amul scm repoort

7/29/2019 Amul Scm Repoort

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A Project Reporton

AMULS SUPPLY CHAIN MANAGEMENT

Submitted To : ASSO. PROF. A SRI NIVASA RAO

Submitted By : ITEE GUPTA-15


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INDEX

1) INTRODUCTION TO AMUL . . . . . . . . . . . . . . . . . . ..3

2) STRATEGIES OF AMUL . . . . . . . . . . . . . . . . . . . . . 5

3) AMULS SUPPLY CHAIN MANAGEMENT . . . . . . . . . . . 6

4) GCMMFS SUPPLY CHAIN . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

5) E- SUPPLY CHAIN MANAGEMENT OF AMUL . . . . . . . . . . . 13

6) AMUL CYBER STORE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

7) BENEFITS OF E-SCM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

8) FUTURE PLANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

9) BIBLIGRAPHY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21


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Introduction

The Kaira District Co-operative Milk Producers Union Limited,popularly known as Amul Dairy is a US $ 500 million turnoverinstitution.

It is a institution built up with a network of over 10000 Village Co-operative Societies and 500,000 plus members.

Formed in the year 1946 Amul is the leading food brand in India. Amul initiated the dairy co-operative movement in India and formed an

apex cooperative organization called Gujarat co-operative MilkMarketing Federation (GCMMF) and today 70,000 villages and 200districts in India are part of it.

GCMMF markets its products through 50 sales offices throughout India

and distribution is done through a network of 4,000 stockiest who in turnsupply 500,000 retail outlets.

Managed by an apex cooperative organization, Gujarat Co-operativeMilk Marketing Federation Ltd. (GCMMF), which today is jointlyowned 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).

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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.

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Strategy of Amul

Amuls strategy is broadly divided into two components:

The first one is the collection chain and the second one is the Supply chain. Thecollection chain starts from weighing the milk to determination of the fatcontent in the milk to finally calculation of the purchase price.

While the supply chain starts from storing the milk to processing the milk tofinally distributing the milk.

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Amuls Supply Chain Management

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AMUL SUPPLY CHAIN MANAGEMENT PRACTICES

AMUL is a dairy cooperative in the western India that has been primarilyresponsible, through its innovative practices, forIndia to become the worldslargest milk producer. The distinctive features of this paradigm involvesmanaging a large decentralized network of suppliers and producers,simultaneous development of markets and suppliers, lean and efficient supplychain, 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, ahierarchical network of cooperatives was developed, this today forms therobust supply chain behind GCMMFs endeavours. The vast and complexsupply chain stretches from small suppliers to large fragmented markets.

Management of this network is made more complex by the fact thatGCMMF is directly responsible only for a small part of the chain, with a

number of third party players (distributors, retailers and logistics supportproviders) playing large roles. Managing this supply chain efficiently iscritical as GCMMF's competitive position is driven by low consumer

prices supported by a low cost system of providing milk at a basic, affordableprice.

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The distribution network

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

GCMMF transacts on an advance demand draft basis from its wholesale dealersinstead of the cheque system adopted by other major FMCG companies. This

practice is consistent with GCMMF's philosophy of maintaining cashtransactions throughout the supply chain and it also minimizes dumping.

Wholesale dealers carry inventory that is just adequate to take care of the transittime from the branch warehouse to their premises. This just-in-time inventorystrategy improves dealers' return on investment (ROI). All GCMMF branchesengage in route scheduling and have dedicated vehicle operations.

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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 cooperativeslinked in a hierarchical fashion.

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

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

Third Party Logistics Services:In addition to the weaknesses in thebasic infrastructure, logistics and transportation services are typically notprofessionally managed, with little regard for quality and service. In addition to

outbound logistics, GCMMF takes responsibility for coordinating with thedistributors to assure adequate and timely supply of products. It also works withthe Unions in determining product mix, product allocations and in developing

production plans. The Unions, on the other hand, coordinate collection logisticsand support services to the member-farmers. In what follows we elaborate onthese aspects in more detail and provide a rationale for the model and strategiesadopted by GCMMF.

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Simultaneous Development of Suppliers and Customers:

From the very early stages of the formation of AMUL, the cooperative realizedthat sustained growth for the long-term was contingent on matching supply and

demand. The member-suppliers were typically small and marginal farmers withsevere liquidity problems, illiterate and untrained. AMUL and other cooperativeUnions adopted a number of strategies to develop the supply of milk and assuresteady 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 thereceipt of milk. For the long-term, the Unions followed a multipronged strategyof education and support.

For example, only part of the surplus generated by the Unions Is paid to themembers 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 wereentrusted to third parties. These include logistics of milk collection, distributionof dairy products, sale of products through dealers and retail stores, someveterinary services etc. It is worth noting that a number of these third parties arenot in the organized sector, and many are not professionally managed. Hence,while third parties perform the activities, the Unions and GCMMF havedeveloped a number of mechanisms to retain control and assure quality andtimely deliveries. This is particularly critical for a perishable product such asliquid milk.

Coordination for Competitiveness

Coordination is one of the key reasons for the success of operations involvingsuch an extensive network of producers and distributors at GCMMF. Some

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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 toensure that the interest of the farmer is always kept at the top of the agendathrough its representatives who constitute the Boards of different entities that

comprise the supply chain. This form of direct representation also ensures thatprofessional managers and farmers work together as a team to strengthen thecooperative. This helps in coordinating decisions across different entities aswell as speeding both the flow of information to the respective constituents anddecisions.

Coordination Agency: Unique Role of Federation

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

Supplier Enhancement and Network servicing

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

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GCMMFS SUPPLY CHAIN

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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 endusers using internet technologies.

E-SCM refers to the complex network of relationship that organizationsmaintain with trading partner to source, manufacture and deliver the

products.

Components of E-SCM

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E-SCM Diagram of Amul

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Working of E-SCM

Amul has installed over 3000 automatic milk collection system units(AMCUS) at village societies to capture member information, milk fatcontent 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 fatcontent

The value of the milk is printed out on the slip and handed over to thefarmer ,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 plannedscheduled

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

ERP software named as enterprise wide integrated application systemcovers a operation like planning advertisement and promotion anddistribution network planning.

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

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Supply & Distribution

At the supply end a computerized database has been setup of all suppliers& their cattle.

Computer equipment measures & records qualities & quantities collected.

At the distribution end stockists have been provided with basic computerskills. Amul experts assist them in building promotional web pages.

Amul Cyber stores have been setup in India, USA, Singapore and Dubai

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Amul Cyber Store

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Strong Initiatives in E-commerce

Amul has linked distributors to the network & also incorporated webpages of top retailers on their website

Distributors can place their order on website amulb2b.com

Automated supply & delivery chain Practices just in time supply chain management with six sigma accuracy

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Benefits of E-SCM

Supports exchange of real time information Platform independent Web visibility & processing capability 24/7 Return on investment

It has open internet application architecture which allows for Rapid

deployment & scalability combining unlimited users in real timeenvironment

Incorporates broadcast & active messaging

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Future Plans

Introduce Internet Banking Services & ATMs which will enable Milksocieties to credit payments directly to sellers bank account

Officials at amul are looking at upgrading the plastic cards which arebeing currently used only for identification purposes, to smart cardswhich can be used to withdraw cash from ATMs.

Expansion of distribution network, creative marketing, consumereducation and product innovation, we will leverage effectively on risingincome levels and growing affluence among Indian consumers.

Tapping the rising demand for new value-added products.

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Bibliography

1. Extracted from Operation Management (6th Edition) by Russell & Taylor.

2. Extracted from www.www. amul .com for information aboutproducts and supply chain management.

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