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Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti The backward sections of society in India have been exploited and ill-treated for many years. Therefore, there is a need to make up for it (the ill-treatment)Dr. Verghese Kurien, Chairman, GCMMF Company Background: Amul (Anand Milk Union Limited), formed in 1946, is a dairy co- operative in Western India. It is managed by Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF). It is a sterling example of a co-operative organization's success and has been primarily responsible for India to become world’s largest milk producer. It has established itself as a uniquely appropriate model for rural development and spurred the White Revolution of India. The company is owned by 3.1 million proud Indian farmers and caters to almost 2.1 billion consumers. Few companies have gone the distance in connecting the farmer with the consumer in a seamless chain as Amul did. Their basic philosophy has been ensuring maximum returns to the milk producer and makes “Value for money” milk products for its consumers. Vision: Liberate the farmers from economic oppression and lead them to prosperity. To implement this vision, a hierarchal network of co-operatives was developed which forms the backbone of the strong Amul’s Supply chain and stretches from small farmers to most fragmented markets. Amul developed distinct capabilities that would deliver competitive advantage to its operations and leveraging on scarce resources. But the fact is that GCMMF is directly responsible only for a small part of the supply chain and a number of third party players are involved, such as milk collection, distribution of dairy products, logistics etc. Managing this supply chain is critical for Amul’s competitive position considering the low margin business. Product Portfolio: Amul has got a diverse portfolio and thus follows umbrella branding strategy through this vast network. The range of products is similar in production by the various unions it handles. Thus with umbrella branding, Amul avoided inter-union conflicts and increased co-operation in developing products.

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Page 1: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

“The backward sections of society in India have been exploited and ill-treated for

many years. Therefore, there is a need to make up for it (the ill-treatment)”

– Dr. Verghese Kurien, Chairman, GCMMF

Company Background:

Amul (Anand Milk Union Limited), formed in 1946, is a dairy co-

operative in Western India. It is managed by Gujarat Co-operative

Milk Marketing Federation Ltd. (GCMMF). It is a sterling example

of a co-operative organization's success and has been primarily

responsible for India to become world’s largest milk producer. It

has established itself as a uniquely appropriate model for rural development

and spurred the White Revolution of India.

The company is owned by 3.1 million proud Indian farmers and caters to almost 2.1 billion

consumers. Few companies have gone the distance in connecting the farmer with the consumer

in a seamless chain as Amul did. Their basic philosophy has been ensuring maximum returns to

the milk producer and makes “Value for money” milk products for its consumers.

Vision: Liberate the farmers from economic oppression and lead them to prosperity.

To implement this vision, a hierarchal network of co-operatives was developed which forms the

backbone of the strong Amul’s Supply chain and stretches from small farmers to most

fragmented markets. Amul developed distinct capabilities that would deliver competitive

advantage to its operations and leveraging on scarce resources.

But the fact is that GCMMF is directly responsible only for a small part of the

supply chain and a number of third party players are involved, such as milk

collection, distribution of dairy products, logistics etc. Managing this supply

chain is critical for Amul’s competitive position considering the low margin

business.

Product Portfolio:

Amul has got a diverse portfolio and thus follows umbrella branding strategy through this vast

network. The range of products is similar in production by the various unions it handles. Thus

with umbrella branding, Amul avoided inter-union conflicts and increased co-operation in

developing products.

Page 2: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

Following are the varieties of products:

1) Fresh Milk

This is the most basic product by Amul. There are around 9 further sub-products

available in various flavors.

2) Milk Products

This segment is the largest and most selling product for Amul. The company has added

further variety by providing them in various flavors and packaging.

3) Powder Milk

This includes varieties like Tea/Coffee whitener and milk for infants. There are around 5

sub-brands including Amul Spray, Amul Full Cream Milk and Amulya.

4) Cheese

It has various sub-products and caters mostly to Tier-I cities.

5) Bread Spreads

Amul butter is the most famous sub-brand in this

category and has almost 85% market share.

Below listed is the complete portfolio across various categories along with year of inception.

SWOT Analysis:

Strength:

Page 3: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

Reputation of being the largest food brand in India

Provides high quality varied product range at low/affordable price

Grading and packaging of all its products meets international standards

Robust distribution network: Amul products are available in over 500,000 retail outlets

across India through its network of over 3,500 distributors

It holds high confidence and loyalty in the minds of the customers since it manufactures

only milk and milk products which is purely vegetarian

Owing to heavy brand recall from milk and butter products, it can easily promote selling

of chocolates without fearing of losses and decreasing revenue

Weakness:

Potential high risk due to complex supply chain and weak infrastructure

Unorganized third party sector which can make the whole supply chain vulnerable

Capital investment is comparatively low

Demand supply mismatch as there is no control on the milk yield

Opportunities:

Rural segment, which covers a large area of its loyal and prospective customers.

Expand in other portfolios such as ice cream, processed foods, chocolates etc.

Can promote tie-ups with various food chains

Threats:

Brand loyalty may take a hit in the ice cream and chocolates business, due to changing

tastes and preferences

Threat of competitors who hold majority shares in market in other products

Potential threats from the unorganized sector for the milk vendors

Growing prices of milk and milk products

Page 4: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

The existing supply chain of AMUL

The distribution network Amul products are available in over 500,000 retail outlets across India through its network of 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products.

GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other FMCG companies. This practice is consistent with GCMMF’s philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. This just in time inventory strategy improves dealer’s ROI. All the branches of GCMMF are engaged in route scheduling and have dedicated vehicle operations.

Largest Cold Chain: AMUL has the largest cold chain network in India (18000 refrigerators) as compared to any other company. The chemical components of milk are water, SNF and solids. It is a perishable product so it has to be consumed within 24 hours. In order to avoid wastage AMUL converts the milk into SNF (Solids not fats) and milk solids by evaporating the water, which comprises of 60-70% of the milk contents.

Customers:

India is still in the evolutionary stage with tremendous potential for high value products such as variants of milk. The distribution network is quite reasonable with access to metros as well as rural areas.

Suppliers:

A majority of suppliers are small or marginal farmers who are illiterate, poor and with liquidity problems.

Third party logistics service:

There are ample deficiencies in the current infrastructure and the outbound logistics is taken care by GCMMF coordinating with distributors. It also connects with unions for product mix, product allocations and in developing production plans.

The key lies in matching supply and demand as the demand outstrips supply by a big margin.

Interlocking control:

The objective of interlocking mechanism is to ensure that the interest of the farmer is always kept at the top of the agenda through representatives who constitute the Boards of different entities that compromise the supply chain. Professional managers and farmers work together as a team to strengthen the cooperative.

Coordination agency:

Objective of such an agency is to ensure the milk produced by the farmer is sold in the market either as milk or as value added product.

Page 5: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

Existing Supply Chain of Amul:

THE CHANNEL NETWORK

Distribution channel

First leg (from manufacturing units)

GCMMF

Depot...1 Depot...n

WD…1 WD…n

Retail…1 Retail...n

Second leg

Third leg

Manufacturing

Downstream flow

Page 6: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

Procurement Channel

Distribution

Value chain in Amul

GCMMF

Heace

MU…1 MU...n

VCS…1 VCS…n

Village…1 Village…n

Upstream flow

Page 7: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

SCM AND MARKET LOGISTICS

The network

Milk is procured from the villages and collected at Village Cooperative Societies (VCS); from there the milk is taken to manufacturing units where the milk is processed into various products. The products are then transporters to the company Depots located in various parts of the country. The products are then sent to Wholesale Distributors (WD) and from there to the retailers.

The fact sheet

Milk is procured twice a day from 2 million from Gujarat alone

The payment is made under twelve hours of procurement

There are 10000 village cooperative societies

There are 3600 wholesale distributors in the country

45 depots

The C&F agents are not fixed and are decided by the local company offices

There are approximately 4,50,000 retailers spread all over India

Total house hold consumers covered are 100,000

The milk procured per day is 5 million liters

Where the total capacity of operation is 7 million liters per day

The peak processing till date has been 6 million liters per day

These co operative societies are bound to supply there produce only to GCMMF.

SCM and Market Logistics Enterprise resource planning: the company at has implemented an ERP program as low as Rs. 3 corers in collaboration with TCS ltd. The company uses it; the data right from the procurement from the farmers till the delivery of goods to the retailers is fed into the system. The software enabling the channel members to use for the synchronized working and best possible utilization of the available resources maintains details regarding the inventory management.

Market logistics deals with the implementation of the SCM of the company. Upstream Channel in which milk is procured from the farmers to the manufacturing units.

1. In the first step, the milk is taken to the VCS by the farmers on foot or bicycles in small quantities

2. The second step involves the transportation of milk from the co-operatives to the manufacturing units this is done in special trucks which are equipped with tankers to carry milk.

