Sales & Distribution Network

Group 6:

Swapnil Jindal

Mohit Johri
Souvik Roy Pravesh Dhavale Abhinav Shekhar

Overview
The Brand Amul is owned by The Gujarat Cooperative Milk Marketing Federation. GCMMF is Largest Food Products Marketing organization of India, with a revenue of $1.5 Billion.

It links 2.8 Million Village Milk producers and 13,141 Cooperative Societies across 13 Districts to milk and dairy consumers across India.
White revolution of India was an initiative under the Umbrella of Amul. Amul sells its products around the world in 40 countries.

Collects more than 5 lacs litres of milk from >2 million farmers everyday Delivers goods worth Rs 6 crore to over 5,00,000 retail outlets across country Aim is to transform lives in rural India & contribute to development of society. Amuls advertising and marketing spend has never exceeded 1% of its revenues. Distribution & value-for-money are the major strengths on which the brands popularity rests.

Key Elements of Business Model

Operations that are low cost, high quality and high efficiency (Competitive Edge). Strict margins at retail and distribution ends, utilizing economies of scale to remain competitive. High Sharing of profits with Farmers, to develop long-term relationships with them.

Amul has a wide range of products:

Cheese Amul Pasteurised Processed Cheese Amul Cheese Spreads Amul Emmental Cheese Amul Pizza Mozzarella Cheese Gouda Cheese Powder Milk Amul Spray Infant Milk Food Amul Instant Full Cream Milk Powder Sagar Skimmed Milk Powder Sagar Tea Coffee Whitener Amulya Dairy Whitener Health Drinks Nutramul Amul Shakti Health Food Drink For Cooking Amul/Sagar Pure Ghee Cooking Butter Amul Malai Paneer Utterly Delicious Pizza Mithai Mate Masti Dahi Pro-Biotic Dahi

AMUL

Product Portfolio
Fresh Milk Amul Fresh Milk Amul Gold Milk Amul Taaza Double Toned Milk Amul Lite Slim & Trim Milk Amul Fresh Cream Amul Shakti Toned Milk Amul Calci+ Amul Buttermilk Desserts Amul Ice Creams Amul Shrikhand Amul Mithaee Gulab Jamuns Amul Chocolates Amul Basundi Amul Yogi Yoghurt

Bread Spreads Amul Butter Amul Lite Delicious Table Margarine

Milk Drinks Amul Kool Milk Shaake Amul Kool Amul Kool Cafe Kool Koko Nutramul Energy Drink Amul Kool Chocolate Milk Amul Kool Flavoured Bottled Milk Amul Kool Flavoured Tetra Pack Amul Kool Masti Spiced Buttermilk Amul Lassee Amul Kool Thandai

The Channel Network

Procurement Channel (Upstream Flow)

Dairy cooperative society at village level

Member union at district level

Milk federation at state level

Procurement Network

An average of 1,000 Farmers sell milk at a Local Cooperative society.

Each Farmer has plastic cards for identification. The Identification Number is fed into a computer.

The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine.
The Computer then calculates the amount due to a farmer on the basis of the fat content in the milk. The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window.

Village Dairy Cooperative Society (VDCS)

Collection of surplus milk & payment based on quality & quantity. Providing support services to the members. Selling liquid milk for local consumers of the village. Supplying milk to the District Milk Union

Member Unions or Depots

Procurement of milk from the VDCS Providing input services to the producers. Conducting training on Cooperative development

Providing management support & regular supervision to the VDCS.

Establish Chilling Centers & Dairy Plants for processing the milk.

Selling liquid milk & milk products within the District.

Process milk into various milk & milk products. Decide on the prices of milk to be paid to milk producers.

Distribution channel (Downstream Flow)

First leg

Manufacturing units to company depots using 9 and 18 MT trucks Amul has 65 depots across major cities of India Frozen food-below 18C Dairy wet-0-4C

Second leg

Depots to Wholesale Dealers Network of over 5000 distributors The margins offered to the distributors range between 3-5% Wholesaler incentives yearly set group targets, on achieving which they get some amount on every additional kg sold Transport through insulated 3 and 5 MT TATA 407s

Third leg

WDs to retailers Transport through rickshaws according to the beat plan

Milk procured twice a day. Payment is procurement. made under twelve hours of

The C&F agents are not fixed and are decided by the local company offices. The milk procured per day is 5 million liters 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

Channel Management

Selection Criteria for the Channel Members

Authentication by way of identity. Proof of solvency-details of the bankers.

Safety of inventory by getting the company stock insured.

Proper storage space in forms of refrigerators. The company requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.

Details of delivery vehicles.

Competent salesman. Details of the product kept of other companies have to be provided.

Dealers of the company must carry a good reputation.

Market coverage of distributors need to be defined.

Motivation of Channel Members

1.

Distributors

Margins Trade marketing Total quality management

2.

Vision and mission statements

Amul yatras

Retailers

Trade schemes
Glow boards Schedule of the salesman Infrastructure of facilitation

Evaluation of Channel Members

Beat plan
Cumulative performance Target versus achievement Other criteria

Conflicts among channel members

Ownership of assets Stocking issues

Replacement of products
Credit policy Packaging Replenishment Margins

Cooperation among channel members

Amul quality circles

Pilot salesman scheme Scheduling of sales Agreement defining rights

Service Output Demanded

Product Line LOT SIZE ASSORTMENT/ VARIETY Youth L L L L M Kids L L M L L Women H M M M H Youth M M L L M

DELIVERY/ WAITING TIME

Kids NA NA NA Women H H H Youth M M H

Kids Ice Cream Chocolates Beverages L L M H L

Women H H L H H

Fresh Milk
Milk Powder Cheese Bread Spread Ghee

NA
NA NA NA NA

H
H H H H

M
M M H M

L
H H

H
L H

M
L M

M
L L

H
L H

L
L M

Corporate Office Functions

Marketing of milk & milk products. Establish distribution network. Arranging transportation from the Milk Unions to the market. Creating & maintaining a brand. Providing Technical Inputs, management support & advisory services. Decide on the products to be manufactured at various Milk Unions (product-mix).

Conduct long-term Milk Production, Procurement, Processing & Marketing Planning.

Conflict Resolution & keeping the entire structure intact.

Policies

Differential Prices: Lower prices in state of Gujarat due to less transportation cost. Unused Milk: Milk, once, supplied to retailer is not taken back. Amul adopted a low-cost price strategy to make its products affordable. GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system 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.

Coordination & 3rd Party Services

Effective coordination is critical for efficiency and cost control. Buy-in from the unions is assured as the plans are approved by GCMMF's board. The boards of the unions comprise of farmers elected through village societies Marketing efforts are assumed by GCMMF. Logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services were done by 3rd party

Establishing Best Practices

The federation and the unions have adapted successful models from around the world including group activities, quality circles at the federation. Every Friday, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at the closest office to discuss their various quality concerns. Examples of benefits from recent initiatives include reduction in transportation time from the depots to the wholesale dealers, improvement in ROI of wholesale dealers, implementation of Zero Stock Out.

Sales Forecasting
Retailer Forecasting. Backend Data. Festivals and Special Occasions. Seasonal demand.

Communication & Advertising

Corporate campaign: The Taste of India Amul butter girl is one of the longest run ad campaigns in the country (44 years!!!) Umbrella Branding Institutional Advertising Controversial issues and Social Messages Amul Greetings Newsletter and publication Competitions , Recipes, Cricket Rankings

Media
Outdoor
Hoardings/billboard

Broadcast
Non-broadcast Print Internet

Television

Cinema Newspaper General interest magazine Independent website Social Networking Sites

Recruitment & Selection

Recruitment @ Amul

Recruitment forms the first stage in the process. Selection and placement of the Sales force in the company.

The selection process starts with the intent for recruitment by the sales department head.
These intents specify the reasons why recruitment is to be made.

Requirement for Recruitment

New expansion

New planning
Retirement

Sources of Recruitment

Internal Sources

Present permanent employee Employee Referrals Former Employees

External Sources

Advertisement Campus recruitment Employment exchange Unsolicited applicants

Steps of Recruitment

Application

Initial interview of the candidate

Employment tests Interviews Checking references Physical / Medial examination Final interview Induction (Internal & External)

Training & Development

Identification of need of Training Module Preparation

Selection of employee for training

Training Feedback

Need & Effect of training

1.

Need

Introduction of new technology Increase quantity & quality of product To meet organization need at all time For better economic use of materials To prepare present employees for bigger role

2.

Effect

Increased effectiveness of work

Increased dedication to work Higher productivity

3 methods of Training @ Amul

On the job training

Coaching Job rotation Lecture method Conference method Seminar In this method the new recruits are sent to different training centers outside the organization for training purposes. generally used for top management recruits.

Off the job training

Outhouse training

Motivational Strategy

Motivation is the process of indoctrinating people with the unity of purpose to maintain a harmonious relationship among each other in the sales organization 2 types of motivators used:

Financial motivators Non-financial motivators

Financial Motivators

Ad hoc HRA LTC (once in 4 years)

Medical
Bonus Production Bonus

Performance allowance
Advance

Non-Financial Motivators
1.

Promotion (Criteria)
Seniority Vacancies Opinion Skill

of div. head, past record, behavior

& Knowledge

Experience Loyalty

2.
3. 4.

Seminar
Conference Fun @ Work

Observations

Strength in its procurement

Leverage on the relationship Strength in transport channel No promotional schemes undertaken Non profit driven organization Push strategy

Comments and Suggestions

Amul should go in for exclusive outlets

Push carts Trade promotions Home delivery Increase margins Additional salesman on field