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SUBMITTED TO-Ms. PREETI SINGH FACULTY OF MARKETING DELHI BUSINESS SCHOOL
SUBMITTED BY-BRIJESH KUMAR ROLL NO-DBS/S 09-11/S-198 SECTION - D BATCH –JULY 09-11
Supply chain management (SCM) is a business practice that aims to improve the way a business sources its raw materials, and delivers it to end users. For any product or service offered by any business, there are usually a number of different business entities involved in the various stages of the supply chain, including manufacturers, wholesalers, distributors and retailers; the last group supply chain is consumers. SCM is important for modern businesses because it coordinates and synchronizes activities of partner businesses, giving efficiency..
Innovation & Research is always a cloud in the air until it green the earth and guidance is a lentil of strong building. Hence I take this opportunity to express my profound sense of gratitude to & for providing me the opportunity to work for such an interesting & knowledgeable project & providing every possible help and guidance. I am immensely grateful to my project guide Ms. PREETI SINGH for this meticulous guidance, constructive criticism and valuable suggestions during the entire duration of the project. I would also like to thank to all those who could not find a separate mention but have helped me directly/indirectly.
+P.G.P. in retail), Delhi Business School, want to state that work conducted on project was performed under the supervision of Ms. PREETI SINGH sincerely prepared the project and reported in the study are genuine and authentic.
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PREFACE ACKNOWLEDGEMENT DECLARATION COMPANY PROFILE GCMMF PRODUCT MIX OF AMUL THREE TIER MODEL OF AMUL AMUL PARLOURS (DIRECT DISTRIBUTION) MANAGING CHANNEL MEMBERS PRODUCT INFOMATION SALES , VOLUME AND PROFIT DISTRIBUTION CHANNEL OF AMUL GOLD STOCK REPLENISHMENT CYCLE TRANSPORATION METHODS COMPETITOR ANALYSIS OBSERVATION COMMENTS AND SUGGESTION
Today Amul is a symbol of many things. Singapore. and a few South African countries. Amul Ghee. Its bid to enter Japanese market in 1994 did not succeed.” Variants. China. Nutramul. of the genesis of a vast co-operative network. Of high-quality products sold at reasonable prices. but now it has fresh plans entering the Japanese markets . Bangladesh. Hong Kong Mauritius. Amul Cheese. are found in several Indian languages. Amul Milk Powder. Amul Shrikhand. Amul Butter. all meaning "priceless". AMUL IN ABROAD . Amul has entered overseas markets such as Australia. Amul Milk and Amulya have made Amul a leading food brand in India. UAE. of the marketing savvy of a farmers' organization and have a proven model for dairy development. Amul products have been in use in millions of homes since 1946. A quality control expert in Anand suggested the brand name “Amul. USA. 25 billion in 2002).COMPANY PROFILE AMUL means "priceless" in Sanskrit. Amul Chocolates. of the triumph of indigenous technology. (Turnover: Rs. Amul Ice cream. Amul spray.” from the Sanskrit “Amoolya. 5 . Besides India. Other potential markets being considered include Sri Lanka.
141 Village Dairy Cooperative Societies (VDCS) at the village level.6 million litres per day.11 billion. It markets the products. 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. Dairy Cooperatives in Gujarat have created an economic network that links more than 2. The farmers of Gujarat own the largest state of the art dairy plant in Asia – Mother Dairy.GCMMF The Gujarat Cooperative Milk Marketing Federation Ltd. under the renowned AMUL brand name. the community and nation benefits as well. Gujarat – which can handle 2. Ever since the movement was launched fifty-five years ago.1 billion litres of milk was collected by Member Unions of GCMMF. Huge capacities for milk drying. product manufacture and cattle feed. The turnover of GCMMF (AMUL) during 2008-09 was Rs. with four dairy plants having processing capacity in excess of 1 million Litres per day.8 million village milk producers with millions of consumers in India and abroad through a cooperative system that includes 13. 6 . marginal farmers and landless labourers and include a sizeable population of tribal folk and people belonging to the scheduled castes. more than 70% of whom are small. During the last year. 67. The Dairy Cooperatives have helped in ending the exploitation of farmers and demonstrated that when our rural producers benefit. These cooperatives collect on an average 7. The combined processing capacity of these plants is 11. affiliated to 13 District Cooperative Milk Producers’ Unions at the District level and GCMMF at the State level.5 million litres of milk per day from their producer members. Gandhinagar. Anand (GCMMF) is the largest food products marketing organization of India. It is the apex organization of the Dairy Cooperatives of Gujarat. 3.5 million litres of milk per day and process 100 MTs of milk powder daily. Gujarat’s Dairy Cooperatives have brought about a significant social and economic change to our rural people. produced by the district milk unions in 30 dairy plants. Over the last five and a half decades.
