MINOR PROJECT REPORT

On

SUPPLY CHAIN MANAGEMENT OF AMUL

Project report submitted in partial fulfillment of the requirements
for award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION

SUBMITTED BY:
GAGANDEEP KAUR

Under the guidance of

Ms. Kulneet Kaur

SRI GURU TEGH BAHADUR INSTITUTE OF MANAGEMENT

AND INFORMATION TECHNOLOGY
(Affiliated to GGSIPU University Delhi)
(2021 – 2024)

[1]
 ACKNOWLEDEMENT

With profound sense of gratitude and regard, I express my sincere

thanks to my guide and mentor Ms. KULNEET KAUR for her valuable
guidance and the confidence she instilled in me, that helped me in the
successful completion of this project report. Without her help, this
project would have been a distant affair, her thorough understanding
of the subject and professional guidance was indeed of immense help
to me.
I am greatly thankful to the faculty members of our institute who
cooperated with me and gave me their valuable time.

________________________________

SIGNATURE OF SCHOLAR

GAGANDEEP KAUR
ENROLLMENT NO – 01891101721

PLACE: DELHI

DATE: ____________

[2]
 CERTIFICATE

This is to certify that GAGANDEEP KAUR student of SRI GURU TEGH

BAHADUR INSTITUTE OF MANAGEMENT AND INFORMATION
TECHNOLOGY of course BBA Batch (2021-2024) has completed his research
work titled “minor project report on marketing strategies of Amul” under my
guidance and supervision. The work submitted is genuine and authentic.

Signature of Project in charge

DR. DIVYA SHARMA

_____________________________________
Signature of Guide
MS. KULNEET KAUR

SIGNTURE OF SCHOLAR
GAGANDEEP KAUR

PLACE: DELHI
DATE : ____________

[3]
 DECLARATION

I hereby declare that the project work entitled minor project report on marketing
strategies of Amul submitted to the Guru Gobind Singh Indraprastha
University is record of an original work done by me under the guidance of Ms.
KULNEET KAUR, faculty member, Sri Guru Tegh Bahadur Institute of
Management and Information Technology.

Signature of the scholar

GAGANDEEP KAUR

Enrollment no. 01891101721

Place: DELHI

Date: ____________

[4]
 INTRODUCTION TO FMCG INDUSTRY

Fast-moving consumer goods (FMCG) sector is India's fourth-largest sector with

household and personal care accounting for 50% of FMCG sales in India.
Growing awareness, easier access and changing lifestyles have been the key
growth drivers for the sector. The urban segment (accounts for a revenue share of
around 55%) is the largest contributor to the overall revenue generated by the
FMCG sector in India. However, in the last few years, the FMCG market has
grown at a faster pace in rural India compared to urban India. Semi-urban and
rural segments are growing at a rapid pace and FMCG products account for 50%
of the total rural spending The FMCG market in India is expected to increase at a
CAGR of 14.9% to reach US$ 220 billion by 2025, from US$ 110 billion in 2020.
The Indian FMCG industry grew by 16% in CY21 a 9-year high, despite
nationwide lockdowns, supported by consumption-led growth and value

[5]
expansion from higher product prices, particularly for staples. The rural market
registered an increase of 14.6% in the same quarter and metro markets recorded
positive growth after two quarters.

In the last 10 years, the revenue in FMCG industry in India has been growing at
the rate of 21.4%. There was a drastic change in revenues in FMCG sector growing
from US$ 31.6 billion to US$ 52.8 from 2011 to 2017-2018 respectively. FMCG
industry in India is expected to grow at the rate of 27

According to Fitch Solutions, real household spending is projected to increase

9.1% YoY in 2021, after contracting >9.3% in 2020 due to economic impact of
the pandemic. The FMCG sector's revenue growth will double from 5-6% in
FY21 to 10-12% in FY22, according to CRISIL Ratings. Price increases across
product categories will offset the impact of rising raw material prices, along with
volume growth and resurgence in demand for discretionary items, are driving

[6]
growth. The FMCG sector grew by 36.9% in the April-June quarter of 2021
despite lockdowns in various parts of the country Number of households shopping
on modern-trade channel grew 29.15% YoY in the September quarter and
shopping volume on the channel went up by 19.2% YoY.

Evolution

Between 1950 and 1980, there was limited investment in the FMCG
sector. Local people had lower purchasing power, which meant that
people opted for necessity products rather than premium products.
Indian government was inclined towards favouring the local shops and
retailers. Between 1980 and 1990, people wanted more variety of
products which encouraged FMCG companies to increase the
availability of products. FMCG Industry started getting traction and
other companies started entering the industry. Media industry in India
also boomed during the same time which gave new companies even
more incentive to make their business profitable Prior to 1991, when
globalisation and liberalisation occurred in India, western apparels and
foreign food products were not available to local customers. Common
people weren’t very aware of brand recognition. After 1991, FMCG
industry was inspired by the international companies which also
allowed government intervention to incentivise foreign FMCG
companies to operate in India.

[7]
The Indian FMCG industry generates massive employment opportunities and
currently employs more than 3 million people. Departmental stores, grocery
stores, and supermarkets are the places where consumers buy the necessary
products for daily consumption.

