AMUL The Taste Of India

Introduction of AMUL: AMUL, in western India that has developed a successful model for doing business in large emerging economy. It has been primarily responsible, through its innovative practices, for India to become worlds largest producer of milk. AMUL has led the milk dairy revolution in India that has now emerged as one of the largest milk producers in the world. Companies Detail: Type: cooperative Industry: dairy Founded: 1946 Revenue: INR 6.11billions Employee: 735 Products of AMUL :

AMUL SUPPLY CHAIN PRACTICE: 2

There are 2 chains: Collection chain Supply chain Collection chain: weighing the milk Detetermination of fat content Calculation of purchase price Supply chain: storing the milk Processing the milk Distributing the milk AMUL is a dairy cooperative in the western India that has been primarily responsible, through its innovative practices, for India to become the worlds largest milk producer. The distinctive features of this is it involves managing a large decentralized network of suppliers and producers, simultaneous development of markets and suppliers, lean and efficient supply chain. Every day Amul collects 447,000 litres of milk from 2.12 million farmers , converts the milk into b r a n d e d , p a c k a g e d p r o d u c t s , and delivers goods worth Rs 6crore (Rs 60 million) to o v e r 500,000 retail outlets across the . The vast and complex supply chain stretches from small suppliers to large fragmented markets. Management of this network is made more complex by t h e f a c t t h a t G C M M F i s d i r e c t l y responsible only for a small part of the chain, with a number of third party. Managing this supply chain efficiently is critical as GCMMFS competitive position is driven by low consumer price supported by a low cost system of providing milk at a basic affordable price.

THE BUSINESS MODEL

AMUL adopted the network as the basic model for long-term growth. 1.The network explicitly includes secondary services to the farmersuppliers. 2.Several of the entities in the network are organized as cooperatives linked in a hierarchical fashion. The success of the network depended on high collection rate of milk and constant concern about the cost to farmers in the network and delivering quality to customers at low prices. The cooperative had decided as part of its value: to charge for each service provided to the supplier to purchase all milk that member farmers produced to sell liquid milk at affordable prices so as to serve a large number of consumers to develop and deliver services that will improve lives of people in the network. PROBLEMS FACED BY THE COMPANY: Suppliers: A majority of the suppliers are small farmers who are often illiterate, poor,and with liquidity problems as they lack direct access to financial institutions. Again, traditional market mechanisms are not adequate to assure sustenance and growth of these suppliers. Third Party Logistics Services: In addition to the weaknesses in the basic infrastructure, logistics and transportation services are typically not professionally managed, with little regard for quality and service. Environment: provided above, it should be clear that the traditional management practices of the west are not sufficient for success in emerging markets. Customers: In comparison with developed economies, the market for dairy products in India is still in an evolutionary stage with tremendous potential for high value products such as ice cream, cheese etc. The distribution network, on the other hand, is quite reasonable with access to rural areas of the country. Traditional methods practiced in western economies are not adequate to realize the market potentitial.

Operations & Supply Chain Management :

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AMULs 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 (a) coordination of the diverse elements of the network (b) use of appropriate technology that includes product, process and information technology and managerial practices and systems Co-operatives are the best mechanism to address market and supply chain failures in agricultural commodities. The formation of cooperatives has to be with the full involvement of members. Amul is the result of milk producers federating into cooperative structure to take advantage of economy of scale in the entire supply chain of milk and milk products. The interventions made by Amul were at all levels of supply chain starting from the producers and culminating in marketing activities. At the producer level interventions were made in terms of raising milk production, providing nutrient balanced cattle feed and upgrading the animal breed. At the procurement level, transportation models were used to develop logistical solutions which included setting of regional collection centers with rudimentary processing to enhanced shelf life of milk, and transport route which would ferry the milk within short times to the processing centers. At the processing level, processing methods were put in place to process milk in order to enhance shelf life and make various products. The marketing function was developed to initially cater to the local and regional markets and was later expanded country wide.

Logistic setup for AMUL:

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COMMERCIAL DAIRY FARM

BULK COLLECTION

RAW MILK

SUPPLIER OF UNPROCCESSED MILK

PROCESSING FACALITY

PACKAGING

DISTRIBUTION

LUMBER COMAPNY

CORRUGATE PAPER CO.

STORES

LABEL MANUFACTURING CUSTOMERS

Technically the dairy chain starts at raw milk production and ends when other processors, institutions and consumers utilize products that were created in the production chain. Raw milk as well as processed milk and by-products are also ingredients in other processing chains. Numerous farms produce raw milk and sell it to secondary stages of the production chain. The wide range of dairy products that are produced from milk, have different demands for milk solids and volume.

Logistic Strategy Adopted by the company:

1. Amul started implementing the ERP in phases which helps to reduce the order time. 2. Automatic Milk Collection System Unit at village societies were installed in first phase to automate milk producers logistics. 3. Use of data analysis software to forecast the milk production and increasing productivity. 4. Improved delivery mechanism and transparency of business operation. 5. Practicing just in time supply chain with six sigma accuracy. 6. Online order placement of Amul product on web. 7. Implementing TQM 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 which also provide the customer with the real time information regarding inventory ability, order status and this is because the more the automated the systems, less the chances of human error. The AMUL milk is collected at the collection centers. These collection centers are in the village. Where milk quantity is measured, the quality is checked and payment is made. The milk is transported by vans doing a milk run and gets the milk into chilling center within 2 hours. At the chilling center the milk is pasteurized and then packed and some milk is send to factory to convert it into milk products.

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