CHAPTER-I:

INTRODUCTION
Mother Dairy, set up in 1974, is a wholly owned subsidiary of National Dairy
Development Board (NDDB) of India. Mother Dairy manufactures, markets & sells milk
and milk products under the Mother Dairy brand (Milk, Cultured Products, Ice Creams,
Paneer and Ghee), Dhara range of edible oils, Safal range of fresh Fruit & vegetables,
Frozen Vegetables, Processed Fruit & Vegetable Products, Fruit Pulps & fruit juices.
Mother Dairy is an ISO 9001:2008 (QMS), ISO 22000:2005 (FSMS) and ISO
14001:2004 (EMS) certified organization. Mother Dairy has Certificate of Approval from
Export Inspection Council of India also.

Currently, it is one of the largest milk (liquid/unprocessed) plants in Asia selling more
than 25 lakh litres of milk per day, thereby enjoying a market share of 66% of the
branded milk sales in Delhi. Other important markets include Mumbai, Saurashtra and
Hyderabad. Mother dairy ice-cream was launched in the year 1995 and has shown
1

continuous growth over the years, and today it boasts approximately 62% market share in
Delhi and NCR.

Process of Procurement & Distribution of Milk:

Process of Procurement & Distribution of Milk Farmers and the Milk Co-operative
Society: Mother Dairy sources its requirement of liquid milk from dairy co-operatives
and producer institutions. Milk is received from farmer cooperatives through insulated
road/rail tankers at very low temperature in order to retain its freshness.

CHECKING THE QUALITY OF MILK:

Checking The Quality Of Milk : At the Dairy stringent hygienic standards are
maintained. The milk in the tankers is first checked for quality and freshness and then
unloaded into huge insulated stainless steel storage tanks. These tanks have a capacity of
1 lakh liters each. Once empty, the tankers are thoroughly cleaned and sanitized using
acid and alkali. The tankers are then finally rinsed with water. The presence of impurities
like urea, neutralizers, preservatives and germs like bacteria are checked. All these tests
ensure that only good quality milk is accepted.

PROCESSING OF MILK:
Processing of milk Unprocessed milk may contain small dirt particles invisible to the
naked eye. In order to remove these particles the milk has to be processed.

PROCESSING OF MILK:
At mother dairy, the processing of milk is done by process automation whereby state of
the art microprocessor technology is adopted to integrate and completely automate all
functions of the milk processing areas to ensure high product quality/reliability and
safety. There are four ways of milk processing Firstly , Clarification, in which milk is
spun at very high speed, removing all dust particles that are invisible to the naked eye.
Secondly , Standardisation which help to milk maintain uniformity by raising or lowering
its fat and SNF (solid not fat) percentage to a desired levels, so as to deliver milk to
consumers as per prescribed PFA norms. Thirdly , it is Homogenization which improves
palatability of milk and Finally , Pasteurization, which kills all pathogenic bacteria
present in the milk and thus making it safe for consumption. In case of packaged milk,
the processing goes through only three processes (excludes homogenization).

DISPATCHING OF MILK:
After processing, the milk is chilled and stored in silos and further chilled to about 2
Degree Celsius by the glycol chilling system, and then dispatched to the Milk Shops in
insulated road milk tankers. Prior to the milk being dispatched in tankers, it is tested for
quality to make sure that it meets the quality standards. When the tanker arrives at the
shop the milk is transferred into a large refrigerated tank. 79 tankers in the morning and
75 tankers in the evening bring in milk from the regional collection centres. After
collection the same tankers are utilized for the delivery of the processed milk to the
vendors and outlets.

Mother Dairy has over 820 Milk Distribution Outlets in the National Capital Region.
Each of these outlets place their demand by raising an invoice one day in advance. The
demand is also calculated using the Calendar Scheme, in this depending on the precalculated seasonal demands the outlets place their orders accordingly. In order to satisfy
immediate demand, 20 to 25 tankers are provided with a buffer stock of 500 litres each
day so that they can be mobilized to cater the demand in an area. To coordinate its
operations all the tankers are equipped with HAM radios.

Distribution Channels::
Distribution Channels: Token Distribution: Also, termed as Lohe ki bhains (Metal
Buffalo), is an automated milk vending machine. COW: Container on Wheels or COW is
a manual milk distribution program in which cycle-rickshaws are employed for milk
distribution. Retailers: The packaged milk is distributed via the retailer network
throughout the city.

QUALITY CONTROL:
Stringent quality control methodologies are employed in Mother Dairy. The milk is tested
for adulterations and quality at the time of collection from the farmers. The Milk that
comes from the collection points to the Mother Dairy plant is ensured to have a
temperature of not more than 7C and is subjected to 15 product and quality checks. The
Milk quality is checked repeatedly after each processing phase and the temperature is
judiciously maintained less than 5C always. Before the milk leaves the plant for the

delivery/distribution outlets the milk is tested again. The temperature of milk in the
delivery trucks is always maintained less than 7C.

All the trucks that deliver milk have specified guidelines to bring back 100 litres of milk
after distribution. This is done in order to test the delivered milk and to ensure that the
tankers are not adulterated during distribution. Since all the employed processing
procedures are automated, no contamination by human hands takes place. To ensure milk
freshness the collection and distribution points are always chosen such that the travel
time between them is always less than 36 hours.

CHAPTER-2:
CONCEPT OF SUPPLY CHAIN
A supply chain is a network between a company and its suppliers to produce and
distribute a specific product, and the supply chain represents the steps it takes to get the
product or service to the customer. Supply chain management is a crucial process,
because an optimized supply chain results in lower costs and a faster production cycle.

Before an organization tries to focus on supply chain management, its leaders must
determine what the supply chain encompasses. Just as you cant manage what you dont
measure, you cant plan and execute what you havent clearly defined. Hence, it is
important to articulate the overall purpose, scope, and components of a supply chain.
Following are useful supply chain definitions that highlight critical aspects of a supply
chain.

From the Council of Supply Chain Management Professionals (2010)The

material and informational interchanges in the logistical process, stretching from

acquisition of raw materials to delivery of finished products to the end user. All
vendors, service providers, and customers are links in the supply chain.

From Christopher Martin L. (1992)The network of organizations that are

involved, through upstream and downstream linkages, in the different processes
and activities that produce value in the form of products and services delivered to
the ultimate consumer.

From Coyle, Langley, Novak, and Gibson (2013)A series of integrated

enterprises that must share information and coordinate physical execution to
ensure a smooth, integrated flow of goods, services, information, and cash
through the pipeline.

One important feature of these definitions is the concept of an integrated network or

system. A simplistic depiction of a supply chain, as featured in Figure 1-1, suggests that a
supply chain is linear with organizations linked only to their immediate upstream
suppliers and downstream customers. It also focuses on only one-way material flow,
which fails to consider vital information and financial flows, as well as reverse material
flows. Such misconceptions oversimplify reality and fail to reveal the dynamic nature of
a supply chain network.

Figure 1-1 Linear representation of a supply line

In truth, supply chains require a multiplicity of relationships and numerous paths through
which products and information travel. This is better reflected by the conceptual diagram
of a supply chain in Figure 1-2, in which the supply chain is a web or network of
participants and resources. To gain maximum benefit from the supply chain, a company
must dynamically draw upon its available internal capabilities and the external resources
of its supply chain network to fulfill customer requirements. This network of
organizations, their facilities, and transportation linkages facilitate the procurement of
materials, transformation of materials into desired products, and distribution of the
products to customers.

Figure 1-2 Network representation of a supply chain

Simple representations aside, it is critical to understand that no two supply chains are
exactly alike. An organizations supply chain structure and relationships will be
influenced by its industry, geographic scope of activity, supply base, product variety,

fulfillment methods, and demand patterns. Consider, for example, a multinational

manufacturer and a local farm-to-table restaurant. Both organizations would benefit from
strong and stable supply chains. However, the manufacturers network is at greater risk of
disruption and must integrate geographically diverse suppliers with multiple selling
channels.
Supply Chain Management Perspectives
Introduced in the early 1980s, the term supply chain management began to take hold in
the mid-1990s and is now part of the everyday business lexicon. Whereas a supply chain
is an entity that exists for the fulfillment of customer demand, supply chain management
involves overt managerial efforts by the organizations within the supply chain to achieve
results (Mentzer et al., 2001). These efforts can be strategic or operational in nature,
though the vast majority of respondents to a Council of Supply Chain Management
Professionals survey indicate that the primary role of supply chain management within an
organization is a combination of strategy and activity (Gibson, Mentzer, & Cook, 2005).
Defining supply chain management would seem to be a straightforward task, yet it has
been a vexing challenge with the introduction of many alternatives. A Google search for
supply chain management definition quickly yields about 12,000 results. Among this
plethora of descriptions, you will find professional associations, consultants, and
academicians addressing similar issues but providing their own interpretations and areas
of emphasis. Following is a sampling of relevant definitions:

From the Council of Supply Chain Management Professionals (2011)The

planning and management of all activities involved in sourcing and procurement,

conversion, and all logistics management activities. More important, it also

includes coordination and collaboration with channel partners, which can be
suppliers, intermediaries, third-party service providers, and customers. In essence,
supply chain management integrates supply and demand management within and
across companies.

From Gartner (2013b)The processes of creating and fulfilling demands for

goods and services. It encompasses a trading partner community engaged in the
common goal of satisfying end customers.

From LaLonde (1997)The delivery of enhanced customer and economic value

through synchronized management of the flow of physical goods and associated
information from sourcing to consumption.

From Stock and Boyer (2009)The management of a network of relationships

within a firm and between interdependent organizations and business units
consisting of material suppliers, purchasing, production facilities, logistics,
marketing, and related systems that facilitate the forward and reverse flow of
materials, services, finances, and information from the original producer to the
final customer with the benefits of adding value, maximizing profitability through
efficiencies, and achieving customer satisfaction.

Although the definitions vary in length and complexity, they collectively focus on three
themes: activities, participants, and benefits (Stock & Boyer, 2009). That is, organizations
must plan and coordinate supply chain activities among their network of suppliers and

10

customers to ensure that the end product is available to fulfill demand in a timely, safe,
and cost-efficient manner. When this is accomplished, the benefits of enhanced customer
satisfaction and retention will be achieved.
Related Terms and Concepts
Supply chain management encompasses a number of business processes, activities, and
goals that are discussed throughout this book. Before moving forward, it is valuable to
clarify their meanings and relevance to supply chain management.
Logistics Management
Logistics is a fundamental set of supply chain processes that facilitates fulfillment of
demand. The goal is to supply the right product or service, at the right place, at the right
time. The Council of Supply Chain Management defines logistics management as that
part of supply chain management that plans, implements, and controls the efficient,
effective forward and reverse flow and storage of goods, services and related information
between the point of origin and the point of consumption in order to meet customers
requirements. Whether provided internally, by a supplier, by the customer, or by an
external logistics services provider, these capabilities are essential for achieving supply
chain success.
Supply Management
Supply management focuses on the identification, acquisition, access, positioning,
management of resources, and related capabilities the organization needs or potentially
needs in the attainment of its strategic objectives (Institute for Supply Management,
2010). For most organizations, logistics controls the distribution of products; whereas

11

supply management controls the strategic sourcing of direct materials, finished goods,
services, capital equipment, and indirect materials. Both are needed to ensure optimal
performance of the supply chain.
Value Chain
The concept of a value chain was developed as a tool for competitive analysis and
strategy. It is composed of primary activities (inbound logistics, operations, outbound
logistics, marketing and sales, and service) and support activities (infrastructure, human
resource management, technology development, and procurement) that work together to
provide value to customers and generate profits for the organization (Porter, 1985). A
value chain and a supply chain are complementary views of an extended enterprise, with
integrated supply chain processes enabling the flows of products and services in one
direction, and the value chain generating demand and cash flows from customers
(Ramsey, 2005).
Distribution Channel
Distribution channels support the flow of goods and services from the manufacturer to
the final user or consumer (Council of Supply Chain Management Professionals, 2010).
An organization can establish direct channels to consumers or rely upon traditional
intermediaries such as wholesalers and retailers to facilitate transactions with final users.
The rapid expansion of the Internet as a key selling platform is forcing manufacturers and
retailers to develop innovative and flexible omnichannel capabilities in their supply
chains to fulfill customer demand from stores, distribution centers, and production
locations.

12

How the Flow of Manufacturing Costs Works

The flow of manufacturing costs refers to the process of using materials and labor to
complete a finished good that can be sold to a customer. A supply chain management
system can reduce the cost and complexity of the manufacturing process, particularly for
a manufacturer that uses many component parts. A clothing manufacturer, for example,
will move raw materials into production first, such as fabric, zippers and other pieces that
are used to make clothing. The manufacturer then incurs labor costs to run machinery and
perform other work using the materials. Once the items are completed, they must be
packaging and stored until they are sold to a customer. A supply chain management
system can forecast when materials are needed and can plan production, and the system
can also help minimize the amount of material and component parts that sit on the factory
floor waiting to be used in production.
Examples of Reliable Suppliers
An efficient supply chain management process requires suppliers that are reliable. This
means that they produce a quality product that meets the manufacturers needs, and the
product is delivered on time. Assume, for example, that XYZ Furniture manufactures
high-end furniture, and that a supplier provides metal handles and other attachments. The
metal components need to be durable, so that they can be used on the furniture for years,
and the metal parts shipped to XYZ should work as intended. The supplier must be able
to fill the manufacturers orders and ship metal parts to meet XYZs production needs.

13

These steps are necessary to produce a quality product that is shipped to a customer in a
timely manner
Factoring in Economic Order Quantity
Many firms that use supply chain management apply the concept of economic order
quantity (EOQ). EOQ is a tool to determine how to order materials, parts and inventory
to minimize costs and meet production needs. EOQ considers the cost to place an order
and the time it takes to receive the order. For example, XYZ needs 100 brass drawer
handles a week for production, and it takes three weeks for the handles to arrive after
they are ordered, at a cost of $10. EOQ can determined the ideal order size and the timing
of the order.

14

CHAPTER-3
CONCEPT OF SUPPLY CHAIN MANAGEMENT
First introduced in the supply chain context in Designing and Managing the Supply
Chain, risk pooling is a statistical concept that suggests that demand variability is reduced
if one can aggregate demand, for example, across locations, across products or even
across time. This is really a statistical concept that suggests that aggregation reduces
variability and uncertainty. For example, if demand is aggregated across different
locations, it becomes more likely that high demand from one customer will be offset by
low demand from another. This reduction in variability allows a decrease in safety stock
and therefore reduces average inventory.
Several examples where risk pooling should be considered when making decisions:
1)

Inventory Management as mentioned above the less variability in demand the

less safety stock is required to buffer against fluctuations. In addition, the more
consolidated the inventory, the easier it is to manage overall and the less risk of
obsolescence. Apple has very few products and options therefore it comes as no surprise
that according to Gartner they have the highest inventory turnover in the electronics
industry - 74, which means Apple turns its entire inventory every five days.
2)

Warehouse location and product flow - the decisions on whether to have many

warehouses close to the customers or more centralized locations should consider the risk

15

pooling effects. By centralizing a product in one location, you can take advantage of the
aggregated demand. On the other hand, you need to consider proximity to customers and
other factors that may push towards maintaining more warehouses. The characteristics of
each product also comes into play here as high demand products with low variability are
not impacted as much by the risk pooling effect while low volume high variability
products are highly vulnerable.
3)

Transportation - the more consolidated the products and the warehouses are, the

cheaper the transportation costs as shipments can be sent in larger batches. Therefore
considering the transportation impact on these decisions is important.
4)

Push-pull strategy in a push-pull strategy the initial stages of the supply chain are

operated on push while the final stages are operated on pull. So for instance, parts could
be manufactured but assembled only after there is a good demand signal. The extreme
case of this is Dell Direct where the components are ready and assembled only after the
order is received from the customer.
5)

Postponement - Delayed differentiation in product design by creating a more

generic product and adding some of the details once demand is revealed. This allows the
use of aggregated demand for the generic product which is much more accurate than the
demand for the differentiated products. Benetton is famous for using postponement
tactics at the actual sequencing point of the production process, whereby dying of the
garments is not completed until the agent network have provided market intelligence on
what particular products are in demand in which locations.

16

6)

Product design decisions on the number of choices and complexity in products

can benefit from risk pooling considerations the less color choices or other options the
simpler the demand forecast and many other aspects of the supply chain since the
aggregated demand is easier to determine. A famous example is HP which created a
universal power cord for its LaserJet printers so that it did not need to differentiate
between the ones shipped to different parts of the world.

In 1997, Supply Chain Management Review published one article called "The Seven
Principles of Supply Chain Management" written by David Anderson, Frank Britt and
Donavon Favre. At that time, SCM was a pretty new term so this article did the excellent
job to explain the important supply chain management principles in one shot. More than
10 years pass and this article is considered the "classic" article and got republished in
2010. As of now, it got more than 160 citations from both scholarly articles and trade
publications. The following section will show the summary of 7 principles in an
infographic form and I will discuss if the concept from 1997 is still relevant to the current
business environment.

17

18

1) Adapt Supply Chain to Customer's Needs

Both business people and supply chain professionals are trained to focus on the
customer's needs. In order to understand customer better, we divide customers into a
different group and we call it "segmentation". The most primitive way to segment
customer is ABC analysis that groups customer based on the sales volume or profitability.
Segmentation

can

also

be

done

by

product,

industry

and

trade

channel.

Back then, Anderson et al suggested that customer be segmented based on the service
needs, namely, "sales and merchandising needs" and "order fulfillment needs".

I totally agree that we should focus on the customer's needs but this doesn't seem to be
enough these days. The reason is that your customers may not know what they need until
your competitors offer something different. For example, in 2011 Amazon initiated a
program called Amazon Prime (free 2-day shipping and discounted 1-day shipping).
Today, people are still discussing if this program makes sense. But one thing for sure,
customer turns to Amazon more and more. The morale of this story is that you should
"anticipate" the customer's needs as well.

2) Customize Logistics Network

When you segment a customer based on the service needs, you may have to tailor the
different logistics networks to serve different segment. However, this principle doesn't
hold true for all situations.

19

For example, if you were a contract manufacturer in China, you might already have
different logistics networks for different customers. Each customer in US or EU might
already control the source of raw materials, ask you to provide dedicated production
lines, nominate 3pl companies and air/sea carriers. So, logistics network design is a kind
of initiative driven mainly by customer.

3) Align Demand Planning Across Supply Chain

Supply chain practitioners are taught to share the demand data with trading partners so
nobody has to keep the unnecessary stock. In general, this principle holds true. But in the
reality, only Walmart is actively sharing the demand data to trading partners.

There is a very interesting paper "Top-Down Versus Bottom-Up Demand Forecasts: The
Value of Shared Point-of-Sale Data in the Retail Supply Chain" by Williams and Waller
2011, the result of research found that,
- If you make the demand forecast based on SKU/Customer level, using your own
historical order data is more accurate than using the POS data you get from retailers

- If you make the demand forecast based on SKU/Store level, using the POS data you get
from retailers is more accurate than using your own historical order data

The implication is that the absence of demand sharing is not necessary bad. But when you
got the demand data from trading partners, you MUST use it the right way.

20

4) Differentiate Products Close to Customer

Dell keeps components and assemble them only after customer places the order in order
to increase the product variety. This principle is still true, but, there is another principle
that you should consider.

"Standardization" is in the opposite polarity of "Differentiation". For example, some

cosmetics manufacturers formulate products and choose a packaging and labeling that
complies with the regulations of multiple countries in Asia. So they only make one SKU
that can be sold in 15 countries instead of 1 SKU/Country. By standardizing product
appropriately, they can drive the cost down drastically due to the economy of scale. So
standardization is something that you should also consider.

5) Outsource Strategically
This is the principle that stands the test of time. In short, don't ever outsource your core
competency. More information about outsourcing can be found from the infographic
named "7 Pitfalls of Outsourcing and How to Avoid Them".

6) Develop IT that Support Multi-Level Decision Making

If you search Google for the term "critical success factor erp", you'll find lots of
information about how to implement ERP successfully. My opinion is that an IT project
shouldn't be done in the isolation, business process reengineering is something that you
have to do before implementing an IT project. This will equip you with the full

21

understanding about process deficiencies then you can determine what kind of
technology that you really need.

7) Adopt Both Service and Financial Metrics

Anderson et al suggested that the activity based costing (ABC) be implemented so you
can determine customer's profitability. However, there is the interesting twist about the
ABC concept.
In 1987, Robert Kaplan and W Bruns defined the activity based costing concept in his
book "Accounting and Management: A Field Study Perspective". However, in 2003
Robert Kaplan said that it's difficult to maintain an ABC costing model to reflect the
changes in activities, processes, products and customers. Then, he introduced the refined
concept called "Time Driven Activity Based Costing".

22

CHAPTER -4
TRENDS IN SUPPLY CHAIN MANAGEMENT
A supply chain is a system of organizations, people, activities, information, and resources
involved in moving a product or service from supplier to customer. Supply chain
activities transform natural resources, raw materials, and components into a finished
product that is delivered to the end customer. Supply chain management (SCM) is the
management of the flow of goods. It includes the movement and storage of raw materials,
work-in-process inventory, and finished goods from point of origin to point of
consumption. The primary objective of SCM is to fulfill customer demands through the
most efficient use of resources, including distribution capacity, inventory, and labor.

Future Trends in Supply Chain Management:

23

Impact of E-commerce
E-commerce industry has become prominent in the last three years. This will create an
impact on supply chains of many retailers. Statistics of 2013 show those customers
preferred online shopping even during holidays. In fact online sales are high during
holidays. So retailers are providing special offers during holidays to attract customers. Ecommerce players are trying innovative techniques to increase customer reach. One such
technique is "click & collect" service, where people order products online for pick-up at
store or any other preferred location. This service is popular with busy internet-savvy
buyers of groceries and electronic gadgets. These people cannot wait at home during
daytime for deliveries and hence prefer to pick up at a convenient location and time. This
service has altered the supply chain and inventory management systems of many firms
and they need to be ready to face challenges.
Emergence of 3D printing
3D printing is the processes of making a three-dimensional object of almost any
shape from a 3D model or any other electronic data source. A 3D printer is a type of
industrial robot. 3D printing is one of the technologies that has potential to revolutionize
manufacturing and supply chain systems in future. 3D printing is already being used in
health care services (in dentistry for artificial implantation). Manufacturers see the
potential for 3D printing to change the way they source various spare parts. At present,
this technology is ideal for creating customized parts and reduces inventory and storage
costs. If the speed at which 3D printing produces items increases, it will change the
structure of supply chains. Right now 3D printing is not that useful in mass production as

24

it takes a long time to print a single item - 2 hours for a smart phone and longer periods
for complex items. But if, for example, it takes 16 hours to print a spare part, and
normally that part is shipped from a factory in Europe to India, then printing the part is
less costly than sourcing it.
Big Role of Big Data
It is very easy to get data related to customer behavior and purchasing trends using
Big data and a proper analysis and thorough number crunching can give significant inputs
to understand customer requirements regarding online and in-store shopping. Accordingly
changes in Supply chains have to be incorporated. The challenge is in using the
information from big data and getting a particular buying pattern of consumers, as
enormous amount of data is generated using big data.
Increasing Use of cloud computing
Logistics and warehouse operators are increasing usage of cloud computing to host their
IT supply chain on a centralized cloud, rather than on different physical computers
located at many locations. Cloud computing is used to set up warehouse and logistics
operations quickly in areas where there is paucity of established infrastructure. A
warehouse is created in the cloud. As long as a physical site is present, data present in the
cloud can be accessed. Cloud computing helps in improving a supply chain's long-term
efficiency.
Urban deliveries are becoming more complex

25

There is increasing complexity of logistics in urban areas. One important factor

contributing to this trend: higher environmental standards set in cities. Cities such as
Mumbai are getting bigger and more congested and are struggling to cope with the
volume of people and traffic. So there is a pressure on users to be more ecologically
responsible. Therefore Retailers and logistics companies need to work on making their
deliveries more environment-friendly by using innovative solutions.
Integrated Supply Chain Management
The ISCM not only means integrated logistics but also demands that the SCM must look
into the ramifications of these arrangements at the cost of transportation of products
within a trade zone and outside it. It also includes developing logistics strategies. The
field of ISCM has developed in the last few years for bridging the gap between demand
and supply using efficiency and cost trade-offs. The SCM now not only involves the
"management of logistics", as was done in the past, but includes the management and coordination of activities, upstream and downstream links in the supply chain. The
integrated supply chain management includes but is not limited to: Planning and
Managing supply and demand; Warehouse Management; Inventory control; Efficient
Transportation and Distribution; Timely Delivery and customer's delight & customer's
satisfaction.
Tough competition among major E-commerce players
Last year we have seen major investments in various E-commerce companies by venture
capitalists. There is an investment of 1 billion dollars in Flipkart by some foreign VCs.

26

Amazon has announced an astronomical 2 billion dollars investment in India; Jabong and
some companies formed as global fashion group. As all these companies have attracted a
lot of investment, there would be huge competition among them. In such highly
competitive scenario, the simple pursuit of market share is no longer sufficient to ensure
profitability. Companies must focus on redefining their competitive space and have
unique strategies. For E-commerce companies, supply chain is a main differentiator. A
company that has an efficient and better supply chain can have edge over others in getting
good revenues.

27

CHAPTER -5
ABOUT MOTHER DIARY

Mother Dairy was commissioned in 1974 as a wholly owned subsidiary of the National
Dairy Development Board (NDDB). It was an initiative under Operation Flood, the
world's biggest dairy development program launched to make India a milk sufficient
nation. Over the years, Mother Dairy has contributed significantly in achieving this
objective through a series of innovations and programs. Today, Mother Dairy
manufactures markets & sells milk and milk products including cultured products, ice
creams, paneer and ghee under the Mother Dairy brand. The Company also has a
diversified portfolio with products in edible oils, fruits & vegetables, frozen vegetables,
pulses, processed food like fruit juices, jams, etc. to meet the daily requirements of every
household.

28

The Company over the last many years has created a market leadership position for itself
in branded milk segment in Delhi & NCR through a robust network of its booth and retail
channels. It has also expanded its reach to other regions in North, South, East and West
with its offering of Milk and Milk products pegging it among the few companies to own
such a vast channel of distribution in India.
Brand Mother Dairy sources a significant part of its requirement of liquid milk from dairy
cooperatives and village level farmer centric organizations. The Company is committed
to uphold institutional structures that empower milk producers and farmers through
processes that are equitable. A significant portion of its income is ploughed back into the
value chain to support and maintain the system.
Mother Dairy is an ISO 9001:2008 (QMS), ISO 22000:2005 (FSMS) and ISO
14001:2004 (EMS) certified organization. Quality of milk is of paramount importance for
the company and hence it has invested extensively in installing hi tech automated
machines

to

ensure

high

product

quality/reliability

and

safety.

Safal, F&V arm of Mother Dairy was the first Company to organize the fruits and
vegetables business in India. Today Safal is the market leader in organized fruit &
vegetable retail business in Delhi NCR and operates the largest number of F&V Stores in
Delhi NCR and has significant presence in Bangalore. Safal was also the first brand in
India to launch frozen vegetable in mid 90s. Over the years, the brand has gained
significant customer support and has become a household brand with market leadership
and presence across the country.

29

Safal also has a state of the art plant in Bangalore which produces and sells around 23000
MT of aseptic fruit pulp & concentrate annually and supplies to noteworthy companies in
food processing space like Coca Cola, Pepsi, Unilever, Nestle etc. Safal also has a
prominent presence across 40 countries viz., USA, Europe, Russia, Middle East, Asia and
Africa and exports Fresh Fruits & Vegetables (Grapes, Banana, Gherkin, Onion, etc.),
Fruit Pulp & Concentrate, Frozen Fruits & Vegetables, etc.
Mother Dairy is also present into edible oils segment under the brand name Dhara which
was launched under the Operation Golden Flow program of NDDB as a market
intervention program to address a larger cause of the Indian farmers & consumers. Trust,
Purity and Taste are the hallmarks of Dhara cooking oil.
It has been a constant endeavor at Mother Dairy to stay connected with its stakeholders.
The corporate tag line of the latest brand campaign Happy Food Happy People
captures the essence of what the Company stands for. Mother Dairy is committed to bring
happiness to every individual with its range offering pure, hygienic and adulteration-free
high-quality products which has been the strength, differentiator and heritage of the brand
over years.
In our effort to instil and create happiness in all the lives we touch, we live our notion of
creating happiness for our employees through creating a workplace reality that is
fulfilling and enriching for them. We constantly listen to our employees and evolve our
people practices. As a result of this, Mother Dairy has been recognized as the 2nd Best in
the FMCG Industry and has also been ranked at 39th amongst Indias Top 100 Best
Companies to Work, in a study by Great Place To Work Institute in association with the

30

Economic Times for their annual 2015 survey. The corresponding ranking in 2014 was
62nd amongst the list of Top 100. In the survey, the brand also witnessed a significant
move its Trust Index from 70% to 83% in 2015.

Vision & Mission

Vision - Provide quality food and beverages to consumers at affordable prices while
ensuring fair returns to the producers.

31

Mother Dairy is committed to deliver products which meet all regulatory, industrial,
consumer Quality and Food safety requirements to our valued consumers.
Our continuous efforts focused on building a sustainable Quality and Food Safety
Program across food chain, using state of the art processes and innovative technologies
towards delivering wide range of Dairy and Food products.
Our systems are designed to have process monitoring and controls at each stage of food
chain towards Continual Improvements.
We, assure that our valued consumers are satisfied, each time they experience our
product.
We achieve this by,

32

 Implementing robust Mother Dairy Management System, which is an Internal System,

developed to meet the all Process Requirements based on National & International
Standards.
Implementing International Management System Standards (ISO)
Bench Marking, Best-In-Class requirements
Process Optimization : Constantly working on latest innovative Technologies
Capability Development across the Organization
Auditing & Assessments : Mother Dairy has established a frame work for Auditing &
Assessments of Complete Food Chain
Consumer Satisfaction
It is our endeavor to create a culture of Total Quality where continuous improvement
of our people, processes and products becomes a way of life.
At Mother Dairy Innovation Centre, we have a dedicated team of Scientists who are
constantly collaborating international standards and best practices for Quality & Food
Safety in its products.
ther Dairys heritage is intrinsically linked to the cooperative movement in India. With
determination & pride we will continue to serve our farmers, rural India & our
consumers. Our values reflect who we are & what we firmly believe in.

Fruit Pulp & Concentrate

33

Product Quality
Milk

Mother Dairy maintains stringent measures to ensure the quality and purity of the milk
provided to its consumers. Each batch of incoming and outgoing milk is subjected to 21
quality tests including presence of foreign matter and bacteriological tests. The quality of
milk accepted and dispatched meets certain predetermined standards. The milk goes
through various processes such as Clarification, Homogenization, Standardization and
Pasteurization, to ensure that it is safe for human consumption. Our motive for following
such strict quality measures is to ensure that there is no contamination while processing
or packaging.
Mother Dairy promises its consumers that it will continue to produce products of the
highest quality standard. Its Dairy products are processed & packed in ISO certified
plants & strict controls are exercised by quality assurance department on all the plants.
Most of our plants are certified for FOOD SAFETY MANAGEMENT SYSTEM.

34

Quality Assurance Laboratory at Mother Dairy Delhi is certified by National

Accreditation Board for Testing and Calibration Laboratory (NABL)-Department of
Science and Technology, Government of India.
All the operations in our organization are manned by qualified & highly experienced
personnel.
We at Mother Dairy focus on motivated & hard working, well qualified & trained
personnel in front end as well as back end operations. The dedicated Field QA team
ensures that the products manufactured at the plant are handled properly once the
products dispatched from manufacturing units.
Fruit & Vegetable
Quality of Safal Produce starts from the field itself. Mother Dairy Quality Assurance
professionals constantly provide technical support to Farmers during all stages of Supply
chain

(e.g

harvesting,

handling,

transportation

and

storage).

We, at Mother Dairy Monitor and Control the produce quality during material receiving,
processing and finished product stage against Company Standards & Specifications.

Our state of the art Manufacturing Operations are certified for Quality Management
System (ISO 9001: 2008) and Food Safety Management System (ISO 22000: 2005).
The Core purpose of Safal is to bring Fresh, Frozen and Processed Fruit & Vegetable
Quality

products

that

form

daily

35

diet

of

the

people.

Edible Oil
Dhara uses sophisticated quality assurance instruments such as GLC, GCMS, HPLC,
HPTLC, Rancimat etc. to ensure that Dhara oils are 100 % pure. The unique packaging
material used for packing Dhara oil variants is food grade to ensure that the oil packed in
it remains hygienic and fresh.

Quality Process
Procurement:
Fresh milk is sourced directly from state level co-operatives and Mother Dairy own New
Generation Co-operatives (NGC). Milk received from individual producer is checked for

36

all basic quality parameters meeting company specifications & requirements at respective
collection & chilling centers.

Milk is then supplied to the Dairy units through insulated Milk Tankers under refrigerated
conditions to maintain the freshness.
Strict Quality checks are performed for all incoming Milk received at Dairy units. These
includes organoleptic (Taster, Odor & Appearance), Physico-chemical (e.g. Temperature,
Foreign matter, % Fat, % SNF, %Acidity, % Protein etc.), microbiological (e.g. MBRT),
also presence of any adulterations in Milk (e.g. Formalin, urea, starch, sugar, Glucose,
maltodextrin, nitrate, Salt, Hydrogen Per-oxide, neutralizer, ammonium compounds and
Fat adulterations).

Commodities, ingredients & packaging material used for our products are checked,
approved and released by Quality functions as per company specifications and
requirements.

GMP & Hygiene:

Good manufacturing Practices (GMP) for our manufacturing units are a given, they are
part of our heritage of producing best quality and safe products. We maintain highest
level of GMP and hygiene requirements for production and handling of safe products for
our valued customers and consumers

37

Processing:

Our products are manufactured in state of the art manufacturing facilities using
innovative Process & Technologies. The Milk received at the plant undergoes various
processing steps before it reaches to the customer. Process steps include filtration,
clarification, pasteurization, chilling, filling, packing and storage for our liquid milk
category. For other dairy product category, few of the process steps are homogenization,
vacreation, ultra heat treatment, evaporation, dehydration etc. Cleaning & Sanitation of
the processing equipment is ensured using automatic Cleaning in Place (CIP) systems by
applying 5T principles viz. Technology, Time, Temperature, Turbulence and Testing.

Critical control points (CCP), Operational Prerequisite Programs (OPRP) are identified
for each process using scientific methodology and appropriate control measures are
applied to ensure compliance of Quality and Food Safety requirements.

Process control parameters are monitored, recorded and reviewed as per the Quality Plan
to ensure right product right at first time.
Manufacturing processes are benchmarked against best-in-class standards towards
continual improvement for infrastructure and system requirements.

38

Packing:
The Filling and packing is considered to be most sensitive operation having appropriate
access control. Zoning principles are applied in these areas to avoid any cross
contaminations in our Finished Product. Online quality control checks (e.g. net weight,
leakages, seal integrity, batch coding, packing material quality, filling temperature etc.)
are carried out and recorded by our Packing In-charges.

Only QC approved and released Packaging materials are used for packing operations.

Packaging material used for our products is with the objective of retaining taste, freshness
and unique natural appeal.

Product Testing & Release:

Finished product is tested for the specified quality parameters of each product category as
per our internal standardized sampling plan and test procedure. Test results are recorded,
reviewed by Quality functions. It is ensured that only good quality product is released for
dispatch and reaches our valued customer & consumer.

Distribution:

39

Our strength lies in adherence to systematic Process approach in the complete distribution
chain to deliver product with highest quality standards to our customers and consumers.
This includes,
1. Availability of standard guidelines & norms for warehousing, handling, storage and
transportation requirements.
2. Benchmarking of Transportation vehicles for infrastructure and hygiene requirements
3. Benchmarking of CFAs and Distributors for infrastructure and hygiene requirements
4. Benchmarking of Milk Shops for infrastructure and hygiene requirements
5. Monitoring of quality parameters (e.g. hygiene, storage temperature) of the distribution
chain

Merchandizing:

Our products are marketed through a chain of our own Milk Shops, retail outlets and
mobile vending units maintaining best-in-class hygiene standards. We ensure that
products are available, displayed appropriately and cold chain conditions are maintained
to retain product quality & freshness.

40

Sub Categories

Token Milk

Premium Full Cream Milk

Full Cream Milk

Toned Milk

Standardized Milk

Double Toned Milk

Skimmed Milk

Special Toned Milk

UHT Toned Milk

41

Live lite

Cow Milk

Overview
Mother Dairy Fruit & Vegetable Pvt. Ltd, a USD 1 billion (1000 million) company and a
leading manufacturer of dairy products and processed foods with well established brands
such as Mother Dairy (packaged milk, ice-cream, butter etc.), Safal (fresh fruits &
vegetables, purees, pulp, concentrate, blend, frozen vegetable, Preserved Gherkins &
fresh fruits & vegetables etc) and Dhara (packaged edible oil).

We manufacture tropical fruits pulps & concentrates of the highest quality in India and
export fruits pulps & concentrates and fresh / frozen vegetables / fruits to over
40countries worldwide including USA, Europe, Middle East, Russia and Far East Asia.
We take pride in having some of the reputed multinationals clientele like Coke, Pepsi,
Unilever etc in our basket.

42

Mother Dairys International Marketing operations are managed by a dedicated export

division that manages a network of international distributors & OEM customers supported by its state of art manufacturing plants and Innovation centre in India.

Mother Dairy / SAFAL maintains Superior quality through processing at ISO 9002, ISO
22000, FDA, FPO, Kosher, Halal, Global GAP, Ecocert, SGF and HACCP certified
plants and GMP procedures are followed at all stage of processing. No wonder that
Mother Dairy / SAFAL is the preferred choice for dairy products, confectionary products
and fruit juice producers, MNCs and traders across the globe.
Mother Dairy
Parent Company

National Dairy Development Board (NDDB)

Category

Milk and Food Processing

Sector

Food and Beverages

Tagline/ Slogan

Piyo Pure
Indias very own producer of milk, milk products,
beverages, foods, etc. at affordable rates and of premium

USP

quality

STP
People who need dairy products and other day to day food
Segment

products

43

Target Group

Middle and upper middle class families

As a foods and dairy brand that has products of high quality

Positioning

at affordable price, with fair returns to the producers

Product Portfolio
1.Mother

Dairy

Plain

Dahi

2.Dhara
Brands

3.Safal

SWOT Analysis
Strengths

1.Awell-recognized

brand

name

2. Popular subsidiary brands like Dhara, Safal, b-Activ, etc.

3.A wide variety of products like milk, dairy products,
fruits, vegetables, groceries, edible oil, beverages, frozen
food,

etc.

4. It is an IS/ ISO-9002, IS-15000 HACCP and IS-14001

EMS certified company
5. An employee strength of 3000 people
6.Strong and efficient supply chain network
7.Procurement of milk from co-operative dairies and

44

vegetables from farmers, providing them with fair prices

8.Technological advancement
9.Popular for its quality and affordable price
1.Limited number of Mother Dairy and Safal outlets
2.Difficult
Weaknesses

to

maintain

competitive

pricing

3.Vegetables and milk products are perishable

1.Continuous demand of dairy products and other products
by Mother Dairy
2.Open more number of Mother Dairy outlets
3.Market and advertise the products
4.Increase its market share by expansion in untapped

Opportunities

markets
1.Strong
2.Unstable

Threats

marketing
economic

3.Other competitor brands

Competition
Competitors

1. Amul
2.Nestle Ltd
3.Britannia Industries
45

muscle

by

condition

competitors
in

India

4.Kissan
5. Heinz
6. Reliance Fresh

CHAPTER -6

46

SUPPLY CHAIN MANAGEMENT IN MOTHER DIARY

Mother Dairy - the New Delhi-based milk and dairy products company - expects to clock
a turnover of Rs 7,000 crore in 2014-15. This is an 11 per cent growth over the previous
year. In 2013-14, it had garnered a turnover of over Rs 6,300 crore.
The company has announced a foray into the Rs 2,000-crore dairy whitener market with
its 'Dailycious' brand.
A new portfolio comprising dairy cream and ambient beverages such as milk shakes,
buttermilk and lassi have also been introduced.
"Mother Dairy Fruit & Vegetable is expecting a turnover of Rs 7,000 crore, of which 80
per cent comes from the dairy business and 20 per cent from Safal and Dhara. Dairy
whitener is an extremely big category. It is a Rs 2,000-crore category and more than 45
per cent of the market is in the east. It is still growing. We should be able to get a 5 per
cent market share by 2015-16. We should be crossing Rs 110-120 crore of dairy whitener
business," said Subhashis Basu, business head (dairy products), Mother Dairy Fruit &
Vegetable Pvt Ltd.
Mother Dairy, a 100 per cent subsidiary of the National Dairy Development Board
(NDDB), was conceived as part of the Operation Flood project of the NDDB in
December 1974. It is different from Mother Dairy Calcutta, which it helped set up, with
the logos being the differentiating factor.

47

Milk booths located and operated in Calcutta do not belong to the New Delhi-based firm.
As part of an agreement, the Delhi-based entity cannot launch liquid pasteurised milk in
Calcutta but can bring in other products.
According to Basu, the company already has in place a supply chain and distribution
network for its products under the Dhara edible oil brand which are sold through 10,000
outlets.
The company will utilise this distribution network for its dairy whitener range and speed
up availability in two weeks. Notable names in this segment include Amulya from Amul
and Everyday from Nestle India.
Investments of Rs 150 crore have been made in a greenfield plant in Etawah in Uttar
Pradesh for this new product.
Statement showing the Comparative Sale of Milk for the year 2011-12, 2012-13, 201314.
Month

2011-12
DMS
Mother

Total

2012-13
DMS
Mother

Total

2.74

2.93

Sudha

April

3.14

Dairy
0.08

May

2.93

0.10

3.03

2.80

0.44

3.24

2.63

0.12

Jun

2.87

0.17

3.04

2.69

0.43

3.12

2.55

0.12

July

3.03

0.22

3.25

2.79

0.43

3.22

2.69

0.12

Aug.

3.04

0.48

3.52

2.81

0.42

3.23

2.73

0.13

3.22

Dairy
0.19

2013-14
DMS
Mother

48

2.71

Dairy
0.11

Dairy
0

Sep.

2.95

0.34

3.29

2.82

0.35

3.17

2.73

0.13

Oct.

2.73

0.24

2.97

2.82

0.28

3.10

2.77

0.12

Nov.

2.59

0.21

2.80

2.66

0.14

2.80

2.19

Dec.

2.67

0.19

2.86

2.67

0.12

2.79

2.25

0.01

Jan.

2.71

0.20

2.91

2.70

0.12

2.82

2.50

0.01

Feb.

2.76

0.20

2.96

2.67

0.12

2.79

2.56

0.05

March

2.76

0.19

2.95

2.70

0.11

2.81

2.52

0.22

Total

2.86

0.22

3.08

2.74

0.26

3.00

2.57

0.12

0.07

Statement showing the Comparative Sale of Milk for the year 2008- 2009, 2009-2010&
2010-11
Month 2008-09
2009-10
2010-11
DMS Mother Total DMS
Mother Total DMS Mother Total
April

3.00

Dairy
0.65

3.65

3.02

Dairy
0.75

3.77

3.13

Dairy
0.17

3.30

May

2.95

0.70

3.65

2.92

0.74

3.66

3.07

0.18

3.25

Jun

2.91

0.75

3.66

2.88

0.77

3.65

2.91

0.005

2.91

July

3.06

0.78

3.84

3.04

0.80

3.84

3.05

0.11

3.16

Aug.

3.15

0.75

3.90

3.04

0.80

3.84

3.15

0.13

3.28

Sep.

3.26

0.75

4.01

3.17

0.81

3.98

3.17

0.15

3.32

Oct.

3.11

0.72

3.83

3.06

0.74

3.80

3.17

0.11

3.28

Nov.

3.02

0.72

3.74

3.03

0.58

3.61

3.08

0.10

3.19

49

Dec.

3.00

0.75

3.75

3.01

0.57

3.58

3.19

0.10

3.29

Jan.

2.97

0.73

3.70

3.01

0.41

3.42

3.22

0.10

3.32

Feb.

3.02

0.68

3.70

2.87

0.17

3.04

3.18

0.09

3.27

March

3.00

0.68

3.68

3.06

0.18

3.24

3.24

0.09

3.33

Total

3.04

0.72

3.76

3.00

0.61

3.61

3.13

0.11

3.24

* In order to utilize the excess milk plant capacity and to make the organization
financially viable, custom packing of milk for Mother Dairy (Delhi) was commenced
w.e.f. 3.12.2003.

CHAPTER -7
CONCLUSION

50

Leading milk supplier Mother Dairy today announced hike in milk prices by Re 1 each
for both half litre and one litre packs from tomorrow due to higher procurement prices.
The company has however not raised the prices of token milk (bulk-vended milk) and
cow milk. Mother Dairy, which sells more than 30 lakh litres of milk per day in DelhiNCR, has increased the prices after 24 months. Early last month, dairy major Amul hiked
milk prices by Re 1 per pouch of both half and one litre in Delhi-NCR.
"Mother Dairy raises its milk prices in Delhi NCR for key polypack milk variants by Re
1 with effect from July 16, 2016," Mother Dairy said in a statement.
As per the new rates, full cream milk will be available at Rs 49 per litre, while toned milk
at Rs 39 and double-toned at Rs 35 per litre.
For a half litre pack, the prices of full-cream milk has been increased to Rs 25 from Rs
24, while the rate of toned milk has been raised to Rs 20 from Rs 19 and double-toned
milk to Rs 18 from Rs 17. However, the prices of bulk vended milk, commonly referred
to as token milk and cow milk, which comprises of over 30 per cent of its total milk sales,
will remain unchanged, the company said.Token milk price remain unchanged at Rs
36/litre, while cow milk will continue to be sold at Rs 20 for half litre.

"It is important to note that the company has increased its farm prices by about 7-8 per
cent in last one year while the effective consumer price hike is not more than 3 per cent,"
the company said.
The new prices will see an increase of Re 1 per litre and to facilitate change management,
the prices of 500 ml pack have been revised and rounded off to neares ..

51

Mother Dairy, commissioned in 1974 as a wholly-owned subsidiary of the National Dairy

Development Board (NDDB), had posted a turnover of Rs 7,186 crore during last fiscal,
out of which about 75 per cent was from dairy segment. The company sells milk and milk
products including ice cream, paneer and ghee under the 'Mother Dairy' brand. It is into
edible oil business under Dhara brand.

CHAPTER -8
SUGGESTIONS & RECOMMENDATIONS

52

1.Continuous demand of dairy products and other products by Mother Dairy

2.Open more number of Mother Dairy outlets
3.Market and advertise the products
4.Increase its market share by expansion in untapped markets

REFERENCES

http://www.motherdairy.com

53

http://www.telegraphindia.com/1150412/jsp/business/story_14099.jsp#.V7_wCjX
hDIU

http://dms.gov.in/distribution-marketing.aspx

http://www.motherdairy.com/MotherDairyPages/exportsoverview.aspx

https://en.wikipedia.org/wiki/Mother_Dairy

http://www.opsrules.com/supply-chain-optimization-blog/bid/319193/The-MostImportant-Concept-in-Supply-Chain-Management

http://www.supplychainopz.com/2013/07/principles-of-supply-chainmanagement.html

http://cerasis.com/2016/01/04/2016-supply-chain-trends/

http://www.mbaskool.com/brandguide/food-and-beverages/3223-motherdairy.html

54

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