Supply Chain Management of Dairy & Bakery products

at AMUL dairy

Synopsis submitted to College of Management & Economic Studies for the partial
fulfillment of the degree of

MBA (Logistics & Supply Chain Management)

Guided by:

Internal Mentor: Industrial Mentor:

Dr. Neeraj Anand Dr. Gopal Shukla

College of Management & Economic Studies Sr. Executive (Sales & Marketing)

University of Petroleum & Energy Studies AMUL Dairy

Dehradun – 248 006 Anand (Gujarat)

Submitted by:

SHIKHA AGARWAL

Enrollment No: R600209100

SAP ID: (500006558)

College of Management and Economic Studies

University of Petroleum and Energy Studies,

Dehradun, Uttarakhand, India

 INDEX

Particulars Page No.

1. Problem statement 1

2. Introduction 1

3. Need for the Study 3

4. Objective of the study 4

5. Scope of the study 4

6. Research Methodology 6
6.1 Type of research
6.2 Sampling Technique
6.3 Sampling Size
6.4 Type of Data collection

7. Literature Review 7

8. Limitations of the Study 11

9. Research Process 12

10. Bibliography 13
Problem Statement

Supply Chain Management of Dairy & Bakery products at AMUL

dairy

Introduction

Supply chain management is the plan and control of material and information
flow among suppliers, facilities, warehouses and customers with the objectives of
minimization of cost, maximization of customer services and flexibility. The
supply chain of a business process comprises mainly five activities viz., Purchase
of materials from suppliers, transportation of Materials from suppliers to facilities,
production of goods at facilities, transportation of goods from facilitates to ware
houses and transportation of goods from warehouses to customers.
A supply chain is an integrated system wherein a number of various business
entities (i.e. suppliers, manufacturers, industrial customers, distributors, retailers)
work together to address issues of both materials flow and information flow.
Dairy industry is a vertically integrated industry with both parts of the supply
chain (farms & manufacture) dependent on each other to ensure safe food.
 AMUL’s SUPPLY CHAIN

Farmer’s

Village Village Local

Co-operative Co-operative Restaurants/other Milk sold to village
Societies (with Societies (without milk related & local residents
chilling units) chilling units) business

Milk Processing Unit &

Network Warehouses
Services Chilling Plants
-Veterinary
Services
GCMMF Warehouses
-Animal
Husbandry
-Animal food
factory Wholesalers/C&S
-Milk Can
Producers
-Agriculture
University Retailers Home delivery contractors
-Rural Mgt.
Institute CONSUMERS
 Amul Lo g is t ic s

Tankers
Through
Milk collected from Milk is send to Local collect Milk Milk is send to Chilling
Local
from these
farmers Mode of Societies Centers
societies
Transport
each day

Use Of
Tankers

Milk send to Union Dairies

Use of Milk is send to Processing
Milk send to the user Chilling
Use of (These may or may not be
Plant Tankers
Vehicles a part of the whole
system)

Need for the Research

Due to the unprofessional and inexperienced 3PL providers there is vast gap
between demand and supply. In the peak season, the company fails to satisfy the
retailers’ demand on certain products. Since the lead time is high so company is
unable to get raw material on time and also unable to produce final product to
match with the quantity demanded by retailers and consumers.
The main goals of the supply chain initiative is improving forecast accuracy to
match supply with demand, delivery performance to avoid stock-outs thereby
creating a dependable and reliable brand image without excessive spend. These
steps are help to reduce dependency on cold storage.

Objectives of the study

 To map the supply chain process of Dairy and Bakery products.
 To improve the efficiency level of Dairy and Bakery products.
 To analyze the supply chain service level for customers and distributors by
surveying various AMUL Dairy booths.
 To offer wide variety of Dairy as well as Bakery products.
 To make improvements in trucking & milk handling.

Scope of the study

This study covers detailed study of AMUL Dairy supply chain, with special focus
on distribution of Dairy as well as Bakery products and time & motion study of
delivery vehicles. This study also covers the detailed introduction to dairy
industry in India along with detailed profile of AMUL Dairy and supply chain of
its products. The study can be used to understand the following: -

 Supply chain lead time, temperature stabilization in vehicles and other

elements affecting the reach of good quality products to the customer.
 The inefficiencies in the supply chain of Dairy and Bakery products.
 Non – value adding activities in the process.
  Points where improvements or redesigning is needed.

Research methodology

Type of research:

It is a descriptive type of research supported by statistical data analysis.

a) Descriptive research:- This type of research is based on some previous
understanding of the business or nature of the problem. Here I am using
descriptive research which is helpful in order to describe the answers to
who, what, when, where and how questions that arise in our project. I will
use “hub and spoke model” to reduce the lead time and try to match
demand and supply of Dairy and Bakery products. In this firstly I will
calculate the distance between suppliers to manufacturing unit and to
distributors. For Vehicle (Time & Motion) study will be used probabilistic
stratified random sampling as the vehicles were divide into homogeneous
groups, i.e. primary & secondary and refrigerated & non – refrigerated. As
it often helps segments and target markets, so descriptive research is best
for our study.

b) Apart from this we are following different methods of data analysis like
graphs, pie charts, tables, etc.

 Sampling technique- We have used non-probabilistic convenience

sampling while obtaining data from various retailers.

 Sampling size- 50 distributors of Anand & Kheda District.

 Primary data- Surveys, questionnaires, interviews

 Secondary data- Course material, internet, data provided by mentor, last

year’s projects etc.
Literature Review

Rajdeep Datta (2006)

Stated that the benefits of an efficient supply chain management included
reduction in lead time faster inventory turnover accurate forecasting increased
warehouse space reduction in safety stock and better working capital utilization. It
also helped in reducing the dependency on distribution center management
personnel resulting in minimization of training costs and errors. Stock outs were
also completely eliminated.

B. Bowonder, B R Raghu Prasad and Anup Kotla (2002)

Stated that the use of Information Communication Technologies (ICT) in rural
areas of Gujarat by GCMMFL has made the operation of the dairy industry
different. While it has always been argued that investments related to ICT made in
rural India are not effective, the case of Amul proves that, where there is a will
there is a way. Amul has become rural India’s flag bearer in the IT revolution.
The use of ICT in the dairy industry by the Gujarat Cooperative Milk Marketing
Federation Ltd. The system makes it easy for the farmers to get the cash payment
as soon as the milk is delivered. The Amul experience indicates that if properly
designed and implemented, the rural poor can benefit from ICT platforms.
Customization of IT platforms for use in rural communities is emerging as a
major opportunity for change.

Phil Psilos, Value Chain Competitiveness Consultant (2005)

Stated that short-term boom in world dairy prices combined with long-term
growth prospects for dairy products in Asia presents a promising opportunity for
strategies to include and upgrade smallholder participation in these markets.
Smallholders and the national and sub-national (local) dairy value chains may be
able to respond to growing market opportunities, but there is no guarantee of this
outcome. This presentation is focused on how the FAO-CFC-APHCA team is
working to develop a framework for understanding the ability of smallholder
dairy in participating countries to respond to these opportunities. For the purpose
of this project, we refer to the related abilities of value chain participants to
respond to market opportunities, upgrade to meet new market requirements,
address challenges posed by international competition, and to provide sustainable
livelihoods to value chain participants as the competitiveness of the smallholder
dairy enterprise

Ajay Sharma & Abhilesh Yadav (Aug 2003)

Stated that the Shree Kamdhenu Electronics Private Ltd (SKEPL)’s business
model is centered on providing technology-based products and services to help
milk cooperatives become more efficient and productive. The company provides
complete IT-enabled solutions that automate the milk collection process at local
milk cooperatives. Its high-end system, selling for about US$3,300 (Rs
151,800)1, incorporates an electronic weighing system, a milk analyzer to test
milk quality, a personal computer, and accounting and management software.
Compared to earlier manual procedures, the AKASHGANGA system is faster,
more accurate, and more transparent. That means milk can be sent on to the
cooperative union for processing more quickly, reducing spoilage; farmers can
see for themselves the weight and quality of their milk via a display and printed
receipt, increasing their trust in the cooperative process. In addition, farmers are
paid immediately, rather than sometimes days later as under manual procedures;
and local cooperatives need fewer employees and have better records and reports
for planning purposes. SKEPL places an emphasis on delivering quality products
and services as well as responsive and efficient after-sales service.