Thus the Kaira District Cooperative was established to collect and process milk in the District of Kaira in 1946. the farmers of the area went on a milk strike refusing to be further oppressed. in 1973. 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). In 1946. V Kurien along with Shri H M Dalaya . the Gujarat Co-operative Milk Marketing Federation was established. Milk collection was also decentralized. which had 7 .9 million 15. as most producers . per day 3740 Mts per day BIRTH OF AMUL The birth of Amul at Anand provided the impetus to the cooperative dairy movement in the country.32 billion litres 9. The Kaira District Co-operative Milk Producers’ Union Ltd. 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. Milk Producers had to travel long distances to deliver milk to the only dairy.07 million litres per day 3.322 13. of Producer Members: No. Village level cooperatives were established to organize the marginal milk producers in each of these villages.10 million litres 647 Mts.2009-10): Milk collection (Daily Average 2009-10): Milk Drying Capacity: Cattlefeed manufacturing Capacity: 13 district cooperative milk producers' Union 2.GCMMF: An overview Members: No. the Polson Dairy in Anand . were marginal farmers who were in a position to deliver 1-2 litres of milk per day. 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). Angered by the unfair and manipulative trade practices. of Village Societies: Total Milk handling capacity: Milk collection (Total . The Cooperative was further developed & managed by Dr. The Kaira District Cooperative Milk Producers’ Union Limited was registered on December 14. He sent Morarji Desai (who later became Prime Minister of India) to organize the farmers.
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.established the brand name AMUL in 1955 decided to hand over the brand name to GCMMF (AMUL). Saffron. 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. GCMMF (AMUL) has ensured remunerative returns to the farmers while providing consumers with products under the brand name AMUL. we[who?] managed to eliminate competition between Gujarat’s cooperatives while competing with the private sector as a combined stronger force. Almond Pistachio. With the creation of GCMMF (AMUL).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 8 .
Kesar Pista. Tutti Frutti) Nut-o-mania range (Kaju Drakshi. Shahi Pista Kulfi. Dates with Honey) Milk Bars (Chocobar. Chocolate. Anjir. Chocolate) Nature's Treat (Alphanso Mango. Badshahi Badam Kulfi. Kesar Carnival. Fresh Litchi. Butterscotch. Roasted Almond) Simply Delicious Range (Vanilla. Fresh Strawberry. Pineapple. Black Currant. Mango) Cassatta 9 . Roasted Almond.5% fat Curd Products: • • Amul Masti Dahi (fresh curd) Amul Butter Milk Amul Icecreams: • • • • • • • • • • Royal Treat Range (Rajbhog. Green Pista Kulfi) Cool Candies (Orange.• 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. Raspberry Dolly. Mawa Malai Kulfi. Black Currant) Sundae Range (Mango. Shahi Badam Kulfi. Strawberry. Mango Dolly. Cappuchino. Rose. Chocochips. Strawberry) Millennium Icecream (Cheese with Almonds. Shista Pista Kulfi) Utsav Range (Anjir.
milk powder. which engaged in producing cheese. ghee. Chocolate) Megabite Almond Cone Frostik . 2. which engaged in the manufacturing of milk. 10 . Third plant is at Kanjari. butter. First plant is at ANAND. Pineapple) Chocolate & Confectionery: • • • Amul Milk Chocolate Amul Fruit & Nut Chocolate Amul Eclairs Brown Beverage: • Nutramul Malted Milk Food AMUL PLANTS 1. Fourth plant is at Khatraj. nutramul. Mango. 3. Banana. 4. flavored milk and buttermilk. Amul Ganthia and Amul lite.exclusively for kids SlimScoop Fat Free Frozen Dessert (Vanilla. which produces cattelfeed. Second plant is at MOGAR.3 layer chocolate Bar Fundoo Range .• • • • • Tricone Cones (Butterscotch. which engaged in manufacturing chocolate.
