SUPPLY CHAIN MANAGEMENT

GROUP NO. 2

 AMIT RAI – 10
 SHUBHANGI CHOUHAN – 61

 KULVINDER PATHANIA – 27

 PRATEEK CHHABRA – 16

 ASHISH SONAWARE – 29

 GAURAV CHOUHAN – 57
 AMUL
 Type - Cooperative

 Industry - Dairy

 Founded - 1946

 Key people - Dr. Verghese kurien

 Revenue - INR 67.11billion (2008-2009)

 Employee - Marketing arm: 735

Milk producers: 2.8 million

 KEY FACTS

 AMUL means priceless in Sanskrit “Amoolya”

 Brand name managed by an apex cooperation organization –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: AN OVERVIEW
 Members
 13 district cooperative milk producers Union

 No. of Producer Members

 2.79 million

 No. of Village Societies

 13,328

 Total Milk handling capacity

 11.22 million liters per day
CONT…
 Milk collection (Total - 2008-09): 3.05 billion liters.

 Milk collection (Daily Average 2008-09): 8.4 million liters

 Milk Drying Capacity: 626 Mts. per day

 Cattle feed manufacturing Capacity: 3500 Mts. per day

VALUE CHAIN PROCESS
 AMUL PRODUCT’S DIVERSIFICATION

Dairy
Non-Dairy
Cheese Products
Instant Food
Bread Spreads
Snacks
Milk Drinks & Desserts
Veg. Oils
Fresh Milk
 PRODUCTS

 Bread Spreads

 Milk Drinks

 Powder Milk

 Fresh Milk

 Cheese

 For Cooking

 Chocolate
MARKET SHARE
PRODUCT SHARE

 Amul butter - 86%

 Ice cream - 36%

 Chocolate - 10%

 Ghee - 20%

 Skimmed milk powder - 40%

 PROBLEMS TO BE ADDRESSED
I. Logistics in collection –

 6 million liters of milk per day

 From about 10,600 separate village cooperative societies.
 Approximately 2.8 million milk producing member.

II. Logistic in coordination of –

 Storing the milk.

 Processing the milk.
 Distributing the milk.
CONT….

III. Supplier logistics –

Weighing the milk.

Determining of fat content.
Calculation of the purchase price.
 EVOLUTION OF “IT”
 The evolution of IT in AMUL was took place in the guidance of
DR.B.M Vyas.

 The milk collection center at village cooperative societies, were first

automated.

 Application and utilization of GIS.

 Data analysis software utilization for milk production estimation and

increasing productivity.

 VATS network between all the level of distribution network and

GCMMF.
 SHIFT PROCESS
 The company zeroed in on ERP as means to keep
pace with dynamically changing business
environment.

 TCS was hired to guide them in its implementation.

 The project was named as Enterprise wise integrated

application system (EIAS)
 IMPLEMENTATION
 Amul start implementation of ERP in phases.

 Automatic milk collection system units(AMCUS) at

village society were installed in the first phase to
automate milk production logistics.

 AMCUS facilities to capture member information, milk

fat content, volume collected, and amount payable to
each member electronically.
CONT….

 Amul also connected its zonal offices, regional

offices and member’s dairies through VSATs.
 The customized ERP- EIAS has been
implemented across the organization
integrating various operational departments.
 Amul is also using Geographic Information
Systems (GIS) for business planning and
optimization of collection processes.
CONT…
 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.
 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.
 Farmers can have access to information related to milk
production, including best practices in breeding and rearing
cattle.
 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.
CONT…

 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.
 Farmers can have access to information related to
milk production, including best practices in breeding
and rearing cattle.
 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.
AUTOMATIC MILK COLLECTION SYSTEM
UNITS (AMCUS)
 REAPING RETURNS

 Radical changes in business processes - eliminating

middlemen .
 Improved delivery mechanisms and transparency of business
operations.
 Due to this process, AMUL is able to collect six million litres of
milk per day.
 Huge reduction in processing time for effecting payments to the
farmers from a week to couple of minute.
 Processing of 10 Million payments daily, amounting to
transactions worth USD 3.78 million in cash.
CONT..
 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.
 Online order placements of Amul’s products on the web.

 Distributors can place their orders on the website.

 Amul exports products worth around US$ 25 million to countries in

West Asia, Africa and USA.
 TOTAL QUALITY MANAGEMENT MODEL

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

milk.

 Sabor 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.

