A PROJECT REPORT ON
STUDY ON THE DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT OF AMUL MILK Summer Internship Report Submitted to the University Of Mumbai In Partial fulfillment for the award of degree of Master Of
Management Studies (Marketing) By (Leroy Correia) (08)
Batch: 2012-2014 For the summer Internship at,
Gujarat CO-operative Milk Marketing Federation Ltd.
VIVA INSTITUTE OF MANAGEMANT AND RESEARCH (Affiliated to the University of Mumbai, Approved By AICTE New Delhi) INDIA July 2013
Evaluation Report Summer Internship 2012-2013 Basic Information Name of the student: Leroy Correia Academic Year and Roll No: 2012-2014
08
Name of the company: Gujarat CO-operative Milk Marketing Federation Ltd Name of the Designation Of the Training Supervisor: Area of training: Special Project, if any: Score card Please rate The Following Attributes On A scale Of 01-05. (01=Average, 02=good,03=Very Good ,04=excellent and 05=outstanding Sr.No.
Attributes 1 2 3 4 5 6 7 8 9 10
score
Attendance Punctuality Attitude Performance Imitative Interpersonal skill Diligence Level Subject Knowledge Personal Grooming Communication skill Total Score(out of 50)
Special Remarks /Appreciation, if any: -------------------------------------------------------------------------------------------------------------------------------------------------Name &signature of Training Supervisor
Official Seal of The Company
Date
place:
:
Evaluation of Dissertation
1. Name of the candidate
: Leroy Correia
2. Seat Number
: 08
3. Name/Code Of Subject
:
4. Title of dissertation
:
5. Evaluation
:
Sr.No.
Parameters
Maximum Marks
1
Introduction
05
2
Literature Review and Problem Definition
05
3
Process Description
10
4
Project Profile
10
5
Findings & Conclusion
15
6
Learning Experience
05 Total
6. Name & Address of Evaluation: 7. Signature Of Evaluator with date : 8. Signature of the Head Of the Institution with seal:
50
Marks Awarded
Declaration
This Is Certify the Summer project titled “STUDY ON STUDY ON THE DISTRIBUTION AND SUPPLY CHAIN MANAGEMENT OF AMUL MILK ” at Gujarat Co-operative Milk Marketing Federation Ltd., Kala Ghoda, Mumbai’’ is original work and being submitted in partial fulfillment for the award the degree ,Master Of Management studies of the University of Mumbai .This Summer Project Report Has been Submitted Earlier Either To this university, or to any Affiliated college of this university , or ,to any other university /institution for the fulfillment of the requirement of MMS Course .
Date: ----------------------
-----------------------------(Signature of student)
Place: ---------------------
------------------------------(Name of the student )
Acknowledgement
This Is To Acknowledge To Something About Those People Who Have Cooperated Me To Reach At The Edge Of My Training Work. I Wish To Place A Close Profound Indeptness And Deep Sense Of Gratitude To Director Dr.Harish Kumar Purohit Sir (Project Guide), Ms.Piyushi Sharma (Placement Advisor), Prof. Manmeet Barve (Faculty) And All Professors For Providing And Guiding Me To Get Training In Amul Industry.
I Am Grateful To Respected Mr. Prakash Aute (In Charge- Amul Fresh Division) Sanjay Patil (Jr.Sales Executive) Of Mumbai And Vishal D’souza (Executive Sales) In Fresh Product Department.
I Am Highly Thankful To The Management Committee For Helping Me In My Project Work By Providing Me All The Information Needed And Guided Me In Making The Report, Directing And Helping Me Which Made The Process Very Easy And Educational. I Would Also Like To Thank All Those People Who Have Knowingly And Unknowingly Helped Me In My Report Making.
Date: ----------------------
-----------------------------(Signature of student)
Place: ---------------------
------------------------------(Name of the student)
INDEX SR.NO
PARTICULARS
1
Executive summary
2
6
Introduction and history History Introduction to Indian dairy industry Literature review & problem statement: Literature review and problem statement Market size and growth Major players Packaging technology Regulatory framework Company profile Amul in abroad GCMMF Birth of Amul Data processing & analysis: Data analysis for retailers Data analysis for customers Process description Product mix of Amul Amul plant The channel network Procurement channel Anand Patten SMC and market logistic Amul parlor's Selection, motivation and evaluation of channel members Conflict and cooperation among channel members Process description: Product information Sales and profit Distribution channel of Amul Transportation method Competitors analysis Learing & findings and suggestions
7
Conclusion and bibliography
8
Appendix
3
4
EXECUTIVE SUMMARY
In today‟s competitive world while entering in the market it is very necessary to have good knowledge of the potential of a particular market. The growth of a company is invariably determined not just by its strategy, but on how it responds to the challenges it encounters. Over the decades AMUL has successfully countered several challenges that have come its way with innovative responses and continuous improvement, which have enabled it to remain stable and even convert some of these challenges into opportunities. It is the culture of endurance that has accorded AMUL the insight and focus to deal with the current economic environment. Drawing from its inner strength and beliefs, AMUL responded by launching several initiatives across all its operations in various geographies that are helping the group achieve growth even in current times. It is also this very strategic culture that will propel AMUL to continue on its growth trajectory in years to come. The report provides a comprehensive insight into the company and also about the company‟s SWOT analysis. This report mainly studies in detail the various product mix strategies of the company and also focuses on the segmentation of both company based and industry based and helps in analysing the company‟s competitive advantage and the reason behind its success.
HISTORY In early 1940‟s a farmer in Kaira district, as elsewhere in India, derived his income almost entirely from seasonal crops. The income from milk was paltry and could not be depended upon. The main buyers were milk traders of Polson Ltd.-a privately owned company that enjoyed
monopoly for supply of milk from Kaira to the Government Milk Scheme Bombay. The system leads to exploitation of poor and illiterate farmers by the private traders. However, when the exploitation became intolerable, the farmers were frustrated. They collectively appealed to Sardar Vallabhbhai Patel, who was a leading activist in the freedom movement. Sardar Patel advised the farmers to sell the milk on their own by establishing a cooperative union, instated of supplying milk to private traders. Sardar Patel sent the farmer to Shri Morarji Dasai in order to gain his Co-operation and help. Shri Dasai held a meeting at „Samrkha‟ village near Anand, on January 4, 1946. He advised the farmers to from a society for collection of the milk.These village societies would collect the milk themselves and also decided prices for that which would be profitable for them. The district union was also from to collect the milk from such village cooperative societies and to sell them. It was also resolved that the government should asked to buy milk from the union.
However, the government did not seem to help farmer by any means. It gave the negative response by turning down the demand for the milk. To respond to this action of government, farmer of Kaira district went on a milk strike. For 15 days not a single drop of milk was sold to the traders. As a result the Bombay milk scheme was severely affected. The milk commissioner of Bombay then visited Anand to assess the situation. Finely he decided to fulfill the farmers demand. Thus their cooperative unions were forced at village and district level to collect and sell milk on a cooperative basis, without the intervention of government. Mr. Verghese Kurien had main interest in establishing union who was supported by Shri Tribhuvandas Patel who convinced farmers in forming the cooperative unions at thevillage level. „The Kaira District Co-operative Milk Producers‟ Union‟ was thus established in Anand and was registered formally under section 10 of Bombay Act VII of 1925 on December 14, 1946. Since then farmers are selling all the milk in Anand through cooperative union. In 1955 it was commonly decided the sell milk under the brand name „Amul‟ At the initial stage only 250 liters of milk was collected everyday. But with the growing awareness of the benefits of the co-operative-ness the collection of milk increased. Today Amul collect 50, 00,000 liters of milk everyday. As the milk is perishable commodity it became difficult to preserve milk for a longer period. Besides when the milk was to be collected from the far places there was a fear of spoiling of milk. To over come this problem the union thought to develop the chilling unit at various junctions, which would collect the milk and could chill so as preserve it a for a longer period. Thus, today Amul has more than 168 chilling centers in various villages. Milk is collected from almost 1097 societies. With the financial help from UNICEF, assistance from the government of New Zealand under the Colombo plan, of Rs. 50 million for factory to manufactory milk powder and butter. Dr. Rajendara Prasad, the president of India laid the foundation on November 50, 1954. Shri Pandit Jawaharlal Nehru, the prim minister of India declared it open at Amul dairy on November 20, 1955.