The above three-tier structure was set-up in order to delegate the various functions. Responsible for Marketing of Milk & Milk Products Responsible for Procurement & Processing of Milk Responsible for Collection of Milk Responsible for Milk Production. one vote. It has membership of milk producers of the village and is governed by an elected Management Committee consisting of 9 to 12 elected representatives of the milk producers based on the principle of one member. mineral mixture sales. The Village Dairy Cooperative is the primary society under the three-tier structure. come together and form a Village Dairy Cooperative Society (VDCS). Milk Procurement & Processing at the District Milk Union and Milk & Milk Products Marketing at the State Milk Federation. It also employs various people for assisting the Secretary in accomplishing his / her daily duties. fodder & fodder seed sales. This helps in eliminating not only internal competition but also ensuring that economies of scale is achieved. etc. The Milk Union is the second tier under the three-tier structure. District Cooperative Milk Producers’ Union (Milk Union) • The Village Societies of a District (ranging from 75 to 1653 per Milk Union in Gujarat) having surplus milk after local sales come together and form a District Milk Union.THREE TIER MODEL OF AMUL The Amul Model is a three-tier cooperative structure. As the above structure was first evolved at Amul in Gujarat and thereafter replicated all over the country under the Operation Flood Programme. conducting training on Animal Husbandry & Dairying. Artificial Insemination services. The village society further appoints a Secretary (a paid employee and member secretary of the Management Committee) for management of the day-to-day functions. Village Dairy Cooperative Society (VDCS) • The milk producers of a village. having surplus milk after own consumption. It has 11 . cattle-feed sales. Selling liquid milk for local consumers of the village Supplying milk to the District Milk Union Thus. 1. milk collection is done at the Village Dairy Society. The main functions of the VDCS are as follows: Collection of surplus milk from the milk producers of the village & payment based on quality & quantity Providing support services to the members like Veterinary First Aid. • • • • • 2. it is known as the ‘Amul Model’ or ‘Anand Pattern’ of Dairy Cooperatives. This structure consists of a Dairy Cooperative Society at the village level affiliated to a Milk Union at the District level which in turn is further federated into a Milk Federation at the State level. the VDCS in an independent entity managed locally by the milk producers and assisted by the District Milk Union.
Artificial Insemination services. Decide on the prices of milk to be paid to milk producers as well on the prices of support services provided to members. cattle-feed sales. Selling liquid milk & milk products within the District Process milk into various milk & milk products as per the requirement of State Marketing Federation. Conducting training on Cooperative Development. 12 . It also employs various people for assisting the Managing Director in accomplishing his daily duties. mineral mixture sales. • Arranging transportation of milk & milk products from the Milk Unions to the market. Establish Chilling Centres & Dairy Plants for processing the milk received from the villages. • Establish distribution network for marketing of milk & milk products. 3. Animal Husbandry & Dairying for milk producers and conducting specialised skill development & Leadership Development training for VDCS staff & Management Committee members. The Federation is the apex tier under the three-tier structure. The main functions of the Milk Union are as follows: Procurement of milk from the Village Dairy Societies of the District Arranging transportation of raw milk from the VDCS to the Milk Union. The State Federation further appoints a Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions. management support & advisory services. • Arranging for common purchase of raw materials used in manufacture / packaging of milk products. It also employs various people for assisting the Managing Director in accomplishing his / her daily duties. Providing input services to the producers like Veterinary Care.• • • • • • • • • membership of Village Dairy Societies of the District and is governed by a Board of Directors consisting of 9 to 18 elected representatives of the Village Societies. etc. • Providing support services to the Milk Unions & members like Technical Inputs. The Milk Union further appoints a professional Managing Director (paid employee and member secretary of the Board) for management of the day-to-day functions. The main functions of the Federation are as follows: • Marketing of milk & milk products processed / manufactured by Milk Unions. • Pooling surplus milk from the Milk Unions and supplying it to deficit Milk Unions. fodder & fodder seed sales. State Cooperative Milk Federation (Federation) The Milk Unions of a State are federated into a State Cooperative Milk Federation. It has membership of all the cooperative Milk Unions of the State and is governed by a Board of Directors consisting of one elected representative of each Milk Union. • Creating & maintaining a brand for marketing of milk & milk products (brand building). Providing management support to the VDCS along with regular supervision of its activities. • Establish feeder-balancing Dairy Plants for processing the surplus milk of the Milk Unions.
