Supply Chain Management of AMUL

The Kaira District Co-operative Milk Producers Union Limited, popularly known as Amul Dairy is a US $1billion turnover institution

It is a institution built up with a network of over 10000 Village Co-operative Societies and 500,000 plus members

Managed by an apex cooperative organization, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.41 million milk producers in Gujarat, India

Amul is the largest food brand in India with an annual turnover of US $1068 million (2007-08)

Amul is the largest producer of milk and milk products in the world.

Sales Turnover US $ (million)

1994-95 355

1995-96 400

1996-97 450

1997-98 455

1998-99 493

1999-00 493

2000-01 500

2001-02 500

2002-03 575

2003-04 616

2004-05 672

2005-06 850

Amul

2007-08 1068

Before Amul

Polson dairy had monopoly rights

Exploitation of milk producers

Producers had to travel long distances to sell their

produce

Had to physically carry their produce

Agents decided the prices and the off-take

Summers- milk would go sour

Winters –surplus milk unsold or sold at very low prices

Producers of Kaira district formed a cooperative to supply

milk directly to Bombay milk scheme

Decentralized milk collection

Village level cooperatives

First modern dairy established at Anand

Indigenous technology and R&D department

Foundation for Amul

Network Structure

Made up of various stakeholders-suppliers to retailers

Linked by a common interest of remaining competitive in

a demanding environment

Global optimum rather than local optimum

Strategies

Core competency

Help network partners

Information sharing

Dairy Cooperative Structure and details for State of Gujarat

GCMMF

Gujarat cooperative milk marketing federation

Marketing entity for the state of Gujarat

42 regional distribution centers in India

5,00,000 retail outlets

Exports to more than 15 countries

NDDB (National Dairy Development Board)

NCDFI (National Co-Operative Dairy Federation of India)-

coordinate dairy activities nationally

Farmers

VillageCooperativeSocieties (withChilling Units)

VillageCooperativeSocieties(without ChillingUnits)

LocalRestaurants/Other Milk relatedbusinesses

Milk Sold toVillage &Local Residents

Milk ProcessingUnion &Warehouses

Warehouses

Wholesalers/C&S

Retailers Home DeliveryContractors

CONSUMERS

NetworkServices* VeterinaryServices* AnimalHusbandry* AnimalFeed Factory* Milk CanProducers* AgricultureUniversity* Rural MgmtInstitute* TruckingFacilities

Chilling Plants

CONSUMERS

AMUL SUPPLY CHAIN

The Supply-Demand Linkages

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

Coordination Mechanisms

Interlocking control

Coordination agency-unique role of federation

Supplier enhancement and network servicing

Fair share allocation of benefits

Spirit of co-operation

Total Quality Management

Friday departmental meetings

Training for transformational leadership

Application of hoshinkanri principles

Training for farmers and their families

Retail census

Key Initiatives

In 1994, decided on IT for competitive edge

Studied its existing functions and operations and

formulated an IT plan.

Aligned the Information strategy with business strategy.

Re-designed and re-organized the existing software

applications.

Output of one system should be input of another system

or vice-versa.

Problems faced

Indirect connection between Producers and Consumers

Could not forecast productivity accurately and timely

No direct connectivity between zonal, regional, member

dairies and head office

Role of Information Technology

Automatic Milk Collection System Units (AMCUS)

CEO of Amul Mr. B.M. Vyas said ”Amul is not a food company ,It is an IT company in the food business.”

Initially AMCUS was installed free of cost to convince farmers

Enterprise-wide integrated application system (EIAS).

Covers market planning, advertising and promotion, distribution network planning, stock control, sales and accounting, budgetary control, quality control management and co-operative service management

Role of IT (contd.)

Connected its zonal offices, regional offices and members dairies

through VSATs.

Each Amul office was connected by e-mail and all send a daily

report on sales & inventory to main system.

Geographic Information System (GIS)

Helps in getting zone wise data used for sales and distribution

planning.

Includes farmer-member census and animal census data.

Helps in monitoring veterinary health

Amul’s IT Roadmap Uses AMCUS for milk collection.

Implemented a customized ERP system which is used in

conjunction with GIS

Uses data analysis software for forecasting milk production and

increasing productivity.

Has connected all zonal, regional and member dairies through

VSAT.

One of the first five organizations to have web presence.

Has made IT education compulsory for all its employees.

Amul’s IT Roadmap (Contd.)

Milk collection information from 10,000 villages is

collected

Dairies can make faster decisions in terms of production

and distribution planning

Disease control in 6700000 animals

Linked with 45 distribution offices and 3900 distributors

GCMMF cyber store-125 cities

Thank You