AMUL SUPPLY CHAIN MGMT

Submitted to Submitted by

Ms. Nupur ChopraAsst. ProfessorNIFT, Gandhinagar

Garima JoshiVinay PrajapatiM.F.Tech, Sem-IINIFT, Gandhinagar

KEY FACTS• 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

• 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

• 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 • Cheese Products• Bread Spreads• Milk Drinks & Desserts• Fresh Milk

Non-Dairy• Instant Food• Snacks• Veg. Oils

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.

III. Supplier logistics –

– Weighing the milk.– Determining of fat content.– Calculation of the purchase price.

EVOLUTION of ‘IT’• Implementation of an ERP program as low as Rs. 3 corers

in collaboration with TCS ltd.

• 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.

EVOLUTION of ‘IT’…

• VATS network between all the level of distribution network and GCMMF.

• Maintains details regarding the inventory management.

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.

STRUCTURE OF IS

CONTINUED…

• 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.

CONTINUED…

• 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.

CONTINUED…

• 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.

CONTINUED…

• 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.

CONTINUED…

• 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.

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.

CONTINUED…

• 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.

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

CONTINUED…

• 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.

AMUL PATTERN

A three tier cooperative structure:

• Dairy cooperative society at village level

• Milk union at district level

• Milk federation at state level

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

• 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

• 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

• 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

Farmers

Village CooperativeSocieties (with Chilling Units)

Village CooperativeSocieties (without Chilling Units)

Local Restaurants/Other Milk related businesses

Milk Sold toVillage &Local Residents

Milk ProcessingUnion &Warehouses

Warehouses

Wholesalers

Retailers Home DeliveryContractors

CONSUMERS

• Network Services• Veterinary Services• Animal Husbandry• Animal Feed Factory• Milk Can Producers• Agriculture University• Rural Mgmt Institute• Trucking Facilities

Chilling Plants

CONSUMERS

AMUL SUPPLY CHAIN

DISTRIBUTION PROCESSCompany

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

MERITS OF MANAGING LARGE NETWORK

• 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• Amul has 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. (Executed)

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 FOR BETTER LOGISTICS

• 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