A plant to manufacture balanced cattle feed was formally commissioned on October 31, 1964 by Shri Lalbahadur Shastri, the Prime Minister of India. At the request of the government of India, a new dairy with a capacity to manufacture 40 tons of milk powder and 20 tons of butter a day was completed in 1963. This was meant to meet the requirement of India‟s defense forces. The dairy was declared open by ShriMorarji Desai in April, 1965. in 1974, the Kaira Union setup a plant to manufacture high-protein weaning food, chocolate and malted food at Mogar, about 8 km south of Anand. In September, 1981, the second cattle feed plant at „Kanjari‟ were started. The succesion of the co-generation project on September 11, 1985, marked a milestone on the energy front when two gas turbine generators of 1.5 MW each based on natural gas, were commissioned. On October 31, 1992, Dr. V. Kurien chairman, National Dairy Development Board, laid the foundation of Kaira Union‟s third dairy with a processing capacity of 6.5 lakh liters of milk a day. Work on the third dairy and cheese plant at „Khatraj‟ with capacity for 20 Metric Ton of cheese per day, began in February, 1994. Also in 1994, Kaira Union put up bread spread plant at „Mogar‟ with the assistance from National Dairy Development Board. Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which 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.
13 district cooperative milk producers' Union
Members: No. of Producer Members: No. of Village Societies: Total Milk handling capacity:
2.6 million 12,792 10.16 million litres per day
Milk collection
2.38 billion litres
Milk collection
6.5 million litres
Milk Drying Capacity:
594 Mts. per day
Cattle feed manufacturing Capacity:
2640 Mts per day
About Machinery In AMUL – 3 production of powder, Butter and Milk are being done continuously. These productions are done by latest machineries equipped with computer system and it is handled by one technicians.
-
The Milk pasteurizer machines belong to Alfa level company of Pune
-
Powder plant machineries belong to L & T Larson and Turbo company of India
-
Butter production machineries belong to S.G.company of switrzland and other
-
Butter manufacturing production machineries belong to Simon Feres com.of France
LITERATURE REVIEW & PROBLEM STATEMENT:-
ORGANISATION STRUCTURE OF AMUL
Board of Director
CHAIRMAN
MANAGING CHAIRMAN
GENERAL MANAGER
ASSISTANT GENERAL MANAGER
MANAGER
DEPUTY MANAGER
ASSISTANT MANAGER
SENIOR EXECUTIVE
SENIOR OFFICER
SENIOR ASSITANT
WORKERS
Grade ( Ato E) .
INTRODUCTION TO THE INDIAN DAIRY INDUSTRY The world's biggest dairy producing country is growing fast and looking to become an export powerhouse despite major quality problems... A Note to our Readers: the following information on India's dairy sector is reproduced from India Infoline.com. India is the world's largest milk producing country and is growing fast, with an eye toward becoming a major dairy exporter. This article is helpful reading for anyone interested better understanding.
CONSUMER HABITS AND PRACTICES Milk has been an integral part of Indian food for centuries. The per capita availability of milk in India has grown from 172 gm per person per day in 1972 to 182gm in 1992 and 203 gm in 1998-99.This is expected to increase to 212gms for 2008. However a large part of the population cannot afford milk. At this per capita consumption it is below the world average of 285 gm and even less than 220 gm recommended by the Nutritional Advisory Committee of the Indian Council of Medical Research. There are regional disparities in production and consumption also. The per capita availability in the north is 278 gm, west 174 gm, south 148 gm and in the east only 93 gm per person per day. This disparity is due to concentration of milk production in some pockets and high cost of transportation. Also the output of milk in cereal growing areas is much higher than elsewhere which can be attributed to abundant availability of fodder, crop residues, etc which have a high food value for milky animals. In India about 46 per cent of the total milk produced is consumed in liquid form and 47 per cent is converted into traditional products like cottage butter, ghee, paneer, khoya, curd, malai, etc. Only 7 per cent of the milk goes into the production of western products like milk powders, processed butter and processed cheese. The remaining 54% is utilized for conversion to milk products. Among the milk products manufactured by the organized sector some of the prominent ones are ghee, butter, cheese, ice creams, milk powders, malted milk food, condensed milk infants foods etc. Of these ghee alone accounts for 85%.
It is estimated that around 20% of the total milk produced in the country is consumed at producer-household level and remaining is marketed through various cooperatives, private dairies and vendors. Also of the total produce more than 50% is procured by cooperatives and other private dairies. While for cooperatives of the total milk procured 60% is consumed in fluid form and rest is used for manufacturing processed value added dairy products; for private dairies only 45% is marketed in fluid form and rest is processed into value added dairy products like ghee, makhan etc. Still, several consumers in urban areas prefer to buy loose milk from vendors due to the strong perception that loose milk is fresh. Also, the current level of processing and packaging capacity limits the availability of packaged milk. The preferred dairy animal in India is buffalo unlike the majority of the world market, which is dominated by cow milk. As high as 98% of milk is produced in rural India, which caters to 72% of the total population, whereas the urban sector with 28% population consumes 56% of total milk produced. Even in urban India, as high as 83% of the consumed milk comes from the unorganized traditional sector. Presently only 12% of the milk market is represented by packaged and branded pasteurized milk, valued at about Rs.8, 000 crores. Quality of milk sold by unorganized sector however is inconsistent and so is the price across the season in local areas. Also these vendors add water and caustic soda, which makes the milk unhygienic.
Market Size and Growth Market size for milk (sold in loose/ packaged form) is estimated to be 36mn MT valued at Rs470bn. The market is currently growing at round 4% pa in volume terms. The milk surplus states in India are Uttar Pradesh, Punjab, Haryana, Rajasthan, Gujarat, Maharashtra, Andhra Pradesh, Karnataka and Tamil Nadu. The manufacturing of milk products is concentrated in these milk surplus States. The top 6 states viz. Uttar Pradesh, Punjab, Madhya Pradesh, Rajasthan, Tamil Nadu and Gujarat together account for 58% of national production. Milk production grew by a mere 1% pa between 1947 and 1970. Since the early 70's, under Operation Flood, production growth increased significantly averaging over 5% pa. About 75% of milk is consumed at the household level which is not a part of commercial dairy industry. Loose milk has a larger market in India as it is perceived to be fresh by most consumers. In reality however, it poses a higher risk of adulteration and contamination. The production of milk products, i.e. milk products including infant milk food, malted food, condensed milk & cheese stood at 3.07 lakh MT in 2008. Production of milk powder including infant milk-food has risen to 2.25 lakh MT in 2008, whereas that of malted food is at 65000 MT. Cheese and condensed milk production stands at 5000 and 11000 MT respectively in the same year.
Major Players The packaged milk segment is dominated by the dairy cooperatives. Gujarat Co-operative Milk Marketing Federation (GCMMF) is the largest player. All other local dairy cooperatives have their local brands (For e.g. Gokul, Warana in Maharashtra, Saras in Rajasthan, Verka in Punjab, Vijaya in Andhra Pradesh, Aavin in Tamil Nadu, etc). Other private players include J K Dairy, Heritage Foods, Indiana Dairy, Dairy Specialties, etc. Amrut Industries, once a leading player in the sector has turned bankrupt and is facing liquidation.