Downstream Channel

It is the distribution part of the supply chain. From the manufacturing units to the retailers.

Page 8: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

First leg of transport is from the manufacturing unit to the company depots. This is done using 9 and 18 MT trucks any lesser quantity will be uneconomical to the company there fore is some time the quantity ordered is lesser then club loading is done which means that the product ordered is supplied with some other products.

Frozen food the temperature of these trucks is kept below -18˚C

Dairy wet the temperature of these trucks is kept between 0-4˚C Second leg is from the depot to the WD’s, this transport is carried out in insulated 3 and 5 MT TATA 407’s here a permanent dispatch plan (PDP) is prepared where the distributor plans out the quantity of various products to be ordered on a particular date.

Third leg this is the flow of good from WD’s to retailers, a beat plan is prepared and transportation is done on auto-rickshaws, rickshaws and bicycles.

SELECTION & MOTIVATION OF CHANNEL MEMBERS

Selection: The company takes into consideration a host of factors while selecting the channel members. This is because GCMMF believes that selection of channel members is a long run decision & the rest of the decision regarding the supply chain depends upon the efficiency & coverage by the channel members. The following are the host of factors considered by the company in selecting the channel members:

Authentication is required by the regarding the identity of the channel members, which includes the name & address, photograph of the location.

Proof of solvency which requires name & address of the channel member’s bankers.

Safety of the inventory, which means that the distributor/ dealer should get the stock of the company insured.

Inventory or the perishable goods kept by the distributor/ dealer should be in good condition which means a detail of storage space & Refrigeration facility is to be provided. Refrigeration system should have deep freezers, cold room & walk in coolers.

Details of the delivery vehicle, which includes Light Commercial Vehicles, Matador, 3 Wheeler Van, Tricycle Van & Hand/Push cart. The number & model of each of the vehicle needs to be furnished to the company.

GCMMF acknowledges the fact that it needs to be sensitive to the market demands. For this it requires that a number of salesmen needs to be present on the field. The salesmen too are divided into various categories like the Field salesmen & Counter salesmen. Also the details of Clerical Staff & Mazdoors are to be provided. The technical competence of the salesmen needs to be mentioned

Details of the product kept of other companies have to be provided. The annual sales of these products too have to be mentioned. Also details of complementary products & product lines need to be mentioned.

Page 9: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

Dealers of the company must carry a good reputation. This is due to the fact that the company believes reputation of the dealer affects the clientele.

Market coverage by the distributors needs to be defined which includes details of Geographic coverage & Outlets per market area.

The company also requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.

Motivation of Channel Members GCMMF strongly believes in maintaining a good relationship with the channel members so that they are genuinely motivated to work for the company. Also if the channel members are motivated, they can also initiate advertising & sales promotion schemes on behalf of the company. However to keep the channel members motivated to work, the company has to incur certain costs but the benefits of it are felt in the long run. The following are the motivation programs run by the company:

Distributors

One of the main factors, which keep the distributors motivated, is the margin. Usually the margins offered by the company are 8% & it is raised to 8.5%. Volume wise this comes out to be a big figure since Amul’s product has a good demand in the market. However compared to the other companies the margins are still lower since the new players in the market offer a much higher margin. But the very fact that Amul’s products have good demand in the market motivates the distributors to stock it.

Amul being a cooperative cannot afford to give heavy monetary incentives. Amul’s products are considered to be value for money since the company does not believe in charging high margins. In fact all monetary incentives are just the short run means to promote the company’s product. In order to keep the Channel members motivated in the long run, Amul builds on the concept of “Trade Marketing” which makes the dealers & the distributors believe that the company’s products are worthy of being pushed in the market.

The company is organizing various Total Quality Management initiatives & workshops. Here various counseling measures are undertaken by the company to improve the overall working of the distribution network.

Vision and mission statement: the company cascades down the vision to the various channel members; this is done through various events organized by the company at different locations where the values of the company are made clear and enforced to the channel members. Also the fact that Amul being a cooperative society cannot afford to spend exorbitantly on such events therefore it has a very traditional way of organizing these get together which leaves an impact on the members.

Amul yatras: this includes taking the channel members on a guided tour of the manufacturing and procuring facilities in Gujarat. So that the channel members can have an experience of the working of the company and can pick up some quality measures that can help them to synchronize and improve their own functioning at various levels. This in turn help the company to co ordinate the entire value chain, as the channel members understand the various constraints and liberties the company goes through.

Page 10: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

The Retailers

Trade schemes: these are undertaken by the company only for the hard selling items e.g. Ice creams, flavored milk etc. for these the company raises the margins by 2%, also schemes like good packaging incase of butter and cheese is undertaken by the company. However this is only a short-term initiative to push the products of the company.

Glow boards: the company puts up glow boards at the retailer and pays the major portion of the cost.

Schedule of the salesmen: they provide the retails with this schedule so the retailers can pre estimate the quantities of the various products needed.

Infrastructure facilitation: the company facilitates the retailers to buy freezers and fridges by formulating an easy payment program and a commitment to buy back the equipment at a reasonable price when the value of the equipment has depreciated.

TQM in Amul:

Amul has benefitted at all levels due to TQM, to develop leadership, operational and strategic capabilities in entire network.

Friday Departmental meetings: Every Friday the network organizes departmental meetings to discuss issues related to quality and policy.

Training for transformational leadership so that individuals are able to coordinate in a better way a carry out their responsibilities in one’s life and surrounding environment

Retail Census: GCMMF undertakes a census of all retail outlets (over 500,000) to evaluate customer perceptions and distribution efficacy of their network. Interestingly, this is being done by wholesalers in their respective territories at their own cost. This information is used for policy deployment exercise.

E-initiative:

The GCMMF – Amul has taken the initiative of installing the AMCUS – Automatic Milk Collection Unit Systems at village societies to enhance the transparency of transaction between the farmer and the Co-Operative Society. These systems not only ensured the transparency but also gave Co-Operative societies a unique advantage by reducing the processing time to 10 percent of what it used to be prior to this. The success of AMCUS prompted the GCMMF to aggressively go on using Information Technology to capture the end-to-end data. GCMMF planned to cover all aspects of the value chain. The Dairy Information and Services Kiosk (DISK) is another initiative that is started with the help of IIM (A) by GCMMFL. Various things like Enterprise wide Integrated Application Systems (EIAS) to integrate the Distribution side of the Supply chain, DISK – to upgrade the application at the Milk Collection Centers and to connect them to the Internet to access a specialized dairy portal with content delivered in the local language have already started giving the fruits to the rural poor, which has persuaded the rural folks to actively participate in IT Revolution of the dairy industry.

Page 11: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

Issues and Recommendations for AMUL SUPPLY CHAIN:

1. Stock outs and huge gap in Supply- Demand of pouched milk:

As we have seen over the past decade that the demand for FDI certified pouched

milk has increased significantly in India due to adulteration and mixing of harmful

agents in locally supplied open milk, there is an increasing gap between the supply

and demand of milk in bigger cities of India. People tend to buy more pouched milk

in large cities due to time constraints, convenience and lack of local dairy operators.

AMUL has been unable to achieve a zero stock out strategy for its pouched milk

retailers. One of the reasons for this is its high brand equity as it is the topmost

brand on consumers mind when you talk about Quality and healthy milk. For

example, in National capital region people buy AMUL and other pouched milk like

Mother dairy from retail stores. Mother Dairy has captured major share in NCR’s

market due to large number of franchised retail outlets as compared to AMUL which

helps them project the demand and improvise on their supply accordingly. Also this

has to do with the ease of local procurement of Mother dairy over AMUL. The

consequence is that customers who are willing to buy AMUL milk are unable to

make the purchase since it goes out of stock by 7:00 pm in the evening. While

Mother dairy retailers keep the adequate stock to be last till late in night.

Forward integration by twin model approach for increasing distribution:

Page 12: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

We recommend that AMUL should aggressively open more retail stores inside big

residential societies and also more outlets per locality/area to cater to increasing

demand. Also, they need to understand the importance of NCR market as it is the

largest consumer of pouched milk in India due to its population strength. AMUL also

needs to tie up with other retail stores, multi stores and superstores like Big Bazaar,

Easy day, etc. to improve demand projection and volume selling.

2. Increasing the production and local procurement of milk to provide an adequate

supply:

The above issue of a significant gap between supply and demand is very much

related to the limitations AMUL faces in terms of procuring milk from areas

surrounding NCR due to which it has to depend heavily on supply from Gujarat milk

unions of GCMMF. This comes with huge transportation costs and wastage of milk

due to reduced shelf life. We recommend AMUL to work on the backward

integration for this problem.

Initially we thought to recommend AMUL to tie up with local suppliers/farmers and

implement a similar model as GCMMF in Delhi region. The issue with this approach

is that it defeats the purpose of local cooperatives of Gujarat and they have to start

sharing their profit with other unions too for which the stakeholder’s approval is

hard to achieve. Also, Mother dairy has already developed strong ties with the local

milk producers and farmers in this region; and AMUL has to offer an incentive

premium for acquiring these producer’s milk. This will result in significant increase in

prices of AMUL milk. Looking at a different perspective we would recommend AMUL

to set up its self funded (owned by GCMMF) dairy in NCR region to boost the supply

in the high demand region and target achieving a zero stock out supply.

Some of the issues with this approach are vested interest of Gujarat farmers who are

heavily dependent on daily income and would not encourage and agree to the

returns to come after sales of Delhi dairy products and thus it would be very hard for

GCMMF to cohesively coordinate the sentiments of its various incorporated unions.

Looking at the positive side of this move, AMUL will be able to cater to 60 % more

demand and also reduce wastage due to souring of milk as a result of longer

transportation route from Gujarat.

3. Investing in high yield cows/buffalos for existing farmers using a Micro finance model:

Another issue which AMUL has faced over decades and which is also inherent in

dairy farming in India is the yield per cow. The yield per buffalo for Indian cows is

almost 1/3 times lower than that of any Hybrid or American cows like Jersey.

Focusing on another backward integration technique, we will suggest improving the

Page 13: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

quality of buffalos by either introducing hybrid or pure breed, specialized

technological equipment. Factors such as fodder, environment, space available/head of

cattle etc. you need to mention that too as it may be less expensive for the farmers or for

the AMUL owned dairy to keep. We suggest use of another option too by the farmers who

cannot afford to go commercial dairy farming instead of the present village dairy farming

for milking higher yields. Since a majority of sourcing is done by marginal farmers

who lack the capital for acquiring the costlier Hybrid breeds, AMUL could look at

provision of micro-financing to these farmers. We keep in mind that the farmers will

resist to any such move and think that as a cannibalization effort of their current

supply and burden on themselves, but with AMUL’s highly competent training

centers and Anand Institute of Management set up by AMUL, educating these

farmers and unions would not be a difficult task.

Financial Implications on Recommendations

1. Improve Logistics in Transportation through Integration with the Railway System

Aside from having its own dedicated fleet of trucks in transporting milk, Amulhas already

considered integrating their transport system with railway cooling units to improve transport

cost and its supply to Delhi. It has tied up with Adani Logistics to have a dedicated train to

transport milk daily from Dudhsagar Dairy of Mehsana to the city. The annual transport cost of

MehsanaDairy is Rs. 40 crore via road tankers for 120,000 liters of milk daily from

Dudhmansagar plant in Manesarto Delhi. According to Mehsana Dairy's chairman Vipul

Chaudhary, with the milk train transport system which would use 50 wagons with a capacity of

24,000 liters each to cater to the same volume, 50% would be saved on transport

cost.1Computing for the cost savings would give us Rs. 0.46 per liter.

Liters of milk per day (Manesar to Delhi) 1,200,000 Number of Delivery per year 365 Annual Transport cost via Road (Rs.) 400,000,000 Transport Cost via Road (Rs.) per liter 0.91

Savings via Railway 50%

Cost Savings (Rs.) per liter 0.46

Page 14: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

Assuming milk train system is applicable throughout Amul supply chain and ratio of

transportation cost to liters is the same, then the company could save Rs. 1,000,000,000 per

year which is .7% of its expected revenue of Rs. 150 bn for 2012-2013.

Total liters of milk collected per day 6,000,000 Total Annual Transportation cost savings (Rs.) 1,000,000,000

In addition, if we consider GCMMF expansion plans to set up two milk processing plants

in Delhi, one each in Kolkata and Mumbai, and four in Gujarat, to boost milk processing capacity

from 14.5 to 20 million liters per dayii and apply the milk train system, then total transportation

cost savings assuming Amul can utilize maximum capacity would be as follows:

Maxliters of milk processing per day 20,000,000 Total Annual Transportation cost savings (Rs.) 3,333,333,333

Therefore, if Amul can implement this transport system throughout applicable dairy

plants in India, then the company’s billion savings in Rupees may be used to invest in their

expansion to increase the supply and their distribution network, or to lessen the Rs. 1-2 price

hikes by 25-50% due to transportation cost. With either of these moves, Amul would benefit

inrevenue and increase in market share over other competitors especially in Delhi and NCR

region.

