Report By: Shabbir Akhtar PGPM 10, School of Marketing Globsyn Business School

Supply Chain Management Of

Marketing

Table of Contents
History of Amul .............................................................................................................................. 4 Amul, Over The Years .................................................................................................................... 7 Organizational Structure of Amul ................................................................................................... 9 Supply Chain of Amul .................................................................................................................. 12 Strategic Management Initiative for SCM by Amul ..................................................................... 13 Distribution Network of Amul ...................................................................................................... 14 Best Practices in Management by Amul to improve SCM ........................................................... 16 IT Initiatives by Amul ................................................................................................................... 17 Bibliography ................................................................................................................................. 23

History of Amul

Over six decades ago the life of a farmer in Kaira was very much like that of farmers anywhere else in India. His income was derived almost entirely from seasonal crops. Many poor farmers faced starvation during off-seasons. Their income from milch buffaloes was undependable. The milk marketing system was controlled by contractors and middlemen. As milk is perishable, farmers were compelled to sell their milk for whatever they were offered. Often they had to sell cream and ghee at a throwaway price. They were in general illiterate. But they could see that the system under which contractors could buy their produce at a low price and arrange to sell it at huge profits was just not fair. This became more noticeable when the Government of Bombay started the Bombay Milk Scheme in 1945. Milk had to be transported 427 kilometers, from Anand to Bombay. This could be done only if milk was pasteurized in Anand. After preliminary trials, the Government of Bombay entered into an agreement with Polsons Limited to supply milk from Anand to Bombay on a regular basis. The arrangement was highly satisfactory to all concerned except the farmers. The Government found it profitable; Polsons kept a good margin. Milk contractors took the biggest cut. No one had taken the trouble to fix the price of milk to be paid to the producers. Thus under the Bombay Milk Scheme the farmers of Kaira District were no better off ever before. They were still at the mercy of milk contractors. They had to sell their milk at a price the contractors fixed. The discontent of the farmers grew. They went in deputation to Sardar Patel, who had advocated farmers co-operatives as early as 1942. Sardar Patel reiterated his advice that they should market their milk through a co-operative society of their own. This co-operative should have its own pasteurization plant. His advice was

that the farmers should demand permission to set up such a co-operative. If their demand was rejected, they should refuse to sell their milk to middlemen. Sardar Patel pointed out that in undertaking such a strike there should be some losses to the farmers as they would not be able to sell their milk for some time. If they were prepared to put up with the loss, he was prepared to lead them. The farmers deputation readily accepted his proposal. Sardar then sent his trusted deputy, Mr. Morarjibhai Desai, to Kaira District to organize milk cooperative and a milk strike if necessary. Mr. Desai held a meeting in Samarkha village on January 4, 1946. It was resolved that milk producers co-operative societies should be organized in each village of Kaira District to collect milk from their member-farmers. All the milk societies would federate into a Union which would own milk processing facilities. The Government should undertake to buy milk from the Union. If this wasnt done, the farmers would refuse to sell milk to any milk contractor in Kaira District. The Government turned down the demand. The farmers called a milk strike. It lasted 15 days. Not a drop of milk was sold to the milk merchants. No milk reached Bombay from Anand, and the Bombay Milk Scheme almost collapsed. After 15 days the milk commissioner of Bombay, an Englishman, and his deputy visited Anand, assessed the situation and accepted the farmers demand. This marked the beginning of the Kaira District Co-operative Milk Producers Union Limited, Anand. It was formally registered on December 14, 1946. Its objective was to provide proper marketing facilities for the milk producers of the district. The Union began pasteurizing milk in June 1948, for the Bombay Milk Scheme just a handful of farmers in two village co-operative societies producing about 250 liters a day. An assured market proved a great incentive to the milk producers in the district. By the end of 1948, 432 farmers had joined village societies, and the quantity of milk handled by the Union had increased to 5000 liters a day. In the early stages, rapid growth brought in its wake serious problems. Their solution provided the stimulus for further growth. For example, as the co-operative movement spread in the district, it was found that the Bombay Milk Scheme could not absorb the extra milk collected by the Union in winter, when buffaloes yielded an average of 2.5 times their summer yield. Thus by 1953, the farmer-members had no regular market for the extra milk produced in winter. They were again forced to sell a large surplus at low rate to middlemen. The only remedy was to set up a plant to process the extra milk into products like butter and milk powder. The logic of this step was readily accepted by the Government of Bombay and the Government of India, except for a few doubting Thomases. The government of India helped the Union to get financial help from UNICEF and assistance from the Government of New Zealand

