prompt in case of amul cheese and

all hard selling items.

Margins: The Company provides least margins to all the channel members. For e.g. The

retailer’s margin in case of butter is 8% as compared to Britannia’s 12%

CO-OPERATION AMONG CHANNEL MEMBERS

Amul quality circles: The members of the local channel meet together every month to share

issues and the achievements of the channel members. This is an ongoing activity facilitated

by the company offices in different locations; this enables the channel members to learn

together and reduces the horizontal conflicts among the WDs.

Pilot salesmen scheme: To reduce the financial burden of the distributors this scheme is run

whereby half the cost of the salesmen is born by the company and the rest half by the

distributor

Scheduling of sales: The WD’s provides Schedule of the distributor’s sales men to the

retailers so that the retailers can plan out and place the orders in advance.

Agreement defining rights: The company makes the distributors sign an agreement where

the areas of operation for each of the distributors are defined, therefore avoiding any conflict

amongst the distributors regarding their areas of operation.

PRODUCT INFORMATION

PRODUCT-AMUL GOLD PASTEURISED FULL CREAM MILK

WEIGHT- 500 ml Nett

PRICE- Rs. 16

FAT-6.0 AND SNF-9.0

NUTRITIONAL INFORMATION

Serving size 200 ml

Amount per 100 ml

Energy 87 kcal

Energy from fat 54 kcal

Total fat : 6 g Phosphorus :130 mg

Saturated fat : 3.7g Sodium :50 mg

Cholesterol :16 mg Thiamine :42 mcg

Total carbohydrate :5.0g Rivoflavin :120mcg

Added sugar :0g Niacin :100mcg

Protein :3.3g Folic acid :7.5 mcg

Calcium :150mg Vita(retinol) :85mcg

VOLUME PURCHASED

Total volume distributed by distributer to dealers in Badarpur Bodor-800-1000 liter

Total volume purchased by each dealers- 160-180 liters (i.e. total no of packets of amul gold

milk purchased by each dealer)- 320-360

Total volume purchased by each retailers-10-12 liter (20-25 packets)

SALES AND PROFIT

Sales and profit for Distributer

Total volume of milk distributed by distributer -800-1000 liters(i.e. total no of packets

distributed 400-450 approx)

Profit margin for distributer per liter-60 paise

Total profit for each distributer- 480-600 Rs

Sales and profit for dealers

Total sale done by each dealer- 160-180 liters

Profit margin for each dealer per liter-40paise

Total profit generated by each dealer-64-72 Rs

Sales and profit for retailers

Total sales done by each retailers-10-12 liters

Profit margin for retailers per litre-50paise

Profit generated by each retailers- 5-6 Rs

DISTRIBUTION CHANNEL OF AMUL MILK

MANUFACTURED UNIT

PACKING AND LABELLING

DISTRIBUTORS

DEALERS

RETAILERS

CUSTOMERS

STOCK REPLENISHMENT CYCLE

Since milk is a fast moving consumer goods daily used by each household in India. So Amul

gold pasteurised full cream milk is supplied by distributer everyday to dealers and retailers.

Stock is purchased within 24 hours (early in the morning).

TRANSPORATION METHODS

They manage the procurement of milk that comes via trucks & tankers from the VS’s to

manufacturing unit and then to distributers and dealers .They negotiate annual contracts with

truckers, ensure availability of trucks for procurement, establish truck routes, monitor truck

movement and prevent stealing of milk while it is being transported.

COMPETITOR ANALYSIS

The main competitor of Amul is Mother dairy in Delhi. Most of the market share is

captured by mother dairy products (55% (approx) market of pasteurized full cream milk is

covered by Mother dairy

product % of market share

Amul 30

Mother dairy 55

others 15

5530

15

market share

mother dairyamulothers

AMUL PESTEURIZED FULL CREAM VS MOTHER DAIRY

PASTEURISED FULL CREAM MILK

VS

AMUL MOTHER DAIRY

Price 16Rs 17Rs

Weight 500 ml 500 ml

Margin for distributors’ 60paise/liter 60paise/liter

Margin for dealers 40paise/liter 40paise/liter

Margin for retailers 50paise/liter 50paise/liter

Sales and profit of Mother dairy pasteurized milk

Mother diary full cream milk is purchased in more quantity as compared to Amul full cream

pasteurized milk.

For distributor

Total quantity of mother dairy full cream pasteurized milk is distributed by distributor at -

2300-2500 liters

Profit margin for distributer-60paise/liter

Total profit generated by distributer- 1380Rs-1500

For dealers

Total quantity purchased by each dealer at 400-500 liters

Profit margin for dealers-40paise/liter

Total profit generated by dealers-160-200Rs

For retailers

Total quantity purchased by each retailer at Badarpur Boder-25-30 liters

Profit margin for retailers- 50paise/liter

Total profit generated by retailer-12.5-15Rs

Table of total Sales done each channel member

Channel member Amul (in liters) Mother dairy(in liters)

By distributer 800-1000 2300-2500

By dealers 160-180 400-500

By retailers 12-15 25-30

Table of profit generated by each member per day

Channel member Amul(in Rs) Mother dairy(in Rs)

For distributor 480-500 1380-1500

For dealers 64-72 160-200

For retailers 10-12 12-15

As compared to amul, mother dairy has more market share and more quantity of mother

dairy full cream pasteurized milk is distributed and supplied by channel members. Hence

more profit is generated by each channel member inspite of having equal margin on each

product.

