Project Report: Amul Dairy From: Vipul Vyas Sub: Resource and value chain
Introduction: THE THE TASTE ASTE OF INDI INDIA, A, AMUL AMUL come comes s from from the the Sanskrit word Amoolya, means priceless. It was suggested by a quality control expert in Anand and it was chosen because it was a perfect acronym for Anand Anand Milk Milk Union Union Limit Limited ed . AMUL AMUL was was form formed ed unde underr the the dair dairy y cooperative movement in India in 1946. Gujarat Gujarat Cooperati Cooperative ve Milk Marketin Marketing g Federat Federation ion (GCMMF) (GCMMF) is India's largest food products marketing organisation. It is a state level apex apex body body of milk milk coop coopera erati tive ves s in Guja Gujarat rat whic which h aims aims to prov provid ide e remun remunerat erative ive retur returns ns to the farmer farmers s and also also serve serve the inter interest est of consum consumers ers by provid providing ing qualit quality y produ products cts which which are good value value for money. money. AMUL is the brand under this organization.
Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.6 million producer members with milk collection average of 10.16 million litres per day. day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of floo floodi ding ng the the Japan Japanes ese e mark market ets s .Oth .Other er pote potent ntia iall mark market ets s bein being g considered include Sri Lanka. Dr Verghese Kurien, former chairman of the GCMMF, is recognised as the man behind the success of Amul. On 10 Aug 2006 Parthi G Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF. GCMMF.
1.
Discuss Amul's Umbrella Branding and Distribution network strategy. An umbrella brand is a brand that covers diverse kinds of products which are more or less related. It applies also to any company that is identified only by its brand and history. It is contrasted with individual branding in which each product in a portfolio is given a unique identity and brand name. Amul has high brand equity and umbrella branding of Amul has helped the company company in bigger bigger sense. sense. Amuls’ Amuls’ss brand name has helped helped its other brands also like like Mitahi Mitahi made, made, Amul Ice creams creams,, chocol chocolate ates, s, Amul Kool Kool etc. etc. So umbrel umbrella la Brand, Amul is used to build and offer value to customers in bigger sense. In literal sense, a company has high brand equity if it has multi dimensions. Amul has explored various available opportunities to reach to mass customers. It has opened opened a community community on public public forums forums like orkut, sponsored sponsored events like Amul voice of India etc. The brand value of Amul will surely help company to maintain the status of largest food brand in India at least for sometime in future.
Amul’ Amul’ss strate strategy gy of using using “umbre “umbrella lla brandi branding” ng” has really really paid paid off. off. Amul’ Amul’ss advertising and marketing spend has never exceeded 1% of its revenues.
Amul’s Amul’s creatives—in the form of billboards or the Taste of India campaign—have always managed to evoke a larger-than-life brand feel, consistency and spirit of Indian culture in a contemporary way.
Distribution Network Consumers expect marketers to deliver products in the locations and forms they require. To meet expectations of such demanding consumers, alignments of our four Distribution Highways of Fresh, Chilled, Frozen and Ambient products were already made by introducing Project DIL. Subsequently, a major initiative was taken to enhance distribution network to smaller towns. About 1200 distributors in small towns across India were added during this initiative. Today about 3000 Distributors ensure availability of our products across India, whether it is in Leh or Lakshadweep, in Kutch or Arunachal. Simultaneously, to augment fresh milk distri distribut bution ion in vario various us market marketss of India India,, approx approxima imatel tely y 1400 1400 exclus exclusive ive Milk Milk Distributors have been inducted.
Distribution Pro rocess Company Dealer
Franchisee
Wholesaler Retailer Shopkeeper Consumers rs
GCMMF’s F’s Supply upply Chai hain
** ***Source: *Source: IIM(A), Working Paper No. 2002-05-06
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 60-70% of milk contents. This is possible only if the distribution channel right from the producer to the consumer is well organized. It will be surprising to know that AMUL makes even the ‘Sarpanch’ to eat pizza i.e. it supplies pizzas even to rural market.
Last year, year, theye theye divided divided the retail market market into 14 specific specific segments segments to achieve achieve further distribution efficiency. This year our focus was on inducting distributors having expertise in servicing such specific market segments. This initiative is yielding results by way of ensuring wider availability of our product range. The role of distributors in our business process has never been more diverse or more important, as it is today. As a matter of fact, we consider our Distributor to be the real real “Mark “Marketi eting ng Manag Manager” er” of our organ organiza izatio tion. n. To enhanc enhancee busine business ss performance of our Distributors, a workshop on Marketing and Sales Management was designed in collaboration with a premier business school. The objective of the entire initiative was to upgrade the knowledge of our Distributors in terms of contemporary Business Management Practices, so that they can perform well not only as our business partner but also as Marketing Managers. During the year, 659 Distributors have undergone this programme in 39 locations. Cold Storage is an extr extrem emel ely y esse essent ntia iall comp compon onen entt in the the Fede Federa rati tion on’’s dist distri ribu buti tion on proc proces ess. s. Unfortunately, availability of efficient cold storage facilities is grossly inadequate in our country. To cope up with the increasing need of suitable cold stores closer to our markets, we have continued our endeavour of creating the Federation’s Federation’s own cold stores this year in various locations across the country. We We now own 24 stateof- the art cold rooms of different sizes. To get an exposure to our cooperative structure, our culture as well as operational systems and processes, every year we invite our distributors, major retailers and other business partners to Anand, for Amul Yatra. So far, about 7000 Distributors and other business partners have participated in this Amul Yatra.
Over recent years, the Federation has successfully introduced new product lines. This year, in order to leverage their distribution network strengths, to optimize market supervision expenditures, to achieve increasing efficiency while keeping the distr distribu ibutio tion n infras infrastru tructu cture re lean, lean, focuse focused d and produc productiv tive, e, the Federa Federatio tion n amalgamated its different distribution networks. Today, they operate an efficient distri distribut bution ion infras infrastru tructu cture re consi consisti sting ng of 46 sales sales offic offices, es, cater catering ing to 3,000 3,000 distribut distributors ors and five lac retailers retailers.. Almost every every Federatio Federation n stockist stockist has visited visited Anand Anand to particip participate ate in a unique unique programme programme called 'Amul Yatra'. atra'. During During this programme programme,, stockist stockistss are exposed exposed to the Federati Federation on Philosoph Philosophy y, the culture culture of Cooperation, as well as operational Systems and Processes. The Federation has also also invite invited d distri distribut butor' or'ss salesm salesmen en from from all over the the countr country y to Anand Anand for a
training program focused on the Federation's philosophy and developing their selling skills.
2.
How do you spell out the importance of establishing the Best Practices by Amul to have competitive advantage?
Amul has Competitive sustainable advantage (CSA) over its competitors. Amul’s CSA lies in its procurement procurement part ,the ability to collect collect 447,000 litres of milk every day from 2.12 million farmers ,convert them into goods worth Rs 6 crore and distribute them to 5,00,000 retailers across country ,is not easy. No other dairy in India has such a sustainable procurement network.
Managing the large scale supply chain of Amul which begins from milk producer and ends with supply to customer from retailer is very critical job. It requires lot of dedi dedica cati tion on and and hard hard work work from from all all memb member erss of the the corp corpor orat atio ion n and and also also distributors and retailers across country It is not that Amul had a successful campaign, many of its ads backfired. One ad meant to target Marathi segment during Ganpati festival had to be removed under political pressure. In another incident on advertisement in which Amul girl was wearing Gandhi cap had to be again removed. In one another incident Amul had aired an ad portraying Hussain as “Heroine addiction”, for this Amul was taken to court. Most of Amul’s Amul’s communication is based on latest happenings in the country. country. That is why its ads are termed different from what is that of its nearest rival, Mother dairy. Most of Mother dairy ads are directly targeted to children where as Amul’s ad are on current affairs, in which adults are also involved. The key to retaining their competitive advantage lies in keeping focused on the basic business principles: •
Be Customer-Driven Customer-Driven
•
Adapt quickly to the changing environment.
•
Anticipate change and act today to meet tomorrow's challenges.
The Federation has invested substantially over the last few years in improving the the qual qualit ity y of its its prod produc ucts ts and and serv servic ices es,, keep keepin ing g in mind mind the the emer emergi ging ng challe challenge ngess of global globaliza izatio tion. n. In recogn recogniti ition on of its achiev achievem ement entss in Qualit Quality y Management Initiatives. Thei Theirr core core busi busine ness ss is mark market etin ing g bran brande ded d food food prod produc ucts ts to hous househ ehol old d consumers. Their success has been grounded in two strengths :•
Distribution network, serving more than five lac retail outlets.
•
Superior product quality - 'Value for money'
The key to maintaining these two competitive advantages rests on their ability to attr attrac actt and and reta retain in the the very very best best manp manpow ower er.. In this this age age of inte intens nsiv ivee competiti competition, on, only dedicated dedicated and committe committed d professio professionals nals can successf successfully ully manage their business.
3. What is the role and importance of Technology and E- Initiatives by GCMMF?
Amul assigned the ERP software development project named as Enterprisewide wide inte integr grat ated ed appl applic icat atio ion n syst system em (EIA (EIAS) S),, on a turn turnke key y basi basiss to Tata ata Consul Consultan tancy cy Servic Services. es. At prese present, nt, the EIAS EIAS syste system m covers covers a pletho plethora ra of operat operation ionss like like marke markett planni planning, ng, advert advertisi ising ng and promot promotion ion,, distri distribut bution ion network network planning, planning, stock stock control, control, sales sales and accounti accounting, ng, budgetary budgetary control, quality control management and co-operative service management. Amul has also also connec connected ted all its zonal zonal offic offices, es, region regional al offic offices es and member memberss dairie dairiess through VSATs for seamless exchange of information. Each of Amul’ Amul’s offices is connected connected by e-mail and all of them send a daily daily report on sales and inventory to the main system at Anand. Also, sales offices, C&F points points and wholes wholesale ale distri distribut butors ors of GCMMF GCMMF have have been been connec connected ted through the Internet for timely exchange of information. The customised ERP EIAS is designed in such a way that it can be plugged into various points of the supply supply chain chain and and extern external al syste system. m. Moreov Moreover er,, the softwa software re is platf platform orm 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 include the likes likes of transport transporters, ers, member-m member-manufa anufacturi cturing ng units, units, oil packing packing stations, suppliers, depots and the entire field force.
The federa federatio tion n has now integr integrate ated d it's it's countr country-w y-wide ide operat operation ionss throug through h successf successful ul implement implementation ation of the "Enterpris "Enterprise-wid e-widee Integrate Integrated d Applicati Application on System". They believe that introduction of similar integrated ERP systems at their Member Unions will help them ensure that the IT revolution serves their members better. better. The Federation is among the Top Top 100 IT Users in the country. country.