Packaging Technology Milk was initially sold door-to-door by the local milkman. When the dairy co-operatives initially started marketing branded milk, it was sold in glass bottles sealed with foil. Over the years, several developments in packaging media have taken place. In the early 80's, plastic pouches replaced the bottles. Plastic pouches made transportation and storage very convenient, besides reducing costs. Milk packed in plastic pouches/bottles have a shelf life of just 1-2 days, that too only if refrigerated. In 1996, Tetra Packs were introduced in India. Tetra Packs are aseptic laminate packs made of aluminum, paper, board and plastic. Milk stored in tetra packs and treated under Ultra High Temperature (UHT) technique can be stored for four months without refrigeration. Most of the dairy co-operatives in Andhra Pradesh, Tamil Nadu, Punjab and Rajasthan sell milk in tetra packs. However tetra packed milk is costlier by Rs5-7 compared to plastic pouches. In 2008-00 Nestle launched its UHT milk. Amul too relaunched its Amul Taaza brand of UHT milk. The UHT milk market is expected to grow at a rate of more than 1012% in coming years.
Regulatory Framework The dairy industry was de-licensed in 1991 with a view to encourage private investment and flow of capital and new technology in the segment. Although de-licensing attracted a large number of players, concerns on issues like excess capacity, sale of contaminated/ substandard quality of milk etc induced the Government to promulgate the MMPO (Milk and Milk Products Order) in 2008. Milk and Milk Products Order (MMPO) regulates milk and milk products production in the country. The order requires no permission for units handling less than 10,000 litres of liquid milk per day or milk solids up to 500 TPA. MMPO prescribes State registration to plants producing between 10,000 to 75,000 litres of milk per day or manufacturing milk products containing between 500 to 3,750 tones of milk solids per year. Plants producing over 75,000 litres per day or more than 3,750 tones per year of milk solids have to be registered with the Central Government. The stringent regulations, government controls and licensing requirements for new capacities have restricted large Indian and MNC players from making significant investments in this product category. Most of the private sector players have restricted themselves to manufacture of value added milk products like baby food, dairy whiteners, condensed milk etc. All the milk products except malted foods are covered in the category of industries for which foreign equity participation up to 51% is automatically allowed. Ice cream, which was earlier reserved for manufacturing in the small-scale sector, has now been de-reserved. As such, no license is required for setting up of large-scale production facilities for manufacture of ice cream. Subsequent to de-canalization, exports of some milk based products are freely allowed provided these units comply with the compulsory inspection requirements of concerned agencies like: National Dairy Development Board, Export Inspection Council etc. Bureau of Indian standards has prescribed the necessary standards for almost all milk-based products, which are to be adhered to by the industry.
Proposal to Amend the MMPO A proposal to raise the exemption limit for compulsory registration of dairy plants, from the present 10,000 litres a day to 20,000 litres, is being considered by the Animal Husbandry Department. The 75,000-litre limit is likely to be raised either to 100,000 litres or 125,000 litres in the amended order. The new order would also do away with the provision for re-registration.
Penetration of milk products Western table spreads such as butter, margarine and jams are not very popular in India. All India penetration of butter/ margarine is only 4%. This is also largely represented by urban areas, where penetration is higher at 9%. In rural areas, butter/ margarine have penetrated in 2.1% of households only. The use of these products in the large metros is higher, with penetration at 15%. Penetration of cheese is almost nil in rural areas and negligible in the urban areas. Per capita consumption even among the cheese-consuming households is a poor 2.4kg pa as compared to over 20kg in USA. The lower penetration is due to peculiar food habits, relatively expensive products and also non-availability in many parts of the country. Butter, margarine and cheese products are mainly manufactured by organized sector. Similarly, penetration of ghee is highest in medium sized towns at 37.2% compared to 31.7% in all urban areas and 21.3% in all rural areas. The all India penetration of ghee is 24.1%. In relative terms, penetration of ghee is significantly higher in North and West, which are milk surplus regions. North accounts for 57% of ghee consumption and West for 23%, South & East together account for the balance 20%. A large part of ghee is made at home and by small/ cottage industry from milk. The relative share of branded products in this category is very low at around 1-2%. Milk powder and condensed milk have not been able to garner any significant consumer acceptance in India as indicated by a very low 4.7% penetration. The penetration is higher at 8.1% in urban areas and lower at 3.5% in rural areas. Within urban areas, it is relatively higher in medium sized towns at 8.5% compared to 7.7% in large metros.
Export Potential India has the potential to become one of the leading players in milk and milk product exports. Location advantage: India is located amidst major milk deficit countries in Asia and Africa. Major importers of milk and milk products are Bangladesh, China, Hong Kong, Singapore, Thailand, Malaysia, Philippines, Japan, UAE, Oman and other gulf countries, all located close to India. The major export products: - The products of Amul is being exported in the 40 countries of the world . Many of the products are now available in the U.S.A , Gulf countries and Singapore. Amul products are being exported to the Singapore since last three decades . undoubtedly , Amul is the preferred taste of Indians in the Gulf countries.
Low Cost of Production: Milk production is scale insensitive and labour intensive. Due to low labour cost, cost of production of milk is significantly lower in India. Concerns in export competitiveness are Quality: Significant investment has to be made in milk procurement, equipments, chilling and refrigeration facilities. Also, training has to be imparted to improve the quality to bring it up to international standards.
Productivity: To have an exportable surplus in the long-term and also to maintain cost competitiveness, it is imperative to improve productivity of Indian cattle. There is a vast market for the export of traditional milk products such as ghee, paneer, shrikhand, rasagulas and other ethnic sweets to the large number of Indians scattered all over the world.
Indian (traditional) Milk Products There are a large variety of traditional Indian milk products such as Makkhan - unsalted butter. Ghee - butter oil prepared by heat clarification, for longer shelf life. Kheer - a sweet mix of boiled milk, sugar and rice. Basundi - milk and sugar boiled down till it thickens. Rabri - sweetened cream. Dahi - a type of curd. Lassi - curd mixed with water and sugar/ salt. Channa/Paneer - milk mixed with lactic acid to coagulate. Khoa - evaporated milk, used as a base to produce sweet meats. The market for indigenous based milk food products is difficult to estimate as most of these products are manufactured at home or in small cottage industries catering to local areas. Consumers while purchasing dairy products look for freshness, quality, taste and texture, variety and convenience. Products like Dahi and sweets like Kheer, Basundi, Rabri are perishable products with a shelf life of less than a day. These products are therefore manufactured and sold by local milk and sweet shops. There are several such small shops within the vicinity of residential areas. Consumer loyalty is built by consistent quality, taste and freshness. There are several sweetmeat shops, which have built a strong brand franchise, and have several branches located in various parts of a city.
Branding Of Traditional Milk Products Among the traditional milk products, ghee is the only product, which is currently marketed, in branded form. main ghee brands are Sagar, Milkman (Britannia), Amul (GCMMF), Aarey (Mafco Ltd), Vijaya (AP Dairy Development Cooperative Federation), Verka ( Punjab Dairy Cooperative), Everyday (Nestle) and Farm Fresh (Wockhardt).
With increasing urbanization and changing consumer preferences, there is possibility of large scale manufacture of indigenous milk products also. The equipments in milk manufacturing have versatility and can be adapted for several products. For instance, equipments used to manufacture yogurt also can be adapted for large scale production of Indian curd products (dahi and lassi). Significant research work has been done on dairy equipments under the aegis of NDDB.
Mafco Limited sells Lassi under the Aarey brand and flavored milk under the Energee franchise (in the Western region, mainly in Mumbai). Britannia has launched flavored milk in various flavors in tetra packs. GCMMF has also made a beginning in branding of other traditional milk products with the launch of packaged Paneer under the Amul brand. It has also created a new umbrella brand "Amul Mithaee", for a range of ethnic Indian sweets that are proposed to be launched the first new product Amul Mithaee Gulabjamun has already been launched in major Indian markets.
Western Milk Products Western milk products such as butter, cheese, yogurt have gained popularity in the Indian market only during the last few years. However consumption has been expanding with increasing urbanization. Butter Most Indians prefer to use home made white butter (makkhan) for reasons of taste and affordability. Most of the branded butter is sold in the towns and cities. The major brands are Amul, Vijaya, Sagar, Nandini and Aarey. Amul is the leading national brand while the other players have greater shares in their local markets. The latest entrant in the butter market has been Britannia. Britannia has the advantages of a wide distribution reach and a strong brand recall. Priced at par with the Amul brand, it is expected to give stiff competition to the existing players. In 2008-00 the butter production is estimated at 4 lakh MT of this only 45K MT is in the white form used for table purposes rest all is in the yellow form.
COMPANY PROFILE
AMUL means "priceless" in Sanskrit. A quality control expert in Anand suggested the brand name “Amul,” from the Sanskrit “Amoolya,” Variants, all meaning "priceless", are found in several Indian languages. Amul products have been in use in millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee, Amul spray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India. (Turnover: Rs. 25 billion in 2002). Today Amul is a symbol of many things. Of high-quality products sold at reasonable prices, of the genesis of a vast cooperative network, of the triumph of indigenous technology, of the marketing savvy of a farmers' organization and have a proven model for dairy development.
AMUL IN ABROAD
. 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 did not succeed, but now it has fresh plans entering the Japanese markets [6]. Other potential markets being considered include Sri Lanka.
GCMMF
The Gujarat Cooperative Milk Marketing Federation Ltd, Anand (GCMMF) is the largest food products marketing organization of India. It is the apex organization of the Dairy Cooperatives of Gujarat. 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. Over the last five and a half decades, Dairy Cooperatives in Gujarat have created an economic network that links more than 2.8 million village milk producers with millions of consumers in India and abroad through a cooperative system that includes 13,141 Village Dairy Cooperative Societies (VDCS) at the village level, affiliated to 13 District Cooperative Milk Producers‟ Unions at the District level and GCMMF at the State level. These cooperatives collect on an average 7.5 million litres of milk per day from their producer members, more than 70% of whom are small, marginal farmers and landless labourers and include a sizeable population of tribal folk and people belonging to the scheduled castes. The turnover of GCMMF (AMUL) during 2008-09 was Rs. 67.11 billion. It markets the products, produced by the district milk unions in 30 dairy plants, under the renowned AMUL brand name. The combined processing capacity of these plants is 11.6 million litres per day, with four dairy plants having processing capacity in excess of 1 million Litres per day. The farmers of Gujarat own the largest state of the art dairy plant in Asia – Mother Dairy, Gandhinagar, Gujarat – which can handle 2.5 million litres of milk per day and process 100 MTs of milk powder daily. During the last year, 3.1 billion litres of milk was collected by Member Unions of GCMMF. Huge capacities for milk drying, product manufacture and cattle feed. Ever since the movement was launched fifty-five years ago, Gujarat‟s Dairy Cooperatives have brought about a significant social and economic change to our rural people. The Dairy Cooperatives have helped in ending the exploitation of farmers and demonstrated that when our rural producers benefit, the community and nation benefits as well.
GCMMF: An overview
Members:
13 district cooperative milk producers' Union
No. of Producer Members:
2.9 million
No. of Village Societies:
15,322
Total Milk handling capacity:
13.07 million litres per day
Milk collection (Total - 2009-10):
3.32 billion litres
Milk collection (Daily Average
9.10 million litres
2009-10): Milk Drying Capacity:
647 Mts. per day
Cattlefeed manufacturing
3740 Mts per day
Capacity:
BIRTH OF AMUL
The birth of Amul at Anand provided the impetus to the cooperative dairy movement in the country. The Kaira District Cooperative Milk Producers‟ Union Limited was registered on December 14, 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). Milk Producers had to travel long distances to deliver milk to the only dairy, the Polson Dairy in Anand . Angered by the unfair and manipulative trade practices, 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. 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). He sent Morarji Desai (who later became Prime Minister of India) to organize the farmers. In 1946, the farmers of the area went on a milk strike refusing to be further oppressed. Thus the Kaira District Cooperative was established to collect and process milk in the District of Kaira in 1946. Milk collection was also decentralized, as most producers . were marginal farmers who were in a position to deliver 1-2 litres of milk per day. Village level cooperatives were established to organize the marginal milk producers in each of these villages. The Cooperative was further developed & managed by Dr. V Kurien along with Shri H M Dalaya . in 1973, the Gujarat Cooperative Milk Marketing Federation was established. The Kaira District Co-operative Milk Producers‟ Union Ltd. which had established the brand name AMUL in 1955 decided to hand over the brand name to GCMMF (AMUL). With the creation of GCMMF (AMUL), we[who?] managed to eliminate competition between Gujarat‟s cooperatives while competing with the private sector as a combined stronger force. GCMMF (AMUL) has ensured remunerative returns to the farmers while providing consumers with products under the brand name AMUL.
DATA PROCESSING & ANALYSIS:Data Analysis For Retailers:1) Number of retailers stocking Amul milk.
Answer
No. of respondents
Percentage
Yes
55
20%
No
114
80%
Yes 33%
Yes No
No 67%
Interpretation: rd
The above graph indicates that only 1/3 of the retailers are selling Amul milk. It shows that Amul milk brand is not popular among the retailers.
2) Sizes of Amul milk packets retailers preferred to store. (Out of 169 retailers only 55 were buying Amul milk.)
Answer
5 Ltr
No. of respondents
250ml
0
500 ml
32
1 Ltr
23
5 Ltr
0
0
1 Ltr
23
500 ml
32
250ml
0
0
5
10
15
20
25
30
35
No. of respondents
Interpretation:
The above graph shows that most of the retailers preferred to stored 500 ml and 1 Ltr pouch of Amul milk as per the customer demand. In case of 5 Ltr. Pouch there was no customers demand. 250 ml pouches were not available to retailers.
3) Reasons for Amul milk not stored by retailers. (Out of 169 retailers 114 were not buying Amul milk.)
Absence of packaging date
No. respondents 6
Low margin
75
No replacement for leakage
20
No distribution
13
Answer
No distribution
of
13
No replacement for leakage
20
Low margin
Absence of packaging date
75
6
0
10
20
30
40
50
60
70
80
No. of respondents
Interpretation:
From above graph it is clear that half of the retailers were not satisfied with Amul replacement and margin policy. Some retailers responded about absence of packaging date. Very less retailers complained about distribution network
4) Preference of retailer‟s to milk brand.
BRANDS
RESPONDENTS
Amul
15
Mother dairy
77
manali
45
Tabala milk
6
Others
26
Others
tabala
26
6
manali
45
motherdry
77
Amul
15 0
10
20
30
40
50
60
70
80
RESPODENT
.
Interpretation:
The above graph shows that the motherdairy is most preferable brand in all. Some retailers also prefers tabala and others brands.
90
5) Sources from where retailers get Amul milk (Out of 169 retailers only 55 were buying Amul milk.)
Answer Distributors Other suppliers
No. respondents 52 3
of Percentage 95 % 5%
Interpretation:
Almost all retailers said that they purchased milk from Amul distributors.