LEARINGS

It was a great opportunity to carry a research project on such a reputed organization which

gave me a good learning experience and knowledge about the products and industry.

Another very crucial area that needs mention is the experience I gained while talking to and

interacting with people. This has been a truly enriching experience because interacting with

people with varied profile helped in enriching my communication skills

FINDINGS

Lack of Awareness in consumers. Many people are not know about Amul chocolates

specially children and teenagers.

As I found that the main product of Amul is Milk and company firstly wants to

capture maximum market share in milk market which is approx. 66%, after it Amul is

concentrating upon butter & cheese which has market share of approx. 88%, so it is not

concentrating upon chocolates.

There is lack of Sales Promotional Activities i.e. free tattoo, extra weight, toys, quiz

contest etc.

Cadbury is main competitor and strategically better performer then Amul.

I find the main thing is that “Amul” brand name has very good image in consumer’s

mind and they consider it as Pure & Good Product.

People who have tasted Amul Chocolate are not ready to purchase the same again.

SUGGESTIONS

First and foremost Amul should take proper action in order to improve service,

because although being on a top slot in Butter and milk supplies it does not get the

sales in chocolate, which it should get.

Company should use brand ambassador which attracts each age segment i.e. Saniya

Mirza, Shaktimaan, Amitabh Bacchan, Superman, Krrish, Jadoo etc.

Amul should give local advertisements apart from the advertisements given at the

national level. Local advertisement must mention the exclusive Amul shops of the

city.

Try and change the perception of the people through word of mouth about Amul in

advertisements, because they are the best source to reach Children and families.

Though Amul chocolate advertisements are rarely shown on television yet many

people could recall it as per the data of research. It shows that there is only need to

give advertisement only to rememorize customers. Because Amul is very strong

brand name.

Company should launch chocolate in new attractive packing to change image of

Amul chocolate in consumers mind.

Company should introduce sales promotion schemes like free weight, pranky,

tattoo, contest, free gifts etc.

Advertisement can be done with the help of animations that attracts children and

teenagers because chocolates are consumed largely in this segment.

CONCLUSION

As Amul is a very huge organization' it has maximum market share in milk

The company must make policy for replacment of product's

The company must call a meeting of retailers time to time

Amul should look Oberlin towards the increment in profit margin of distributors and

retailers

Amul should provide credit facilities for retailers and distributors

The overall management of Amul is so superior that they manage the overall system

in 750 employees

Amul must come up with new promotional activities such that the people become

aware of Amul milk like Tazza n Gold

BIBLIOGRAPHY

Books:

i. Marketing Management (12th Edition) – Philip Kotlar

ii. Research Methodology – C. R. Kothari

Websites:

i. www.google.co.in

ii. www.wikipedia.com

iii. www.amul.com.

iv. www.marketresearch.com

v. www.dairy.com

ANNEXURE

QUESTIONNAIRE:-

(Retailer Survey)

Name of the shop: __________________________________________________

Retailer Name: ____________________________________________________

Address: __________________________________________________________

1) Do you stock Amul milk? a) Yes

b) No

2) If yes, what is the size of Amul milk packets do you preferred to store?

a) 250 ml

b) 500 ml

c) 1 Ltr

d) 5 Ltr.

3) If No, Why?

a. Absence of packaging date

b. Low margin

c. No replacement for leakage

d. Low distribution

4) Which is the most preferable brand of packaged milk that you stock?

Amul motherdairy manali tabala Others

5) From where do you get Amul milk?

a) Distributors

b) Other

suppliers

6) Are you satisfied with Amul distributor?

a)

Yes

b)

No

7) Do you know which Sales promotional activities does the company undertake for

Amul milk?

a) Price off d) Free samples

b) Credit facility e) Coupons

c) Advertisement f) P-O-P Displays

8) Are you interested in distribution of Amul milk?

a) Yes

b) No

9) Are you aware of Amul Parlor (APO) and its benefits?

a)

Yes

b)

No

10) Are you interested in opening an Amul Parlor (APO)

a)

Yes

b)

No

11) What is consumer’s expectation from Amul

milk? a) Good quality

b)

Packaging

c)

Availability

12) Give your ratings to following attributes of Amul milk.

Very good Good Average Bad Very bad

a) Quality

b) Brand image

c) Availability

d) Packaging

e) Margin

QUESTIONNAIRE:-

(Customer survey)

Name of the shop: __________________________________________________

Retailer Name: ____________________________________________________

Address: __________________________________________________________

1) Do you know about Amul?

Yes No

2) What are the products of Amul you use very frequently?

Butter Cheese Shrikhand Milk Powder

Dahi Milk Ice-Cream Butter Milk

3) Do you regularly get the Amul Milk?

Yes No

4) Which brand’s milk do you like most?

Amul Katraj Chitale Gokul

Other (Specify)……………………..

5) Do you know about Amul God and Taaza?

Yes No

6) How is the taste of Amul milk?

Poor Satisfactory Excellent

7) How is the taste of Amul Tazza?

Poor Satisfactory Excellent

8) What about the price of Amul milk?

Low Average High

9. Do you like the home delivery scheme of Amul Milk?

Yes No

10. Give your ratings to following attributes of Amul milk.

Very good Good Average Bad Very bad

f) Quality

g) Brand image

h) Availability

i) Packaging

j) Price

11. Any suggestion about Amul milk: