EXECUTIVE SUMMARY
Title: Understanding the Importance of Distribution Channel in Supply Chain Management (Amul Pouch Milk). Organization: “Gujarat Co-operative Milk Marketing Federation (GCMMF), Anand, Gujarat”. Objective: • Calculate the Loading and Unloading Time of the Crates from the Truck. • To Calculate the Kilometers from the Biosar Plant to the Drop Point of the Distributors. • To Analyze the Trucksheet of the Distributors and do Area Mapping. • To Calculate the Transportation Cost of the Distributors. • To Calculate the Returns On Investments of the Distributors. Research Methodology: Research type was First Hand, Explanatory and Descriptive. The research was done through visiting Plant of the Organisation, Travelling along with Trucks, visiting the Distributors drop points and personally meeting them. All the information which has been collected is First Hand. Data Analysis: The data analysis has done region wise. Route mapping for every distributor is set according to the route and timing of delivery to each distributor. Trucksheet of each distributor was used for the purpose of Area Mapping Conclusion: Amul has around 60 percent of milk market share in Nallasopara Area.
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INTRODUCTION AND HISTORY
The brand name Amul means “AMULYA”. This word derived from the Sanskrit word “AMULYA” which means “PRICELESS”. A quality control expert in Anand had suggested the brand name “AMUL”. The Kaira District Cooperative Milk Producers’ Union Limited was established on December 14, 1946 as a response to exploitation of marginal milk producers in the city of Anand (in Kaira district of the western state of Gujarat in India) by traders or agents of existing dairies. Producers had to travel long distances to deliver milk to the only dairy, the Polson Dairy in Anand – often milk went sour, especially in the summer season, as producers had to physically carry in individual containers. These agents decided the prices and the off-take from the farmers by the season. Milk is a commodity that has to be collected twice a day from each cow/buffalo. In winter, the producer was either left with surplus unsold milk or had to sell it at very low prices. Moreover, the government at that time had given monopoly rights to Polson Dairy (around that time Polson was the most well known butter brand in the country) to collect milk from Anand and supply to Bombay city in turn (about 400 kilometers away). India ranked nowhere amongst milk producing countries in the world in 1946. The producers of Kaira district took advice of the nationalist leaders, Sardar Vallabhbhai Patel (who later became the first Home Minister of free India) and Morarji Desai (who later become the Prime Minister of India). They advised the farmers to form a Cooperative and supply directly to the Bombay Milk Scheme instead of selling it to Polson (who did the same but gave low prices to the producers). Thus the Kaira District Cooperative was established to collect and process milk in the district of Kaira. Milk collection was also decentralized as most producers were marginal farmers who would deliver 1-2 liters of milk per day. Village level cooperatives were established to organize the marginal milk producers in each of these villages. The first modern dairy of the Kaira Union was established at Anand (which popularly came to be known as AMUL dairy after its brand name). The new plant had the capacity to pasteurize 300,000 pounds of milk per day, manufacture 10,000 pounds of butter per day, 12,500 pounds of milk powder per day and 1,200 pounds of Casein per day. Indigenous R&D and technology development at the Cooperative had led to the successful production of skimmed milk powder from buffalo milk – the first time on a commercial scale anywhere in the world.
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The foundations of a modern dairy industry in India had just been laid as India had one of the largest buffalo populations in the world. We move to year 2000. The dairy industry in India and particularly in the State of Gujarat looks very different. India for one has emerged as the largest milk producing country in the world. Gujarat emerges as the most successful State in terms of milk and milk product production through its cooperative dairy movement. The Kaira District Cooperative Milk Producers’ Union Limited, Anand becomes the focal point of dairy development in the entire region and AMUL emerges as one of the most recognized brands in India, ahead of many international brands. Starting with a single shared plant at Anand and two village cooperative societies for milk procurement, the dairy cooperative movement in State of Gujarat had evolved into a network of million milk producers (called farmers) who are organized in 10,411 milk collection independent cooperatives (called Village Societies). These Village Societies (VS) supply milk to thirteen independent dairy cooperatives (called Unions). AMUL is one such Union. Milk and milk products from these Unions are marketed by a common marketing organization (called Federation). Dr Verghese Kurien, former chairman of the GCMMF, is recognised as a key person behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF.
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Figure 1 and 2 together show the structure and the range of activities in this extensive network.
Figure 1: Describes the hierarchical nature of the cooperative structure
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Figure 2: Presents the supply chain linking farmer-suppliers of milk with the Millions of consumers.
GCMMF has 42 regional distribution centers in India, serves over 5,00,000 retail outlets and exports to more than 15 countries. All these organizations are independent legal entities yet loosely tied together with a common destiny.(In a recent survey GCMMF was ranked amongst the top ten FMCG firms in the country while AMUL was rated the second most recognized brand in India amongst all Indian and MNC offerings). Interestingly, the Gujarat movement spread all over India and a similar structure was replicated (all are at different levels of achievement but their trajectory appears to be quite similar). Two national organizations, the National Dairy Development Board (NDDB) and the National Co-operative Dairy Federation of India (NCDFI) were established to coordinate the dairy activities through cooperatives in all the States of the country. The former provides financing for development while the latter manages a national milk grid and coordinates the deficit and surplus milk and milk powder across the states of India. In the early nineties, AMUL was asked by the Government of Sri Lanka to establish a dairy on similar lines in Sri Lanka. Interestingly, while Polson folded up sometimes in 1960s, the cooperatives are
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faced with new competition in liberalizing India – from MNCs who brought in new business paradigms, new and improved product portfolio, international network and immense financial support. The Cooperatives face new challenges that test the robustness of their approach and their commitment to the movement and a new style of management thinking. Today AMUL is a symbol of many things. Of high-quality products sold at reasonable prices. Of developing and coordinating a vast co-operative network. Of making a strong business proposition out of serving a large number of small and marginal suppliers. Of the triumph of indigenous technology. Of the marketing savvy of a farmers' organization. Indian Dairy Industry -- A Profile: India’s dairy sector is expected to triple its production in the next 10 years in view of expanding potential for export to Europe and the West. Moreover with WTO regulations expected to come into force in coming years all the developed countries which are among big exporters today would have to withdraw the support and subsidy to their domestic milk product sector. Also India today is the lowest cost producer of per liter of milk in the world, at 27 cents, compared with the US’ 63 cent The urban market for milk products is expected to grow at an accelerated pace of around 33% per annum to around Rs.83, 500 crores by year 2012. This growth is going to come from the greater emphasis on the processed food sector and also by increase in the conversation of milk into milk products. By 2012, the value of Indian dairy produce is expected to be Rs 10, 00,000 million. Co-Operative Unions:
Backward integration of the process led the cooperatives to advances in animal husbandry and veterinary practice. The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk besides acting as a channel to market the production enhancement package. It does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic up liftmen and common good. Recently the Indian cooperative movement got a much needed facelift. With competition snapping at its heels, the sector which has been governed by arcane laws until the recent past will see a special provision inserted in the companies Act, 1956.
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All the cooperative unions will be rechristened cooperative companies; they will come under the purview of the registrar of companies, instead of the registrar of cooperatives. The dairy board's programs and activities seek to strengthen the functioning of dairy cooperatives, as producer-owned and controlled organizations. NDDB supports the development of dairy co-operatives by providing them financial assistance and technical expertise, ensuring a better future for India's farmers. Over the years, brands created by cooperatives have become synonymous with quality and value. Brands like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among those that have earned customer confidence.
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13 million in India 1,22,534 Villages in India 176 District Unions in India 3.0 million in Gujarat 15,332 villages in Gujarat 13 District Unions in Gujarat 22 State Fedns. in India
GCMMF in Gujarat
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Some of the major dairy cooperative federations include ? Andhra Pradesh Dairy Development Co-operative Federation Ltd
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(APDDCF) ? Bihar State Co-operative Milk Producers Federation Ltd (COMPFED) ? Gujarat co-operative Milk Marketing Federation Ltd (GCMMF) ? Haryana Dairy Development Cooperative Federation Ltd. (HDDCF) ? Himachal Pradesh State Cooperative Milk Producers Federation Ltd (HPSCMPF) ? Karnataka Cooperative Milk Producers Federation Ltd (KMF) ? kerala State Cooperative Milk Marketing Federation Ltd (KCMMF) ? Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF) ? Maharashtra Rajya Sahkari Maryadit Dugdh Mahasangh (Mahasangh) ? Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF) ? Punjab State Cooperative Milk Producers Federation Ltd (MILKFED) ? Rajasthan Cooperative Dairy Federation Ltd (RCDF
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Amul Secret Of Success: Amul has been able to: Produce an appropriate blend of the policy maker’s farmer’s board of management and the professionals: each group appreciating its role and limitations. Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment. Provide a support system to the milk producers without disturbing their agro- economic systems. Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers. Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change. The Union looks after policy formulation, processing and marketing of milk, provision of technical inputs to enhance milk yield of animals, the artificial insemination service, veterinary care, better feeds and the like - all through the village societies. Basically the union and cooperation of people brought Amul into fame i.e. AMUL (ANAND MILK UNION LIMITED), a name which suggest THE TASTE OF INDIA. Amul (Anand milk union ltd.) is based on four hands, which are coordinated with each other. The actual meaning of this symbol is coordination of four hands of different people by whom this union is at the top position in Asia.
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First hand is of farmers, without whom the organization would not have existed. Second hand is of processors, who process the raw material (milk) into finished goods. Third hand is of marketer, without whom the product would have not reached the customers. Fourth hand is of customers, without whom the products would have not carried on.
GCMMF Overview:
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Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) is the largest organization in FMCG industry engaged in marketing of milk & milk products under the brand names of AMUL and SAGAR with an annual turnover exceeding Rs 9000 crores. GCMMF is a unique organization. It's a body created by Farmers, managed by competent professionals serving a very competitive and challenging consumer market. It is a true testimony of synergistic national development through the practice of modern management methods. Vision: GCMMF will be an outstanding marketing organization, with specialization in marketing of food and dairy products both fresh and long life with customer focus and IT integrated. The network would consist of over 100 offices, 7500 stockiest covering at least every taluka. Head quarter servicing nearly 10 lakh outlets with a turnover of Rs.10,000 Cr and serving several co-operatives.GCMMF shall also create markets for its products in neighboring countries.
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Mission: We at GCMMF endeavor to satisfy the taste and nutritional requirements of the customer of the world through excellence in the marketing by our committed team. Through co-operative networking, we are committed to offering quality product that provides best value for money. Organization Structure: Organization Structure is divided into two parts: • • External Organization Structure Internal Organization Structure
? External Organization Structure External Organization Structure is the organization structure that affects the organization from the outside. State Level Marketing Federation. District Milk Product Union Ltd. Village Milk Product Union Ltd. Villager s
As we know, GCMMF is unit of Gujarat Milk Marketing Federation, which is a co-operative organization. The villagers of more than 10000 villages of Gujarat are the bases of this structure. They all make village milk producers union, district level milk producers union and then a state level marketing federation is established. The structure is line relationship, which provides easy way to operation. It also provides better communication between two stages.
? Internal Organization Structure:
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The following is internal organization chart of Amul: Organization Structure Chart
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Production Function:Explosion of the production technology and changes in technical field is going to bring out revolution in the industry sector which eventually gives stand to study and favors the come backing subject i.e. production and management. Production and operation management is planning, organizing, staffing, directing and controlling of all the production system those portions of organization that convert inputs into products and services. In general production system takes raw material, personnel, machines, buildings and other resources and produce products and services. The core of production system is its conversion subsystem where in workers; raw materials are used to convert inputs into products and services. This production department is at heart of the firm, as it is able to produce low cost products and superior quality in timely manners. Thus, there arises enormous need of giving due importance to this department as a whole and a strong concrete base being foundation pillars of a manufacturing organization, if the intention is to succeed domestically and globally. Distribution Network: Most producers work with marketing intermediaries to bring their products to market. The marketing intermediaries make up a marketing channel also called distribution channel. Distribution channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. The Head Office of GCMMF is located at Anand. The entire market is divided in 5 zones. The zonal offices are located at Ahmedabad, Mumbai, New Delhi, Kolkata and Chennai. Moreover there are 49 Depots located across the country and GCMMF caters to 13 export markets.
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A zero level of channel also called a direct marketing channel consists of a manufacturer selling directly to the final customers. A one level channel; contains one selling intermediary such as retailer to the final customers. A two level channel two intermediaries are typically wholesaler and retailer. A three level channel are typically wholesaler, retailer and jobber in between. GCMMF has an excellent distribution. It is its distribution channel, which has made it so popular. GCMMF’s products like milk and dahi are perishable. It becomes that much important for them to have a good distribution.
Distribution Channel
Product s | Age nts | Wholesal er | Retail er | Consum er
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We can see from above figure that GCMMF distribution channel is simple and clear. The products change hands for three times before it reaches to the final consumer. First of all the products are stored at the Agents end who are mere facilitators in the network. Then the products are sold to wholesale dealers who then sell to retailers and then the product finally reaches the consumers. GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations. Upstream Channel in which milk is procured from the farmers to the manufacturing units.
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In the first step, the milk is taken to the VCS by the farmers on foot or bicycles in small quantities. The second step involves the transportation of milk from the cooperatives to the manufacturing units this is done in special trucks which are equipped with tankers to carry milk.
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Downstream Channel, it is the distribution part of the supply chain. From the manufacturing units to the retailers: • First leg of transport is from the manufacturing unit to the company depots.
• Frozen food the temperature of these trucks is kept below -18?C • Dairy wet the temperature of these trucks is kept between 0-4?C
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Second leg is from the depot to the WD’s, this transport is carried out in insulated 3 and 5 MT TATA 407’s here a permanent dispatch plan (PDP) is prepared where the distributor plans out the quantity of various products to be ordered on a particular date.
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• Third leg this is the flow of good from WD’s to retailers, a beat plan is prepared and transportation is done on auto-rickshaws, rickshaws and bicycles.
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Managing Competition: The Indian market is dominated by a large number of small local and regional players. There are an estimated 150 manufacturers in the organized segment, which accounts for 30-35% of sales and about 1000 units in the unorganized segments of the market. In the organized segment the significant brands are Kwality Walls , Vadilal, Amul, Havmor, Mother dairy and Baskins & Robbins. GCMMF is facing very tough competition from both in and outside India. Amul combats competition from its competitors by providing quality products at a price which its customers value. Along with good quality products and reasonable price the packaging is also very good. Most of its products are available in many flavors. Excellent advertising backs its products and helps GCMMF (AMUL) to leave its competitors a tough time. Also Amul has come out with Amul Parlours to cater to various segments of customers. Amul has a very strong Brand Image in the Domestic market. Many products are exported by GCMMF. Sales Turnover: Sales turnover of GCMMF from 2000 to 2012:Sales Turnover Rs. (Million)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
22588 23365 27457 28941 29225 37736 42778 52554 67113 80050 90000 11200
Areas Operation:
of
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Besides India, AMUL has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African nations. Other potential markets being considered include Sri Lanka. Achievement & Awards: Amul: Asia’s largest dairy co-operative was created way back in1946 to make the milk producer self-reliant and conduct milk- business with pride. Amul has always been the trend setter in bringing and adapting the most modern technology to door steps to rural farmers. Amul created history in following areas:
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First self motivated and autonomous farmers “organization comprising of more than 5000000 marginal milk producers of Kaira District” Created Dairy co-operatives at village level functioning with milk collection centers owned by them. Computerized milk collection system with electronic scale and computerized accounting system. The first and only organization in world to get ISO 9000 standard for its farmer’s co-operatives. First to produce milk from powder from surplus milk. Amul is the live example of how cooperation amongst the poor marginal farmers can provide means for the socio-economic development of the under privileged marginal farmers.
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Awards:
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Magsaysay award for community leadership presented in manila, Philippines to Shri Tribhuvandas Patel, Shri D N Khurody and Shri V. Kurien 1965: “Padmshri” awarded was given to V. Kurien, general manager, by the president of India. 1987: “Best Productivity” awarded by national productivity council for the year 1985-86 awarded to Amul dairy.
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1988: “Best Productivity” awarded for the second successive year 198687 by the president of India, Mr. R. Venkatrao to kaira union.
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1993: “ICA” Memento towards genuine and self sustaining cooperative worldwide ICA regional office for Asia and pacific, New Delhi, 1996. 1999: G.B.Birla award. Moreover the Amul union has achieved the prestigious ISO 9001-2000 HACCP Certificate and effects are got to obtain ISO 14000. 1999: Best of All" Rajiv Gandhi National Quality Award for the year. 2003: The Gujarat Co-operative Milk Marketing Federation Ltd. has emerged as the top scorer in the service category of the prestigious IMC Ramakrishna Bajaj National Quality Award. 2006-07: GCMMF has bagged award for excellent performance in exports of dairy products from Agricultural and Processed Food Exports Development Authority (APEDA).
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2007: Amul Pro-Biotic Ice-cream gets No. 1 Award at World Dairy
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Summit.
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OBJECTIVES AND SCOPE OF THE PROJECT
Objectives of the Project
• To Calculate the Loading and Unloading Time of the Crates from the Transporting Vehicle. • To Calculate the Kilometers from the Biosar Plant to the Individual Drop Points of the Distributors. • To Calculate Returns On Investments of all the Distributors in Nallasopara Area. • To Analyze the Trucksheet of the Retailers and do an Area mapping accordingly.
Scope of the Project
• It gives the Information about the Distributors Channel of the Company. • It threw some lights on the Distributors Investments. • Distributors act as the mediators for the Supply of the Milk Products to the Local Area. • It gives Information about the Time Consumed by each truck to deliver the Products to each Different Distributor. • It provides suggestions to the company to improve their distribution techniques. • It will help to calculate the time to delivery and give the distributor proper timing to deliver the product.