6) Retailer‟s satisfaction with Amul distributor. (Out of 169 retailers only 55 were buying Amul milk)
Answer Yes
No. of Percentage Respondents 34 62 %
No
21
38 %
No 38%
Yes Yes 62%
No
Interpretation:
Graph shows that most of the retailers were satisfied with the service provided by the Amul distributors.
7) Awareness among retailers about different Sales Promotional activities for Amul milk. (Out of 169 retailers only 55 were buying Amul milk.)
Activities
Aware
Not aware
Price off
37
18
Free samples
13
42
Credit facility
16
39
Advertisement
49
6
P-O-P Displays
41
14
Coupons
50
5
60 50
6
18
40
42
30
14
39 49
20 10
5
50 41
37 13
16
0 Price off
Free samples Credit facility
Aware
Advertisement
P-O-P Displays
Coupons
Not aware
Interpretation:
The graph shows that retailers were aware about the sales promotion activity that Amul carried out, but some respondents were unaware about various activities. Most of the retailers were aware about advertisement and coupons scheme during festivals. Credit facility and free samples were not provided to single retailers.
8) Interest of retailers in wholesale distribution of Amul milk.
Answer Yes
No. of respondents 27
No
Percentage 16 %
142
84 %
Yes 16%
Yes No
No 84%
Interpretation:
Graph represents the interest of the retailers to start Amul milk distribution .The questions asked to increase the retail coverage. Most of the retailers were not interested. Only 16% of the retailers were ready to start Amul distribution.
9) Awareness among retailers for Amul Parlor (APO) and its benefits. (Out of 169 retailers only 118were questioned as they had large store.)
Answer
Percentage
Yes
No. of respondents 70
No
48
41 %
59 %
No 41%
Yes No
Yes 59%
Interpretation:
APO is the outlet where you get Amul milk and milk products and it helps to increase the market share. This question asked to the retailers who were strong enough in capital. From graph it can be interpreted that the awareness about APO is very low.
10) Interest of retailers in opening an Amul Parlor (APO). (Out of 169 retailers only 118 were questioned as they had large store.)
Answer Yes No
.
No. of respondents 15
Percentage 13 %
103
87 %
Yes 13%
Yes No
No 87%
Interpretation: The graph represent that very less number of retailers were interested to start APO.
11) Consumer‟s expectation from Amul milk. (Out of 169 retailers only 55 were buying Amul milk.) ATTRIBUTE
RESPONDENTS
Good quality
7
Clear packaging date
23
Availability
25
Availability
25
Clear packaging date
23
Good quality
0
7
5
10
15
20
25
30
RESPODENT
Interpretation:
The question asked to the retailers where the Amul milk is being sale, and tried to collect feedback of customers about Amul milk.
More customers were having complaints about the clear date of packaging and availability.
Some customers were not happy with quality of milk.
12) Ratings from retailers for attributes of Amul milk. (Out of 169 retailers only 55 were questioned as they buying Amul milk.) Attribute
Brand Quality
Rating
image
Availability
Packaging
Margin
Very good
37
48
34
5
0
Good
13
7
15
2
0
Average
5
0
0
48
0
Bad
0
0
6
0
0
Very bad
0
0
0
0
55
Total
55
55
55
55
55
60 0 50 40
5
0
0
7
6
0
0
13
15 48
30 48 20
37
34
10
2 5
0 Quality
55
Brand image Very good Good
Availability
Packaging
Average
Bad Very bad
0 Margin
Interpretation: From the above graph it can be concluded that
QUALITY: Most of the retailers were satisfied with Amul milk quality. BRAND IMAGE: The graph shows that Amul is having good brand image. AVAILABILITY: Most of the retailers were satisfied with the Amul milk distribution. PACKAGING DATE: Most of the retailers were not satisfied about not printing of packaging date and they were facing a problem regarding same. MARGIN: All retailers were not satisfied with the margin policy given by Amul.
6.2
DATA ANALYSIS FOR CUSTOMERS:1) Number of customers purchasing Amul milk.
Answer
No. of respondents
Percentage
Yes
30
32%
No
65
68%
Yes 32%
Yes No
No 68%
Interpretation:
The above graph indicates that only 32% of the customers are purchasing Amul milk. It shows that Amul milk brand is not popular among the customers.
2) Ratings from customers for attributes of Amul milk. (Out of 95 customers only 30 were questioned as they buying Amul milk.) Attribute
Brand Quality
Rating
image
Availability
Packaging
Price
Very good
18
25
16
5
6
Good
9
5
9
2
13
Average
3
0
0
15
11
Bad
0
0
5
8
0
Very bad
0
0
0
0
0
Total
30
30
30
30
30
35 30 25
0 3
0 5
0 5 0
9
20
0
8
11
9
15 10
0
15
25 18
13
16 2
5
5
6
0 Quality
Brand image Very good
Good
Availability Average
Packaging Bad
Price
Very bad
Interpretation: From the above graph it can be concluded that
QUALITY: Most of the customers were satisfied with Amul milk quality. BRAND IMAGE: The graph shows that Amul is having good brand image. AVAILABILITY: Most of the customers were satisfied with the Amul milk distribution. PACKAGING DATE: Most of the customers were not satisfied about not printing of packaging date and they were facing a problem regarding same. PRICE: Some customers were not satisfied with the price given by Amul.
3) Preference of retailer‟s to milk brand.
BRANDS
RESPONDENTS
Amul
15
motherdairy
44
manali
11
tabala
8
Others
17
17
Others 8
tabala
11
manali
44
motherdairy 15
Amul 0
.
5
10
15
20
25
30
35
40
RESPODENTS
Interpretation:
The above graph shows that the motherdairy is most preferable brand in all. Some customers also prefers tabala and others brands.
45
1. Data Analysis for Sales Promotion Activity:We carried sales promotion activity at two places of nallasopara city 1. Shri prastra 2. Apna nagar Store name
Sales(Ltr) Initially
Day 1
Day 2
Day 3
Day 4
Day 5
Day 6
Day 7
Sai
0
10
5
5
5
5
5
5
Vaishali
0
15
15
15
15
15
15
15
New hanuman
5
20
15
15
15
15
15
15
Hanuman
15
30
25
25
25
25
25
25
Durga
5
10
10
8
8
8
8
8
Sales (Ltr) 35 30
30
25
25
25
25
25
25
25 sai
20
20
15
15
10
15
vaishali 15
15
15
15
15
15
hanuman
8 5
8 5
8 5
8 5
8 5
new hanuman Durga
Day 3
Day 4
Day 5
Day 6
Day 7
10
5
5
8 5
0
0 initially
Day 1 Day 2
Interpretation: Most of the retail outlets were not interested in Amul milk selling, but after launching coupons scheme, not only sales shoot up by considerable amount initially but also remain constant for next days.
In case of Sai and Vaishali retail outlet they were not interested in Amul milk selling but now they are selling 20 Ltr of milk daily. And they said if response will remain same they will increase milk order.
PROCESS DESCRIPTION: 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, Saffron, Almond Pistachio, Cardamom)
Amul Amrakhand
Amul Mithaee Gulabjamuns
Amul Mithaee Gulabjamun Mix
Amul Mithaee Kulfi Mix
UHT Milk Range:
Amul Taaza 3% fat Milk
Amul Gold 4.5% fat Milk
Amul Slim-n-Trim 0% fat milk
Amul Chocolate Milk
Amul Fresh Cream
Amul Snowcap Softy Mix
Pure Ghee:
Amul Pure Ghee
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 1.5% fat
Curd Products:
Amul Masti Dahi (fresh curd)
Amul Butter Milk
Amul Icecreams:
Royal Treat Range (Rajbhog, Cappuchino, Chocochips, Butterscotch, Tutti Frutti)
Nut-o-mania range (Kaju Drakshi, Kesar Pista, Roasted Almond, Kesar Carnival, Badshahi Badam Kulfi, Shista Pista Kulfi)
Utsav Range (Anjir, Roasted Almond)
Simply Delicious Range (Vanilla, Strawberry, Pineapple, Rose, Chocolate)
Nature's Treat (Alphanso Mango, Fresh Litchi, Anjir, Fresh Strawberry, Black Currant)
Sundae Range (Mango, Black Currant, Chocolate, Strawberry)
Millennium Icecream (Cheese with Almonds, Dates with Honey)
Milk Bars (Chocobar, Mango Dolly, Raspberry Dolly, Shahi Badam Kulfi, Shahi Pista Kulfi, Mawa Malai Kulfi, Green Pista Kulfi)
Cool Candies (Orange, Mango)
Cassatta
Tricone Cones (Butterscotch, Chocolate)
Megabite Almond Cone
Frostik - 3 layer chocolate Bar
Fundoo Range - exclusively for kids
SlimScoop Fat Free Frozen Dessert (Vanilla, Banana, Mango, Pineapple)
Chocolate & Confectionery:
Amul Milk Chocolate
Amul Fruit & Nut Chocolate
Amul Eclairs
Brown Beverage:
Nutramul Malted Milk Food
AMUL PLANTS
1. First plant is at ANAND, which engaged in the manufacturing of milk, butter, ghee, milk powder, flavored milk and buttermilk.
2. Second plant is at MOGAR, which engaged in manufacturing chocolate, nutramul, Amul Ganthia and Amul lite.
3. Third plant is at Kanjari, which produces cattelfeed.
4. Fourth plant is at Khatraj, which engaged in producing cheese.
THE CHANNEL NETWORK
Procurement Channel (Upstream flow)
Distribution
GCMMF Head office
MU…1
MU...n
VCS…1
VCS…n
Village…1
Village…n
THE ANAND PATTERN
Distribution channel Manufacturing
GCMMF Head office
First leg(from manufacturing units)
Depot...1
Depot...n
Second leg
WD…1
WD…n
Third leg
Retail...n Retail…1
Downstream flow
Downstream Channel, it is the distribution part of the supply chain, from the manufacturing units to the retailers.
•
First leg of transport is from the manufacturing unit to the company depots. 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.
•
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, 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.
•
Third leg this is the flow of good from WD‟s to retailers, a beat plan is prepared and transportation is done on auto-rickshaws, rickshaws and bicycles.
Amul products are available in over 500,000 retail outlets across India through its network of over 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products. GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. 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. This just-in-time inventory strategy improves dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations.
Policy regarding unsold/spoilt goods
•
If product crosses the shelf life, the retailer bears the costs.
•
If the product gets spoilt during the transportation or if there is any customer complaint, Amul bears costs.
•
Unsold goods are not returned to the manufacturer.
•
No reverse logistics.
SCM AND MARKET LOGISTICS
THE BUSINESS MODEL
The strategy, 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. Management of this network is built around two key elements – 1. Coordination of the diverse elements of the network and 2. Use of appropriate technology that includes product, process and information technology and managerial practices and systems.
Simultaneous Development of Suppliers and Customers: From the very early stages of the formation of AMUL, the cooperative realized that sustained growth for the long-term was contingent on matching supply and demand. The member-suppliers were typically small and marginal farmers with severe liquidity problems, illiterate and untrained. AMUL and other cooperative Unions adopted a number of strategies to develop the supply of milk and assure steady growth.
First, for the short term, the procurement prices were set so as to provide fair and reasonable return.
Second, aware of the liquidity problems, cash payments for the milk supply was made with minimum of delay. For the long-term, the Unions followed a multipronged strategy of education and support. Only part of the surplus generated by the Unions is paid to the members in the form of dividends. A substantial part of this surplus is used for activities that promote growth of milk supply and improve yields. These include provision of veterinary services, support for cold storage facilities at the village societies etc. In parallel, the Unions have put in place a number of initiatives to help educate the members.
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, these concepts were practiced by GCMMF and AMUL. From the beginning, it was recognized that the core activity for the Unions lay in processing of milk and production of dairy products. Accordingly, the Unions focused efforts on these activities and related technology development. Marketing efforts (including brand development) were assumed by GCMMF. All other activities were entrusted to third party service providers. These include logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, some veterinary services etc.
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 interesting mechanisms exist for coordinating the supply chain at GCMMF. These range from ensuring fair share allocation of benefits to various stakeholders in the chain to coordinated planning of production and distribution. More importantly, the reason for setting up of this cooperative is not amiss to anyone in this large network organization. Employees, third part service providers, and distributors are constantly reminded that they work for the farmers and the entire network strives to provide the best returns to the farmers, the real owners of the cooperative. It may be r
emembered that coordination mechanisms have to link the
lives and activities of 2.12 million small suppliers and 0.5 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. These mechanisms are:
Inter-locking Control: - 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. This form of direct representation also ensures that professional managers and farmers work together as a team to strengthen the cooperative. This helps in coordinating
decisions across different entities as well as speeding both the flow of information to the respective constituents and decisions.
Coordination Agency: Unique Role of Federation:- In addition to being the marketing and distribution arm of the Unions, GCMMF plays the role of a coordinator to the entire network within the State – coordinating procurement requirements with other Federations (in other states), determining the best production allocation for its product mix from amongst its Unions, managing inter-dairy movements, etc. It works with two very clear objectives:
1. To ensure that all milk that the farmers produce gets sold in the market either as milk or as value added products and 2. To ensure that milk is made available to increasingly large sections of the society at affordable prices.
Supplier Enhancement and Network servicing:- Their objective is to ensure that producers get maximum benefit and to resolve all their problems. They manage the procurement of milk that comes via trucks & tankers from the VS‟s. They negotiate annual contracts with truckers, ensure availability of trucks for procurement, establish truck routes, monitor truck movement and prevent stealing of milk while it is being transported.
Technology for Effectiveness:Technology or knowledge that was embodied in products, processes, and practices became an important factor in delivering effectiveness to the network of cooperatives. One distinguishing feature of AMUL (in comparison with other similar cooperatives globally) is the large variety in their product mix. Most of its plants are state of art and automated. AMUL‟s innovations in the areas of energy conservation and recovery have also contributed to reduction in cost of its operations. AMUL also indigenously developed a low cost process for providing long shelf life to many of its perishable products. The extent of IT usage includes a B2C ordering portal, an ERP based supply chain planning system for the flow of material in the network, a net based dairy kiosk at some village societies (for dissemination of dairy related information), automated milk collection stations at village societies and a GIS based data network connecting villages societies to markets. Milk collection information at more than 10,000 villages is available to all dairies (or Unions) to enable them make faster decisions in terms of production & distribution planning, and disease control in more than 6,700,000 animals. This is linked with information at all 45
distribution offices and 3900 distributors. This network is being extended to cover all related field offices in the network. The GCMMF cyber store delivers AMUL products at the doorsteps of the consumers in 125 cities across the country. Now, going back to the supply chain of Amul, Amul has gone the e- commerce way. The 1st initiatives taken for an ERP system was in ‟94. Tata Consultancy Services was hired to guide in its implementation. The implementation project was named as Enterprise- wise Integrated Application System (EIAS). Automatic Milk Collection System units (AMCUS) at village societies were installed in the first phase to automate milk producers logistics. Amul also connected its zonal offices, regional offices and member‟s dairies through VSATs for seamless exchange of information. Amul is also using Geographic Information Systems (GIS) for business planning and optimization of collection processes. 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. 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. Distributors can place their orders on the website www.amul2b.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, operational and strategic capabilities in the entire network – farmers, village cooperatives, dairy plants, distributors and wholesalers and retailers. Key elements of this TQM movement have been:
Friday Departmental Meetings : Each Friday, at a prescribed time, 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.