In the 21st century, people don’t want to move across different stores
to acquire the common household goods. Hence, the introduction of
supermarkets, where customers have a variety of choices for different
household products, into localities are proving to be extremely
convenient to the customers. Some of the most common stores in India
are: Reliance Retail, Big Bazaar, D-Mart, Easy day, MORE,
Spencer’s, Spar, Hyper City, and Star Bazaar. Although the operations
of supermarkets are profitable, local grocery stores are suffering due
[8]
to lack of variety of products. Unlike other emerging FMCG industry
around the world, FMCG sector in India is still quite conventional.
Despite street markets are still one of the most visited places for
shopping in urban and rural settings, online platforms are leading the
way to buy FMCG products.

Types of Fast-Moving Consumer Goods

As mentioned above, fast-moving consumer goods are

nondurable goods, or goods that have a short lifespan, and are
consumed at a fast pace.
FMCGs can be divided into several different categories,
including:

• Processed foods: Cheese products, cereals, and boxed

pasta
• Prepared meals: Ready-to-eat meals
• Beverages: Bottled water, energy drinks, and juices
• Baked goods: Cookies, croissants, and bagels
• Fresh foods, frozen foods, and dry goods: Fruits,
vegetables, frozen peas and carrots
• Medicines: Aspirin, pain relievers, and other medication
that can be purchased without a prescription
[9]
 • Cleaning products: Baking soda, oven cleaner, and
window and glass cleaner
• Cosmetics and toiletries: Hair care products, concealers,
toothpaste, and soap
• Office supplies: Pens, pencils, and markers

Characteristics Of FMCGS

There are some key characteristics that define FMCG products and separate them
from other types of products. These are:

From The Consumer Perspective High availability:

FMCG products are usually widely available and sold in several stores and
supermarkets worldwide. This allows consumers to purchase these products
easily without too much trouble.

• Purchased frequently: FMCGs include products that consumers frequently

require, usually daily or near-daily. For example, breads and coffee are generally
bought at least once a week.

[10]
FMCG Industry Trends

1. Sustainability

Consumers are becoming more conscious of climate change and its impact on the
environment. Thus, they pay more attention to companies’ social activities and
seek those that offer more responsible product choices. As sustainability comes
to the forefront, FMCG companies not only address how they present and package
their products but also what materials they use in their products. To meet
consumer demand, more and more FMCG companies offer compostable,
recyclable, and reusable packaging.

2. Digitalization

Digitization is increasingly becoming a priority for FMCG brands as

customers interact with brands across multiple online and offline
channels. Companies get access to valuable data from these sources,
including various social media platforms, web, and mobile applications.
Besides, it also allows FMCG brands to better engage with their
customers and convert one-time buyers into repeat customers.

3. FMCG e-Commerce

The share of sales coming from e-commerce is increasing exponentially. The

outbreak of the COVID-19 pandemic has further shifted consumers’ shopping
habits towards online channels. Brands are now building their online presence to
boost their engagement with consumers. Social media also plays a significant role
in the world of e-commerce as more items are sold via social platforms such as
[11]
Instagram. To this end, FMCG startups actively incorporate diverse media,
leveraging mobile and headless commerce, to market their products.

4) Big Data & Analytics

FMCG companies actively leverage big data to innovate and compete

in the industry. As data is becoming more and more accessible with
consumers shopping online, brands explore new ways to increase
relationships with their customers and gain insights from their behavior.
Data analytics explores customer preferences and behavior to provide
FMCG companies with a deeper understanding of their purchase habits.

5) Direct Distribution

More and more FMCG companies are leveraging direct distribution to

increase customer loyalty and ensure growth. For example,
manufacturers directly interact with their end customers through their
own online and offline distribution channels. This increases their profit
margin and offers consumers a direct channel to reach their favourite
brands. This FMCG industry trend is closely associated with
ecommerce growth as well as the penetration of smartphones and the
internet.

[12]
 Largest FMCG Companies

1. Hindustan Unilever Ltd

Hindustan Unilever Limited is India’s largest fastmoving consumer goods

(FMCG) company with a Historical presence in India of over 80 years. It is the
largest in the list of top 5 FMCG companies in India

.Nine Out of ten Indian households use one or more of HUL Brands. Divisions –
Home Care, Beauty & Personal Care and Foods and Refreshment – includes a
portfolio of brands that serve consumers across the length and breadth of India.

• Revenue: Rs 40,511 Cr
• Market Cap: 451,666 Cr

[13]
2. ITC Ltd

Established in 1910, ITC Limited is a diversified conglomerate with businesses

spanning Fast Moving Consumer Goods comprising Foods, Personal Care,
Cigarettes and Cigars, Branded Apparel, Education & Stationery Products,
Incense Sticks and Safety Matches; Hotels, Paperboards, and Packaging, Agri-
Business and Information Technology. ITC is among the top fmcg brands in
India

Revenue: Rs 51,321 Cr

Market Cap: 320,094 Cr.

[14]
3. Nestle India Ltd
Nestlé is the world’s largest food and beverage company. The company has more
than 2000 brands ranging from global icons to local favourites, and are present in
191 countries around the world.

After more than a century-old association with the country, today, NESTLÉ India
has a presence across India with 8 manufacturing facilities and 4 branch offices.
It is the third Largest in Top FMCG Companies in India

• Revenue: 12,117 Cr
• Market Cap: 139,532 Cr.

[15]
4. Britannia Industries Ltd
Britannia Industries is one of India’s leading Top FMCG Companies with a
100year legacy. Britannia is among the most trusted food brands and
manufactures
India’s favorite brands like Good Day, Tiger, NutriChoice, Milk Bikis and Marie
Gold which are household names in India

Britannia’s product portfolio includes Biscuits, Bread, Cakes, Rusk, and Dairy
products including Cheese, Beverages, Milk, and Yoghurt.