• • • • Decide on the prices of milk & milk products to be paid to Milk Unions. Procurement & Processing as well as Marketing Planning. Decide on the products to be manufactured at various Milk Unions (product-mix) and capacity required for the same. 13 . Arranging Finance for the Milk Unions and providing them technical know-how. Conduct long-term Milk Production.
n VCS…1 VCS…n Village…1 Village…n 14 .THE CHANNEL NETWORK Procurement Channel (Upstream flow) Distribution GCMMF Head office MU…1 MU...
THE ANAND PATTERN 15 .
.n Downstream flow 16 .Distribution channel Manufacturing GCMMF Head office First leg (from manufacturing units) Depot.....n Second leg WD…1 WD…n Third leg Retail…1 Retail.1 Depot..
it is the distribution part of the supply chain. 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.000 retail outlets across India through its network of over 3. Third leg this is the flow of good from WD’s to retailers. 17 . GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. • First leg of transport is from the manufacturing unit to the company depots. This just-in-time inventory strategy improves dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations. rickshaws and bicycles. 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. from the manufacturing units to the retailers. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. a beat plan is prepared and transportation is done on auto-rickshaws. 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. • • Amul products are available in over 500.Downstream Channel. • 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.500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products.
If the product gets spoilt during the transportation or if there is any customer complaint. No reverse logistics. the retailer bears the costs. Unsold goods are not returned to the manufacturer. 18 .Policy regarding unsold/spoilt goods • • • • If product crosses the shelf life. Amul bears costs.
SCM AND MARKET LOGISTICS 19 .
distribution of dairy products. the Unions followed a multipronged strategy of education and support. Coordination of the diverse elements of the network and 2. First. third part service 20 . Some interesting mechanisms exist for coordinating the supply chain at GCMMF. Management of this network is built around two key elements – 1. for the short term. cash payments for the milk supply was made with minimum of delay. Employees. Marketing efforts (including brand development) were assumed by GCMMF. These include provision of veterinary services. the Unions have put in place a number of initiatives to help educate the members.THE BUSINESS MODEL The strategy. A substantial part of this surplus is used for activities that promote growth of milk supply and improve yields. these concepts were practiced by GCMMF and AMUL. These range from ensuring fair share allocation of benefits to various stakeholders in the chain to coordinated planning of production and distribution. Accordingly. • Second. 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 veterinary services etc. 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. For the long-term. Only part of the surplus generated by the Unions is paid to the members in the form of dividends. From the beginning. the reason for setting up of this cooperative is not amiss to anyone in this large network organization. the cooperative realized that sustained growth for the long-term was contingent on matching supply and demand. sale of products through dealers and retail stores. The member-suppliers were typically small and marginal farmers with severe liquidity problems. In parallel. More importantly. the procurement prices were set so as to provide fair and reasonable return. it was recognized that the core activity for the Unions lay in processing of milk and production of dairy products. illiterate and untrained. support for cold storage facilities at the village societies etc. Use of appropriate technology that includes product. These include logistics of milk collection. the Unions focused efforts on these activities and related technology development. AMUL and other cooperative Unions adopted a number of strategies to develop the supply of milk and assure steady growth. Simultaneous Development of Suppliers and Customers: From the very early stages of the formation of AMUL. process and information technology and managerial practices and systems. All other activities were entrusted to third party service providers. aware of the liquidity problems. • 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.