under the Colombo Plan. Technical aid was provided by F.A.O. A Rs.50 lakh factory to process milk powder and butter was blueprinted. Its foundation stone was laid by the then President of India the late Dr. Rajendra Prasad on November 15, 1954. The project was completed by October 31, 1955, on which day the late Pandit Jawaharlal Nehru, the then Prime Minister of India, declared it open. The new dairy provided a further fillip to the co-operative movement among milk producers. The union was thus enabled to organize more village co-operative societies and to handle more and more milk each year. This event also brought a breakthrough in dairy technology as the products were made processing buffalo milk for the first time in the world. Kaira Union introduced the brand Amul for marketing its product range. The word Amul is derived from Sanskrit word Amulya which means priceless or precious. In the subsequent years Amul made cheese and baby food on a large commercial scale again processing buffalo milk creating a history in the world. 1964 was the turning point in the history of dairy development program in India. Late Shri Lal Bahadur Shastri, the then Prime Minister of India who visited Anand on 31s October for inauguration of Amuls Cattle Feed Plant, having spent a night with farmers of Kaira and experiencing the success wished and expressed to Mr Kurien, then the General Manager of Amul that replicating Amul model throughout our country will bring a great change in the socioeconomic conditions of the people. In order to bring this dream into reality, 1965 The National Dairy Development Board (NDDB) was established at Anand and by 1969-70 NDDB came out with the dairy development program for India popularly known as Operation Flood or White Revolution. The Operation Flood program, even today, stands to be the largest dairy development program ever drawn in the world. This saw Amul as model and this model is often referred in the history of White Revolution as Anand Pattern. Replication of Anand Pattern has helped India to emerge as the largest milk producing nation in the world.

Amul, Over The Years

Amul came into being as a consequence of a revolution and it has continued to be revolutionary in every stage of its life. It initially started as means to balance the fluctuating milk supply and grew at a phenomenal rate as a liquid milk supplier. The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in 1948. However by the 1950s it was amply clear that the future lay in manufactured dairy products. Amul responded by embarking on a wide range of dairy processing activities, involving new technologies, and by expanding its processing facilities. It challenged the established Polson brand in butter manufacturing, and then moved on to sweetened condensed milk in direct confrontation with the international giant Nestle. It also locked horns with Glaxo over the production of baby food in India. On all of these occasions Amul not only displayed feats of resilience but in fact came out much stronger than ever before. Amul realized it as early as late 1960s that the only way it could increase the share of the market was by maintaining the reasonable prices of its products, but widening the range. During 19661970, Amul added sweet buttermilk powder, a second brand of baby food (Amulspray) and a high protein weaning food (Balamul). In 1974 the Amul Milk Chocolate was released commercially and was followed by several varieties of chocolates and chocolate confectionaries. Also, Nutramul, a malted cocoa beverage was launched in 1976. Cheese powder was released commercially in the early 70s. As district unions multiplied, Kaira Cooperative recognized the benefits of a marketing federation and thus the Gujarat Cooperative Milk Marketing Federation (GCMMF) was established in 1973. GCMMF commenced marketing on April 1, 1974 under the single brand name of Amul. GCMMF test marketed Amul Cheese spread in 1983 following it with a new softer cheese spread. In 1982, it introduced Amul Shrikhand in Bombay, and brought out new flavors between 1986 and 1989. Amul UHT milk in tetra packs, with a shelf life of 15 days, was released in 1983 and by 1988-89 UHT milk with shelf life of 60 days had become available. Between 1987 and 1989, Amul Choco Shake, Amul Elaichi Shake, and Amul Lassi were successfully marketed in tetra bricks. In the 1990s, Amul continued on an expansion path and several new product ranges were added to its portfolio. A much deeper Amul Cheese range with Amul Malai Paneer and Amul Pizza Cheese, extended Amul Mithaee range with Gulabjamuns and Kulfi mix, a wider UHT milk range Amul Taaza milk and Amul Fresh Cream, fresh milk range with brands like Amul Gold, Amul Smart and Amul Shakti, a new Curd range with Amul Masti Dahi, and a new Milk drink Amul Shakti Flavored Milk. Amul also started aggressive marketing of its wide array of Ice creams posing stiff competition to established players like HLLs Kwality Walls and Mother Dairy. Recently it also introduced ready to serve soups under the brand name of Masti. Today 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. Amul has evolved from its traditional image and now 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 of a proven model for dairy development.

