amul supply chain
- 1. Amul Supply Chain Process & Management Made by: Esther Mary Johnson Harsh Shah Karan Shah Rutvej Takpere 1
- 2. Table of contents: Sr.No Particulars Page No. 1. Title 1 2. Executive Summary 3 3. Introduction 4 4. Amul Products 5 5. Supply Chain Management of Amul 7 6. Challenges Faced 11 7. Future – Steps to be taken to Improve Supply Chain Process of Amul 14 8. Conclusion 15 9. Bibliography 16 Executive summary 2
- 3. We the students of Thadomal Shahani Centre for Management have made a research report on the “Supply Chain of Amul”. For this study, we have considered secondary data from dependable and genuine sources and compiled them. All information stated by us is verified and then used for the same. Through our research work we have tried to explain the supply chain management of Amul on the best words we could put forth. Amul is a dairy corporative in the western part of India which was primarily responsible various innovative practices which lead in India being world’s largest producers for milk. The feature which keeps it distinct because of the paradigm is the large decentralized network of producers and suppliers, various developments of markets and suppliers, efficient supply chain management and a good leadership. A hierarchical network of cooperatives was developed to implement their vision also to retain focus on the farmers. The objective of the supply chain was that the small fragmented milk producers should receive maximum possible remuneration and also create products which cost low but are high in quality. The availability as well as good service to the suppliers and the customers was a priority. Finally, we have given the conclusion of the study. Through this report, we can analyse that how the supply chain of Amul operates and what could be done to improve the same. Introduction 3
- 4. The name Amul was derived from the Indic word “AMULYA” which suggests “Priceless”. Amul is an Indian cooperative dairy company, which is based at Anand, Gujarat. formed in 1956, cooperative brand Amul was and it is a managed by Marketing Federation Gujarat Co-operative Milk Ltd. (GCMMF). Today, GCMMF is jointly owned by 3.6 million milk producers In Gujarat. Amul was headed by Tribhuvandas Patel under the guidance of Sardar Vallabhbhai Patel. As they moved forward, they encouraged Indians to encourage white revolution, which made the country the world’s largest producer of milk and milk products. As a result, Karia District Milk Limited was established in 1946 which was the first milk union where they started with 250 litres per day. But with the increasing awareness of the benefits of cooperativeness, there was an increase in the collection of milk. At the present time, Amul collects 11 lakh litres of milk every day. To overcome the problem of the milk getting spoiled because of external factors and also because of the location factor, various chilling units were created at various junctions for the preservation of milk. Today Amul has more than 150 chilling centres across various villages as milk is being collected from almost most 1075 societies. Amul grew by strength to strength all thanks to the inspired leadership of Tribhuvandas Patel who then became the founding chairman of one if the biggest cooperative and led it until his death. He latter hired Kurien, founder-chairman of the GCMMF for more than 30 years (1973– 2006), he is credited with Amul’s marketing success. AMULS’s strategy is broadly classified into 2 parts- The first part is the ‘Collection Chain’ and the latter part is the ‘Supply Chain’. From weighing the milk to determining the fat content in the milk to the final calculation of the purchase price comes under Collection Chain. The Supply chain merely focuses on storing the milk to the milk processes and then its distribution. The vivid supply chain has helped Amul to venture into markets overseas. Amul- Anand Mill Union Limited Amul has 9 world class automation manufacturing plants around India. There are total 81 Amul plants around India including all the middlemen. Amul is the leading milk producer of India. Amul Products 4
- 5. Amul product line: Amul milk Roti softener Amul Camel Milk Bread spread Cheese UHT Milk Beverage range Amul Pro Ice Cream Paneer Dahi Ghee Milk Powder Mithai Mate Chocolates Lactose Free Milk Fresh Milk Amul Sour cream Pouch Butter Milk Amul cattle Feed Recipes Happy Treats 5
- 6. Channels Extension: Amul preferred outlets Amul ice-cream parlour Amul railway stalls Amul Kiosks 6
- 7. Supply chain management of Amul The Business Model of Amul includes: Customers: The demand today for dairy product in India is still in an evolutionary stage with tremendous potential for high value products such as ice cream, cheese, butter etc. Suppliers: A majority of the suppliers are small or marginal farmers who are illiterate, poor and with liquidity problems as they lack direct access to financial institutions. Suppliers of Amul are all over India. The biggest strength of Amul are their farmers. They believe in their farmers for quality milk produced by them. Third party logistics services: The outbound logistics, GCMMF takes responsibility for coordinating with the distributors to assure timely supply of products, collection logistics and support service to the member farmers. Simultaneous development of suppliers and customers: Amul and other cooperative Unions adopted a number of strategies to develop the supply of milk and assure growth. First, for the short term, the procurement prices were set so as to provide for the milk supply was produced with minimum delay. This particular practice continues today with many village societies making payment upon receipt of the milk. Managing third party service provider: Their tasks include logistics of milk collection, distribution of dairy products, sale of the products through dealers and retail store. Inter-locking control: The objective to develop such an interlocking system is to ensure that the interest of the farmers is always kept at the top of their agenda through its representatives who constitute the Boards of different units that comprise the supply chain. Coordination agency: 7
- 8. Its role is to ensure that all the farmer’s produce gets sold in the market in the form of raw milk or as value added product to an increasingly large section of the society at affordable prices. Supplier enhancement and network servicing: The main objective is to ensure that producers get maximum benefit and to resolve all their problems. They also manage procurement of milk that comes via truck and tankers. They negotiate contracts with tankers and ensures availability of trucks for procurement, establish truck roots, monitor truck movement and prevent stealing of milk while it is being transported. Gujarat Cooperative Milk Marketing Federation (GCMMF) Supply Chain As shown in the figure above, the supply chain of Amul consists of farmers who produce milk from their cattle. The farmers are organised into cooperatives called Village Cooperative Societies (VCS). These VCS supply milk to thirteen different dairy cooperatives, called Unions, of which Amul is one. The milk or milk products are made at these unions which are further supplied to the Gujarat Cooperative Milk Marketing Federation (GCMMF). The GCMMF is the marketing unit for the products of all the unions in the state of Gujarat. GCMMF has 42 regional distribution centres in India, serves over 500,000 retail outlets and exports to more than 14 8
- 9. countries. All these organizations are independent legal entities yet tied together with a common destiny! The eventual goal of the GCMMF is to benefit the farmers through this hierarchical supply chain that includes diverse kinds of entities ranging from small suppliers to large uneven markets. The success of Amul can be attributed to the quality of products, the economic pricing and the trust that it has imparted in its customers since its inception. E-supply chain management Amul uses E-supply chain management for faster functioning. Working of E-Supply chain management Amul has installed around 3000 automatic milk collection system units (AMCUS) at village societies to capture member information, amount payable and milk fat content to each member. Each and every member is given plastic card for indentification. Computer automatically calculates amount due to the farmer on the basis of fat content. The value of milk is then printed out on the slip which is then handed over to the farmer, who collects the payment from the end-to-end window. Thus, as per the above process farmer gets their payment within minutes. On the logistics side, more than 5000 trucks collect milk from 200 dairy processing plants twice a day with proper and carefully planned schedule. Every day Amul collects 24 lakh litter from 2.6 million farmers and converts the milk into packaged products and deliver its product over to 500000 retail outlets across the country. ERP software named as Enterprise Wide Integrated Application system covers operations like planning, advertisements, distribution and promotion. Each and every office are connected via internet and all of them send daily data of sales and inventory to the main system at Anand. Supply and distribution At the supply end, a computerized data base has been setup of all their suppliers and their cattle. 9
- 10. Technologcal equipments measures and records qualities and quantities collected. At the distribution end, stockists are provided with basic computer skills which is assisted by Amul executive. Amul has also set up their cyber cell in India, USA, Dubai and Singapore. 10
- 11. Challenges faced: Challenges faced by Amul as a company Farmers are not interested in selling to VCS mostly because of higher prices given by private local diaries even though they are receiving all supports from GCMMF. Number of dairy farmers coming down due to urban migration from villages and more lucrative contract agricultural cash crop farming in Gujarat. Farmers hire no longer want to be a farmer as they want to explore urbane society for jobs in factory etc. Increasing cost of inputs to farmers for cattle feeds, scarcity of grassland due to poor rain Competition from international and national brands likes Nestle, Godrej, ITC, Nilgiries etc in non-milk products with greater qualities. Increasing competition in milk and milk products from local state co-societies like MILMA at lesser cost. Increasing 3PL and local transportation costs 11
- 12. Challenges faced by Amul’s Supply Chain There are various challenges that are met at various levels. Few challenges that are met at different levels are stated below: At the Value Chain - Meeting the seasonal spikes in demand - Complexity in logic of payments based of fat content - Keeping track of tanker and truck routes At the Production & Standardization Stage Level - Time consuming processes for standardization of milk because of manual handling - Efficient accounting as well as tracking of fat in the production process At Suppliers’Level - Animals being inadequately fed - More prone to disease - Farmers being exploited - Cost of production being high - Payments getting delayed At Collection Level - Gap in passing of information - Absence of screening systems - Need of better infrastructure - Quality of milk being manipulated by farmers At Processing Stage Level - Fluctuating supply - Adulterations & safety of food products - Lack of skilled as well as trained workers At Storage & Logistics Stage Level - Lack of chilling units - Gap in transport facilities At Corporative Level - Lesser number of farmers - Lower participation in decision making process - Inefficiency in services 12
- 13. - Lowers prices of milk 13
- 14. Future – Steps to be taken to Improve Supply Chain Process of Amul Improvise The Branding and Advertising of Amul Products Codification of raw materials in an easy to understand manner Payment to the suppliers of milk on time and as per their need In order to improve the quality, educating suppliers Using technology to connect farmers with veterinary doctors when they need it Breeding and Cross –breeding of animals to produce milk Make products information available to the consumers through Amul.com Widening and integrating information technology at village level Active customer feedback and its incorporation in product line. Improve Relationships with the business associates that is Wholesalers Implementing SGA’s (Small Group Activities) to understand the problem and come up with the counter measures 14
- 15. Conclusion: Amul has played a vital role in serving the rural class and contributing to their economic welfare through their vast supply chain which generated job opportunities for many and also took care of their daily needs. Amul has been helping farmers by giving them good facilities by providing them with feed and fodder, necessary veterinary services etc. Amul has been reaping benefits on the introduction of latest technology for their supply chain which has increased in the quality of the products. The benefits of an effective supply chain management was that it lead to reduction in lead time, faster inventory turnover, increased warehouse, space reduction in safety stock and better utilization of the working capital. They have computerized all their manufacturing process. There are quite a few challenges which is earlier stated in the report. If those challenges are met, then it will have a positive effect for Amul. In spite of the challenges, they have been able to maintain a top position in the market with good recognition. 15
- 16. Bibliography: 1. https://www.slideshare.net/strategian/supply-chain-management-of-Amul-supply-chain- management 2. https://www.Amul.com/m/about-us 3. https://www.slideshare.net/pramodvishe/Amul-supply-chain-management 4. https://rksupplychainmanagement.wordpress.com/supply-chain-Amul/ 5. http://www.Amul.com/ 6. https://www.slideshare.net/pramodvishe/Amul-supply-chain-management 16