Advanced Supply Chain Management:

AMUL Transportation and Distribution

Channels

Submitted by:
Group 1
IIFT Batch 2013-15

Agenda

Introduction
Company Overview
E-Supply Chain Management
Components of E-SCM
Benefits of E-SCM
AMCUS Working Structure
Procurement Channel
Cold Storage Network
E-Supply Management
Supply and Distribution Network
Total Quality Management Model

COMPANY OVERVIEW
Amuls Inception and Business Model
AMULs INCEPTION
Launched in 1946
Prior to Amuls launch, Indian Dairy industry was dominated British Polson Dairy
In the protest against Polsons discriminatory policies, a non-cooperation movement was
launched
which eventually culminated in to the inception of Amul in late 1946
BUSINESS MODEL
Eliminating the middlemen
Division of Procurement units on the basis of Societies (Amalgamation of villages)
On the Supply side, daily procurement of 3 million litres a day from 1.25 million milk suppliers, and
thus in 1994, it implemented Automatic Milk Collection Units (AMCUS)
On the Demand side, GCMMF (Gujarat Co-operative Milk Manufacturing Federation) controls the
manufacturing, distribution and marketing of milk and other related products
Low price strategy
Dual strategy of simultaneous development of the market and member farmers helped attain
sustainable competitive advantage. IT and TQM have significantly optimized operations at Amul

E-Supply Chain Management

Integrated Management Approach

Bi-directional flow of information and materials
Integrates trade partners throughout value chain
Complex networks established with trade partners
Procurement, sourcing, manufacturing and delivery
simplified
Analytics and forecasting at lowest echelon
Transportation and Logistics planning
Customer Order fulfillment assured

Components of E-SCM
ADVANCED
SCHEDULING

ORDER
COMMITMENT

DEMAND
FORECASTING`

CUSTOMER
ORDER

DISTRIBUTION
PLANNING

TRANSPORTATION
LOGISTICS

BENEFITS OF E-SCM

Supports exchange of real time information

Platform independent
Web visibility & processing capability 24/7
Return on investment
It has open internet application architecture which
allows for Rapid deployment & scalability combining
unlimited users in real time environment
Incorporates broadcast & active messaging
Time Reduction
Improved efficiency, transparency and reduction in
wastage and pilferage

BUSINESS SOLUTION
E-SCM to Amuls rescue
In order to address the scalability and integration issues, Amul started implementing a collection of
Technical and IT initiatives.
As a part of its E-SCM implementation, the following systems were introduced:
1.
2.
3.
4.
5.

AMCUS
Supply Side -- Procurement
DISK
Milk Processing and Marketing
VSAT
GIS
Amul Cyber Store
Demand Side - Distribution

Thus, over a period of 7 years, Amul introduced a

variety of end-to-end IT solutions to tightly integrate
the various components of its Supply Chain.

Farmers

Village Societies

Milk Unions

(Production)

(Procurement)

(Milk Processing)

GCMMF
(Marketing)

Distributors

Retailers

(Distribution)

(Retailing)

AMCUS working structure

Amul has installed over 3000 Automatic milk collection system
units(AMCUS) at village societies to capture member information,
milk fat content, volume collected and amount payable to each
member.
Each farmer is given a plastic card for identification
Computer calculates amount due to farmer on the basis of fat
content
The value of the milk is then printed out on slip & handed over to
the farmer, who collects the payment from adjacent window
With the help of IT, farmers receive their payment within minutes
Mentors assigned by Amul has helped easy transition from
traditional practices

E-Supply Management
Amul makes over 10 million payment transactions daily.
On the logistics part, more than 5000 trucks move milk from
the villages to 200 dairy processing plants twice a day
according to a carefully planned schedule.
Its ERP software named as Enterprise Wide Integrated
Application System(EIAS) covers a plethora of operations like
market planning, advertising and promotion, distribution
network planning.
Each of Amuls offices are connected via internet and all of
them send daily reports on sales and inventory to the main
system at Anand.
Amul has also connected all zonal, regional & member dairies
through VSAT

VALUE CHAIN PROCESS

ORGANISATION METRICS
How effective is Amul and its supply chain
(a) QUALITY MEASUREMENT ISSUES
METHOD USED: Kaizen Techniques of six sigma

Number of AMCUS installed

Satisfaction level of villagers is measured
Improvement in quality of milk (reduction in acidity and sour milk)
Planned activities for maintenance of machines
(b) COMMUNICATION EFFECTIVENESS
METHOD USED: INFORMATION COMMUNICATION TECHNIQUES

Reduced time delay in getting money.

Improved cash availability and reduced the need for loan.
Possibility of error was reduced.
Reduced Waiting time

(c) TRAINING AND SKILL DEVELOPMENT

Procurement system- integrator and knowledge sharing platform

Trained 2 or 3 operators by system provider

GCMMFs Supply Chain

THE CHANNEL NETWORK

Procurement channel- upstream flow

Distribution channel- downstream flow

Procurement
Activities at the village level comprised developing and
servicing the VCSs.
Increasing milk collection, procuring milk, and transporting
it to the chilling and processing units twice a day.
The VCSs provided the farmers with good quality animal
feed, fodder, and other services like veterinary first aid.

PROCUREMENT CHANNEL
On an average around thousand farmers come to sell milk at
their local co-operative milk collection center.
Each farmer has been given a plastic card for identification.
At the milk collection counter, the farmer drops the card into a
box and the identification number is transmitted to a personal
computer attached to the machine.
The milk is then weighed and the fat content of the milk is
measured by an electronic fat testing machine.
Both these details are recorded in the PC. The computer then
calculates the amount due to farmer on the basis of the fat
content.
The value of the milk is then printed out on a slip and handed
over to farmer who collects the payment at adjacent window.

COLD STORAGE NETWORK

Chillers in proximity of villages
Prompt transport to district facilities for further
dispatch to consumers/ processing units.
Chilled trucks to transport processed products
Delivery to local chillers by insulated rail tankers and
chilled trucks.
Refrigerators and freezers with retailers
departmental stores to retain freshness.

and

Distribution
GCMMF coordinated with various unions to get a regular supply of
milk and dairy products.
The processed milk and dairy products were procured from district
dairy unions and distributed through third party distributors.
To ensure quality and timely deliveries, GCMMF and the district
unions had several mechanisms in place.

The unions monitored the supplies of milk and the distribution of

finished products.

DOWNSTREAM FLOW
First leg
Manufacturing units to company depots using 9 and 18 MT
trucks
Frozen food-below 18C
Dairy wet-0-4C

Second leg
Depots to WDs
Transport through insulated 3 and 5 MT TATA 407s

Third leg
WDs to retailers
Transport through rickshaws according to the beat plan

Reverse logistics
MILK CHURN
from dairy to VCS
POUCH MILK TRAY
from retailer to dairy
BOTTLE
from retailer to dairy
DAMAGED PRODUCTS
from customer to retailer then to dairy

Total Quality Management Model

There is improvement in quality of milk in term of acidity and
sour milk.
Sabor milk union records show 2% reduction in the amount of
the sour milk received from the union.
Improved microbiological quality of upcoming raw milk in the
form of methylene blue reduction.

This gives better shelf life to the product.

Program like Red Tag Day was launched for cleaning the milk
collection center.

ADVANTAGES
Has E-SCM been useful to Amul?

After the implementation of AMCUS in 1995 and other IT initiatives, there have been a steady
and a healthy increase in the procurement of milk
Demonstrated benefits of the ICT platform:

Reduction in lead time

Reduction of pilferage
Reduction in human errors
On the spot payment for farmers (from
a week to a couple of minutes)
Reduction in wastage
Transparency in operation
Integration in operation

After calculating the economic benefits it is

found that the AMCUS benefits the farmer
community by saving Rs. 1159.4 million per
year.

CONCLUSION
E-SCM has helped Amul achieve better efficiency in terms of inventory
management, reduce lead time, reduce processing time (by 90%) and
better distribution and reach.
AMCUS has ensured transparency in the process, which has lead to
better relations with stakeholders.

FUTURE SCOPE

Agreement with Walmart to export milk to 15 countries

Mission for 2020, whose objectives are:

Turnover of Rs. 27,000 crores

Milk production of 33.1 million litres / day

Milk drying capacity of 200 m3 / day

Introduction of banking and ATM services to enable milk societies to credit

payments directly to a sellers bank account

Replacement of plastic cards with smart cards that enable one to use banking & ATM
facilities

Strong e-commerce push - JIT supply chain, online selling & distribution via
amulb2b.com