Organizational Structure of Amul

The Amul Model of dairy development is a three-tiered structure with the dairy cooperative societies at the village level federated under a milk union at the district level and a federation of member unions at the state level.

AMUL is organized as a cooperative of cooperatives (i.e., each village society, a cooperative in itself, is a member of the AMUL cooperative) thereby deriving the advantage of scale and uniformity in decision making. The founders of Kaira Union realized that to fulfill their objectives, a large number of marginal farmers had to benefit from the cooperative a network of stakeholders had to be built. And once built, it had to grow so as to draw more rural poor to undertake dairy farming as a means of livelihood. The network had to have several layers the organizational network where the voice of the owners governed all decisions, a physical network of support services and product delivery process and a network of small farmers that could deliver the benefit of a large corporation in the market place. More importantly, a process had to be put in place to build these networks. Building an organizational network that would represent the farmers and the customers was the most complicated task. A loose confederation was developed with GCMMF representing the voice of the customers, the Unions representing the milk processors and the village societies representing the farmers. Competition in the markets ensured that the entire network was responding to the requirements of the customers at prices that were very competitive. The task of ensuring that returns to the farmers was commensurate with the objectives with which the cooperatives were setup was achieved through representation of farmers at different levels of decision making throughout the network the board of directors of societies, Unions and the Federation comprised farmers themselves. In order to ensure that most returns from sales went to the producers, the intermediaries had to operate very effectively and on razor thin margins. This turned out to be a blessing in disguise the operations remained very lean and started to provide cost based advantage to the entire network. AMUL established a group to standardize the process of organizing farmers into village societies. In addition to establishing the criteria for selecting members, the group had to train the VS to run the cooperative democratically, profitably and with concern for its members. This included establishing procedures for milk collection, testing, payment for milk purchased from member farmers and its subsequent sale to the union, accounting, ensuring timely collection and dispatch of milk on milk routes established by the union, etc. The Village Societies Division at AMUL acts as the internal representative of village societies in their dealings with the Union. Cooperative development programs at the village level for educating & training its members have become an important part of the strategy to build this extensive network. Milk procurement activity at AMUL comprises development and servicing of village societies, increasing milk collection, procurement of milk from societies & its transport to the chilling locations, and resolving problems of farmers and village societies. Their stated objective is to ensure that producers get maximum benefits. The Village Societies Division coordinates these activities. Milk collection takes place over a large number of pre-defined routes according to a precise timetable. The field staff of this division also helps village societies interface with the Union on various issues ranging from improvement of collection, resolving disputes, repair of

equipments to obtaining financing for purchase of equipment etc. In addition, they are also responsible for the formation of new societies, which is an important activity at AMUL. The Amul model has its advantages:

Establishment of a direct linkage between milk producers and consumers by eliminating middlemen Milk Producers (farmers) control procurement, processing and marketing Professional management

The Amul model has helped India to emerge as the largest milk producer in the world. More than 15 million milk producers pour their milk in 1,44,246 dairy cooperative societies across the country. Their milk is processed in 177 District Co-operative Unions and marketed by 22 State Marketing Federations, ensuring a better life for millions.

