PRESENTATION ON

SUPPLY CHAIN MANAGEMENT

OF

AMUL

Presented by:

Karishma BhavnaniNikunj GajaraChandan PahelwaniKinjal Pokar

Presented to:Dr. Tejash Pujara

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INDIAN DAIRY INDUSTRY

India is world’s largest producer of dairy products by volume.

It is accounting more than 13% of world’s total milk production.

Also India is world’s largest consumer of dairy products, consuming almost all of its own milk production.

Indian dairy market is growing at an annual rate of 7%. 2

CONT…

Interests from private sector investors have facilitated construction of larger dairies through partnering with dairy processors.

Indian dairy industry is different from other dairy producing countries as India places its emphasis on both cattle and buffalo milk.

India nevertheless faces a milk supply gap due to increasing demand from a growing middle class population.

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CHALLENGES FACED BY INDIAN DAIRY INDUSTRY

Procurement (collection)

• The three-tier system of milk collection

Advent of organized retail channels

• Increased availability of branded, packaged milk

• Reduced role of middlemen, mainly the milk vendors

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Distribution

• Lack of superior cold-storage transport

• Distribution wastage due to improper storage

• No enforcement of HACCP principles

Lack of supporting information systems

• Database maintained by Milk Producers Organizations in developed countries

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AMUL

Type - Cooperative

Industry - Dairy

Founded - 1946

Key people - Dr. Verghese Kurien

Milk Producers 52.8 million

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KEY FACTS

AMUL means priceless in Sanskrit “Amoolya”

Brand name managed by an apex cooperationorganization –GCMMF

World’s biggest vegetarian cheese brand

World’s largest pouched milk brand

Largest food brand in India

Spurred the white revolution in India

Accreditation with 9001 and HACCP certification by QAS,Australia.

GCMMF

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Year of Establishment 1973

Members17 District Cooperative Milk

Producers' Unions (16 Members & 1 Nominal Members)

No. of Producer Members 3.18 Million

No. of Village Societies 16,117

Total Milk handling capacity per day

13.67 Million litres per day

Milk Collection (Total - 2011-12) 3.88 billion litres

Milk collection (Daily Average 2011-12)

10.6 million litres (peak 13 million)

Milk Drying Capacity 647 Mts. per day

Cattle feed manufacturing Capacity 3690 Mts. per day

Sales Turnover -(2011-12) Rs. 11668 Crores (US $2.5 Billion)

GCMMF - An Overview

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1. QUALITY

2. VALUE FOR MONEY

3. AVAILIBILITY

4. SERVICE

STRATEGICAL PILLERS OF AMUL

AMUL PRODUCT’S DIVERSIFICATION

Dairy

• Cheese Products

• Bread Spreads

• Milk Drinks & Desserts

• Fresh Milk

Non-Dairy

• Instant Food

• Snacks

• Veg. Oils

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PRODUCTS

Bread Spreads

Milk Drinks

Powder Milk

Fresh Milk

Cheese

For Cooking

Chocolate 12

MARKET SHARE

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AMUL MODEL

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SUPPLY CHAIN

MANAGEMENT

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LOGISTICS PROCESS

I. Logistics in collection –

6 million liters of milk per day

From about 10,600 separate village cooperativesocieties.

Approximately 2.8 million milk producingmember.

II. Logistics in coordination of –

Storing the milk.

Processing the milk.

Distributing the milk.

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CONT…

III. Supplier logistics –

Weighing the milk.

Determining of fat content.

Calculation of the purchase price.

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EVOLUTION OF “IT”

The evolution of IT in AMUL was took place inthe guidance of DR.B.M Vyas.

The milk collection center at villagecooperative societies, were first automated.

Data analysis software utilization for milkproduction estimation and increasingproductivity.

VATS network between all the level ofdistribution network and GCMMF.

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AUTOMATIC MILK COLLECTION UNIT

SYSTEM

BENEFITS OF IT

Processing of 10 Million payments daily, amounting totransactions worth USD 3.78 million in cash.

Radical changes in business processes - eliminatingmiddlemen.

Improved delivery mechanisms and transparency ofbusiness operations.

Due to this process, AMUL is able to collect six millionlitres of milk per day.

Huge reduction in processing time for effectingpayments to the farmers from a week to couple ofminute.

CONT…

Movement of 5000 trucks to 200 dairy processingplants twice a day in a most optimum manner.

Practicing just in time supply chain management withsix sigma accuracy.

Online order placements of Amul’s products on theweb.

Distributors can place their orders on the website.

Amul exports products worth around US$ 25million to countries in West Asia, Africa and USA.

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There is improvement in quality of milk in term of acidity and sour milk

Milk union records show 2% reduction in the amount of the sour milk received from the union

Improved microbiological quality of upcoming raw milk in the form of methylene blue reduction

This gives better shelf life to the product

TOTAL QUALITY MANAGEMENT

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Friday Departmental meetings: to disscuss issues related to quality.

Distribution Process

Company

Wholesaler Dealer Franchisee

Retailer

Consumers

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THE CHANNEL NETWORK

Procurement channel- upstream flow

Distribution channel- downstream flow

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PROCUREMENT

Activities at the village level compriseddeveloping and servicing the VCSs.

Increasing milk collection, procuring milk, andtransporting it to the chilling and processing unitstwice a day.

The VCSs provided the farmers with good qualityanimal feed, fodder, and other services likeveterinary first aid.

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PROCUREMENT CHANNEL(UPSTREAM)

On an average around thousand farmers come to sellmilk at their local co-operative milk collection center.

Each farmer has been given a plastic card foridentification.

At the milk collection counter, the farmer drops thecard into a box and the identification number istransmitted to a personal computer attached to themachine.

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

CONT…

Both these details are recorded in the PC. Thecomputer then calculates the amount due tofarmer on the basis of the fat content.

The value of the milk is then printed out on aslip and handed over to farmer who collects thepayment at adjacent window.

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COLD STORAGE NETWORK

Chillers in proximity of villages

Prompt transport to district facilities forfurther dispatch to consumers/ processingunits.

Chilled trucks to transport processed products

Delivery to local chillers by insulated railtankers and chilled trucks.

Refrigerators and freezers with retailers anddepartmental stores to retain freshness. 32

DISTRIBUTION

GCMMF coordinated with various unions to get aregular supply of milk and dairy products.

The processed milk and dairy products wereprocured from district dairy unions and distributedthrough third party distributors.

To ensure quality and timely deliveries, GCMMF andthe district unions had several mechanisms inplace.

The unions monitored the supplies of milk and thedistribution of finished products.

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DOWNSTREAM FLOW

First leg

Manufacturing units to company depots using 9 and 18 MT trucks

Frozen food below -18 C

Dairy wet 0-4 C

Second leg

Depots to WDs

Transport through insulated 3 and 5 MT TATA 407’s

Third leg

WDs to retailers

Transport through rickshaws34

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REVERSE LOGISTICS

MILK CHURN from dairy to VCS

BOTTLEfrom retailer to dairy

DAMAGED PRODUCTS from customer to retailer then to dairy

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POUCH MILK TRAYfrom retailer to dairy

DIRECT RETAILING

Amul has recently entered into directretailing through "Amul Utterly Delicious"parlors created in major cities.

Amul has plans to create a large chain ofsuch outlets to be managed byfranchisees throughout the country.

More than 2000 parlor with a turnover ofRs. 200 crores.

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THANK YOU…

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