Welcome to the world of Amul !

Journey of Amul
1946- Company inception 1948- Milk collection reaches 5000 litres/day 1955- Manufacturing of milk powder and butter 1965- Creation of national dairy development board 1973- Creation of GCMMF (Gujarat cooperative milk marketing federation ) 1996- Manufacturing of ice cream 2005- Milk collection reaches 62 lakhs litres/day .

History
• Realization of the dream began with the Kaira District Cooperative Milk Producers‘ which processes milk purchased from local village producers for distribution to Bombay, and now also sells other dairy products under the trade name AMUL throughout India . KDCMP was founded by Varghese Kurien and Tribhovandas Patel Union on December 14, 1946 As a brand name Amul with the blessing of Vallabhai Patel and the inspiration of former Union Finance Minister Morarji Desai

• • •

Varghese Kurien

Pandit Jawaharlal Nehru, Indira Gandhi, Morarji Desai and others at the inauguration of Amul Dairy.

Tribhuvandas K. Patel

History

• Amul Word is Sourced from the Sanskritword
“अमूलया

Amoolya”, means priceless.

• • Suggested by a quality control expert in Anand and it was chosen because it was a perfect acronym for Anand Milk Union Limited. • • The Amul revolution was started as awareness among the farmers. It grew and matured into a protest movement that was channeled towards economic prosperity.
Image : Amul Dairy, Anand

Continued…
• It is a cooperative managed by professionals but owned by its mn. of semi-literate and illiterate farmers • • • • • • The reason for the co-operation to be started was to free the milk producer from intermediaries and provide access to market their by ensuring maximum returns for their efforts. • The white revolution has not been easy to achieve. At one time, the milk lake of Kaira district was stagnant. A few traders skimmed off fat profits, leaving to the numerous producers only a sour thin whey of

Implementation
• To implement this vision a hierarchical network of cooperatives was developed. • • To manage this network and making it commercially viable they required professional managers and technocrats.

Obstacles Faced…
• During winter the production was 2.5 times more than summer which the Bombay milk scheme was not able to absorb in a winter season. So they decided to set up a plant to process milk in to butter and milk powder. They were the first in the world who introduced spray drying technology to convert buffalo milk into milk powder. • • Problem of integrating - logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services into Amul robust supply chain management.

Obstacles Faced…
• Where number of these third parties are not in the organized sector, and many are not professionally managed with little regard for quality and service. • Establishing best practices was to maintain quality concerns like: every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at the closest office, be it a department or a branch or a depot to discuss their various quality concerns. •

Competitors

Overview of GCMMF
Gujarat Cooperative Milk Marketing Federation • • • • • India's largest food products marketing organization State level apex body of milk cooperatives in Gujarat Aims to provide remunerative returns to the farmers and Also serve the interest of consumers by providing quality products which are good value for money.

Overview of GCMMF
Gujarat Cooperative Milk Marketing Federation
Sales Turnover 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 Rs (million) 11140 13790 15540 18840 22192 22185 22588 23365 27457 28941 29225 37736 42778 52554 US $ (in million) 355 400 450 455 493 493 500 500 575 616 672 850 1050 1325

Entry of GCMMF
Gujarat Cooperative Milk Marketing Federation

• As supply and range of products grew there was a great need for better marketing and production for which GCMMF was formed in 1973 • Mr. Kurien is the chairman of GCMMF • Mr. Kurien defined its objective simultaneously creating long term demand and supply of the dairy market • He also ensured equitable distribution of milk production across all Amul unions

Role of GCMMF
• To coordinate production planning with unions • Coordinate with 47 depots, 3,500 distributors and 5 lakh retailers • Handle the distribution of milk from surplus to the deficit area • Market including branding, product development and pricing

Role of district union
• To coordinate production planning with GCMMF • To collect and transport milk from village societies • To manage farmer’s payments, create subsidies, and loans for yield improvement programmes • To supply animal feed and veterinary services, support farmers education for long term supplier development

Business Model

Amul supply chain is based on 3 tiered
cooperative structure.
1. Supply starts with farmers who are members of village level societies who buy a share of the society and agree to sell milk exclusively to that society 2. 3. Farmers take their milk to village collection point twice a day where their milk is measured for quality and quantity and they are paid immediately 4. 5. GCMMF provides each plants with a monthly production plan and coordinates distribution of products from the plants to nationwide distribution.

Collection of milk at a village society

Business Model

Amul supply chain is based on
3 tiered cooperative structure. Supply starts with farmers who are members of village level societies who buy a share of the society and agree to sell milk exclusively to that society

1.

2. 3. 4.

Farmers take their milk to village collection point twice a day where their milk is measured for quality and quantity and they are paid immediately.

5. 6. 7. 8.

GCMMF provides each plants with a monthly production plan and coordinates distribution of products from the

Basic concept

Milk and milk products :
• Branding on a value driven platform, • Growing organically into an umbrella brand • That supports a variety of products with Consistent personality and positioning.

Umbrella Brand

An umbrella brand is a brand that covers diverse kinds of products which are more or less related.

AMUL Supply Chain

Distribution Network
• 5 lakh retail outlets • Network of 3,500 distributers. • 47 depot with dry and cold warehouses to buffer inventory of the entire range of products. • 25 lakh members farmers from 12,000 village societies that feed into 12 district unions. • GCMMF maintains cash transaction throughout the supply chain which minimizes dumping

Distribution Network
• Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to the their premises. • • The JIT (Just-in-Time) inventory strategy improves dealers ROI (Return on Investment). • • All GCMMF branches engage in route-scheduling and have dedicated vehicle operation

Strategy Formulation
• Amul and GCMMF adopted a number of strategies to assure the growth of the dairy industry contingent on the simultaneous development of supply and demand • • Amul adopted a low price strategy to make their products affordable and guarantee value to the consumer

Strategy Implementation
• Low cost strategy - through innovating technology • • Installed automatic milk collection unit system – Test of Fat and SNF – Reduced time required for collecting the milk – Immediate payment to farmers • • GCMMF gets all supplier (milk farmers) information through system integration •  Amul and the unions retain tight control over above stated process in order to ensure efficiency and quality

Strategy Implementation
• • Organized delivery animal feed and other supplies to the village level societies • • Continuous implementation and development of good practices across all elements of the network • • Bought “Kaizen” system for milk sour and acidity improvement

Results
 Amul compete successfully against MNCs like Nestle,
HLL, and Cadbury. • • •

 Amul collects 63 lakh litres of milk everyday  Amul have a total milk handling capacity of 99 lakh
litres/day.

 Amul have 25 lakh producer members
• • There are 11962 village societies associated with Amul. (year- 2005-06)

Critical Success factor
• Use of technology to overcome problems • Long-term commitment to develop supply and demand in equitable manner. • Efficient supply chain and operational management • Ability to coordinate and control large network of people • Continuous improvement program to improve quality • Creation of Amul as a brand

Impact
 Amul transform the Indian dairy industry by inspiring
other states  Amul provided livelihood to billions of farmers.  Amul contributed to India to become the largest milk producer in the world •

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