automated milk collection stations at village societies and a GIS based data network connecting villages societies to markets. Technology for Effectiveness:Technology or knowledge that was embodied in products. monitor truck movement and prevent stealing of milk while it is being transported. To ensure that milk is made available to increasingly large sections of the society at affordable prices. They manage the procurement of milk that comes via trucks & tankers from the VS’s. Milk collection information at more than 10. a net based dairy kiosk at some village societies (for dissemination of dairy related information). One distinguishing feature of AMUL (in comparison with other similar cooperatives globally) is the large variety in their product mix. the real owners of the cooperative. ensure availability of trucks for procurement.Their objective is to ensure that producers get maximum benefit and to resolve all their problems. This helps in coordinating decisions across different entities as well as speeding both the flow of information to the respective constituents and decisions.providers. They negotiate annual contracts with truckers.In addition to being the marketing and distribution arm of the Unions. Coordination Agency: Unique Role of Federation:. and distributors are constantly reminded that they work for the farmers and the entire network strives to provide the best returns to the farmers.000 villages is available to all dairies (or 21 . an ERP based supply chain planning system for the flow of material in the network. managing inter-dairy movements. It works with two very clear objectives: 1. AMUL also indigenously developed a low cost process for providing long shelf life to many of its perishable products.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. To ensure that all milk that the farmers produce gets sold in the market either as milk or as value added products and 2. establish truck routes. etc. It may be remembered that coordination mechanisms have to link the lives and activities of 2. This form of direct representation also ensures that professional managers and farmers work together as a team to strengthen the cooperative. and practices became an important factor in delivering effectiveness to the network of cooperatives. Most of its plants are state of art and automated. The extent of IT usage includes a B2C ordering portal.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. AMUL’s innovations in the areas of energy conservation and recovery have also contributed to reduction in cost of its operations. processes. determining the best production allocation for its product mix from amongst its Unions.12 million small suppliers and 0. GCMMF plays the role of a coordinator to the entire network within the State – coordinating procurement requirements with other Federations (in other states). These mechanisms are: • Inter-locking Control: . • Supplier Enhancement and Network servicing:.
• 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. Amul has gone the e. Amul is also using Geographic Information Systems (GIS) for business planning and optimization of collection processes. going back to the supply chain of Amul.Unions) to enable them make faster decisions in terms of production & distribution planning.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. This is linked with information at all 45 distribution offices and 3900 distributors. Tata Consultancy Services was hired to guide in its implementation. regional offices and member’s dairies through VSATs for seamless exchange of information. • Training for Transformational Leadership so that individuals are able to control their thoughts.wise Integrated Application System (EIAS). The GCMMF cyber store delivers AMUL products at the doorsteps of the consumers in 125 cities across the country. Amul also connected its zonal offices. Key elements of this TQM movement have been: • Friday Departmental Meetings : Each Friday. village cooperatives. and disease control in more than 6. 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. Automatic Milk Collection System units (AMCUS) at village societies were installed in the first phase to automate milk producers logistics.700.amul2b.000 animals. The 1st initiatives taken for an ERP system was in ’94. Now. 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. dairy plants. The implementation project was named as Enterprise. This network is being extended to cover all related field offices in the network. Distributors can place their orders on the website www. feelings and behavior and take more responsibility in one’s life and surrounding environment. distributors and wholesalers and retailers. operational and strategic capabilities in the entire network – farmers. at a prescribed time. ISO/HACCP certification 22 .commerce way. 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.
• • was obtained for all the Unions and each village society is in the process of obtaining the same. 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. This information is used for policy deployment exercise. This effort has brought about a significant social change towards such issues in villages that have cooperative milk societies. The products are then sent to Wholesale Distributors (WD) and from there to the retailers. 4.500 distributors. This is being done by wholesalers in their respective territories at their own cost. The products are then transporters to the company Depots located in various parts of the country.000 retail outlets across India through its of over 3.000 retailers spread all over India Total house hold consumers covered are 100.50. 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. from there the milk is taken to manufacturing units where the milk is processed into various products. THE NETWORK Milk is procured from the villages and collected at Village Cooperative Societies (VCS).000) to evaluate customer perceptions and distribution efficacy of their network.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. Retail Census: GCMMF undertakes a census of all retail outlets (over 500. 47 depots with dry and cold warehouses to buffer inventory of the entire range of products 23 .