Supply Chain of Amul

At the start of the GCMMFs supply chain were the farmers who supplied the milk to the VCSs. The district unions processed the milk and took care of making the final product. GCMMF was the marketing agency for the products produced by different milk co-operative member societies in Gujarat and some unions in other states, which marketed their products under the brand name Amul. In 2005, GCMMF had 12 district milk unions, with each union having one or more manufacturing units producing different Amul products. GCMMFs large product portfolio called for efficient procurement and distribution in order to ensure product availability across the country. The essential elements of GCMMFs supply chain management included milk production, procurement, transportation, processing, packaging and distribution of final products like butter, cheese, ice-cream, etc. to the customers. The logistics of collecting 5.71 million liters of milk each day, processing them at 23 plants of 12 dairy unions, and sending them to more than 500,000 retailers was highly complicated. However, the coordination among producers and distributors ensured the smooth functioning of the supply chain. The employees, third party service providers, and distributors were constantly reminded that they were working for the farmers and that they needed to do their best to provide the farmers with the best possible returns. The structure of GCMMF guaranteed that the farmers interests would be given prime importance. The representatives of the farmers who constituted the board of the unions and GCMMF ensured that the professional managers worked toward strengthening the cooperative by applying modern management practices and using the latest technologies. GCMMF coordinated with different unions to decide on the product mix. This was a highly complicated task wherein GCMMF had to match the market requirements with the production capacity of each union. While doing this, it had to keep in mind that the demand for milk and milk products changed with the seasons. What made the task even more complex was the fact that the production of milk was higher in winter when the demand for products like ice-creams and chilled milk was low, and low in summer when the demand peaked. Several factors like local demand for products, overall demand, procurement volumes at each union, distribution costs from various locations, and long term strategy of the union were taken into consideration while allocating the product mix for each union.

Strategic Management Initiative for SCM by Amul

Managing the 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 had dedicated vehicle operations. Even though the cooperative was formed to bring together farmers, professional managers and technocrats were 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. GCMMFs 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 used to suffer from 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 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 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.

Distribution Network of Amul

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. 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. AMUL has the largest cold chain network in India (i.e. 18000 refrigerators) as compared to any other company. The chemical components of milk are water, SNF and solids. Milk is very perishable product so it has to be consumed within 24 hours. In order to avoid wastage AMUL converts the milk in to SNF and milk solids by evaporating the water, which comprises up to 6070% of milk contents. This is possible only if the distribution channel right from the producer to the consumer is well organized. 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. In addition to outbound logistics, GCMMF takes responsibility for coordinating with the distributors to assure adequate and timely supply of products. It also works with the Unions in determining product mix, product allocations and in developing production plans. The Unions, on the other hand, coordinate collection logistics and support services to the member-farmers. In what follows we elaborate on these aspects in more detail and provide a rationale for the model and strategies adopted by GCMMF. 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 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 Its objective is to ensure that all milk that the farmers produce gets sold in the market either as milk or as value added products and to ensure that milk is made available to an increasingly large section 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 VSs. 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. Amul Yatra Program The Amul Yatra Program ensures that every new distributor visits Anand before commencing business, thereby imbibing an appreciation of Federation philosophy and culture as well as operational systems and processes. All new distributors salesmen are trained in the Federation's philosophy and methods as well as in selling skills.

Best Practices in Management by Amul to improve SCM

Branding and Advertising of the product: The Taste of India slogan coupled with the record holding, Amul Girl Topicals campaign wins half the battle for the Federation. Codification of raw material in an easy to understand manner Payment to the milk suppliers on time and whenever they need it Quality checks at every level Educating suppliers about the things that improve quality Business process ownership throughout the supply chain Using technology to connect farmers with veterinary doctors when they need it Breeding and cross-breeding of animals to produce better milk Make product information available to the consumers through Amul.com Information Technology integration and widening the reach of IT at village level Active customer feedback and incorporation in product improvement Active customer feedback for improving product-lines Active involvement of GCMMF employees in all activities of the member unions Closer and deeper relationships with the business associates, i.e. wholesalers Implementing globally proven philosophies such as Kaizen, Hoshin, Kanri, etc. Implementing small group activities (SGA) to select and understand the problem and come up with counter measures, which are then tested, standardized and internalized in the company Completely in tune with the ground reality an enquiry is initiated on the organizational climate Have recognized change as an essential factor governing business needs and hence incorporates change in every form at every stage Recognized the importance of housekeeping and implemented the Japanese System or 5S principles to create a process and internalize in the company that is implemented through regular housekeeping audits by cross-functional teams Self-managing leadership course for all federation and GCMMF employees by Brahmakumaris at Mount Abu Strong committed leadership which is directly involved in everything that is happening

IT Initiatives by Amul
The term, Digital Divide, has always fascinated the Indian IT industry. Both the government and social organizations from the private sector have launched various schemes to take IT to the masses. It has always been argued that Indias rural populationwhich accounts for more than 70 percent of the total populationcan be uplifted with the help of IT. And if rural India or the government needs a poster boy who could inspire organizations to strategize operations with the help of IT it has to be Amul. No other Indian brand comes close to it. Formed in the year 1946, Amul initiated the dairy co-operative movement in India and formed an apex co-operative organization called the Gujarat Co-operative Milk Marketing Federation (GCMMF). Today, this movement is being replicated in 70,000 villages in over 200 districts in India, transforming the life of the Indian villager. This co-operative revolution has made India the largest producer of milk in the world today. Amul is also one of the largest food brands in India with an annual turnover of $500 million, and with products ranging from milk, butter, ghee, cheese, chocolates, ice-creams and pizzas. The case of Amul is noteworthy simply because the movement has not only lead to efficient collection of milk, but more importantly, has used IT to create higher profits for milk producers. Its no wonder that when the Nasscom -Boston Consulting group wanted to showcase successful e-commerce cases in India, they chose Amul, for setting an example for building an online bridge to its consumers. The successful utilization of IT to bridge the digital divide has aptly been described by Dr V Kurien, chairman, GCMMF and the man credited for revolutionizing the co-operative movement. Computers were not created to solve the problems of poverty, hence it is futile to expect that the world will be a better place if we all had access to computers and the Internet. But information is power and it stands to reason that if this power is shared equitably, all will benefit. There is no better example than Amul to prove this fact. Role of Information Technology: IT has played a critical role in the development of the Amul brand. The logistics behind the coordination of approximately six million litres of milk per day from about 10,675 separate village co-operative societies throughout Gujarat, and storing, processing and producing of milk products at the 12 district dairy societies, is carried out with military-like precision. Its in these operations that IT plays a critical role. The installation of over 3,000 Automatic Milk Collection System Units (AMCUS) at village societies to capture member information, milk fat content, volume collected, and amount payable to each member, has proved invaluable in ensuring fairness and transparency throughout the entire organization.

The way things were: GCMMF is an apex co-operative organization that comprises 12 affiliated member dairies/district milk unions, with each having its own manufacturing unit. These member dairies in turn have collectively about 2.1 million milk-producing members who supply milk twice a day to the respective village co-operative societies. As the collection and co-ordination of milk was a complex task, the organization needed a methodology to streamline operations. Further, following the relaxation on food imports by the government of India, the Indian dairy sector faced a strong challenge from large organized dairies. To meet this challenge, the Indian dairy sector needed a strategy to make its operations competitive. Accordingly, IT was decided as the thrust area that would streamline the production and collection process and the processing of milk products. This is where the installation of AMCUS made the entire operation look simple. For example, on an average, around thousand farmers come to sell milk at their local cooperative milk collection centre. Each farmer is given a plastic card for identification. At the milk collection counter, the farmer drops the card into a box and the identification number is transmitted to a personal computer attached to the machine. The milk is then weighed and the fat content of the milk measured by an electronic fat testing machine. Both these details are recorded in the PC. The computer then calculates the amount due to the farmer on the basis of the fat content. The value of the milk is then printed out on a slip and handed over to the farmer, who collects the payment at the adjacent window. Earlier, members had passbooks containing details like identification number, fat percentage of milk and volume of milk. The volume of the milk was recorded in the passbook and a small sample was stored in plastic bottles for measurement of the fat content. The testing of the milk was done at a later date and the entire process used to take more than a week. In the current scenario, with the help of IT, the farmers receive their payments within a matter of minutes. Also, as the method is transparent, the likelihood of fraud has also decreased to a large extent. But all these initiatives have not come without challenges. For example, in the initial phases, to convince skeptical farmers, the AMCUS were installed free of cost and the co-operative was requested to pay up only if they found the unit satisfactory. However, the experiment paid off and these initiatives made farmers aware to the benefits of the new system. Today, the application is being used in over 3,000 rural locations. Subbarao Hegde, chief information officer, GCMMF told Financial Express in an interview, As milk is a highly perishable commodity, the AMCUS initiative is vital for our operations. Due to this automation, we are in a position to collect six million litres of milk per day from around two million members. More importantly, this initiative has increased the trust and transparency for IT in rural areas. There are around 10,755 organized village co-operative societies in Gujarat, which are affiliated to the respective district union or member dairies. Each member preserves

the milk in the cold storage, processing it and producing several products, which are then sold under the Amul brand name. As all products have a limited shelf life, the organizations ability to conduct its operations in a smooth way is much more praiseworthyespecially when one considers the scale of the operations. Amul makes about 10 million payments daily amounting to transactions worth Rs 170 million in cash. More than 5,000 trucks move the milk from the villages to 200 dairy processing plants twice a day, according to a carefully planned schedule. In modern day lingo, it can be described as Just-in-Time supply chain management with Six Sigma accuracy.

Key initiatives: While Amul has always been at the forefront of IT initiatives, the major thrust came only in 1994, when the organization decided on Information Technology as the key component needed to sharpen its competitive advantage. Amul studied its existing functions and operations and formulated an IT plan for spearheading its growth in the 21st century. The guiding principle behind the exercise was to align the information strategy with the business strategy of the organization, and derive maximum benefits from computerization. During the implementation of the plan, Amul took a strategic decision to re-design and re-organize the existing software applications. While implementing the new software, care was taken to integrate the applications in such a manner that once the information was captured at source, it could be leveraged for the enterprises decision making process. The main focus was to ensure that the output of one system could become input of another system and vice-versa. Thus providing a seamless flow of information.

Enterprise-wide integrated application system: Accordingly, Amul assigned the ERP software development project named as Enterprise-wide integrated application system (EIAS), on a turnkey basis to Tata Consultancy Services. At present, the EIAS system covers a plethora of operations like market planning, advertising and promotion, distribution network planning, stock control, sales and accounting, budgetary control, quality control management and co-operative service management. Amul has also connected all its zonal offices, regional offices and members dairies through VSATs for seamless exchange of information. Each of Amuls offices is connected by e-mail and all of them send a daily report on sales and inventory to the main system at Anand. Also, sales offices, C&F points and wholesale distributors of GCMMF have been connected through the Internet for timely exchange of information. The customized ERP EIAS is designed in such a way that it can be plugged into various points of the supply chain and external system. Moreover, the software is platform independent and can work on any operating system. Amul is also in the process of Web-enabling the entire supply chain so that it can capture key information at the source, and use the same for decision-making. This would include the likes of transporters, member-manufacturing units, oil packing stations, suppliers, depots and the entire field force. In the interview with Financial Express, Hegde had said, In the co-operative space, this is the first instance of an integrated system. The same system is going to be linked to each member dairys ERP system in order to get information about a variety of details. For example, details like milk procurement, production and stocks ready for dispatch, wholesale distributor orders, secondary sales, direct consumers and demographic census data are available on the click of a button. This has proved to be extremely effective in streamlining the demand versus supply data activity on a continuous basis. Geographic information systems: In addition to the EIAS, Amul has also been using Geographic Information Systems (GIS) in an innovative way. The company uses GIS in its head office and key marketing offices. Using the Indian map in GIS, the company is in a position to plot zone/depot boundary as well as a pointer for zone, depot and distributor locations, which are superimposed by product-wise sales data. This data is then used for sales and distribution planning according to the various zones. The unique thing about Amuls GIS is that it is used for business planning activity at the collection level as it captures the farmer-member census information, which includes animal census data. This has enabled Amul to decipher information regarding milk production and productivity of animals, region wise in Gujarat. This ultimately helps in forecasting milk production according to the region and suggests remedies, if any, for a region that has a lower milk production rate. The same GIS system can also be used for monitoring veterinary health and controlling the outbreak of diseases.

DISK Also significant are the efforts of IIM-Ahmedabads (IIMA) e-governance centre that has developed additional modules, by building applications upon the existing system. The centre has tried to extend the benefits of the existing applications by developing a Dairy Information System Kiosk (DISK). Besides automating the collection of milk, the system would be used for data analysis and decision support to help in improving milk collection. The kiosk would also contain an extensive database on the history of cattle owned by the farmers. This would contain details like medical history of the cattle, reproductive cycle and history of diseases. Besides this, farmers can have access to information related to milk production, including best practices in breeding and rearing cattle. Using the same system, the farmers can even have access to a multimedia database on innovations captured by Srishti, an NGO working with IIMA. As a large amount of detailed history on milk production is available in the database, the system can be used to forecast milk collection and monitor the produce from individual sellers. Going forward, there are plans to introduce features like Internet banking services and ATMs which will enable milk societies to credit payments directly to the sellers bank account. In line with this vision, officials at Amul are looking at upgrading the plastic cards which are being currently used only for identification purposes, to smart cards which can be used to withdraw cash from ATMs. Online initiatives: The history of Amul shows that it radically changed the way business was doneby eliminating the middleman and bringing the producer closer to the consumerresulting in benefits for both. Incidentally, it was also one of the first Indian companies to have a Web presence. Today, Amuls cyberstore gifting service is capable of servicing consumers in more than 125 cities. Hegde also mentioned in the interview, We have also linked our distributors to our network and also incorporated Web pages of top retailers in our site, amul.com, as part of our B2B initiatives. Distributors can place their orders on the website, amulb2b.com, especially meant for accepting orders from stockists and promoting Amuls products via e-commerce. Currently, the company receives queries from overseas agents for distributing its products in countries like the US, Britain, New Zealand, Singapore and Thailand. As a result of the online initiatives, today, Amul exports products worth around Rs 100 crore, to countries in West Asia, Africa and the US. Amul has also launched sites like amulgreetings.com and amulkids.com to extend the brand identity to kids and teenagers who are its target market for its ice-cream and chocolates products. Also, as a strategy, Amul has a customer feedback channel which uses e-mail like cheese@amul.com for cheese products and butter@amul.com for butter products.

In addition, the organizations corporate intranet site contains all the companys updates including policies, procedures, functional role and responsibilities of each person in the organization. Another example that puts Amul in a league of its own, is its recruitment policy. For instance, for any new requirement in different functional areas, candidates have to compulsorily undergo a computer literacy test, where the minimum passing mark is 80 percent. Amuls success in leveraging IT to its advantage lies in the simple fact that the organization has a clear IT vision. For example, after a top-level domain co-operative was made available, Amul embraced it with gusto. Hegde says that by developing the Amul.coop Web portal, the organization will be in a position to communicate with other similar co-operative movements. As co-operatives can interact with each other with similar organizations sharing this domain, knowledge can be shared on a pro-active basis, which can lead to further productivity benefits. While it has always been argued that investments related to information technology made in rural India are a disaster, the case of Amul proves that where there is a will, there is a way. From catchy billboards to being a e-commerce success story, Amul is truly rural Indias flag-bearer in the IT revolution.

Bibliography
Source: Website Web Address
www.amul.com www.amuldairy.com www.thehindubusinessline.com www.rediff.com www.business-standard.com economictimes.indiatimes.com www.financialexpress.com www.businessreviewindia.in www.businesswireindia.com

Copyright GCMMF Amul Dairy The Hindu Business Line Rediff.com Business Standard Ltd Times Internet Limited The Indian Express Limited WDM Group Business Wire India

Source: Book Book Amuls India Supply Chain Management: Creating Linkages for Faster Business Turnaround

Publication HarperCollins Publishers Tata McGraw-Hill Publishing Company Limited