 Program like Red Tag Day was launched for cleaning the milk
collection center.
 AMUL PATTERN

A three tier cooperative structure:

 Dairy cooperative society at village level

 Milk union at district level

 Milk federation at state level

 ORGANIZATION STRUCTURE
LEVEL MEMBERS
State District level Chairpersons,
Registrar of Co-operatives,
Federation
NDDB Representative,
Technical Expert, CEO
Chairpersons of Village Dairy
DistrictCo-operative Societies, BOD,
MD
Milk Producers, Managing
Village Committee
DECISION-MAKING
• Price paid to district
unions (fixed across
unions)
• Product mix and quantity
• Price paid to village
co-operative societies
• Membership
• Price paid to milk
suppliers
 VILLAGE DAIRY COOPERATIVE SOCIETY
(VDCS)

 Collection of surplus milk & payment based on quality &

quantity.

 Providing support services to the members.

 Selling liquid milk for local consumers of the village.

 Supplying milk to the District Milk Union

DISTRICT COOPERATIVE MILK PRODUCERS’
UNION (MILK UNION)

 Procurement of milk from the Village Dairy Societies of

the District.

 Arranging transportation of raw milk from the VDCS to the

Milk Union.

 Providing input services to the producers.

 Conducting training on Cooperative development

CONT..
 Providing management support & regular supervision to the
VDCS.

 Establish Chilling Centers & Dairy Plants for processing the

milk.

 Selling liquid milk & milk products within the District.

 Process milk into various milk & milk products.

 Decide on the prices of milk to be paid to milk producers.

 STATE COOPERATIVE MILK FEDERATION
(FEDERATION)

 Marketing of milk & milk products

 Establish distribution network

 Arranging transportation from the Milk Unions to the market.

 Creating & maintaining a brand

 Providing Technical Inputs, management support & advisory services.

 Decide on the products to be manufactured at various Milk Unions

(product-mix)
 Conduct long-term Milk Production, Procurement, Processing &
Marketing Planning
 Conflict Resolution & keeping the entire structure intact
GCMMF’S SUPPLY CHAIN
 DISTRIBUTION PROCESS

Company
Dealer Franchisee
Wholesaler

Retailer

Shopkeeper

Consumers
THE CHANNEL NETWORK

 Procurement channel- upstream flow

 Distribution channel- downstream flow

 PROCUREMENT
 Activities at the village level comprised developing and servicing the
VCSs.

 Increasing milk collection, procuring milk, and transporting it to the

chilling and processing units twice a day.

 The VCSs provided the farmers with good quality animal feed,
fodder, and other services like veterinary first aid.
PROCURNMENT CHANNEL

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

local co-operative milk collection center.
 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.
 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.
 COLD STORAGE NETWORK

 Chillers in proximity of villages

 Prompt transport to district facilities for further dispatch to

consumers/ processing units.

 Chilled trucks to transport processed products

 Delivery to local chillers by insulated rail tankers and chilled trucks.

 Refrigerators and freezers with retailers and departmental stores to

retain freshness.
 DISTRIBUTION
 GCMMF coordinated with various unions to get a regular supply of milk
and dairy products.

 The processed milk and dairy products were procured from district dairy
unions and distributed through third party distributors.

 To ensure quality and timely deliveries, GCMMF and the district unions
had several mechanisms in place.

 The unions monitored the supplies of milk and the distribution of finished
products.
 DOWNSTREAM FLOW

 First leg
 Manufacturing units to company depots using 9 and 18 MT trucks
 Frozen food-below 18C

 Dairy wet-0-4C

 Second leg
 Depots to WDs
 Transport through insulated 3 and 5 MT TATA 407’s

 Third leg
 WDs to retailers
 Transport through rickshaws according to the beat plan
 REVERSE LOGISTICS

MILK CHURN
 from dairy to VCS

POUCH MILK TRAY

from retailer to dairy

BOTTLE
from retailer to dairy

DAMAGED PRODUCTS
from customer to retailer then to dairy
LESSONS FOR MANAGING LARGE NETWORKS

 Long term perspective

 Simultaneous development of markets and suppliers.

 Network partnership Vs. ownership

 Cost leadership and value for money

 Technology and Information Sharing

 DIRECT RETAILING
 Amulhas recently entered into direct retailing through
"Amul Utterly Delicious" parlors created in major cities.

 Amul has plans to create a large chain of such outlets

to be managed by franchisees throughout the country.

 More than 2000 parlor with a turnover of 200 crore.

 EXPANSION PLAN

 Tie up with the Wal Mart

 Export is in 15 countries.

 Plan to open 10000 Amul parlor by the end of the 2010.

 MISSION 2020
Very ambitious future plan –

 Turnover of 27000 crore.(three fold increase in the group turn

over.)

 Milk production 33.1 million liter/day.

 Milk drying capacity 200 mt/day

 AMUL (RECENTLY IN NEWS)

 Milk via milk train.

 Tie up with Adani Logistics.

 50 wagon each capacity 24k liter.

 Initial transport cost was 40 crores ,reduce it to half.

THANK YOU………..