These are called “Utterly delicious parlors”. temples.000 outlets by March 2010 24 . Amul has come up with Amul parlors. This might start pretty soon. Wipro. These parlors are set at prominent locations such as campuses of Infosys. They have come up in major cities like Ahmadabad. Baroda. and many more starting up real soon.AMUL PARLOURS (DIRECT DISTRIBUTION) With products being highly perishable. Facts – 2300 Amul Parlors in 2007-08 – Goal of setting up 10. Till date there are about 400 Amul parlors across the country. Amul has franchisee plans in regards of the Amul parlors. humidity etc and the chain should move fast. Mumbai. since the talk is almost at the end. Bangalore. the supply chain ought to have to maintain correct temperature. Hyderabad and Surat already. Metros etc. Delhi. IIM-A. To reach out its consumers more directly and let them the total brand experience. IIT-B.
The technical competence of the salesmen needs to be mentioned Details of the product kept of other companies have to be provided.Selection. 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 salesmen too are divided into various categories like the Field salesmen & Counter salesmen. Details of the delivery vehicle. cold room & walk in coolers. 3 Wheeler Van. photograph of the location. This is due to the fact that the company believes reputation of the dealer affects the clientele. Matador. which means that the distributor/ dealer should get the stock of the company insured. Refrigeration system should have deep freezers. Also the details of Clerical Staff & Mazdoors are to be provided. The number & model of each of the vehicle needs to be furnished to the company. Dealers of the company must carry a good reputation. GCMMF acknowledges the fact that it needs to be sensitive to the market demands. Tricycle Van & Hand/Push cart. which includes Light Commercial Vehicles. which includes the name & address. Motivation & Evaluation of Channel Members Selection: The company takes into consideration a host of factors while selecting 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. Proof of solvency which requires name & address of the channel member’s bankers Safety of the inventory. Also details of complementary products & product lines need to be mentioned. For this it requires that a number of salesmen needs to be present on the field. 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. • • • • 25 . The annual sales of these products too have to be mentioned.
Here various counseling measures are undertaken by the company to improve the overall working of the distribution network. However to keep the channel members motivated to work. Amul being a cooperative cannot afford to give heavy monetary incentives. However compared to the other companies the margins are still lower since the new players in the market offer a much higher margin. the company has to incur certain costs but the benefits of it are felt in the long run. But the very fact that Amul’s products have good demand in the market motivates the distributors to stock it. 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. Usually the margins offered by the company are 8% & it is raised to 8. 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 • • • 26 . Amul’s products are considered to be value for money since the company does not believe in charging high margins. Vision and mission statement: the company cascades down the vision to the various channel members.• • Market coverage by the distributors needs to be defined which includes details of Geographic coverage & Outlets per market area. In order to keep the Channel members motivated in the long run.5%. Also if the channel members are motivated. which keep the distributors motivated. The company is organizing various Total Quality Management initiatives & workshops. Volume wise this comes out to be a big figure since Amul’s product has a good demand in the market. In fact all monetary incentives are just the short run means to promote the company’s product. The following are the motivation programs run by the company: Distributors • One of the main factors. they can also initiate advertising & sales promotion schemes on behalf of the company. is the margin. 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 also requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.