Training for Transformational Leadership so that individuals are able to control their thoughts, feelings and behavior and take more responsibility in one‟s life and surrounding environment.
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. ISO/HACCP certification was obtained for all the Unions and each village society is in the process of obtaining the same.
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. This effort has brought about a significant social change towards such issues in villages that have cooperative milk societies.
Retail Census: GCMMF undertakes a census of all retail outlets (over 500,000) to evaluate customer perceptions and distribution efficacy of their network. This is being done by wholesalers in their respective territories at their own cost. This information is used for policy deployment exercise.
THE NETWORK
Milk is procured from the villages and collected at Village Cooperative Societies (VCS), from there the milk is taken to manufacturing units where the milk is processed into various products. The products are then transporters to the company Depots located in various parts of the country. The products are then sent to Wholesale Distributors (WD) and from there to the retailers. 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. 4,50,000 retailers spread all over India
Total house hold consumers covered are 100,000
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 500,000 retail outlets across India through its of over 3,500 distributors.
47 depots with dry and cold warehouses to buffer inventory of the entire range of products
AMUL PARLOURS (DIRECT DISTRIBUTION)
With products being highly perishable, the supply chain ought to have to maintain correct temperature, humidity etc and the chain should move fast.
To reach out its consumers more directly and let them the total brand experience, Amul has come up with Amul parlors. These are called “Utterly delicious parlors”. They have come up in major cities like Ahmadabad, Bangalore, Baroda, Delhi, Mumbai, Hyderabad and Surat already, and many more starting up real soon. Till date there are about 400 Amul parlors across the country. These parlors are set at prominent locations such as campuses of Infosys, Wipro, IIM-A, IIT-B, temples, Metros etc.
Amul has franchisee plans in regards of the Amul parlors. This might start pretty soon, since the talk is almost at the end.
Facts – 2300 Amul Parlors in 2007-08 – Goal of setting up 10,000 outlets by March 2010
Selection, Motivation & Evaluation of Channel Members
Selection:
The company takes into consideration a host of factors while selecting the channel members. 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 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, which includes the name & address, photograph of the location.
Proof of solvency which requires name & address of the channel member‟s bankers
Safety of the inventory, which means that the distributor/ dealer should get the stock of the company insured.
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. Refrigeration system should have deep freezers, cold room & walk in coolers.
Details of the delivery vehicle, which includes Light Commercial Vehicles, Matador, 3 Wheeler Van, Tricycle Van & Hand/Push cart. The number & model of each of the vehicle needs to be furnished to the company.
GCMMF acknowledges the fact that it needs to be sensitive to the market demands. For this it requires that a number of salesmen needs to be present on the field. The salesmen too are divided into various categories like the Field salesmen & Counter salesmen. Also the details
of Clerical Staff & Mazdoors are to be provided. The technical competence of the salesmen needs to be mentioned
Details of the product kept of other companies have to be provided. The annual sales of these products too have to be mentioned. Also details of complementary products & product lines need to be mentioned.
Dealers of the company must carry a good reputation. This is due to the fact that the company believes reputation of the dealer affects the clientele.
Market coverage by the distributors needs to be defined which includes details of Geographic coverage & Outlets per market area.
The company also requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.
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. Also if the channel members are motivated, they can also initiate advertising & sales promotion schemes on behalf of the company. However to keep the channel members motivated to work, the company has to incur certain costs but the benefits of it are felt in the long run. The following are the motivation programs run by the company:
Distributors
One of the main factors, which keep the distributors motivated, is the margin. Usually the margins offered by the company are 8% & it is raised to 8.5%. Volume wise this comes out to be a big figure since Amul‟s product has a good demand in the market. However compared to the other companies the margins are still lower since the new players in the market offer a much higher margin. But the very fact that Amul‟s products have good demand in the market motivates the distributors to stock it.
Amul being a cooperative cannot afford to give heavy monetary incentives. Amul‟s products are considered to be value for money since the company does not believe in charging high margins. In fact all monetary incentives are just the short run means to promote the company‟s product. In order to keep the Channel members motivated in the long run, 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 is organizing various Total Quality Management initiatives & workshops. Here various counseling measures are undertaken by the company to improve the overall working of the distribution network.
Vision and mission statement: the company cascades down the vision to the various channel members, 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 spend exorbitantly on such events therefore it has a very traditional way of organizing these get together which leaves an impact on the members.
Amul yatras: this includes taking the channel members on a guided tour of the manufacturing and procuring facilities in Gujarat. 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. This in turn help the company to co ordinate the entire value chain, as the channel members understand the various constraints and liberties the company goes through. The company has already got the Rajiv Gandhi award for quality.
The Retailers
Trade schemes: these are undertaken by the company only for the hard selling items e.g. Ice creams, flavored milk etc. for these the company raises the margins by 2%, also schemes like good packaging incase of butter and cheese is undertaken by the company. However this is only a short-term initiative to push the products of the company.
Glow boards: the company puts up glow boards at the retailer and pays the major portion of the cost.
Schedule of the salesmen: they provide the retails with this schedule so the retailers can pre estimate the quantities of the various products needed.
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.
Evaluation of channel members
Beat plan: this plan is generated for the various product categories i.e. diary dry, diary wet, Dhara and ice cream. A weekly schedule is prepared for various markets and the retailers the turnover for each of the product is calculated for the wholesale dealers.
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-à-vis the previous ones.
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. This is done for each of the product category.
Other criterion
o Details of the bank guaranty o Photographs of the offices o Details of the WD salesmen and the product lines he deals in o The computerization facility available o The storage space o Refrigeration facility with photograph o Details of the delivery vehicle with photograph o Summary of the monthly potential sales of markets o 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, when the company wanted the stuff back; the retailer disagreed to comply and created issues of ownership.
Stocking issues: The company doesn‟t want the retailers to stock the competing brand in the company leased fridges, which at times s hard to manage as retailers tend to do it often.
Replacement of products: The deterioration in the product calls for fail in replacement by the company this major issue of vertical conflict.
Credit policy: Compared to the market, the company‟s credit period is less that specially incase of institutional sales is very important.
Packaging: The channel members for easy storing demand a better quality of packaging.
Replenishment: The replenishment of the stocks is not prompt in case of amul cheese and all hard selling items.
Margins: The Company provides least margins to all the channel members. For e.g. The retailer’s margin in case of butter is 8% as compared to Britannia’s 12%
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. 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, therefore avoiding any conflict amongst the distributors regarding their areas of operation.
PRODUCT INFORMATION
PRODUCT-AMUL GOLD PASTEURISED FULL CREAM MILK WEIGHT- 500 ml Nett PRICE- Rs. 16 FAT-6.0 AND SNF-9.0 NUTRITIONAL INFORMATION
Serving size
200 ml
Amount per 100 ml Energy
87 kcal
Energy from fat
54 kcal
Total fat
:6g
Phosphorus
:130 mg
Saturated fat
: 3.7g
Sodium
:50 mg
Cholesterol
:16 mg
Thiamine
:42 mcg
Total carbohydrate
:5.0g
Rivoflavin
:120mcg
Added sugar
:0g
Niacin
:100mcg
Protein
:3.3g
Folic acid
:7.5 mcg
Calcium
:150mg
Vita(retinol)
:85mcg
VOLUME PURCHASED
Total volume distributed by distributer to dealers in Badarpur Bodor-800-1000 liter Total volume purchased by each dealers- 160-180 liters (i.e. total no of packets of amul gold milk purchased by each dealer)- 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 distributed 400-450 approx) Profit margin for distributer per liter-60 paise Total profit for each distributer- 480-600 Rs
Sales and profit for dealers
Total sale done by each dealer- 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- 5-6 Rs
DISTRIBUTION CHANNEL OF AMUL MILK
MANUFACTURED UNIT
PACKING AND LABELLING
DISTRIBUTORS
DEALERS
RETAILERS
CUSTOMERS
STOCK REPLENISHMENT CYCLE
Since milk is a fast moving consumer goods daily used by each household in India. So Amul gold pasteurised full cream milk is supplied by distributer everyday to dealers and retailers. Stock is purchased within 24 hours (early in the morning).
