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What was this project about?

We tried to understand how the distribution of dairy products work considering that it has different
set of attributes and challenges vis-à-vis other products

As in milk is perishable quickly and it needs extensive distribution coverage (Attributes)

And there is fragmented purchase, low technical advancements & multiple small size stakeholders
(Challenges)

So we chose Amul (National) and Gyan (State level) and tried to analyse them.

What were your learnings?


Amul

Amul was started in 1946 to stop the exploitation by middlemen, currently has handling capacity of
about 3 Cr litres per day.

There is direct linkage between consumers & milk producers (No middleman). The Milk producers
control procurement, processing & marketing.

Its supply chain is as below

In the procurement channel, Milk is taken to the VCS by the farmers themselves. Transportation of
milk from the co-operatives to the manufacturing units in special trucks with tankers.

In the distribution channel,

From manufacturing unit to Wholesale distributors and then to retailers based on beat plan.
Distributor has a region which is assigned to him and has DMS (Distributor Management System)
installed on their computers facilitated by the company. This system tracks the amount of products
sold over a period. Distributors get the materials from Amul for a credit period of 15 days and he
gives credit period of 10 days to the retailers

The distributor has multiple people under him, uses Tata Ace or sometimes a rickshaw.

Other points

 It has a three tier co-operative structure as below

 They have various product mix like milk, dahi, cheese, butter, ghee, sweets etc. These are for
various segmentations such as kids(amul kool), women(amul calci), Health conscious
people(Amul skimmed milk) etc.
 The whole country is divided into 5 zones and each has a zonal manager responsible for
various products in his zone
 They don’t spend much on marketing except for Amul satires and comic strips. Innovative
puns are used on most recent news to attract the TG.

.
Gyan

Lucknow everyday gets about 15 Lakh Litres per day and its 10% is from Gyan. Mr. CP Agarwal laid
the foundation of Gyan Dairy in 2007. With just two products initially, they started small. Purity and
consistent quality are what they are known for.

Procurement channel

Processing
Farmers VLCC MCC Distributor Retailer Consumer
Plant

 Farmers : 17,000 farmers from nearby villages of Lucknow get their xyz milk to nearest
collection center

 VLCC ( Village Level Collection Center) : Each VLCC collects milk from many farmers according
to its capacity. The milk is then transported to next stage

 MCC ( Milk Chilling Center) : Undergoes qualitative tests

 Processing Plant : Milk is treated and posturized to remove remaining pathogens and germs

Distribution channel

Processing
Farmers VLCC MCC Distributor Retailer Consumer
Plant

ONWARD BEAT (4-7 AM)

Each distributor receives his demanded milk between 3-4 AM in the morning. From 4am he delivers
it. Typically, in one beat, he covers 50-55 shops.

RETURN BEAT (7-11 AM)

The salesman collects empty crates, cash and takes order for evening demand

DEMAND PUNCH

The evening demand is punched to MIS at 12 noon. The required demand is transported from plant
at 2 pm and reaches distributor at 3 PM and then onto the retailers

Other info

The Gyan in Lucknow is managed by 2 ASM’s who look after 45 distributors. There are 4-5 area
executives under each ASM to take care of on-ground and unforeseen problems.
What are the major problems faced by these companies? Also tell the recommendations

Amul

Problems

 No incentives are offered if extra products are sold or if extra orders are made by the
distributors
 If the products get expired, then claims are refunded within 15 days. This may sometimes
require a bit longer time also
 Packaging: The channel members demand a better quality of packaging for easy storing.

Recommendations

• Incentives based on sales target should be provided by Amul. Distributor margins can be
improved to cope up with competitors

• Claims related to refund and return policies of retailer and distributor need to be taken care
of because it creates lack of trust

• Better packaging to ensure lesser spoilage

Gyan

Storage – leakage and spoilage

Transport – difficult to transport in small villages, and rural areas

Distributors - The distributor typically works from morning 4 AM to night 11 PM. The margin is also
less hence it’s a challenge to retain distributors

Recommendations

• Improve technology during storage and transportation to ensure lesser spoilage. Like Amul

• Proper incentive to the distributors to retain them.

• Open milk parlors in Malls, use promotion to compete with Amul/Mother Dairy.