• Schedule of the salesmen: they provide the retails with this schedule so the retailers can pre estimate the quantities of the various products needed. The company has already got the Rajiv Gandhi award for quality.e. A weekly schedule is prepared for various markets and the retailers the turnover for each of the product is calculated for the wholesale dealers. flavored milk etc. also schemes like good packaging incase of butter and cheese is undertaken by the company.g. This in turn help the company to co ordinate the entire value chain. 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. The Retailers • Trade schemes: these are undertaken by the company only for the hard selling items e. • • 27 . • Amul yatras: this includes taking the channel members on a guided tour of the manufacturing and procuring facilities in Gujarat. However this is only a short-term initiative to push the products of the company. diary wet. 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. diary dry. Dhara and ice cream. Evaluation of channel members • Beat plan: this plan is generated for the various product categories i.spend exorbitantly on such events therefore it has a very traditional way of organizing these get together which leaves an impact on the members. • 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. for these the company raises the margins by 2%. as the channel members understand the various constraints and liberties the company goes through. Ice creams. 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-àvis the previous ones. • Glow boards: the company puts up glow boards at the retailer and pays the major portion of the cost. This is done for each of the product category.
the retailer disagreed to comply and created issues of ownership. which at times s hard to manage as retailers tend to do it often. Stocking issues: The company doesn’t want the retailers to stock the competing brand in the company leased fridges. Replenishment: The replenishment of the stocks is not prompt in case of amul cheese and all hard selling items. For e.• Other criterion o o o o o o o o o Details of the bank guaranty Photographs of the offices Details of the WD salesmen and the product lines he deals in The computerization facility available The storage space Refrigeration facility with photograph Details of the delivery vehicle with photograph Summary of the monthly potential sales of markets 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. Packaging: The channel members for easy storing demand a better quality of packaging. the company’s credit period is less that specially incase of institutional sales is very important. Replacement of products: The deterioration in the product calls for fail in replacement by the company this major issue of vertical conflict.g. Credit policy: Compared to the market. when the company wanted the stuff back. The retailer’s margin in case of butter is 8% as compared to Britannia’s 12% • • • • • • 28 . Margins: The Company provides least margins to all the channel members.
therefore avoiding any conflict amongst the distributors regarding their areas of operation. 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. • • • 29 .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.
500 ml Nett PRICE.3g :150mg Phosphorus Sodium Thiamine Rivoflavin Niacin Folic acid 200 ml 87 kcal 54 kcal :130 mg :50 mg :42 mcg :120mcg :100mcg :7.PRODUCT INFORMATION PRODUCT-AMUL GOLD PASTEURISED FULL CREAM MILK WEIGHT.0g :0g :3. 16 FAT-6.0 NUTRITIONAL INFORMATION Serving size Amount per 100 ml Energy Energy from fat Total fat Saturated fat Cholesterol Total carbohydrate Added sugar Protein Calcium :6g : 3.7g :16 mg :5.0 AND SNF-9.5 mcg :85mcg Vita(retinol) 30 .Rs.
Mehsana Packed at.kwality dairy (India).Palwal .5 There are so many retailers to whom product is distributed by 5 dealers VOLUME PURCHASED Total volume distributed by distributer to dealers in Badarpur Bodor-800-1000 liter 31 .AMUL KEE CHAAL Manufactured by-Mehsana District Co-operative Milk producers. Sachin kumar Contact no. Tehsil.Dist-Faridabad (Hariyana) Total no of distributiors of Amul gold pasteurized full cream milk in Mohan baba nagar (Badarpur Boder Delhi).+91 -9911545221 Total no of dealers of Amul gold pasteurized full cream milk in Mohan baba nagar and Molar Band (Badarpur Boder Delhi).1 Distributor name – Mr. Union ltd. Softa Village.
e.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.480-600 Rs Sales and profit for dealers Total sale done by each dealer.5-6 Rs 32 .160-180 liters (i.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 of amul gold milk purchased by each dealer).Total volume purchased by each dealers. total no of packets distributed 400-450 approx) Profit margin for distributer per liter-60 paise Total profit for each distributer.
DISTRIBUTION CHANNEL OF AMUL GOLD AT BADARPUR BODER MANUFACTURED UNIT PACKING AND LABELLING DISTRIBUTORS DEALERS RETAILERS 33 .
