E-Commerce Case Study Presented by:

Rajiv BhatnagarChairman cum Managing Director

National Small Industries Corporation India

AMUL DAIRY

AMUL DAIRY

• The Kaira District Co-operative Milk Producers Union Limited, popularly known as Amul Dairy is a US $ 500 million turnover institution

• It is a institution built up with a network of over 10000 Village Co-operative Societies and 500,000 plus members

AMUL DAIRY

• The product range includes milk, butter, cheese, chocolates, ice creams and pizzas

• Amul has been accredited with ISO 9001 and HACCP Certification by QAS, Australia – the first food company in Asia and one of the 100 companies in the world to receive the HACCP Certification

AMUL DAIRY

• Formed in 1946, Amul initiated the dairy cooperative movement in Indian through an apex cooperative organization called the Gujarat Cooperative Milk Marketing Federation (GCMMF)

• Today this movement is being replicated in 70,000 villages in over 200 Districts in India, transforming the life of Indian villagers

• Amul was chosen to show case successful e-commerce cases in India for setting an example for building an online bridge to its customers

Contd..

PROBLEMS TO BE ADDRESSED

• Logistics in collection of :– 6 million liters of milk per day – from about 10600 separate Village Cooperative

Societies – Approximately 2.1 million milk producing

members

• Logistics in coordination of :– Storing the milk– Processing the milk– Distributing the milk

PROBLEMS TO BE ADDRESSED

• Supplier logistics:– Weighing the milk– Determination of fat content– Calculation of the purchase price

• Strong challenge from large organized dairies due to globalization

• Considerable time (One Week) to test the milk and work out the purchase price through pass book system resulted in delayed payments to farmers

Contd..

• A need was felt to look for a strategy to make its operations competitive and streamline the collection and production processes of Milk products with the help of ICT tools.

• Amul decided to leverage on the strengths of an ERP System and took major initiatives in this direction in 1994.

• Amul studied its existing functions and operations to formulate an IT plan for spearheading its growth in the long term perspective

THE NEED

• Thrust was given to integrate the existing applications with ICT Tools through redesign/re-organisation of existing software applications.

• The focus was to provide a seamless flow of information leveraging for the enterprise’s decision making process.

• Amul also recognized the need to connect its regional and field offices through e-media.

THE NEEDContd…

• Company zeroed in on ERP as means to keep pace with dynamically changing business environment.

• Tata Consultancy Services was hired to guide them in its implementation.

• The implementation project was named as Enterprise- wise Integrated Application System (EIAS).

SHIFT PROCESS

• Amul started implementing the ERP in phases

• Automatic Milk Collection System units (AMCUS) at village societies were installed in the first phase to automate milk producers logistics.

• AMCUS facilitated to capture member information, milk fat contents, volume collected and amount payable to each members electronically.

IMPLEMENTATION

On an average, around thousand farmers come to sell milk at their local co-operative milk collection centre.

Each farmer has been given a plastic card for identification.

IMPLEMENTATIONContd…

• At the milk collection counter, the farmer drops the card into a box and the identification number is transmitted to a personal computer attached to the machine.

• The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine. Both these details are recorded in the PC.

• The computer then calculates the amount due to farmer on the basis of the fat content. The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window.

IMPLEMENTATIONContd…

• Amul also connected its zonal offices, regional offices and member’s dairies through VSATs for seamless exchange of information.

• The customized ERP- EIAS has been implemented across the organization integrating various operational departments.

IMPLEMENTATIONContd..

• In addition to EIAS, Amul is also using Geographic Information Systems (GIS) for business planning and optimization of collection processes.

• Indian Institute of Management – Ahmedabad supplemented Amul’s IT strategy by providing an application software – Dairy Information System Kiosk(DISK) to facilitate data analysis and decision support in improving milk collection.

IMPLEMENTATIONContd..

• The kiosk would also contain an extensive database on the history of cattle owned by the farmers, medical history of the cattle, reproductive cycle and history of diseases.

• Besides this, farmers can have access to information related to milk production, including best practices in breeding and rearing cattle.

• Using the same system, the farmers can even have access to a multimedia database on innovations captured by Srishti, an NGO working with IIMA. As a large amount of detailed history on milk production is available in the database, the system can be used to forecast milk collection and monitor the produce from individual sellers.

IMPLEMENTATION Contd..

• Going forward, there are plans to introduce features like Internet banking services and ATMs which will enable milk societies to credit payments directly to the seller’s bank account.

• In line with this vision, officials at Amul are looking at upgrading the plastic cards which are being currently used only for identification purposes, to smart cards which can be used to withdraw cash from ATMs.

IMPLEMENTATIONContd..

• Uses automated milk collection system units for collection of milk

• Customized ERP system which is used in conjunction with GIS

• Use of data analysis software for forecasting milk production and increasing productivity

• All zonal, regional and member diaries connected through VSAT

• One of the first five Indian organization to have web presence

• Made IT education compulsory for all its employees.

• Opted for the .coop.coop domain to position its brand in a distinct way.

AMUL’S IT ROADMAP

• Radical changes in business processes - eliminating middlemen and bringing the producers closer to the customers.

• Improved delivery mechanisms and transparency of business operations.

• Due to this process, AMUL is able to collect six million litres of milk per day.

REAPING RETURNS

• Huge reduction in processing time for effecting payments to the farmers from a week to couple of minutes after implementing the ERP.

• Processing of 10 Million payments daily, amounting to transactions worth USD 3.78 million in cash.

• Controlling the movement of 5000 trucks to 200 dairy processing plants twice a day in a most optimum manner.

• Practicing just in time supply chain management with six sigma accuracy.

REAPING RETURNS Contd…

REAPING RETURNSContd…

• Online order placements of Amul’s products on the web.

• Distributors can place their orders on the website www.amul2b.com especially meant for accepting orders from stockists and promoting Amul’s products via e-commerce.

• Company has started receiving queries from overseas agents for distribution of its products in countries like US, Britain, New Zealand, Singapore and Thailand.

• As a result of on-line initiatives, today, Amul exports products worth around US$ 25 million to countries in West Asia, Africa and USA

REAPING RETURNSContd…

• The decision making process has rapidly improved since real time data is available on the click of a button.

• Easy monitoring of crucial management practices like demand versus supply with the help of ERP .

ACKNOWLEDGEMENT

Matter in this study has been sourced from Express Computers

Thank you