• Revenue: 11,211 Cr

• Market Cap: 75,893 Cr.

[16]
5. Godrej Consumer Products Ltd

Godrej Consumer Products is a leading emerging markets company. As part of

the over 122-year young Godrej Group. Godrej Consumer Products Ltd enjoys
the patronage of 1.15 billion consumers globally, across different businesses. It is
fifth in the list of top 5 FMCG companies in India.

In line with the 3 by 3 approach to international expansion at Godrej Consumer

Products, building a presence in three emerging markets (Asia, Africa, and Latin
America) across three categories (home care, personal care, and hair care).
The Company is Among the Top FMCG Companies in India

• Revenue: 10,156 Cr
• Market Cap: 75,089 Cr.

[17]
 INRODUCTION TO AMUL

Amul is an Indian dairy state government cooperative society, based at

Anand in Gujarat. Formed in 1946, it is a cooperative brand managed
by the Gujarat Cooperative Milk Marketing Federation Ltd.
(GCMMF), which today is jointly controlled by 36 lakh milk producers
in Gujarat, and the apex body of 13 district milk unions, spread across
13,000 villages of Gujarat. Amul spurred India's White Revolution,
which made the country the world's largest producer of milk and milk
products Word AMUL stands for Anand Milk Union Limited . Kaira
Union introduced the brand "Amul" for marketing its product range.
The word "Amul" is derived from the Sanskrit word 'Amulya' which
means 'priceless' or 'precious', a name proposed by the founding leader
of Anand Agriculture College, Maganbhai Patel. Tribhuvandas
Kishibhai Patel under the guidance of Sardar Vallabhbhai
Patel became the founding chairman of the organization and led it until his
retirement in the 70s. He hired Verghese Kurien in 1949 and convinced
[18]
him to stay and help with the mission. Under the chairmanship of
Tribhuvandas, Kurien was initially the general manager and helped guide
the technical and marketing efforts of Amul. Kurien was the chairman of
Amul briefly after Tribhuvandas Kishibhai Pateldied in 1994. Kurien,
founder-chairman of the GCMMF for more than 30 years (1973–2006), is
credited with the success of Amul's marketing. The GCMMF is the largest
food products marketing organization in India. It is the apex organization
of the dairy cooperatives of Gujarat. It is the exclusive marketing
organization for products under the brand name Amul and Sagar. Over the
last five and a half decades, dairy cooperatives in Gujarat have created an
economic network that links more than 3.1 million (3.1 million) village
milk products with crores of consumers in India. In 2007, Gujarat
Cooperative Milk Marketing Federation Ltd crossed US$ 1 billion in its
sales turnover and entered the elite club of food companies having this
distinction from India. In one more major achievement, the dairy
cooperatives of Gujarat under the GCMMF fold crossed milk procurement
of 10 million kgs. per day mark on 27 December 2007, which is the highest
ever milk procurement achieved by any dairy network in India, be it private
or cooperative and the entire quantity of milk received was accepted
without any milk holidays and was processed successfully into milk and
other milk products Managed by an apex cooperative organization, Gujarat
Co-operative Milk Marketing Federation Ltd. (GCMMF), which today is
jointly owned by some 2.41 million milk producers in Gujarat, India Amul
is the largest food brand in India with an annual turnover of US $1068
million (2007-08)

[19]
Currently Amul has 3.11 million producer members with milk
collection average of 6.04 million litres/ day. Amul is the largest
producer of milk and milk products in the world To implement their
vision while retaining their focus on farmers, a hierarchical network of
cooperatives was developed, this today forms the robust supply chain
behind GCMMF’s endeavors. The vast and complex supply chain
stretches from small suppliers to large fragmented markets.

Management of this network is made more complex by the fact that

GCMMF is directly responsible only for a small part of the chain, with
a number of third party players (distributors, retailers and logistics
support providers) playing large roles. Managing this supply chain
efficiently is critical as GCMMF's competitive position is driven by low
consumer prices supported by a low cost system of providing milk at a
basic, affordable price. Despite the negative impact of the COVID19
pandemic on demand from restaurants, hotels and catering segment, as
well as adverse impact on dairy commodity markets, Amul Federation
(GCMMF) registered a turnover of Rs 39,248 crore in 202021, while
the Amul group's turnover crossed Rs 53,000 crore, GCMMF aims to
achieve a group business turnover of Rs 1 lakh crore by 2024-25," it
said in a statement after the 42nd AGM held at Anand.

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

[20]
GCMMF transacts on an advance demand draft basis from its
wholesale dealers instead of the cheque system adopted by other major
FMCG companies. This practice is consistent with GCMMF's
philosophy of maintaining cash transactions throughout the supply
chain and it also minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of

the transit time from the branch warehouse to their premises. This
justin-time inventory strategy improves dealers' return on investment
(ROI). All GCMMF branches engage in route scheduling and have
dedicated vehicle operations.

[21]
 MARKET SHARE

The brand positions itself as a brand both masses I classes, unlike competitors like
Nestle Gujarat Cooperative Milk Marketing Federation (GCMMF), owners of Amul
brand of milk and dairy products, posted sales of Rs 11,670 crore for the year ended
March 2012 almost 55% more than Nestle India's Rs 7,541-crore sales. Amal owns 85
percent share in butter market and 75 percent in cheese share market. It may be
mentioned here that Amul is the market leader in Rs 600 crore cheese market in India
with 65-66% share also has 88% market share in butter, 63% share in infant milk and
45% market share in dairy whitener. Amal also enjoys a 26% share in the 25,000-
cmore packaged milk market. With expected growth rate of 20 percent, 12% growth
rate can be attributed to price rise and another 8 percent to rise in demand for dairy
products

[22]
DIVERSE PRODUCT MIX

Amul Butter,

Milk Powder,

Ghee

Cheese

Srikhand

Ice- cream
[23]
ANALYSE 4P’s OF AMUL

[24]
a) PRODUCT:

Tracks consumer needs & their changing lifestyles, & accordingly develops products to suit
their needs. Product quality plays a paramount role & so does packaging. Amul ice cream
has wide range of variety that consists of more than hundred flavors available in the market
including 20 new flavors, which is introduced in summer. As ice cream is an impulsive
purchase item so, its sale depends mostly on availability and variety.

b) PRICING

The main USP of Amul brand is its low pricing. It hits at the transnationals by reducing its prices
on its product portfolio. The competitive advantage is its
"backward integration" strategy, which helps substantially in cost reduction. The price of
Amul ice cream is very less compared to its competitors. In novelty item the price of the
flavors varies from Rs.2 to R:22. The pricing strategy of Amal is, to target each income
group of the society. The cheaper price of ice cream is meant for targeting the people with
low income. Along with the low income group Amul is also targeting medium as well as the
premium segment by providing different flavors at different prices.

c) PLACE

Any food company requires a dedicated cool chain network. Amul boasts of the largest cold
chain network (18000 refrigerators) in India, as compared to any other company. It is
surprising to note that it sells pizzas in rural markets too!

The distribution of the ice cream in Delhi is done through exclusive Amal outlets situated in
various bcations. In Delhi, Amal has eleven distributors who supplies ice cream to more
than 3000 outlets. These eleven distributors are responsible for their respective

[25]
d) PROMOTION:

Amul spends very less on its advertising budget, but spends it very effectively. It has the
power of an umbrella brand Amul, which is highly respected brand name & enjoy the trust
of 1000 million households. Thank to its brand mascot , the Amul girl, the co-operative has
been able to get away with spending just one per cent of its revenues on advertising. In
contrast, its competitors spends anywhere between 7 to 10 per cent on advertising Amul
positioning is "Value for Money". It uses the services of Da Cunha Associates & FCB Ulka
for its advertising efforts Amul is a well-established brand name of GCMMF. For
promotion of the ice cream the company gives advertisement in newspaper and magazines.
It gives glow sign board to every retailers and also makes wall paintings on there request.
Amul uses their punch line "Real milk real ice cream" for the promotion

[26]
MARKETING & SALES PROMOTION STRATEGY

Looking at the current Indian marketing scenario, "AMUL" is moving back in time. An expert
says that in the evolution of marketing, before the marketing concept became popular, there
is a selling concept which states that "customers and businesses, if left alone will ordinarily
not buy enough of the organizations products. The organization must therefore undertake an
aggressive selling and promotion effort" In this present scenario, it is true that companies will
survive only if there is a super efficient sales force. The reasons are that increasingly every
product is being commoditized and there is an increase in the power of retails, information
explosion that has given the consumer an unusual power. This has ensured that without an
efficient sales force companies cannot survive.

[27]
Even when companies focus on sales effort, concept like segmentation should not be
overlooked. For example, there has been bot of effort on increasing credit cand usage in India.
Credit card now comes free for life and sales people are just selling credit cards like
chocolates. Is it not wise to look at whether the consumer wants a credit card? Does he like
to use one? Does he have the ability to pay back? Recently a news channel showed a mutual
fund agent giving discounts to a client from his brokerage. What does that mean? It simply
means that we are not practicing marketing We are just selling.

Many business gurus are saying that," customers are the god or king of the market". It can be
understood from the fact that the customer is not the king as the companies want the consumer
to be loyal. The real fact is that no company regard customer as the king. Everyone in the
market cares about the money. Marketing is creating and exchanging goods of value between
company objectives are achieved in that process. So what is happening now is this exchange
process. Marketers tried to attract customers by treating them well and thus came the cliche
"customer is the King". It is only economics in play. It is now the choice of the customer that
whether he was himself to be treated as a king (and pay for it). After realizations of the big
issue Amul stated to make the marketing and sales promotion strategy to overcome the
problem Amal is the largest co-operative movement in India with 2.2 million milk producers
organized in 10,552 cooperative societies in 2003 2004.

The country's largest food company, Amul the market leader in butter, whole milk, cheese,
ice cream, dairy whitener, condensed milk, saturated fats and long life milk. Amul follows a
unique business model, which aims at providing value for money products to its consumers,
while protecting the interests of the milk-producing farmers who are its suppliers as well as
its owners. Despite being a farmers' co-operative. Anal has given multinational a nan for their
money. In butter, cheese and saturated fats, Amal has remained the undisputed market leader
since its inception in 1955, by offering quality products at competitive prices. In other
categories, Amul has nullified its late mover disadvantage through aggressive pricing, better
quality, innovative promotion, and superior distribution.
[28]
AMUL MODEL

Amul Model of dairy development is a three-tiered

structure with the dairy cooperative societies at the
village level federated under a milk union at
the district level and a federation of member
unions at the state level.

Establishment of a direct linkage between

milk producers and consumers by eliminating
middlemen

Milk Producers (farmers) control

procurement, processing and marketing

Professional management

[29]
 THE BUSINESS MODEL

From the very beginning, in the early 1950s, AMUL adopted the network as the
basic model for long-term growth.
• The network explicitly includes secondary services to the farmer-suppliers.
• Several of the entities in the network are organized as cooperatives linked in a
hierarchical fashion.

Customers: In comparison with developed economies, the market for dairy

products in India is still in an evolutionary stage with tremendous potential for
high value products such as ice cream, cheese etc. The distribution network, on
the other hand, is quite reasonable with access to rural areas of the country.
Traditional methods practiced in western economies are not adequate to realize
the market potential and alternative approaches are necessary to tap this market.

Suppliers: A majority of the suppliers are small or marginal farmers who are
often illiterate, poor, and with liquidity problems as they lack direct access to
financial institutions. Again, traditional market mechanisms are not adequate to
assure sustenance and growth of these suppliers.

Third Party Logistics Services: In addition to the weaknesses in the basic

infrastructure, logistics and transportation services are typically not
professionally managed, with little regard for quality and service. In addition to
outbound logistics, GCMMF takes responsibility for coordinating with the
distributors to assure adequate and timely supply of products. It also works with
the Unions in determining product mix, product allocations and in developing
production plans. The Unions, on the other hand, coordinate collection logistics
and support services to the member-farmers. In what follows we elaborate on
[30]
these aspects in more detail and provide a rationale for the model and strategies
adopted by GCMMF.

Simultaneous Development of Suppliers and Customers: From the very early

stages of the formation of AMUL, the cooperative realized that sustained growth
for the long-term was contingent on matching supply and demand. The
membersuppliers were typically small and marginal farmers with severe liquidity
problems, illiterate and untrained. AMUL and other cooperative Unions adopted
a number of strategies to develop the supply of milk and assure steady growth.
First, for the short term, the procurement prices were set so as to provide fair and
reasonable return. Second, aware of the liquidity problems, cash payments for the
milk supply was made with minimum of delay. This practice continues today with
many village societies making payments upon the receipt of milk. For the
longterm, the Unions followed a multi-pronged strategy of education and support.
For example, only part of the surplus generated by the Unions is paid to the
members in the form of dividends

Managing Third Party Service Providers:

Unions focused efforts on these activities and related technology development .
The marketing efforts were assumed by GCMMF. All other activities were
entrusted to third parties. These include logistics of milk collection, distribution
of dairy products, sale of products through dealers and retail stores, some
veterinary services etc. It is worth noting that a number of these third parties are
not in the organized sector, and many are not professionally managed. Hence,
while third parties perform the activities, the Unions and GCMMF have
developed a number of mechanisms to retain control and assure quality and timely
deliveries. This is particularly critical for a perishable product such as liquid milk.

[31]
Coordination for Competitiveness

Coordination is one of the key reasons for the success of operations involving
such an extensive network of producers and distributors at GCMMF. Some
interesting mechanisms exist for coordinating the supply chain at GCMMF.
These mechanisms are:

Inter-locking Control

The objective for developing such an inter-locking control mechanism is to ensure

that the interest of the farmer is always kept at the top of the agenda through its
representatives who constitute the Boards of different entities that comprise the
supply chain. This form of direct representation also ensures that professional
managers and farmers work together as a team to strengthen the cooperative. This
helps in coordinating decisions across different entities as well as speeding both
the flow of information to the respective constituents and decisions.

Coordination Agency: Unique Role of Federation

Its objective is to ensure that all milk that the farmers produce gets sold in the
market either as milk or as value added products and to ensure that milk is made
available to an increasingly large sections of the society at affordable prices

[32]
Supplier Enhancement and Network servicing

Their objective is to ensure that producers get maximum benefit and to resolve all
their problems. They manage the procurement of milk that comes via trucks &
tankers from the VcSs. They negotiate annual contracts with truckers, ensure
availability of trucks for procurement, establish truck routes, monitor truck
movement and prevent stealing of milk while it is being transported

[33]
 Strategy of Amul

Amul’s strategy is broadly divided into two components:

The first one is the collection chain and the second one is the Supply chain. The
collection chain starts from weighing the milk to determination of the fat content
in the milk to finally calculation of the purchase price. While the supply chain
starts from storing the milk to processing the milk to finally distributing the milk

[34]
Raw Milk Reception:

Raw milk received through insulated road/rail tankers at a very low temperature thus retaining

the freshness of milk. The milk goes for more than 15 stringent quality tests before it is

accepted for the processing of milk.

Milk achieved from individual producers is checked for all basic quality parameters meeting

the company specification and required norms at respective collection and chilling centres.

Milk is then supplied to the dairy units through insulated milk tankers at <4 degree C.

Processing of Milk:

Processing of milk is done in basically 4 steps

Clarification

Standardization

Homogenization

Pasteurization

Raw milk reception Clarification Standardization

Processed Milk Pasteurization Homogenization

Deep Chilling Dispatch

Clarification:

[35]
The chilled milk from the silos goes to the clarifier after pre-heating. The clarifier
spins the milk at very high speed, removing all the dust particles that are invisible
to naked eyes.

Standardization:

Milk from different breeds of cow and buffalo may vary in its composition.
Hence, to make Milk uniform in composition, before supply to the market, it is
standardized by raising or lowering its fat and SNF percentage present in the milk
to a desired level, so as to deliver the milk to consumers as per prescribed norms
of FSSAI.

Homogenization:

In this process, the milk is processed at very high pressure during which the large
fat globules presently in milk are broken down into tiny droplets. The milk fat
gets evenly distributed in the milk and milk become whiter and thicker. Milk is
homogenized for consumers who do not like cream layer on top.
Homogenization improves Palatability of milk and is easily digestible.

Pasteurization:

The milk is then pasteurized, named after Louis Pasteur, a French Scientist who
invented the
process to use in wine. Pasteurization was first applied by Dr. Soxhiet of Germany. This

involves heating of milk to 72 degree Celsius for 15 second and then cooling it down to 4

degree Celsius. The process kills all pathogenic bacteria present in the milk making. It makes

milk safe for consumption. Pasteurization, unlike boiling does not affect the nutritional value

of the milk.

[36]
Amul’s Supply Chain Management

[37]
 AMUL SUPPLY CHAIN MANAGEMENT PRACTICES

AMUL is a dairy cooperative in the western India that has been primarily
responsible, through its innovative practices, for India to become the world’s
largest milk producer. The distinctive features of this paradigm involves
managing a large decentralized network of suppliers and producers, simultaneous
development of markets and suppliers, lean and efficient supply chain, and
breakthrough leadership.

Every day Amul collects 447,000 litres of milk from 2.12 million farmers ,
converts the milk into branded, packaged products, and delivers goods worth Rs
6 crore (Rs 60 million) to over 500,000 retail outlets across the country.

To implement their vision while retaining their focus on farmers, a hierarchical

network of cooperatives was developed, this today forms the robust supply chain
behind GCMMF’s endeavors. The vast and complex supply chain stretches from
small suppliers to large fragmented markets.

Management of this network is made more complex by the fact that GCMMF is
directly responsible only for a small part of the chain, with a number of third party
players (distributors, retailers and logistics support providers) playing large roles.
Managing this supply chain efficiently is critical as GCMMF's competitive
position is driven by low consumer prices supported by a low cost system of
providing milk at a basic, affordable price.

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 E- Supply Chain Management Of Amul

 Amul uses E- SUPPLY CHAIN MANAGEMENT

 E-SCM may be described as the integrated management approach for

planning and controlling the flow of materials from suppliers to the end
users using internet technologies.

 E-SCM refers to the complex network of relationship that organizations

maintain with trading partner to source, manufacture and deliver the
products.

Components of E-SCM

ADVANCED
SCHEDULING

ORDER
COMMITMENT DEMAND
FORECASTING`

CUSTOMER
ORDER

DISTRIBUTION TRANSPORTATION
PLANNING LOGISTICS

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E-SCM Diagram of Amul

[40]
 Working of E-SCM

 Amul has installed over 3000 automatic milk collection system units
(AMCUS) at village societies to capture member information, milk fat
content and amount payable to each member.

 Each member is given plastic card for indentification

 Computer calculate amount due to the farmer on the basis of the fat content

 The value of the milk is printed out on the slip and handed over to the
farmer ,who collects the payment from the adjacent window

 Thus with the help of it farmer gets the payment within the minutes

 On the logistic more than 5000 trucks move milk from the villages to 200
dairy processing plants twice a day according to a carefully planned
scheduled

 Every day Amul collects 7 million liters of milk from 2.6 million farmers
(many illiterate), converts the milk into branded, packaged products, and
delivers goods to over 500,000 retail outlets across the country

 ERP software named as enterprise wide integrated application system

covers a operation like planning advertisement and promotion and
distribution network planning.

Each Amul office are connected via internet and all of them send daily
reports on sales and inventory to the main system at Anand,

DISTRIBUTION PROCESS

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COMPANY

WHOLESELLER

DEALER FRANCHISE

RETAILER

CONSUMER

CHANNEL NETWORK

- Procurement channel- upstream flow

- Distribution channel- downstream flow

PROCUREMENT

Activities at the village level developing and servicing the VCSS

The VCSS provided the farmers with good quality animal feed, fodder,
and other services like veterinary first aid
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Increasing milk collection, procuring milk, and transporting it to the
chilling and processing units twice a day.

Activities at the village level developing and servicing the VCS

PROCUREMENT CHANNEL(UP STREAM)

- On an average around thousand farmers come to sell milk at their local

co-operative milk collection center.

- The milk is then weighed and the fat content of the milk is measured
by an electronic fat testing machine.

- Each farmer has been given a plastic card for identification.

- 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.

[43]
- 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.

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[45]
 DISTRIBUTION

The unions monitored the supplies of milk and distribution of

finished products.

To ensure quality and timely deliveries, GCMMF and the district

unions had several mechanisms in place.

The processed milk and dairy products were procured from

district dairy unions and distributed through third party
distributors.

GCMMF coordinated with various unions to get a regular supply

of milk and dairy products.

DOWNSTREAM FLOW

- First leg

Manufacturing units to company depots using 9 and 18 MT

trucks

Frozen food below -18 C

Dairy wet 0-4

- Second leg

Transport through insulated 3 and 5 MT TATA 407's

Transport through rickshaws

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WDS to retailers

Third leg - Depots to WDs

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REVERSE LOGISTICS

MILK CHURN from dairy to VCS

(Plastic Crate to store Milk packets

POUCH MILK TRAY ➤

from retailer to dairy

DAMAGED PRODUCTS ➤

from customer to retailer then to dairy

BOTTLE ➤from retailer to dairy

[48]
Strengths of Amul

Strengths are always internal to a company. A strength is something that comes from
within the company, from its people, its process or the resources employed by it. Here
are the strengths from the SWOT Analysis of Amul.

1. Investment in Technology

Amul has experienced exponential growth in the last few decades. The company is
continually investing in adaptive and revolutionary technologies within the dairy
industry. The company is targeting a turnover of Rs. 50,000 crore in the fiscal year
2020.

2. Production Capacity

Amul is one of the largest manufacturers of milk and dairy products in the world. The
company is managed by the Gujarat Co-operative Milk Marketing Federation Limited,
which is a dairy producers cooperative which supplies the company with almost 18
million liters of milk daily.

3. Market Share

Amul has transformed itself into the market leader of milk and dairy products in the
country. For instance, Amul has a market share of 33 per cent in the organised ice
cream industry. The ice cream market is expected to grow by 30 per cent.

[49]
Amul has expanded its ice cream product and business portfolio by opening standalone
Amul ice cream stores all over the country.

Furthermore, the flavoured milk industry in India is also expected to grow by 20 per
cent, and once again, Amul is a market leader in flavoured milk in India.

4. Strong Brand Value

Amul is one of the most recognizable and valuable brands in India. The Amul girl, the
company’s mascot which features on its advertisements is one of the oldest and most
iconic brand mascots which Amul uses even today.
None of the milk or dairy products brands in India has come close to the public image
or brand value which Amul enjoys in the Indian market.

5. Quality

One of the primary reasons for Amul being one of the most trusted brands in Indian
and having a strong and loyal consumer base is its quality. Amul has never faced any
significant issues pertaining to its quality within the Indian market. The company has
also maintained transparency concerning its quality control practices.
Amul maintains excellent relationships with the health department and government
agencies. Validation from these authorities further develops trust within the minds of
the consumers about the quality of Amul’s products.

5. Large Consumer Base

The company has a large consumer base which spreads across the urban and rural
regions of the country. This wide-reaching consumer base has allowed the company
to maintain distinct leverage over its competitors

Weaknesses of Amul

Just like the strengths, weaknesses are also internal to the brand or the company. You
could see it as lack of certain aspects in the business that makes it vulnerable.
[50]
Sometimes, certain strengths bring with them certain weaknesses. Examples of that is,
however, the matter of another blog post.

So, here are the weaknesses from the SWOT Analysis of Amul.

1. High Operational Cost

Amul has a high operational cost due to its massive size and complex structure. This
can become problematic for the company if the company experiences fall in demand.

The company also heavily depends on the dairy unions and communities for its supply
of milk. As the needs of the dairy community are changing with them demanding
higher prices for their produce.
These issues can add up to the operational cost of the company and lower its profit
margins.

2. Lack of Success in Certain Areas of Portfolio Expansion

Amul has expanded its product portfolio to add products such as butter, ghee,
buttermilk, flavored milk, ice cream, chocolates, cheese, creams, sweets and more.

However, not every product of Amul within its portfolio has tasted the same amount
of success.
For instance, Amul’s chocolates have not been able to replicate the success of its ice
cream brands. Amul chocolates have a tiny market share in the chocolates, sweets and
confectionery market in India.

3. Frequent Legal Issues

The company has faced legal issues in the recent past wherein Amul chose to advertise
its products while disparaging the brand and products of its rivals. This led to
Hindustan Unilever filing a lawsuit against Amul in the Bombay High Court.

[51]
In 2017, The Bombay High Court passed a verdict in favour of Hindustan Unilever. This
caused the company a lot of embarrassment and has also contributed to tarnishing the
public image of the company.

Opportunities for Amul

In the SWOT Analysis, Opportunities are the points that can be and should be
converted to the strengths of the company. In the case of the SWOT Analysis of
Amul, I have listed below the opportunities that can be worked on by Amul.

1. High per capita Milk consumption

India is a high milk consuming nation with milk and dairy products being an
essential component of the Indian diet. According to research, Indians consume
almost 100 liters of milk per annum.
India has a billion plus population which is only increasing. This growth in
population and high milk consumption opens up opportunities for Amul to
expand its production capacities and acquire new consumers.

2. International Expansion

Amul can serve global markets. The brand can expand into overseas markets
such as the Middle-East and the Asian markets by aggressively targeting Indian
expats living in these countries. Amul can organically broaden its international
presence and consumer base.

3. Expansion of Product Portfolio

Amul can invest in research and development or adopt a mergers and acquisition
strategy to expand its product line. Amul has an extensive distribution network
which can be used to sell its new products into the market, and the substantial

[52]
brand value and trust of the consumers will also enable easier acceptance from
the consumers.

Threats for Amul

The way a company should take care of the threats is by working on its strengths to
mitigate the effects of threats. Some organisations who are in a niche, niche down
further to mitigate the risks of a competitive environment. I have listed below some of
the Threats for Amul.

1. Increasing Competition

Amul is facing increasing competition in milk and dairy products sector from
brands such as Mother Dairy, Aavin, Kwality Ltd, Nadini Dairy, HUL and other
local players. Amul is also facing increasing competition within the ice cream
sector from Kwality Walls, Baskin Robins, Havmor, London Dairy and other
domestic brands

2. Growing trend of Veganism in India

Many people in India are turning towards veganism, which implies that these people
do not consume dairy or dairy products. This can impact the demand for Amul’s milk
and dairy products if the popularity of veganism increases and spreads across different
parts of the country.

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RESEARCH METHODOLOGY

Sources of data collection

Data Resources: The data required for the research can be either primary
data or secondary data or both.

Secondary data
Secondary data are data that were collected for another purpose and already exists
somewhere. Researchers usually start their investigation by examining secondary
data see whether the problem can be partly or wholly solved without collecting
costly primary data secondary data provides a starting point for research and after
offer advantages of low cost and ready availability.

Limitation of research

Data may be readily available but the credibility of sources is under

constant scrutiny. Research can break down due to a lack of credible
and authentic information.

Most secondary data sources don't offer the latest statistics, studies or
reports. Accurate data doesn't necessarily mean updated data.

As a researcher has no control over the primary source or quality of

information, the success of secondary research heavily depends on the
quality of the primary research that was conducted.

Primary data collection may often be expensive but the credibility,

accuracy and quality of information is seldom questionable.
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Secondary data can be general and vague and may not really help
companies with decision making

The information and data may not be accurate. The source of the data
must always be checked

The data maybe old and out of date

The sample used to generate the secondary data may be small

The company publishing the data may not be reputable

OBJECTIVE

- To study the efficient supply chain of amul

- to study Inventory Optimization

- To study Transportation cost optimization

- to study Replenishment of the Material or Product whenever

required
- To study Better Distribution and logistics

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 FINDINGS
1) Direct milk bill payment to farmers. After every 10 days cycle
payment has made to farmers.

2) Produce meeting to be conducted at DCS level for the better

transparency and improvement in trust level.

3) Amul focus on that to maintaining good rates in flush season.

4) Random visit of quality person to attend the reception , collection of

doubtful samples and adulteration test. All per strictly monitored for
good since .

5) Veterinary service started at all target area.

6) Amul provides good quality of cattle feed to Amul milk producers.

7) Bonus to milk producer for year 2014-15. Distributed near about 7

core rupees farmers on bank.

8) Amul provided milk adulteration kit at per level .it helps to know
identify the Milk adulteration at per.

9) FSSAI license to societies- All the per have applied for food & drugs
license

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 10) Lack of Awareness in consumers. any peoples are not know about

Othere products of amul for ex - amul chocolate

11) As ' found that the main product of Amul is milk and company firstly
wants to capture maximum market share in milk market which
is approx. 66%. after it Amul is concentrating upon other dairy and

12)The recall of amul advertisement in mind of peoples is not good which shows
lack of catchy and attractive advertisements.

'13) Its advertisement is not using any brand ambassador which attract sell
age group people like cadbury.

14) There is lack of Sales Promotional Activities i.e. free tattoo, , toys,
contest etc

15 ) Amul brand name has very good image in consumer’s mind and
they consider it as Pure and good Product.

[57]
 CONCLUSION
AMUL risen from 'indian soil and it remains 'indian in every sense.
with roots well established in the domestic market Amul is all set to
fight in the global arena with the commitment it has shown in the past
it will not be too long when Amul emerges a winner on all fronts. There
is ample scope in the low priced segment as also in other categories
where consumers presently are dissatisfied with the quantity being
provided &is a &is the price being charged.

As we know that Amul is very big organisation and market leader in

dairy products. 'that has maximum market share in milk, butter and
cheese, which are its main and core products. As we know Amul is a
co-operative organisation but their other products are not profitable
we cannot ignore it them because the market for these products are
emerging day by day but with the help of research, and suitable
strategies it may make them profitable

[58]
AMUL, is playing a vital role in serving the rural class & contribution for
the economic upLiftment of farmers. It is helping the farmers by giving
them all facilities to rural people by supplying fodder & feed, improving
the breed by artificial insemination with the help of their veterinary
services. AMUL is reaping profit by equipping the latest technology&
producing better quality products. It is serving the best quality milk &
milk products to its customers, thereby maintaining their top position
in the market. It has atomized manufacturing and every process is
computerized. In other words, through automation

The survey is resulted into following conclusion

AMUL must come up with the new promotional techniques and

Advertisement techniques

Quality is the dominating aspect which influence" consumer to purchase

AMUL product, but prompt availability of other brands and aggressive
promotional activities by others influences the consumer towards them
and also leads to increase sales .of products of the other players

People are mostly satisfied with the quality of AMUL but for diversify and
to expand AMUL has to use aggressive selling techniques and attractive
style of sales promotion to attract the coustmer

[59]
 RECOMMENDATION AND SUGGESTIONS

-Tie-up with local suppliers and farmers to increase the production and
local procurement of milk

WHICH HELPS IN

• Reduces travel time and transportation cost → increasing lead time

• Reduces wastage due to souring of milk

• No high investment capital involved

• Assurance of supply

- Invest in high yielding cows/buffalos for existing farmers using a

Micro finance model

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WHICH HELPS IN

• Increase milk yield per cow from 10-15 litres per day to 25 litres per
day

• Farmers will earn more

• Micro finance enables the farmers to invest and upgrade their cattle
Improve Logistics in Transportation by continuing integration with the
Railway System

WHICH HEPS IN

• 50% savings on transport costs lessen the price hikes by due to

transportation cost

• prevent the risk of accidents on the road • High investment cost on

railway cooling units avoid delays in transportation due to traffic on

roads

[61]
 BIBLOGRAPHY

- https://www.ibm.com/in-en/topics/supply-chainmanagement

- https://en.wikipedia.org/wiki/Supply_chain_management

- http://www.amul.com/index.php

- https://en.wikipedia.org/wiki/Amul

- https://www.amuldairy.com/

- https://fdocuments.in/document/amul-brand-

[62]
 BOOKS

- ESSENTIALS OF SUPPLY CHAIN MANAGEMENT

BY: Hugos, Michael H.

- PRINCIPLES OF SUPPLY CHAIN MANAGEMENT

BY: Joel D. Wisner
- LEAN SUPPLY CHAIN AND LOGISTICS MANAGEMENT
BY: Paul Myerson,

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