So Amul gold pasteurised full cream milk is supplied by distributer everyday to dealers and retailers.CUSTOMERS STOCK REPLENISHMENT CYCLE Since milk is a fast moving consumer goods daily used by each household in India. Most of the market share is captured by mother dairy products (55% (approx) market of pasteurized full cream milk is covered by Mother dairy 34 . monitor truck movement and prevent stealing of milk while it is being transported.They negotiate annual contracts with truckers. COMPETITOR ANALYSIS The main competitor of Amul is Mother dairy in Delhi. ensure availability of trucks for procurement. Stock is purchased within 24 hours (early in the morning). establish truck routes. 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 .
product Amul Mother dairy others % of market share 30 55 15 35 .
AMUL PESTEURIZED FULL CREAM VS MOTHER DAIRY PASTEURISED FULL CREAM MILK VS Price Weight Margin for distributors’ Margin for dealers AMUL 16Rs 500 ml 60paise/liter 40paise/liter MOTHER DAIRY 17Rs 500 ml 60paise/liter 40paise/liter 36 .
For distributor Total quantity of mother dairy full cream pasteurized milk is distributed by distributor at Badarpur Boder-2300-2500 liters Profit margin for distributer-60paise/liter Total profit generated by distributer.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.1380Rs-1500 For dealers Total quantity purchased by each dealer at Badarpur Boder-400-500 liters Profit margin for dealers-40paise/liter Total profit generated by dealers-160-200Rs For retailers 37 .
5-15Rs Table of total Sales done each channel member Channel member By distributer By dealers By retailers Amul (in liters) 800-1000 160-180 12-15 Mother dairy(in liters) 2300-2500 400-500 25-30 Table of profit generated by each member per day Channel member For distributor For dealers For retailers Amul(in Rs) 480-500 64-72 10-12 Mother dairy(in Rs) 1380-1500 160-200 12-15 38 .50paise/liter Total profit generated by retailer-12.Total quantity purchased by each retailer at Badarpur Boder-25-30 liters Profit margin for retailers.
mother dairy has more market share and more quantity of mother dairy full cream pasteurized milk is distributed and supplied by channel members. 39 . Distribution channel As compared to amul mother dairy has more own retail outlets where they can directly place their products.As compared to amul. Hence more profit is generated by each channel member inspite of having equal margin on each product.
COMMENTS AND SUGGESTION Observations 40 .Amul distribution channel MANUFACTURED UNIT Mother dairy distribution channel MANUFACTURED UNIT PACKING AND LABELLING PACKING AND LABBLING DISTRIBUTORS DISTRIBUTOR RETAIL OUTLETS DEALERS DEALERS RETAILERS RETAILERS CUSTOMERS CUSTOMERS CUSTOMERS OBSERVATION.
over time the relationship of trust has built up with these people that amul leverages now. The company should start a home delivery where a particular household will order full range of products required by it over a period of time. iv. The advantages of this channel will be: i. also the fact this would affect the cost of the product the company doesn’t undertake many promotion schemes. • • • Comments and Suggestion: • Amul should go in for exclusive outlets in at least all the shopping malls coming up these days and any location where footfalls are large in number. iii. Amul dahi where it faces competition from Nestle & Mother dairy. Amul is not able to capture market share in delhi and NCR. and is able to give least channel margins as the channel members earn through volumes and not through high margins. For this the company could provide a deliveryman with cycle to reach the different houses. Amul has very few exclusive retail outlets in Delhi. Full range display Easier to promote new products Easy to push impulse purchase products Brand building will be facilitated • • Trade promotion should be formulated for newly launched products instead of just tagging them onto best sellers. The company believes that there is an ongoing demand in the market and therefore no promotions are needed to increase the sales. ii. Transport channel is another strength as the transporters have grown with the company overtime the bonding with them enables the company to give least margins when it comes to the distributors in the industry. is able to provide products at the least price in the industry. In order to motivate the channel members it is also very essential for the company to increase the margins for the hard selling items e.• • Amul has loyal cooperatives that provide milk only to them. • 41 . The not being a profit driven organization. lowering the costs.g.
42 . it is essential for the company to place additional salesmen on the field since the brand as such commands a high demand in the market but fails to match it with the supply.In order to remain sensitive to market demand.
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