SAP AG (2005)
Stated that based on years of experience working with companies in the dairy
industry, SAP has developed an understanding of the industry best practices you
need to maintain competitive advantage. Our consulting and implementation
services help you configure the SAP software to perform these best practices,
speeding up the implementation and scoping it properly to meet your needs as a
midsize company.
SAP has packaged software and services to help midsize dairy companies
improve operational efficiency, and provides a solution designed to address
certain regulatory compliance issues. SAP Consulting is also focusing on midsize
food companies and can provide consulting and implementation services in
conjunction with this new packaged solution. The anticipated benefits
of working with a recommended implementation partner such as SAP Consulting
include accelerated implementations, attention to certain integration risks, and
easier adoption of new
Technologies.

The solution (16-week implementation) supports:

• Milk procurement and payment
• Procure to stock and internal procurement
• Dairy production planning and process control including seamless quality
control
• Inventory management
• Sales and distribution of dairy products and raw materials
• Generic sales order processing including sales returns
• Food safety including batch management, handling-unit management, quality
management
• Financials and controlling

Gurpreet Issar (2004)

Stated that the supply chain and the firm levels, and the relationships were
explored from multiple perspectives. Analysis of the dairy-food supply chains
illustrates the potential of the supply chain concept for exploring dairy-food
industry development. Understanding the supply
chain dynamics provides insights into the potential drivers of change, and the
resources and capabilities likely to determine chain success in the medium and
longer term. The future supply chain development will depend on the capabilities
of the chain participants in operational and strategic management within the firm,
and also in successfully negotiating linkages within the chain. In addition, the
organizational structures of both the firms and the chain need to be responsive to
changing end-user needs and the dynamic business environment. The research
demonstrated that in addition to the continuous efficiency improvements,
effective business strategies for individual firms and the supply chain will need to
be developed and redeveloped to accommodate the dynamic nature of Australian
dairy-food supply chains post-deregulation. A paradigm shift may be required in
the way dairy-farm businesses are managed. While continued efficiency
improvement on-farm is essential, there are additional challenges for milk
producers
in managing their businesses strategically. Being part of a dynamic supply chain
environment would necessitate taking a position which makes best use of their
capabilities and resources. The distinctive positioning could be aligning with a
particular processor, or accessing a niche market. It could be entering into an
 individual contract with a processor or being part of a supply group. The strategic
choice of the producer will need to be backed by capabilities such as market
knowledge, strong relationships in the output and input markets, and financial,
negotiation, and people management skills.

Limitations of the study

The major limitations in carrying out the study are: -

 Time constraint.
 Data collection sources are located far off which makes it difficult to have
frequent visits.
 Lack of proper response by distributors due to ignorance.

Research Process

Related literature
tools
1. Situation Analysis
 Immersion Supply chain
management

Strategic
management
meet industry people literature Review
Resource based
view
Develop Develop Trust/
Identify issues theoretical Methodology
Issues

2. Data collection & Design Research Strategy Qualitative

analysis (phase: 1) interviews

Semi-structured interviews with key participants from the Dairy food chains Template analysis
approach

Preliminary Analysis

SPSS assisted
Feedback from industry respondant in a workshop setting Analysis

3. data collection Qualitative

Semi-structured interviews with key participants from the Dairy food chains
interviewing
& analysis
Template analysis
Final Analysis approach

4. Thesis
Develop thesis & present Findings
Development

Bibliography
1. B. Bowonder, B R Raghu Prasad and Anup Kotla (2002), “ICT application in a
dairy industry: The e-experience of Amul”

2. Rajdeep Dattam (2006), “Amul’s Supply chain management practices”

3. Phil Psilos, Value Chain Competitiveness Consultant (2005) “Competitiveness

framework for Asian smallholder dairy development”

4. Ajay Sharma & Abhilesh Yadav (Aug 2003), “what works: AKASHGANGA’s
IT tools for the Indian dairy industry”

5. SAP AG (2005), “SAP® ERP PACKAGED SOLUTION FOR THE DAIRY

INDUSTRY”

6. Gurpreet Issar (2004), “Strategies and Relationships in the Dairy-food Supply

Chain: Options for Milk Producers in South-east Queensland”

7. www.amul.com

8. Kotler, Keller, Koshy and Jha, (2007), Marketing Management: A south Asian
Perspective, Pearson Education, India.

9. AMUL DAIRY OFFICE