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 .They negotiate annual contracts with truckers, ensure availability of trucks for procurement, establish truck routes, monitor truck movement and prevent stealing of milk while it is being transported.
COMPETITOR ANALYSIS
The main competitor of Amul is Mother dairy in Delhi. Most of the market share is captured by mother dairy products (55% (approx) market of pasteurized full cream milk is covered by Mother dairy
product
% of market share
Amul
30
Mother dairy
55
others
15
market share 15
mother dairy amul 30
55
others
AMUL
PESTEURIZED
FULL
CREAM
VS
MOTHER
PASTEURISED FULL CREAM MILK
VS
AMUL
MOTHER DAIRY
Price
16Rs
17Rs
Weight
500 ml
500 ml
Margin for distributors’
60paise/liter
60paise/liter
Margin for dealers
40paise/liter
40paise/liter
Margin for retailers
50paise/liter
50paise/liter
DAIRY
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.
For distributor
Total quantity of mother dairy full cream pasteurized milk is distributed by distributor at 2300-2500 liters
Profit margin for distributer-60paise/liter
Total profit generated by distributer- 1380Rs-1500
For dealers
Total quantity purchased by each dealer at 400-500 liters
Profit margin for dealers-40paise/liter
Total profit generated by dealers-160-200Rs
For retailers Total quantity purchased by each retailer at Badarpur Boder-25-30 liters
Profit margin for retailers- 50paise/liter
Total profit generated by retailer-12.5-15Rs
Table of total Sales done each channel member
Channel member
Amul (in liters)
Mother dairy(in liters)
By distributer
800-1000
2300-2500
By dealers
160-180
400-500
By retailers
12-15
25-30
Table of profit generated by each member per day
Channel member
Amul(in Rs)
Mother dairy(in Rs)
For distributor
480-500
1380-1500
For dealers
64-72
160-200
For retailers
10-12
12-15
As compared to amul, mother dairy has more market share and more quantity of mother dairy full cream pasteurized milk is distributed and supplied by channel members. Hence more profit is generated by each channel member inspite of having equal margin on each product.
LEARINGS
It was a great opportunity to carry a research project on such a reputed organization which gave me a good learning experience and knowledge about the products and industry. Another very crucial area that needs mention is the experience I gained while talking to and interacting with people. This has been a truly enriching experience because interacting with people with varied profile helped in enriching my communication skills
FINDINGS
Lack of Awareness in consumers. Many people are not know about Amul chocolates specially children and teenagers.
As I found that the main product of Amul is Milk and company firstly wants to capture maximum market share in milk market which is approx. 66%, after it Amul is concentrating upon butter & cheese which has market share of approx. 88%, so it is not concentrating upon chocolates.
There is lack of Sales Promotional Activities i.e. free tattoo, extra weight, toys, quiz contest etc.
Cadbury is main competitor and strategically better performer then Amul.
I find the main thing is that “Amul” brand name has very good image in consumer‟s mind and they consider it as Pure & Good Product.
People who have tasted Amul Chocolate are not ready to purchase the same again.
SUGGESTIONS First and foremost Amul should take proper action in order to improve service, because although being on a top slot in Butter and milk supplies it does not get the sales in chocolate, which it should get.
Company should use brand ambassador which attracts each age segment i.e. Saniya Mirza, Shaktimaan, Amitabh Bacchan, Superman, Krrish, Jadoo etc.
Amul should give local advertisements apart from the advertisements given at the national level. Local advertisement must mention the exclusive Amul shops of the city.
Try and change the perception of the people through word of mouth about Amul in advertisements, because they are the best source to reach Children and families.
Though Amul chocolate advertisements are rarely shown on television yet many people could recall it as per the data of research. It shows that there is only need to give advertisement only to rememorize customers. Because Amul is very strong brand name.
Company should launch chocolate in new attractive packing to change image of Amul chocolate in consumers mind.
Company should introduce sales promotion schemes like free weight, pranky, tattoo, contest, free gifts etc.
Advertisement can be done with the help of animations that attracts children and teenagers because chocolates are consumed largely in this segment.
CONCLUSION
As Amul is a very huge organization' it has maximum market share in milk
The company must make policy for replacment of product's
The company must call a meeting of retailers time to time
Amul should look Oberlin towards the increment in profit margin of distributors and retailers
Amul should provide credit facilities for retailers and distributors
The overall management of Amul is so superior that they manage the overall system in 750 employees
Amul must come up with new promotional activities such that the people become aware of Amul milk like Tazza n Gold
BIBLIOGRAPHY
Books:
i.
Marketing Management (12th Edition) – Philip Kotlar
ii.
Research Methodology – C. R. Kothari
Websites:
i.
www.google.co.in
ii.
www.wikipedia.com
iii.
www.amul.com.
iv.
www.marketresearch.com
v.
www.dairy.com
ANNEXURE QUESTIONNAIRE:(Retailer Survey)
Name of the shop: __________________________________________________ Retailer Name: ____________________________________________________ Address: __________________________________________________________
1) Do you stock Amul milk? a) Yes b) No
2) If yes, what is the size of Amul milk packets do you preferred to store? a) 250 ml b) 500 ml c) 1 Ltr d) 5 Ltr. 3) If No, Why? a. Absence of packaging date b. Low margin c. No replacement for leakage d. Low distribution 4) Which is the most preferable brand of packaged milk that you stock?
Amul motherdairy manali tabala Others
5) From where do you get Amul milk?
a) Distributors b) Other suppliers
6) Are you satisfied with Amul distributor? a) Yes b) No
7) Do you know which Sales promotional activities does the company undertake for Amul milk? a) Price off
d) Free samples
b) Credit facility
e) Coupons
c) Advertisement
f) P-O-P Displays
8) Are you interested in distribution of Amul milk?
a) Yes b) No
9) Are you aware of Amul Parlor (APO) and its benefits? a) Yes b) No
10) Are you interested in opening an Amul Parlor (APO) a) Yes b) No
11) What is consumer‟s expectation from Amul milk? a) Good quality b) Packaging c) Availability
12) Give your ratings to following attributes of Amul milk.
Very good Good Average Bad Very bad
a) Quality b) Brand image c) Availability d) Packaging e) Margin
QUESTIONNAIRE:(Customer survey)
Name of the shop: __________________________________________________ Retailer Name: ____________________________________________________ Address: __________________________________________________________
1)
Do you know about Amul? Yes
2)
3)
No
What are the products of Amul you use very frequently? Butter
Cheese
Shrikhand
Milk Powder
Dahi
Milk
Ice-Cream
Butter Milk
Do you regularly get the Amul Milk? Yes
4)
No
Which brand‟s milk do you like most? Amul
Katraj
Chitale
Other (Specify)…………………….. 5)
Do you know about Amul God and Taaza? Yes
6)
No
How is the taste of Amul milk? Poor
Satisfactory
Excellent
Gokul
7)
How is the taste of Amul Tazza? Poor
8)
Satisfactory
Excellent
What about the price of Amul milk? Low
Average
High
9. Do you like the home delivery scheme of Amul Milk? Yes
No
10. Give your ratings to following attributes of Amul milk.
Very good Good Average Bad Very bad
f) Quality g) Brand image h) Availability i) Packaging j) Price
11. Any suggestion about Amul milk:
