A PROJECT REPORT

ON Distribution Channel of AMUL in the subject International Marketing

SUBMITTED TO UNIVERSITY OF MUMBAI FOR SEMESTER IV OF M.COM.

BY

Mr. NIKHILESH N.PILLAY Roll No. 28

UNDER THE GUIDANCE OF Prof. SAURABH CHAVAN YEAR 2013 2014

C E R T I F I C A T E

This is to certify that the project entitled Distribution Channel of AMUL submitted by Mr. Nikhilesh N. Pillay student of M.Com. (Part-II) Management (University of Mumbai) Semester IV examination has not been submitted for any other examination and does not form a part of any other course undergone by the candidate. It is further certified that he has completed all required phases of the project. This project is original to the best of our knowledge and has been accepted for Internal Assessment.

Internal Examiner

External Examiner

Co-ordinator

Principal

College seal

ACKNOWLEDGEMENT

At the beginning, I would like to thank GOD for his shower of blessing. The desire of completing this project was given by my guide Prof. Saurabh Chavan. I am very much thankful to him for the guidance, support and for sparing his precious time from a busy schedule.

I would fail in my duty if I dont thank my parents who are pillars of my life. Finally I would express my gratitude to all those who directly and indirectly helped me in completing this project.

Nikhilesh N.Pillay

DECLARATION BY THE STUDENT

I, Nikhilesh N.Pillay student of M.Com. Part-II Management, hereby declare that the project for the Paper International Marketing titled, Distribution Channel of AMUL submitted by me to University of Mumbai, Semester IV examination during the academic year 2013-2014, is based on actual work carried by me under the guidance and supervision of Prof. Saurabh Chavan.

I further state that this work is original and not submitted anywhere else for any examination.

Nikhilesh N. Pillay

Serial No.

PARTICULARS

Page No.

Chapter 1

1.1 1.2 1.3

Executive Summary Objective of Study Review of Literature

7 7 7

Chapter 2

2.1 2.2 2.3

AMUL Story Evolution of the cooperative movement Operation Flood

9 11 14

Chapter 3

3.1 3.2

Overview GCMMF ANAND Pattern

20 24

Chapter 4

4.1 4.2 4.3

AMUL- The Commercial Brand BCG Matrix SWOT

28 30 33

Chapter 5

5.1 5.2 5.3

Distribution Supply chain framework Problems and Issues

39 42 45

Chapter 6

6.1 6.2

Observation of issues Recommendations and Suggestions

48 51

Chapter 7

7.1 7.2

Conclusion Bibliography

54 56

1.1 EXECUTIVE SUMMARY

Imagine going for a morning walk in the wee hours to a park, making a brief stopover and coming back home with a belly-full of tasty flavored milk and hot pizza topped with cheese! Defeats the purpose of the walk, but may make you feel on top of the world. Now, imagine the CEO of a dairy company saying, Ours is not a food company, it is an IT company in the food business. The most efficient way of building links between milk producers and consumers so as to provide the best returns for both is through IT and innovation. Or better still, imagine a cooperative movement that has delivered a Rs. 2746 crore turnover and has been planning actively to take it up to the 10000 crore mark. Amul India limited, and its team of energetic professionals have planned to take on HLL in ice-creams, Cadbury in chocolates, and NDDB in a verbal duel to uphold the cooperative movement. On top of all this, set up a retailing network that would be the toast of the town.

1.2 Objective of Study

To understand what it takes to safeguard brand AMUL through its distribution channel.

1.3 Review of Literature

It shows that, How a democratically owned and managed farmer organisation can successfully develop and sustain a commercial product in a national and overseas market with a sound and effective Distribution Channel.

Chapter 2

2.1 AMUL STORY

Amul (Anand Milk Union Limited), formed in 1946, is a dairy cooperative movement in India. It is a brand name managed by an apex cooperative organisation, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is jointly owned by some 2.8 million milk producers in Gujarat, India. AMUL is based in Anand, Gujarat and has been a sterling example of a co-operative organization's success in the long term. It is one of the best examples of co-operative achievement in the developing economy. "Anyone who has seen ... the dairy cooperatives in the state of Gujarat, especially the highly successful one known as AMUL, will naturally wonder what combination of influences and incentives is needed to multiply such a model a thousand times over in developing regions everywhere." The Amul Pattern has established itself as a uniquely appropriate model for rural development. Amul has spurred the White Revolution of India, which has made India the largest producer of milk and milk products in the world. It is also the world's biggest vegetarian cheese brand. Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.8 million producer members with milk collection average of 10.16 million litres per day. 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 had not succeeded, but now it has fresh plans of flooding the Japanese markets. Other potential markets being considered include Sri Lanka. Dr Verghese Kurien, former chairman of the GCMMF, is recognised as the man behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF.

2.1.1 MASCOT
Since 1967 Amul products' mascot has been the very recognisable "Amul baby" (a chubby butter girl usually dressed in polka dotted dress) showing up on hoardings and product wrappers with the equally recognisable tagline Utterly Butterly Delicious Amul.The mascot was first used for Amul butter. But in recent years in a second wave of ad campaign for Amul products, she has also been used for other product like ghee and milk.

10

2.2 EVOLUTION OF THE CO-OPERATIVE MOVEMENT

One of the most powerful co-operative movements originating from the birth state of Mahatma Gandhi is responsible for the birth and growth of the popular FMCG brandAMUL. Before the cooperative movement began, middlemen who supplied milk to the consumers were exploiting the dairy industry in the Kaira District. It began as a response to this exploitation and put an end to it. It grew because it responded to the farmers financially as well as with services. It has thrived because farmers who have a stake in its success, own it. And because it has been managed by capable professionals and strengthened by dedicated scientists, technologists and workers, it has forged ahead. Today in India, there are 75,000 dairy cooperative societies, spread all over the country with a membership of 10 million. The farmer in the village is now assured of a better future thanks to these cooperatives. Recently one of the European Embassies in Delhi requested Amul for information on the five biggest "companies" in the dairy business. The first three are in the cooperative sector - The Gujarat Cooperative Milk Marketing Federation (GCMMF), The Kaira District Cooperative Milk Producers' Union Limited and The Mehsana District Cooperative Milk Producers' Union. The Kaira District Cooperative is the second best in the country. It helped to create GCMMF, the apex body of all cooperatives in Gujarat.

2.2.1 - THE HUMBLE BEGINNING In the forties one firm - Polsons, dominated the dairy industry. Established by a rather enterprising gentleman who discovered that Kaira District, of what was then Bombay Presidency, produced a good deal of milk. He established a creamery and for a while the name Polsons was synonymous with butter - much as Amul is today. One of Polson's businesses was to supply milk to Bombay. As Kaira district was an abundant source of the commodity, Polson was chosen to procure it from there. He in turn, entered into an arrangement with a number of contractors who actually went to the villages and collected the milk. Everyone was happy. Bombay received reasonably good quality milk and Polson made a handsome profit. The contractors too

11

managed to earn large margins by over quoting the farmers. It was only the poor farmers who were unhappy for it. They invested in the animal feed and fodder and they put in their labor. Yet, it was they who received the smallest share of the Bombay consumers' rupee. The arrangement benefited everyone but them.

2.2.2 - THE FIRST STEP: FORMATION OF KAIRA UNION

Realizing that something needed to be done about the unequal balance of wealth, they turned to Sardar Vallabhbhai Patel for advice. Sardar Patel knew that their only chance of earning a decent income was when they themselves gained control over the resources they created. He also knew that the cooperatives offered them the best chance of gaining that control. So he advised them to stop selling milk to Polson and form a cooperative of their own. In his opinion they were to own their own dairy unit. He said, "Throw out Polson and his milk contractors". They followed his advice and the Kaira District Cooperative Milk Producers' Union (AMUL) was born, in 1946. By good fortune, they could get as Chairman - Shri Tribhuvandas Patel, an equally remarkable man. He understood the concept of cooperation and he understood people. His integrity was absolute. Because the farmers of Kaira district trusted and respected Tribhuvandas Patel, the cooperative was able to pass through some very difficult times and eventually become a model of cooperative dairying throughout the world. The Kaira Union began with a clear goal, to ensure that its producer members received the highest possible share of the consumers' rupee. This goal itself defined their direction. The focus was on production by the masses, not mass production. By the early 'sixties, the modest experiment in Kaira had not only become a success, people began to recognize it as such. Farmers came from all parts of Gujarat to learn.They went back to their own districts and started their own cooperatives. The result - Together, the district milk producers unions of Gujarat owned the Gujarat Cooperative Milk Marketing Federation, which markets the milk and milk products manufactured by its owners. The Federation's turnover was over Rs. 1700 crore making it the largest in the food industry. In 1964, the then Prime Minister Shri Lal Bahadur Shastri came to inaugurate cattle

12

feed factory owned by Amul near Anand. Impressed by the cooperative's success, he expressed his wish to "transplant the spirit of Anand in many other places". He wanted the Anand model of dairy development replicated in other parts of the country. With institutions owned by rural producers, which were sensitive to their needs and responsive to their demands, it was an ideal tool for progress. The National Dairy Development Board was created in 1965 in response to this call.

13

2.3 OPERATION FLOOD

The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the Himalayas. Similar is the story of Amul, which inspired 'Operation Flood' and heralded the 'White Revolution' in India. It began with two village cooperatives and 250 liters of milk per day, nothing but a trickle compared to the flood it has become today. Today Amul collects , processes and distributes over a million liters of milk and milk products per day, during the peak, on behalf of more than a thousand village cooperatives owned by half a million-farmer members. Further, as Ganga-ma carries the aspirations of generations for moksha, Amul too has become a symbol of the aspirations of millions of farmers, creating a pattern of liberation and self-reliance for every farmer to follow.

2.3.1 - THE START OF A REVOLUTION

The revolution started as awareness among the farmers that grew and matured into a protest movement and the determination to liberate them. Over four decades ago, the life of a farmer in Kaira District was very much like that of his counterpart anywhere else in India. His income was derived almost entirely from seasonal crops. The income from milch buffaloes was undependable. Private traders and middlemen controlled the marketing and distribution system for the milk. As milk is perishable, farmers were compelled to sell it for whatever they were offered. Often, they had to sell cream and ghee at throwaway prices. In this situation, the one who gained was the private trader. Gradually, the realization dawned on the farmers that the exploitation by the trader could be checked only if marketed their milk themselves. In order to do that they needed to form some sort of an organization. This realization is what led to the establishment of the Kaira District Cooperative Milk Producers' Union Limited (popularly known as Amul) that was formally registered on December 14, 1946. The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June 1948.

14

An assured market proved a great incentive to the milk producers of the district. By the end of 1948, more than 400 farmers joined in more village societies, and the quantity of milk handled by one Union increased from 250 to 5,000 liters a day.

2.3.2 - OBSTACLES: SPRINGBOARDS FOR SUCCESS

Each failure, each obstacle, each stumbling block can be turned into a success story. In the early years, Amul had to face a number of problems. With every problem came opportunity- a chance to turn a negative into a positive. Milk by-products and supplementary yield, which suffered from the same lack of marketing and distribution facilities, became encumbrance. Instead of being bogged down by their fate they were used as stepping-stones for expansion. Backward integration of the process led the cooperatives to advances in animal husbandry and veterinary practice.

2.3.3 - MILK BY PRODUCTS: AN EXCUSE TO EXPAND The response to these provided stimulus for further growth. For example, as the movement spread in the district, it was found that the Bombay Milk Scheme could not absorb the extra milk collected by the Kaira Union in winter, when the production on an average was 2.5 times more than in summer. Thus, even by 1953, the farmermembers had no assured market for the extra milk produced in winter. They were again forced to sell a large surplus at low rates to the middlemen. The remedy was to set up a plant to process milk into products like butter and milk powder. A Rs 5 million plant to manufacture milk powder and butter was completed in 1955. In 1958, the factory was expanded to manufacture sweetened condensed milk. Two years later, a new wing was added for the manufacture of 2500 tons of roller-dried baby food and 600 tons of cheese per year, the former based on a formula developed with the assistance of Central Food Technological Research Institute (CFTRI), Mysore. It was the first time anywhere in the world that cheese or baby food was made from buffalo milk on a large, commercial scale. Another milestone was the completion of a project to manufacture balanced cattle feed. The plant was donated by OXFAM under the Freedom from Hunger Campaign of the FAO.

15

To meet the requirement of milk powder for the Defense, the Kaira Union was asked by the Government of India in 1963 to setup additional milk drying capacity. A new dairy capable of producing 40 tons of milk powder and 20 tons of butter a day was speedily completed. It was declared open in 1965. The Mogar Complex where high protein weaning food, chocolate and malted food are being made was another initiative by Amul to ensure that while it fulfilled the social responsibility to meet the demand for liquid milk, its members were not deprived of the benefits to be had from the sale of high value-added products.

2.3.4 - CATTLE: FROM STUMBLING BLOCKS TO BUILDING BLOCKS

Traditionally dairying was a subsidiary occupation of the farmers of Kaira. However, the contribution to the farmer's income was not as prominent as his attachment to dairying as a tradition handed down from one generation to the next. The milk yield from animals, which were maintained mainly on the by products of the farm, was decidedly low. That together with the lack of facilities to market even the little produced rendered the scientific practice of animal husbandry irrational as well as unaffordable. The return on the investment as well as the prospects of being able to market the product looked very bleak. It was a vicious cycle reinforced by generations of beliefs. The Kaira Union broke the cycle by not only taking upon themselves the responsibility of collecting the marketable surplus of milk but also provided the members with every provision needed to enhance production. Thus the Kaira Union has full-fledged machinery geared to provide animal health care and breeding facilities. As early as late fifties, the Union started making high quality buffalo semen. Through village society workers artificial insemination service was made available to the rural animal population. The Union started its mobile veterinary services to render animal health care at the farmers' doorstep. Probably for the first time in the country, veterinary first aid services, by trained personnel, were made available in the villages. Fully qualified staff mans the Unions 16 mobile veterinary dispensaries. All the villages are visited bi-monthly, on a predetermined day, to provide animal health care.

16

A 24-hour Emergency Service is also available at a fee (Rs. 35 for members and Rs.100 for nonmembers). All the mobile veterinary vans are equipped with Radio Telephone. The Union runs a semen production center where it maintains high pedigreed Surti buffalo bulls; Holstein Friesian bulls, Jersey bulls and 50 per cent crossbred bulls. The semen obtained from these bulls is used for artificial breeding of buffaloes and cows belonging to the farmer members of the district. The artificial insemination service has become very popular because it regulates the frequency of calving in cows and buffaloes thus reducing their dry period. Not only that, a balanced feed concentrate is manufactured in the Union's Cattle Feed Plant and sold to the members through the societies at cost price. Impressive though its growth, the unique feature of the Amul sagas did not lie in the extensive use of modern technology, nor the range of its products, not even the rapid inroads it made into the market for dairy products. The essence of the Amul story lies in the breakthrough it achieved in modernizing the subsistence economy of a sector by organizing the rural producers in the areas.

2.3.5 - PEOPLE POWER: AMUL'S SECRET OF SUCCESS

The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk besides acting as a channel to market the production enhancement package. What's more, it does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic upliftment and comm.on good. Looking back on the path traversed by Amul, the following features make it a pattern and model for emulation elsewhere. Amul has been able to: Produce an appropriate blend of the policy makers farmers board of management and the professionals: each group appreciating its roles and limitations Bring at the command of the rural milk producers the best of the technology and

17

harness its fruit for betterment Provide a support system to the milk producers without disturbing their agroeconomic systems Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers and Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change. The Union looks after policy formulation, processing and marketing of milk, provision of technical inputs to enhance milk yield of animals, the artificial insemination service, veterinary care, better feeds and the like - all through the village societies. The village society also facilitates the implementation of various production enhancement and member education programs undertaken by the Union. The staffs of the village societies have been trained to undertake the veterinary first-aid and the artificial insemination activities on their own.

18

Chapter 3

19

3.1 GCMMF: AN OVERVIEW

Gujarat Cooperative Milk Marketing Federation (GCMMF) is the Indias largest food product marketing organization. It is a state level apex body of milk cooperatives in Gujarat, which aims to provide remunerative returns to the farmers.

Year of Establishment Members No. of Producer Members No. of Village Societies Total Milk handling capacity per day Milk Collection (Total 2012-13) Milk collection (Daily Average 2012-13) Cattlefeed manufacturing Capacity

1973 17 District Cooperative Milk Producers' Unions (16 Members & 1 Nominal Members) 3.18 Million 16,914 16.8 Million litres per day 4.66 billion litres 12.7 million litres 5890 Mts. per day

Sales Turnover -(2012-13) Rs. 13735 Crores (US $ 2.54 Billion)

3.1.1 - ORGANIZATION STRUCTURE IS DIVIDED INTO TWO PARTS:

External Organization Structure Internal Organization Structure

External Organization Structure

External Organization Structure is the organization structure that affects the organization from the outside.

20

State Level Marketing Federation

District Milk Product Union Ltd

Village Milk Product Union Ltd

Villagers
The structure is line relationship, which provides easy way to operation. It also provides better communication between two stages.

21

Internal Organization Structure of Amul

Chairman

Managing Director

General Manager

Asst. General Manager

Finance

Production

Marketing

Sales & Purchase

Personnel

Senior Manager

Senior Manager

Senior Manager

Senior Manager

Senior Manager

Finance Manager

Production Manager

Marketing Manager

Sales Manager

Personnel Manager

Accountant

Officer

Marketing Executive

Officer

P.R.F

Officers

Supervisor

F.S.R

Salesmen

Executive

A systematic & well-defined organizational structure plays a vital role & provides accurate information to the top-level management. An organisation structure defines a clear-cut line of authorities & responsibilities among the employees of GCMMF.The Organisation structure of Amul is well-arranged structure. At a glance a person can completely
22

come to know about the organization structure. Amul is leaded by thedirector under him five branches viz. Factory, Marketing, Accounts, Purchase, Human Resources Department. Factory department has a separate general manager under him there are six braches viz. Production, Stores, Distribution, Cold Storage, Quality, and Deep-freezing. This department takes care of the factory work. Marketing department has regional senior marketing manager and under him there is a regional manager. This department takes care of the marketing aspects of Amul. Accounts department takes care regarding accounts i.e. day-to-day work. Under the accountant there is one clerk. Purchase department takes care regarding the purchase of raw materials and many other things. Sales Turnover 1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13
23

Rs (million) 11140 13790 15540 18840 22192 22185 22588 23365 27457 28941 29225 37736 42778 52554 67113 80053 97742 116680 137350

US $ (in million) 355 400 450 455 493 493 500 500 575 616 672 850 1050 1325 1504 1700 2172 2500 2540

3.2 ANAND PATTERN OF DEVELOPMENT

It began with two village co-operatives and 250 liters of milk per day -- anything but a trickle compared to the flood it has become today. Today AMUL collects processes and distributes over 9 lakh liters of milk per day during the peak on behalf of 962 village co-operatives owned by 5.42 lakh farmer members. AMUL has become the sign and symbol of the aspirations of millions of farmers, and the pattern of liberation and self-reliance for every farmer. The Kheda District Co-operative Milk Producers' Union Limited (popularly known as AMUL) was formally registered on December 14, 1946. The Kheda Union began pasteurizing milk for the Bombay Milk Scheme in June 1948. An assured market proved a great incentive to the milk producers of the district. By the end of 1948, more than 400 farmers joined in more village societies, and the quantity of milk handled by the Union increased from 250 to 5000 litres a day. In the early years, AMUL had to face a number of problems. The response to these provided stimulus for further growth. For example, as the movement spread in the district, it was found that the Bombay Milk Scheme could not absorb the extra milk collected by the Kheda Union in winter, when the production on an average was 2.5 times the summer. Thus, even by 1953, the farmer-members had no assured market for the extra milk produced in winter. They were again forced to sell a large surplus at low rates to the middlemen. The remedy was to set up a plant to process milk into products like butter and milk powder. A Rs. 5 million plant to manufacture milk powder and butter was completed in 1955. In 1958, the factory was expanded to manufacture sweetened condensed milk. Two years later, a new wing was added for the manufacture of 2500 tons of roller-dried baby food and 600 tons of cheese per year, the former based on a formula developed with the assistance of Central Food Technological Research Institute (CFTRI), Mysore. It was the first time anywhere in the world that cheese or baby food was made from buffalo milk on a large, commercial scale. Another milestone was the completion of a project to manufacture balanced cattle feed. The plant was donated by OXFAM under the Freedom From Hunger Campaign of the FAO. To meet the requirement of milk
24

powder for the Defense, the Kheda Union was asked by the Government of India in 1963 to set-up additional milk drying capacity. A new dairy capable of producing 40 tons of milk powder and 20 tons of butter a day was speedily completed. It was declared open in 1965. The Mogar Complex where high protein weaning food, chocolate and malted food are being made was another initiative by AMUL to ensure that while it fulfilled the social responsibility to meet the demand for liquid milk, its members were not deprived of the benefits to be had from the sale of high value-added products. The Mogar complex also started manufacturing Amullite a substitute for butter in 1994. Amul has also set up a new Dairy Plant to handle 6.5 lakh liters per day with facilities to produce 60 tonnes of powder and 70 tonnes of butter in a highly automated plant. It has recently set up a 20 MT Cheese plant at Khatraj near Memdabad. Impressive though its growth, the unique feature of the AMUL sagas did not lie in the extensive use of modern technology, nor the range of its products, nor even the rapid inroads it made into the market for dairy products. The essence of the AMUL story lies in the breakthrough it achieved in modernizing the subsistence economy of a sector by organizing the rural producers in the area. True, traditionally dairying was a subsidiary occupation of the farmers of Kheda. However, the contribution to the farmer's income was not as prominent as his attachment to dairying as a tradition handed down from one generation to the next. Low milk yield of animals maintained on the by-products of the farm, together with lack of facilities to market even the little produced, turned the decision to invest in scientific practice of animal husbandry and nutrition, decidedly irrational; the return on the investment as well as the prospects of being able to market the product looked very bleak indeed. Since its inception, the Kheda Union also believed that the responsibility to collect the marketable surplus of milk should be coupled with the provision of making the production enhancement inputs reach the members. The Kheda Union has thus a fullfledged machinery to provide animal health care and breeding facilities. As early as late fifties, the Union started making high quality buffalo semen and the artificial insemination service available to the rural animal population through the village
25

society workers. The Union started its mobile veterinary services to render animal health care at the door steps of the farmers. Probably for the first time in the country, the veterinary first aid service was made available in the villages through trained village-society workers. The Union's 16 mobile veterinary dispensaries have fully qualified staff. All the villages are visited bi-monthly on a pre-determined day, to provide animal health care. A 24-hour Emergency Service is also available at a fee (Rs.35 for members and Rs.100 for non-members). All the mobile veterinary vans are equipped with Radio Telephones. The Union runs a semen production centre where it maintains high pedigreed Surti buffalo bulls, Holstein Fresian bulls, Jersey bulls and 50 per cent cross-bred bulls to cater to the need of semen for artificial breeding of buffaloes and cows belonging to the farmer members of the district. Artificial insemination service has become very popular and effective because it regulates the frequency of calving in cows and buffaloes and thus reduces their dry period. A balanced feed concentrate is manufactured in the Union's Cattle Feed Plant and sold to the members through the societies at cost price. The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk, besides acting as a channel to market the production enhancement package; and does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socioeconomic upliftment and common good. The Union looks after policy formulation, processing and marketing of milk and provision of technical inputs to enhance milk yield of animals: artificial insemination service, veterinary care, better feeds and the like, all through the village societies. The village society also facilitates the implementation of various production enhancement, and member education programmers undertaken by the Union. The staffs of the village societies have been trained to undertake the veterinary first-aid and the artificial insemination activities on their own.
26

Chapter 4

27

4.1 AMUL THE COMMERCIAL BRAND

AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit "Amoolya," was suggested by a quality control expert in Anand. 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, Amulspray, 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. 37.74 billion in 2005-06). Today Amul is a symbol of many things. Of high-quality products sold at reasonable prices. Of the genesis of a vast co-operative network. Of the triumph of indigenous technology. Of the marketing savvy of a farmers' organisation. And of a proven model for dairy development.

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The Product Range

Breadspreads Amul Butter, Amul Lite, Delicious Table Margarine Amul Pasteurized Processed Cheddar Cheese, Amul Processed Cheese Spread, Amul Pizza (Mozarella) Cheese,Amul Emmental Cheese, Amul Gouda Cheese, Amul Malai Paneer (cottage cheese), Utterly Delicious Pizza Amul Gold Full Cream Milk 6% fat, Amul Shakti Standardised Milk 4.5% Fat, Amul Taaza Toned Milk 3% fat,Amul Slim & Trim, Amul Cow Milk Amul Gold 4.5% fat Milk, Amul Shakti 3% fat Milk, Amul Taaza 1.5% fat Milk, Amul Lite Slim-n-Trim Milk, Amul Fresh Cream Amul Full Cream Milk Powder, Amulya Dairy Whitener, Sagar Skimmed Milk Powder, Amulspray Infant Milk Food, Sagar Tea and Coffee Whitener Amul Kool Flavoured Milk, Amul Kool Cafe, Amul Kool Koko,Amul Kool Millk Shaake, Amul Kool Chocolate Milk,Nutramul Energy Drink Stamina Instant Energy Drink Nutramul Malted Milk Food Amul Masti Dahi (fresh curd), Amul Masti Spiced Butter Milk,Amul Lassee, Amul Flaavyo Yoghurt Amul Pure Ghee, Sagar Pure Ghee Amul Mithaimate Amul Shrikhand, Amul Mithaee Gulabjamuns, Amul Basundi,Avsar Ladoos Sundae Range, probiotic,,sugarfree and probiotic Amul Milk Chocolate, Amul Fruit & Nut Chocolate, Amul Chocozoo, Amul Bindass, Amul Fundoo

Cheese Range

Fresh Milk

UHT Milk Range

Milk Powders

Milk Drink Health Drink Brown Beverage Curd Products Pure Ghee Sweetened Condensed Milk Mithaee Range (Ethnic Sweets) Ice-cream Chocolate & Confectionery

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4.2 BCG MATRIX

The BCG Growth-Share Matrix is a portfolio planning model.. It is based on the observation that a company's business units can be classified into four categories based on combinations of market growth and market share relative to the largest competitor, hence the name "growth-share". Market growth serves as a proxy for industry attractiveness, and relative market share serves as a proxy for competitive advantage. The growth-share matrix thus maps the business unit positions within these two important determinants of profitability.

4.2.1 BCG GROWTH-SHARE MATRIX

This framework assumes that an increase in relative market share will result in an increase in the generation of cash. This assumption often is true because of the experience curve; increased relative market share implies that the firm is moving forward on the experience curve relative to its competitors, thus developing a cost advantage. A second assumption is that a growing market requires investment in assets to increase capacity and therefore results in the consumption of cash. Thus the position of a business on the growth-share matrix provides an indication of its cash generation and its cash consumption. It is observed that the cash required by rapidly growing business units could be obtained from the firm's other business units that were at a more mature stage and generating significant cash. By investing to become the market share leader in a rapidly growing market, the business unit could move along the experience curve and develop a cost advantage. From this reasoning, the BCG Growth-Share Matrix was born. Here, we shall consider the products of GCMMF (Amul India). The products to be placed in the BCG matrix for the study are, Amul Butter, Amul Ice cream, Amul Kool and Amul Chocolates.

THE FOUR CATEGORIES ARE: Question marks Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much
30

cash. The result is a large net cash comsumption. A question mark (also known as a "problem child") has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. For Amul brand, Amul Kool and Amul Chocolates are a perfect example of a Question mark product or a problem child. Question marks business are wait and watch business. Amul kool and the chocolates.are businesses the company entered because it felt that both these product category have high growth potential.

Stars Stars generate large amounts of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate; therefore the cash in each direction approximately nets out. If a star can maintain its large market share, it will become a cash cow when the market growth rate declines. The portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation. Amul Ice cream, is a star generating huge amounts of cash for the company. No doubts it demands huge amount of investments as well but at the same time has enormous growth rate. It has still maintained its large market share in competition with other large brands like Kwality Walls Ice cream and Dullops etc. It has earned very high returns compared to its investments and continues to be so. The company hopes to cash on this product in future.

Cash cows As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate, and thus generate more cash than they consume. Such business units should be "milked", extracting the profits and investing as little cash as possible. Cash cows provide the cash required to turn question marks
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into market leaders, to cover the administrative costs of the company, to fund research and development, to service the corporate debt, and to pay dividends to shareholders. Because the cash cow generates a relatively stable cash flow, its value can be determined with reasonable accuracy by calculating the present value of its cash stream using a discounted cash flow analysis. Amul Butter is one of the unbeatable product in the product profile of the company. It is primarily their most successful product with hardly any competitors in the market. The pricing of this product is absolutely strategic so as to avoid further competitors from entering this segment of the product consumers. The advertisements and billboards of this product is major contributor to the sales. It is the oldest in the market and hence still enjoys the First Mover Advantage, as per the law of marketing. This product has been a thorough cash cow from the beginning since it gave huge returns with lowest investments which made it easy for the company to plough those profits for other products, i.e the Question Mark and the Star segments.

Dogs Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture. The unfortunate product for any company is when it enters the Dog segment. The most unsuccessful product for the company has been Amul Ready to eat Pizza. The company had to call off the product from its list of products. Inspite of all the marketing strategies the company undertook to make this product a success it proved to be futile. Somehow, the company could not induce the idea of ready to-eat pizza in the minds of the consumers. With tough competitors like Pizza Hut and Dominos Pizza it was wise for them to withdraw the product from the market to avoid further losses for the company.

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4.3 SWOT ANALYSIS

4.3.1 STRENGTHS

Demand profile: Absolutely optimistic. Milk being a necessity product, the demand will stay and the sales at GCMMF are bound to increase over a period of time. Margins: Quite reasonable, even on packed liquid milk. The margins are enough to limit the entry of potential entrants. Flexibility of product mix: Tremendous. With balancing equipment, GCMMF has kept adding a wide array of products to its product line. Availability of raw material: Abundant. Presently, more than 80 per cent of milk produced is flowing into the unorganized sector, which requires proper channelization. Amul & GCMMF have leveraged this and has got itself a strong base of suppliers who provide them milk throughout the year. Large number of dairy plants in public and cooperative sectors besides several others coming up in the private sector would result in competition. Because of this the end consumer would benefit and a good product mix would emerge. Technical manpower: Professionally trained, technical human resource pool, built over last 30 years is the strength that GCMMF has. The employees of GCCMF are highly recognized in the industry and have earned name for themselves as well as the federation. Enhanced Milk Production: Increase in the milk production with consequently increased availability of milk processing has led to increase in consumption and faster access to the consumers through effective distribution. The technology is brought from Denmark and the production of milk has benefited from that. Transportation: The transportation facilities and the easy availability of the special trucks have provided a boost. Cold refrigerated trucks are there in place and the warehouses also have the cold storage facilities that facilitate the transportation.
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Vast resources: Country has vast natural resources which offer immense potential growth and development for dairying. Moreover the financial resources available with the federation are immense and the reputation is such that in case of any further requirements, it can approach any institution and raise any form of capital. Increasing purchase power and changing tastes of the consumers: The purchasing power of the residents is increasing. As a result a lot of products are being consumed. Moreover, the consuming habits are changing. As a result, the demand for products such as butter and cheese is increasing at a very rapid rate.

4.3.2 WEAKNESSES Perishability: Pasteurization has overcome this weakness partially. UHT gives milk long life. Still perishability is there at the milk vendors end. This does result in loss of some production. But Amul Dairy is taking steps to store milk at the vendors end. Surely, many new processes will follow to improve milk quality and extend its shelf life. Lack of control over yield: Theoretically, there is little control over milk yield. A lot depends upon the monsoon in the country. This is because of the quality of cattle feed that would be available will not have the required nutritional content. Steps are taken to provide awareness regarding these and the penetration of quality feed is being increased. Moreover, increased awareness of developments like embryo transplant, artificial insemination and properly managed animal husbandry practices, coupled with higher income to rural milk producers should automatically lead to improvement in milk yields. Logistics of procurement: Woes of bad roads and inadequate transportation facility make milk procurement problematic. All these factors lead to perishability of the procured milk. But with the overall economic improvement in India, these problems would also get solved. Erratic power supply: The erratic power supply would cause harm in the processing of milk.
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Underdeveloped systems: There still exist underdeveloped raw milk collection systems in some parts of the country. However steps are being taken such as setting up of cold storage points at key collection centers to combat the situation. Lack of proper implementation: Dairy development programmes have not been fully implemented as per the needs of the region in different agro-climatic zones. Infrastructure: The infrastructure that is available is not up to the current world standards. Also lack of infrastructure for offering dairy business management programmes to the trained personnel is creating a hindrance.

4.3.3 OPPORTUNITIES "Failure is never final, and success never ending. Dr Kurien bears out this statement perfectly. He entered the industry when there were only threats. He met failure head-on, and now he clearly is an example of never ending success! If dairy entrepreneurs are looking for opportunities in India, the following areas must be tapped: Competition: With so many newcomers entering this industry, competition is becoming tougher day by day. But then competition has to be faced as a ground reality. The market is large enough for many to carve out their niche. Moreover due to competition, there is a chance to better serve the market with innovative products. Value addition: There is a phenomenal scope for innovations in product development, packaging and presentation. Given below are potential areas of value addition: Steps should be taken to introduce value-added products like shrikhand, ice creams, paneer, khoa, flavored milk, dairy sweets, etc. This will lead to a greater presence and flexibility in the market place along with opportunities in the field of brand building. Addition of cultured products like yoghurt and cheese lend further strength - both in terms of utilization of resources and presence in the market place. Yet another aspect can be the addition of infant foods, geriatric foods and nutritional.

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Export potential: Efforts to exploit export potential are already on. Amul is exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new GATT treaty, opportunities will increase tremendously for the export of agri-products in general and dairy products in particular. There is a strong basis of cost efficiency, which GCMMF can leverage in the world market. Markets: The market for the traditional as wells as processed dairy products is expanding both at the domestic and international front. IT support: Software is now available for project formulation for dairy enterprise. It has also computerized its production processes. Mother Dairy was the first fully computerized dairy in India. In its Anand plant all products are processed computerized, which does not have any hand touch during any stage of process.

4.3.4 THREATS Milk vendors, the un-organized sector: Today milk vendors are occupying the pride of place in the industry. Organized dissemination of information about the harm that they are doing to producers and consumers should see a steady decline in their importance. Infestation: There are increasing incidents of chemical contaminants as well as residual antibiotics in milk. Quality: The quality of the milk is found to be poor as compared to the international standards. One of the reasons for these according to the EU and America is the method of milching the milk. In these nations the milk is hands by the farmers owning the cattle do milched with the help of machines, while in India. Exploitation: The liberalization of the Dairy Industry is likely to be exploited by the multinationals. They will be interested manufacturing the milk products, which yield high profits. It will create milk shortage in the country adversely affecting the consumers. Subsidy by Western Nations: There have been incidences wherein the Western nations subsidizing the dairy products by a few means like transportation. Because of such reasons the final price of the product goes below the prices prevailing in the Indian Market. Hence it proves a threat to GCMMFs and other Indian dairy products.
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Creation of Non Tariff Barriers by Developed Nations: The Developed Nations have created Non Tariff Barriers related to Quality of the milk specifically. They want that the milk be processed with potable Air and Water. They also want that the milching of cattle be done with the help of machines. However this type if system is yet to evolve in India. Because of these reasons they are reducing the market potential of Indian made products, where GCMMF holds a lions share. The study of this SWOT analysis shows that the strengths and opportunities far outweigh weaknesses and threats. Strengths and opportunities are fundamental and weaknesses and threats are transitory. Any investment idea can do well only when you have three essential ingredients: entrepreneurship (the ability to take risks), innovative approach (in product lines and marketing) and values (of quality/ethics).

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Chapter 5

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5.1 DISTRIBUTION NETWORK

Distribution Network Most producers work with marketing intermediaries to bring their products to market. The marketing intermediaries make up a marketing channel also called distribution cannel. Distribution channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. The Head Office of GCMMF is located at Anand. The entire market is divided in 5 zones. The zonal offices are located at Ahmedabad, Mumbai, New Delhi, Kolkata and Chennai. Moreover there are 49 Depots located across the country and GCMMF caters to 13 Export markets. A zero level of channel also called a direct marketing channel consists of a manufacturer selling directly to the final customers. A one level channel; contains one selling intermediary such as retailer to the final customers. A two level channel two intermediaries are typically wholesaler and retailer. A three level channel are typically wholesaler, retailer and jobber in between. GCMMF has an excellent distribution. It is its distribution channel, which has made it so popular. GCMMFs products like milk and milk products are perishable. It becomes that much important for them to have a good distribution.

5.1.1 DISTRIBUTION CHART

PRODUCTS

AGENTS

WHOLESELER

RETAILER

CONSUMER 39

We can see from above figure that GCMMF distribution channel is simple and clear. The products change hands for three times before it reaches to the final consumer. First of all the products are stored at the Agents end who are mere facilitators in the network. Then the products are sold to wholesale dealers who then sell to retailers and then the product finally reaches the consumers. Amul Parlors Amul has come out with a unique concept of Amul Parlours. They have classified those under four types namely: Center for excellence On the Move Amul Parlours Amul Preferred Outlets Center for Excellence: These Amul Parlours are specifically at a place, which has a class of excellence of its own. We can find such parlors at the Infosys, IIMA, NID Ahmedabad etc. On the Move: These parlors are at the railway stations and at different state bus depots across different cities. Amul Parlours: These parlors can be seen at different gardens across different cities. These are fully owned by Amul. Amul Preferred Outlets: These are the private shops that keep the entire of product range of Amul. They also agree not to keep any competitor brands in the outlets. They can keep other brands that are in the non-competitor category. Amul has more than 200 such outlets right now. It wants to have 1,00,000 parlors by the end of the year 2010.

5.1.2 - MANAGING COMPETITION The Indian market is dominated by a large number of small local and regional players. There are an estimated 150 manufacturers in the organized segment, which accounts for 30-35% of sales and about 1000 units in the unorganized segments of the market. In the organized segment the significant brands are Kwality Walls , Vadilal, Amul, Havmor, Mother dairy and Baskins & Robbins. GCMMF is facing very tough competition from both in and outside India.
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Amul combats competition from its competitors by providing quality products at a price which its customers value. Along with good quality products and reasonable price the packaging is also very good. Most of its products are available in many flavors. Excellent advertising backs its products and helps GCMMF (AMUL) to leave its competitors a tough time. Also Amul has come out with Amul Parlours to cater to various segments of customers. Amul has a very strong Brand Image in the Domestic market. Many products are exported by GCMMF. Exports: GCMMF is India's largest exporter of Dairy Products. It has been accorded a "Trading House" status. GCMMF has received the APEDA Award from Government of India for Excellence in Dairy Product Exports for the last 9 years. The major export products are: Consumer Packs Amul Pure Ghee Amul Butter Amul Shrikhand Amul Mithaee Gulabjamun Nutramul Brown Beverage Amulspray Infant Milk Food Amul Cheese Amul Malai Paneer Amul UHT Milk (Long Life) Amul Fresh Cream Bulk Packs Amul Skimmed Milk Powder Amul Full Cream Milk Powder

The products are exported to 18 countries namely, USA, Kuwait, Qatar, UAE, Yemen, Bahrain, Muscat, Saudi Arabia, Tanzania, Madagascar, Sri Lanka, Singapore, Nepal, Bangladesh, Nepal Thailand and Australia.

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5.2 SUPPLY CHAIN FRAMEWORK

The supply chain of Amul can be described in the following steps: Some 2.2 million farmers from 12 districts of Kaira (kheda), Sabar Kantha, Baroda, Panchmahal, Rajkot, Bharuch, Mehsana, Banas Kantha, Surat, Ahmedabad, Valsad and Gandhi nagar reach the milk collection centers every day in the morning and afternoon to sell the milk their buffaloes have given in the morning and in the noon The total milk procurement in the last year 2002 was an average 47.32 l per day where the peak the peak procurement touched a high of 62 l. All the milk procurement centers are equipped with computers and electronic milk testers (EMTs). EMTs ensure efficient testing and measurement of milk constituents. The computers run the automatic milk collection system, which ensures immediate preparation of milk payment bills, transparency of operations and greater efficiency of milk collection. The milk is then sent to chilling depots in each village of the member unions. There are 10852 villages under GCMMF and each one has a village Cooperative society. VDC also runs the automatic milk collection system. The milk is then sent to the 12 member unions. All of them run an ultra modern dairy that processes this raw material, which has traveled from faraway villages to the district headquarters. The various products made under the flagship of AMUL such as butter, milk powder, cheese, dahi, readymade foods such as gulab jamun, pizza etc. Are manufactured at these various plants and distributed through the various distributors across the country and abroad through GCMMF.

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FARMERS

VGS 10675

MEMBER UNIONS 12 UNITS

GCMMF 700 Employs

DISTRIBUTORS 3000+

RETAILERS 500000+

END USERS

Fig: - The flow of materials and information at AMUL One reason that Amul is a giant because its built on the back of a co-operative movement. It encourages women and farmers to collect milk from their cows and pass it on to them for a price. By managing milk supplies from the cattle farmer and sending it straight to the factory, its been able to eliminate the middleman.
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Complexity and dynamics of the supply chain make it very difficult to assess the interaction effects. Increased cooperation among network members has resulted in a number of changes at all levels -- operational, tactical and strategic, and has led to the emergence of practices and strategies for improving the chain's performance. Most prominent among these include the following: (i) Information sharing, often dynamically, to improve planning and execution. Sharing of POS data is a classic example for minimizing the distortions due to bullwhip effect and reducing perceived variability of demand by the partners in the chain. Typically, information sharing extends to costs as well. (ii) Focus on core competence of each player in the chain. The objective is to ensure that each task is performed by the entity best suited for it. As a result, firms have become willing partners in ceding control to a network partner for improving performance. VMI in many industries is a direct result of such change in management thinking. Similarly, the role of third parties for providing specific expertise such as logistics has grown substantially with emphasis on supply chain. (iii) Capacity improvement: It helps network partners in improving their capability and making them competitive.

Milk procurement
Total milk procurement by our Member Unions during the year 2012-13 averaged 93.02 lakhs kilograms (9.30 million kgs) per day representing a growth of 6.68% over 87.19 lakhs kgs (8.7 million kgs) per day achieved during the year 2008-09. The highest procurement as usual was recorded during January, 2012 at 122.5 lakhs kgs per day

The distribution network

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.

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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.

Managing third party service providers Its core activity lay in milk processing and the production of dairy products and all other activities such as logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services were entrusted to third parties.

5.3 PROBLEMS & ISSUES WITH SUPPLY CHAIN

Managing this supply chain efficiently is critical as GCMMF's competitive position is driven by low consumer prices supported by a low cost system. In the past years the concept of just-in-time was not introduced, all GCMMF branches were engaged in route scheduling and have dedicated vehicle operations. Even though the cooperative was formed to bring together farmers, professional managers and technocrats would be still required to manage the network effectively and make it commercially viable. It is worth noting that a number of third parties are not in the organized sector, and many are not professionally managed with little regard for quality and service. This is a particularly critical issue in the logistics and transport of a perishable commodity where there are already weaknesses in the basic infrastructure. Its network which consists of large number of members requires regular roll out improvement programs and high implementation rate of these programs. Having a strong supply chain is only the beginning, the remaining part includes making consumer products that sell well and that the same consumers are able to be impacted by marketing and advertising movements. The organization was also suffering from the high middleman cost which was tackled by managing milk supplies from the cattle farmer and sending it straight to the factory.
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 Due to the perishable nature of the product, it has to invest in cold storage which is an extra burden in distribution and warehousing. At the time Amul was formed; consumers had limited purchasing power, and modest consumption levels of milk and other dairy products. Thus Amul adopted a low-cost price strategy to make its products affordable and attractive to consumers by guaranteeing them value for money. 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. GCMMF was one of the first FMCG (fast-moving consumer goods) firms in India to employ Internet technologies to implement B2C commerce. Today customers can order a variety of products through the Internet and be assured of timely delivery with cash payment upon receipt. Another e-initiative underway is to provide farmers access to information relating to markets, technology and best practices in the dairy industry through net enabled kiosks in the villages. GCMMF has also implemented a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk collection as well as the marketing process.

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Chapter 6

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6.1 OBSERVATION OF SCM ISSUES

Following are the major issues analyzed with respect to the SCM of Amul: Larger lead time:A number of third parties are not in the organized sector, and many are not professionally managed with little regard for quality and service. Due to the old and obsolete means of transportation, failure of machinery etc. leads the delay in reaching to retailers and end users. In the past years the concept of just-in-time was not introduced, all GCMMF branches were engaged in route scheduling and have dedicated vehicle operations. Due to the perishable nature of the product, it has to invest in cold storage which is an extra burden in distribution and warehousing. As a result need of JIT were felt and the concept has introduced to avoid any kind of delay and destruction of products. Introduction of just-in-time inventory strategy improves dealers' return on investment (ROI).

Gap between demand and supply: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 was high so company were unable to get raw material on time and also were unable to produce final product to match with the quantity demanded by retailers and consumers. Amul decided to focus on farmers facing business processes such as supply, distribution and its own internal operations. The main goals of the supply chain initiative were 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 were taken to reduce dependency on cold storage.

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SUPPLIERS: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.

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. The marketing efforts (including brand development) were assumed by GCMMF. All other activities were entrusted to third parties. These include logistics of milk collection, Distribution of dairy products, sale of products through dealers and retail stores, some veterinary services etc. Some other issues found in its supply chain are as follows: It has excellent ability to anticipate the right type of product at the right time through the years. Amul is a cooperative where the milk suppliers are the shareholders. The owners decide what they should pay themselves for the raw material they supply. A unique situation where the owners of the company are also its largest vendors! To implement their vision while retaining their focus on farmers, a hierarchical network of cooperatives was developed, which today forms the robust supply chain behind GCMMF's endeavors. Introduction of just-in-time inventory strategy improves dealers' return on investment (ROI). In order to manage the network effectively and make it commercially viable professional managers and technocrats were introduced.
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 The company has core competency in milk processing and the production of dairy products and all other activities were entrusted to 3PLs Infreight logistics solutions limited, Transport Corporation of India, Gammon India ltd. are some of its main 3PL providers. Amul was one of the first FMCG firms in India to employ Internet technologies to implement B2C commerce. Today customers can order a variety of products through the Internet and be assured of timely delivery with cash payment upon receipt. It has also implemented a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk collection as well as the marketing process.

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6.2 RECOMMENDATION & SUGGESTION

Amul should improve its distribution system, as it has already implemented on

ERP in the company, still due to in disciplined behavior of its distributors, retailers suffers which ultimately affect the consumers. We know that the time schedule of the distributors & their transportation system

cannot be capsuled, but they can reduce their errors. E.g. drive carefully to prevent accidents. Manpower should be more than 18 years of age. (in some of the areas, we have observed small children engaged in loading & unloading the trays from the truck) Before offering any extra benefits or schemes to their retailers, Amul should aware them in advance, so that the incentives can be reached in the right hands at right time. Otherwise distributors enjoy the benefits of retailers. Codification of raw material should be done in an easily understand manner. Reduce the solving time of the consumer/retailers complaints. Payment to the milk suppliers should be made on time to ensure the proper inflow of milk.

Amul should also launch certain schemes for households. It has schemes for retailers but not for households. This section being the major user of milk and in order to enter into a new area such starting schemes can be very helpful.

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For refrigerated and frozen food distribution, a world class cold chain would help in providing quality assurance to the consumers around the region. Logistics and transportation services should be professionally managed to avoid wastes. Use of internet for exploring the unknown terrain. Active customer feedback should be taken regularly for increasing product line. Employees of GCMMF should involved actively in all activities of the member unions. Relationship with business associates like wholesaler should be made closer and deeper.

The company should take initiative to reduce transportation time from the depots to the wholesale dealers, improvement in ROI of wholesale dealers, implementation of Zero Stock Out through improved availability of products at depots and also the implementation of Just-in-Time in finance to reduce the float.

Completely in tune with the ground reality an enquiry is initiated on the organizational climate. This gave detail about the core competencies and most importantly gave details about the handicaps and inadequacies.

Have recognized change as an essential factor governing business needs and hence incorporates changes in every form at every stage. employees, suppliers and distributors also change ready always

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Chapter 7

53

7.1 CONCLUSION

Amul means different things to different people. To a milk producer A life enriching experience To a consumer Assurance of having wholesome milk To a mother A reliable source of nourishment for her child To the country Rural development and self reliance Amul has given a new dimension to marketing. It showed that a democratically owned and managed farmer organisation can successfully develop and sustain a commercial product in a national market. By doing this Amul provided virtually guaranteed marketing service to the milk producer at his door step. Amul has displayed dynamic initiative at a time when its multinational competitors were merely content to use depreciated machinery. Following factors have given us the insight to conclude, why Amul is thriving with success today: Emphasis on Quality: All the products of Amul are of highest grade. Consumers were very quick to perceive this and the sales success that followed reflected the publics stamp of approval. Modern marketing: A good product alone cannot succeed unless backed by innovative marketing, including packaging, price and promotion. Amuls advertising campaigns created a splash in the market that eventually led to a tidal wave that rocked the competition. Management: The judicious handling of people, recognition of performance and encouragement for a good try has gone a long way to build a sound foundation of people. All the basic components of management that is production, marketing, finance and organisation behavior are nicely arrayed at Amul. The co-operative concept: The fundamental thesis underlying the Anand model is that the rural producer must own and enjoy the assets they have helped to create. The model has inspired the creation of hundreds of other Anand. The system has succeeded mainly because of involvement of people on such a large scale, providing assured market at remunerated prices for milk producers, enables the
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consumers access to high quality milk and milk products, ploughing back the profit to the members, part of the profit is used by the society for common good and community development. Amul has established itself as a uniquely appropriate model for rural development. Amul has spurred the white revolution of India, which has made India the largest producer of milk and milk products in the world. Amul products have been in use in millions of homes since 1946. Today Amul is a symbol of many things like of highquality products sold at reasonable prices & the genesis of a vast co-operative network. Its supply chain is easily one of the most complicated in the world. The supply chain linking farmer-suppliers of milk with the millions of consumers. Amul encourages women and farmers to collect milk from their cows and pass it on to them for a price directly eliminating cost of middleman. Introduction of just-in-time inventory strategy improves dealers' return on investment (ROI).Amul was one of the first FMCG firms in India to employ Internet technologies to implement B2C commerce. Today customers can order a variety of products through the Internet and be assured of timely delivery with cash payment upon receipt. It has also implemented a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk collection as well as the marketing process.

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7.2 BIBLIOGRAPHY
Johnson Gerry, Scholes Kevan; Exploring Corporate Strategy-Text and Cases, Sixth Edition, Prentice Hall of India Pvt. Ltd. 2004, pp 100-102,134,183. Thompson Arthur A. Jr., Strickland J. A. III; Strategic ManagementConcepts and Cases, Thirteenth Edition, Tata McGraw-Hill Publishing Co. Ltd. 2003, pp 117, 123 127. Patel, Rameshbhai P., Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Dr. Kurien., Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Carter, Thomas R., Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Patel, T. K., Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Gowda, Shri Deve, Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Halse, Michael, Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Baxi, J. J. Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Singh, Katar, Mittal, S. P., Singh Virendra, Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Dr. Oza, D. R., Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health. Thodarson, Bruce, Amul, The Kaira District Cooperative Milk Producers Union Ltd. Anand, 50 Years of Milk & Health.

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WEBSITE VISITED www.amul.coop www.indiadairy.com www.indianmilkproducts.com

BOOKS White revoltion - Dr. Kurien Management of Co-Operatives - Romeo S Mascarenhas Management of Co-Operatives - Ramkison Tapping of Rural India

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