Aside from the above mentioned, using the railway cooling units can prevent the risk of

accidents on the road. Therefore, this can reduce wastage, vehicle maintenance cost, and

hospitalization expense. This alternative can also avoid delays in transportation due to traffic

on roads which is very crucial for Amul’s business since goods are perishable.

2. Reduce transportation time by choosing nearer dairy sites in their expansion plans

Currently, Amul’s plant inManesar is around 49 kilometers (or 49 minutes drive) away

from Delhi. Amul’s major competitor which is leading in the region, Mother Dairy, also sources

nearby but from more than one plant. Dairy plants they source from are Noida, Ghaziabad, and

Meerut which are 30, 46, and 91 minutes away respectively. Therefore, Amul’s plan in opening

2 more plants in Delhi would be best since it could be more responsive because it would have

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more lead time in catering to the demand in the region. Also, if we have our source of raw milk

nearby, then transportation from the source would decrease drastically because in their current

set-up, tankers would have to travel 700 kilometers from Gujarat. Therefore, Amul should

consider creating farmer cooperatives near Delhi. This will make GCMMF’s daily procurement

of 12-15 lac kilo liters outside Gujaratiii to increase to an additional of 12 lac liters per day if

thinking of increasing current market share in Delhi to 60%.Having this plan, zero stock-out in

stores can be maintained because delivery of goods can be done immediately. With its

proximity to the dairy plant, the distributors will be able to maintain just-in-time practices with

their inventory thereby reducing costs and improving return on investment.

3. Improve Distribution Network in Retail Outlets, Supermarkets to Increase Reach

Currently, out of the demand of 115 lac liters of milk per day in India’s national capital

and adjoining areas, Amul supplies 20 lac liters of milk per day, Quality Dairy about 1.25 lac

liters per dayiv, and Mother Dairy supplies around 30 lac liters per day.vIn order to take the lead

over Mother Dairy, Amul has to increase its distribution network after increasing its supply by

more than 50%. If Amul increases its reach now to Delhi and NCR, say by 60% to ensure lead in

market share, then a portion of Mother Dairy’s current market share may be eaten up since the

brand is said to be top of mind in India and probably also eat up a large chunk in the other dairy

brands.

With the expansion plan of Amul for the next 5 years, the two plants which it will add in

Delhi could increase their supply by an additional of 40 lacs per day. Hence, Amul should

already start increasing its retail outlets, and supermarkets to increase reach and utilize their

plants’ capacity increase and dominate the market.

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References

www.amul.com

http://www.iimb.ernet.in/

http://www.fsg.org/Portals/0/Uploads/Documents/PDF/India_CSV_Appendices.pdf?cpgn=WP%20D L%20-%20India%20CSV%20Appendices

http://www.youtube.com/watch?v=N_950sc6oZk&feature=relmfu

http://www.rediff.com/money/2005/sep/23spec.htm

http://en.wikipedia.org/wiki/Amul

http://www.moneycontrol.com/news/wire-news/dairy-farmers-will-suffer-if-fdi-is-allowedretail-

gcmmf_645521.html

http://www.financialexpress.com/news/amul-claims-to-be-no-1-in-delhi-mother-dairy-refutes-

it/580518/1

http://www.business-standard.com/india/news/amul-milk-to-get-costlier-by-5-7-soon/469844/

http://www.financialexpress.com/news/amul-gears-up-to-strengthen-fresh-milk-base-in-delhi/86054/2

Report on supply chain management of Amul by Institute of Management and Technology (India)

Report on ICT application of AMUL by Raghu Prasad and A. Kotla

Page 17: Amul supplychain futureinitiatives

Prepared by: Learning Team 2B | Akash Tyagi| Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti

1http://articles.timesofindia.indiatimes.com/2010-02-24/ahmedabad/28139283_1_lac-litres-milk-banas-dairy-dudhsagar-dairy iihttp://dairyproducts.food-business-review.com/news/amul-plans-579m-expansion-030412 iiihttp://articles.economictimes.indiatimes.com/2011-12-13/news/30511706_1_milk-procurement-gcmmf-daily-procurement ivhttp://www.indianexpress.com/news/amul-milk-to-be-dearer-by-rs-2-litre/937050/

vhttp://www.thestatesman.net/index.php?option=com_content&view=article&id=406655&catid=40