SUPPLY CHAIN MANAGEMENT

GROUP NO. 2
AMIT RAI 10 SHUBHANGI CHOUHAN 61 KULVINDER PATHANIA 27 PRATEEK CHHABRA 16 ASHISH SONAWARE 29 GAURAV CHOUHAN 57

AMUL

Type Industry Founded Key people Revenue Employee -

Cooperative Dairy 1946 Dr. Verghese kurien INR 67.11billion (2008-2009) Marketing arm: 735 Milk producers: 2.8 million

KEY FACTS

AMUL means priceless in Sanskrit Amoolya Brand name managed by an apex cooperation organization GCMMF Worlds biggest vegetarian cheese brand Worlds largest pouched milk brand Largest food brand in India Spurred the white revolution in India Accreditation with 9001 and HACCP certification by QAS, Australia.

GCMMF: AN OVERVIEW

Members

13 district cooperative milk producers Union

No. of Producer Members

2.79 million

No. of Village Societies

13,328

Total Milk handling capacity

11.22 million liters per day

CONT

Milk collection (Total - 2008-09): 3.05 billion liters. Milk collection (Daily Average 2008-09): 8.4 million liters

Milk Drying Capacity: 626 Mts. per day

Cattle feed manufacturing Capacity: 3500 Mts. per day

VALUE CHAIN PROCESS

AMUL PRODUCTS DIVERSIFICATION

Dairy
Cheese Products Bread Spreads Milk Drinks & Desserts Fresh Milk

Non-Dairy
Instant Food Snacks Veg. Oils

PRODUCTS

Bread Spreads Milk Drinks Powder Milk Fresh Milk Cheese

For Cooking
Chocolate

MARKET SHARE

PRODUCT SHARE
Amul Ice

butter - 86%

cream - 36%

Chocolate
Ghee

- 10%

- 20% milk powder - 40%

Skimmed

PROBLEMS TO BE ADDRESSED
I.

Logistics in collection

6 million liters of milk per day From about 10,600 separate village cooperative societies. Approximately 2.8 million milk producing member. Logistic in coordination of

II.

Storing the milk. Processing the milk. Distributing the milk.

CONT.
III.

Supplier logistics
Weighing the milk. Determining of fat content. Calculation of the purchase price.

EVOLUTION OF IT

The evolution of IT in AMUL was took place in the guidance of DR.B.M Vyas. The milk collection center at village cooperative societies, were first automated. Application and utilization of GIS. Data analysis software utilization for milk production estimation and increasing productivity. VATS network between all the level of distribution network and GCMMF.

SHIFT PROCESS
The

company zeroed in on ERP as means to keep pace with dynamically changing business environment.

TCS
The

was hired to guide them in its implementation.

project was named as Enterprise wise integrated application system (EIAS)

IMPLEMENTATION
Amul

start implementation of ERP in phases.

Automatic

milk collection system units(AMCUS) at village society were installed in the first phase to automate milk production logistics. facilities to capture member information, milk fat content, volume collected, and amount payable to each member electronically.

AMCUS

CONT.
Amul

also connected its zonal offices, regional offices and members dairies through VSATs. The customized ERP- EIAS has been implemented across the organization integrating various operational departments. Amul is also using Geographic Information Systems (GIS) for business planning and optimization of collection processes.

CONT
Indian Institute of Management Ahmedabad supplemented Amuls IT strategy by providing an application software Dairy Information System Kiosk(DISK) to facilitate data analysis and decision support in improving milk collection. The kiosk would also contain an extensive database on the history of cattle owned by the farmers, medical history of the cattle, reproductive cycle and history of diseases. Farmers can have access to information related to milk production, including best practices in breeding and rearing cattle. 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.

CONT
The

kiosk would also contain an extensive database on the history of cattle owned by the farmers, medical history of the cattle, reproductive cycle and history of diseases. Farmers can have access to information related to milk production, including best practices in breeding and rearing cattle. 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.

AUTOMATIC MILK COLLECTION SYSTEM UNITS (AMCUS)

REAPING RETURNS
Radical changes in business processes - eliminating middlemen . Improved delivery mechanisms and transparency of business operations. Due to this process, AMUL is able to collect six million litres of milk per day. Huge reduction in processing time for effecting payments to the farmers from a week to couple of minute. Processing of 10 Million payments daily, amounting to transactions worth USD 3.78 million in cash.

CONT..
Movement of 5000 trucks to 200 dairy processing plants twice a day in a most optimum manner. Practicing just in time supply chain management with six sigma accuracy. Online order placements of Amuls products on the web. Distributors can place their orders on the website. Amul exports products worth around US$ 25 million to countries in West Asia, Africa and USA.

TOTAL QUALITY MANAGEMENT MODEL

There is improvement in quality of milk in term of acidity and sour milk. Sabor milk union records show 2% reduction in the amount of the sour milk received from the union. Improved microbiological quality of upcoming raw milk in the form of methylene blue reduction.

This gives better shelf life to the product.

Program like Red Tag Day was launched for cleaning the milk collection center.

AMUL PATTERN
A three tier cooperative structure:
Dairy

cooperative society at village level

Milk
Milk

union at district level

federation at state level

ORGANIZATION STRUCTURE
LEVEL MEMBERS
District level Chairpersons, Registrar of Co-operatives, NDDB Representative, Technical Expert, CEO

DECISION-MAKING Price paid to district unions (fixed across unions) Product mix and quantity Price paid to village co-operative societies

State Federation

District

Chairpersons of Village Dairy Co-operative Societies, BOD, MD

Village

Milk Producers, Managing Committee

Membership Price paid to milk suppliers

VILLAGE DAIRY COOPERATIVE SOCIETY (VDCS)

Collection

of surplus milk & payment based on quality &

quantity.
Providing Selling

support services to the members.

liquid milk for local consumers of the village.

Supplying

milk to the District Milk Union

DISTRICT COOPERATIVE MILK PRODUCERS UNION (MILK UNION)

Procurement

of milk from the Village Dairy Societies of

the District.
Arranging

transportation of raw milk from the VDCS to the Milk Union. input services to the producers. training on Cooperative development

Providing

Conducting

CONT..

Providing management support & regular supervision to the VDCS. Establish Chilling Centers & Dairy Plants for processing the milk. Selling liquid milk & milk products within the District.

Process milk into various milk & milk products.

Decide on the prices of milk to be paid to milk producers.

STATE COOPERATIVE MILK FEDERATION (FEDERATION)

Marketing of milk & milk products Establish distribution network Arranging transportation from the Milk Unions to the market. Creating & maintaining a brand Providing Technical Inputs, management support & advisory services. Decide on the products to be manufactured at various Milk Unions (product-mix) Conduct long-term Milk Production, Procurement, Processing & Marketing Planning Conflict Resolution & keeping the entire structure intact

GCMMFS SUPPLY CHAIN

DISTRIBUTION PROCESS
Company

Dealer Franchisee
Wholesaler Retailer

Shopkeeper
Consumers

THE CHANNEL NETWORK

Procurement Distribution

channel- upstream flow

channel- downstream flow

PROCUREMENT

Activities at the village level comprised developing and servicing the VCSs. Increasing milk collection, procuring milk, and transporting it to the chilling and processing units twice a day. The VCSs provided the farmers with good quality animal feed, fodder, and other services like veterinary first aid.

PROCURNMENT CHANNEL
On an average around thousand farmers come to sell milk at their local co-operative milk collection center. Each farmer has been 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 is measured by an electronic fat testing machine. Both these details are recorded in the PC. The computer then calculates the amount due to farmer on the basis of the fat content. The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window.

COLD STORAGE NETWORK

Chillers Prompt

in proximity of villages

transport to district facilities for further dispatch to consumers/ processing units.

Chilled

trucks to transport processed products

to local chillers by insulated rail tankers and chilled

Delivery

trucks.

Refrigerators

and freezers with retailers and departmental stores to retain freshness.

DISTRIBUTION

GCMMF coordinated with various unions to get a regular supply of milk and dairy products. The processed milk and dairy products were procured from district dairy unions and distributed through third party distributors. To ensure quality and timely deliveries, GCMMF and the district unions had several mechanisms in place. The unions monitored the supplies of milk and the distribution of finished products.

DOWNSTREAM FLOW
First

leg

Manufacturing units to company depots using 9 and 18 MT trucks Frozen food-below 18C Dairy wet-0-4C
Second

leg

Depots to WDs Transport through insulated 3 and 5 MT TATA 407s

Third

leg

WDs to retailers Transport through rickshaws according to the beat plan

REVERSE LOGISTICS
MILK CHURN from dairy to VCS POUCH MILK TRAY from retailer to dairy BOTTLE from retailer to dairy DAMAGED PRODUCTS from customer to retailer then to dairy

LESSONS FOR MANAGING LARGE NETWORKS

Long

term perspective development of markets and suppliers.

Simultaneous

Network
Cost

partnership Vs. ownership

leadership and value for money and Information Sharing

Technology

DIRECT RETAILING
Amul

has recently entered into direct retailing through "Amul Utterly Delicious" parlors created in major cities.

Amul

has plans to create a large chain of such outlets to be managed by franchisees throughout the country. than 2000 parlor with a turnover of 200 crore.

More

EXPANSION PLAN

Tie up with the Wal Mart Export is in 15 countries.

Plan to open 10000 Amul parlor by the end of the 2010.

MISSION 2020
Very ambitious future plan

Turnover of 27000 crore.(three fold increase in the group turn over.) Milk production 33.1 million liter/day. Milk drying capacity 200 mt/day

AMUL (RECENTLY IN NEWS)

Milk via milk train. Tie up with Adani Logistics.

50 wagon each capacity 24k liter.

Initial transport cost was 40 crores ,reduce it to half.

THANK YOU..