Curren Currently tly,, there there are more more than than 3,000 3,000 comput computers ers instal installed led in their their villag villagee societies, which support the Automated Milk Collection System. Their goal is to install computers in all their village societies and to integrate them with their respective unions. On the market side, their distributors have responded enthus enthusias iastic ticall ally y to their their sugges suggestio tion n of comput computeri erizin zing g their their operat operation ionss and getting getting email email connectivi connectivity ty for better better communica communication tion with their sales sales offices offices.. The The dist distri ribu buto tors rs can can now now plac placee thei theirr orde orders rs on our our inte intern rnet et webs websit itee www.Amulb2b.com. They continue to receive a good consumer response to their their websi website te www www.Amul. .Amul.com com which which is noted noted for its distin distinct ct featu features res like like cyberstore for ice-cream and other milk products, cricket rankings and the recently launched e-greetings site. To streng strengthe then n busine business ss linkag linkages es with with the the busine business ss partne partners, rs, GCMMF GCMMF has enhanced its “Amul e-Groupware System” by adding more features like emailing mailing the invoices invoices and ledgers ledgers to business business partners partners,, announcin announcing g various various schemes online, calendar facility etc. “Video “Video conferencing” is rapidly gaining in popularity, popularity, which provides business with the ability to meet and to work with others over a distance. For real time communica communication, tion, better better brainstorm brainstorming, ing, knowledge knowledge sharing sharing and informati information on gathering, we have installed and implemented Video conferencing System at our Head Office, Zonal Offices and a few Sales Offices. The world is moving towards virtual reality by creating virtual world on the Internet. Our Federation has taken the initiatives towards virtual commerce by creating an online virtual Amul Parlor in the Second Life, an online virtual world. GCMMF has further advanced the use of Geographical Information systems by implementing GIS based Sales Analytics solution across various offices. The history of Amul shows that it radically changed the way business was done—by eliminating the middleman and bringing the producer closer to the consumer—resulting in benefits for both. Incidentally, it was also one of the first Indian Indian companie companiess to have a Web presence. presence. Today Today,, Amul’ Amul’s cybersto cyberstore re gifting service is capable of servicing consumers in more than 125 cities. Says Hegd Hegde, e, “W “Wee have have also also link linked ed our our dist distri ribu butor torss to our our netw networ ork k and and also also incorporated Web pages of top retailers in our site, amul.com, as part of our B2B B2B init initia iati tive ves. s.”” Dist Distri ribu buto tors rs can can plac placee thei theirr orde orders rs on the the webs websit ite, e, amulb2 amulb2b.c b.com, om, especi especiall ally y meant meant for accept accepting ing orders orders from from stocki stockists sts and promoting Amul’s 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 initia initiativ tives, es, today today,, Amul Amul export exportss produc products ts worth worth around around Rs 100 crore, 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
[email protected] for cheese products and
[email protected] for butter products.
In addi additi tion on,, the the orga organi nisa sati tion on’’s corp corpor orat atee intr intran anet et site site cont contai ains ns all all the the comp compan any’ y’ss upda update tess incl includ udin ing g poli polici cies es,, proc proced edur ures es,, func functi tion onal al role role and and responsibilities of each person in the organisation. Another example that puts Amul in a league of its own, is its recruitment policy. policy. For instance, for any new requireme requirement nt in differen differentt functional functional areas, candidates candidates have to compulsor compulsorily ily undergo a computer literacy test, where the minimum passing mark is 80 percent. Explains Vyas, “Our main emphasis is to increase competency at the end user level with the help of IT. IT. All our employees have undergone computer training according to the departmental needs so that they can take charge of their responsibilities in an effective way at the respective supply points.”
Amul’s Amul’s success in leveraging IT to its advantage lies in the simple fact that the organisation has a clear IT vision. For example, after a top-level domain cooperative was made available, Amul embraced it with gusto. Hegde says that by develo developin ping g the ‘Amul. ‘Amul.coo coop’ p’ Web Web portal portal,, the organ organisa isatio tion n will will be in a position to communicate with other similar co-operative movements. As cooperatives can interact with each other with similar organisations sharing this domain, knowledge can be shared on a pro-active basis, which can lead to further productivity benefits.
While While it has alway alwayss been been argue argued d that that inves investme tments nts relate related d to inform informati ation on technology made in rural India are a disaster, the case of Amul proves that wher wheree ther theree is a will will,, ther theree is a way way. From From catc catchy hy bill billbo boar ards ds to bein being g a e-commerce success story, Amul is truly rural India’s flag-bearer in the IT revolution.