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BREIF INTRODUCTION TO DISTRIBUTORS
For taking an agency of Amul an individual needs to have a basic initial investment of Rs. 10000. This sum of amount is kept with the company as bank Guarantee on which a Distributor earns Interests. With some additional basic paper work an individual may gets the distributorship of Amul, once everything is verified and trustworthy, he would start receiving the Amul products. Anyone can become the distributor of Amul. At morning around 5.00 the distributors get his ordered products. For receiving the order a fixed place is selected and is called as drop point. He can then start delivery of milk and after the end of the day, he need to accumulate all the empty crates and keep them at the same drop point. On second day the truck driver would drop unload the ordered crates and will load the empty crates. This process goes on and on. Amul has three different Amul products departments and are as follows:• Dairy • Ice-cream • Dairy Products. There are overall 17 Distributors of Amul pouch milk and are situated at different places. In Nallasopara W. we have Following Distributors:• Mahalaxmi Distributors • Bhoomi Distributors • Ashtavinayak Distributors • Jai Jivdani • Datta Sai • Siddhakala Agency In the East region of Nallasopara we have following Distributors. • Yash • Deva • 2D • Thakkar Enterprises • Thakkar Dairy • Riddhi Siddhi
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• Central Park Dudh Vitralak Kendra • Riddhi Raj • Santoshi Dudh • Mourya Milk • Om Sai Collection.
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RESEARCH METHODOLOGY
The research was conducted from 21st May to 21st July, 2012. The research includes meetings with the Distributors, Truck drivers, Retailers and Biosar Plant Staff. It included Sheets provided by the Vimal Riaz (GCMMF) which has to be answered by Distributors. I went with the trucks to know the route and noted down the timing of reaching to each distributor and delivering and then again leaving for another distributor. I noted down the route which truck was following. The views of the above parties are mentioned in the Report. I visited Vasudhara manufacturing plant located at boisar, Mumbai. I saw the overall process of Milk, lassee, Dahi Production. I also studied the loading of products in refrigerated trucks and which was going to the Distributors and also saw the unloading Process. I also calculated the time of loading and unloading of the crates. For Calculation of Returns on Investments, I went to all the Distributors and asked for the required Information and calculated their Returns.
The Business Model.
The objective of the network was to deliver profitable and equitable returns to a large number of farmers for a long period of time. This follows rather directly from the fact that the member farmers own essentially the network of cooperatives. An additional objective was to develop the supplier over the long term through social change. Consequently, the business model had to include both the costs and benefits of services that would be needed to deliver milk with high productivity as well as to assist farmers in improving their social environment. The success of the network depended on high collection rate of milk. This required increasing membership with more VSs, raising the number of members per VS, and improving the milk yield (i.e., better cattle management), constant concern about the cost to farmers in the network and delivering quality to customers at low prices. The cooperative had decided as part of its value: • To charge for each service provided to the supplier. • To purchase all milk that member farmers produced • To sell liquid milk at affordable prices so as to serve a large number of consumers.
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• To develop and deliver services that will improve lives of people in the network. • To hire professional managers, to run the federation and unions, whose values included upliftment of rural poor class. It is noteworthy that from the very beginning, in the early 1950s, Amul adopted the network as the basic model for long-term growth. Two aspects of this network deserve special attention. First, the network explicitly includes secondary services to the farmersuppliers. Second, several of the entities in the network are organized as cooperatives linked in a hierarchical fashion.
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DATA COLLECTION AND ANALYSIS
All data which were collected was Firsthand. For the same I visited the Biosar Plant and travelled through the same truck which was responsible for the delivery of Amul Products. With this trip I got an experience of the route of the drivers and also about the time taken by them to reach the first Drop point of the ADA. I was responsible for the Following products: • Amul Tazza 500X20 • Amul Tazza 1000X10 • Amul Tazza 5000X2 • Amul Gold 500X20 • Amul Gold 1000X10 • Amul Gold 5000X2 All this products starts loading after 17:45 from the Biosar plant so that can leave the Plant for Mumbai and drop the Milk to ADA’s on Time. The Vehicles have a Capacity of around 750 crates to 850 crates each. The Vehicles start leaving the Plant at 19:00. The Vehicles for Nallasopara area leaves around 22:00 because the distance from the Plant to the Nallasopara is approx 80 KMs. In Biosar Plant only Amul Tazza is produced. Amul Gold is produced at Vashi Plant and is transported to Biosar Plant, and from Biosar plant it gets transported to Biosar Zone. In between, drivers tend to have a small break of around 20 minutes. Many drivers have a small meet at that place and stops for talk and tea. The Overall Nallasopara Area comprises of 4.5 kms in all. This includes the East and West regions. All the Crates which are placed in the vehicles have some ice cubes in it. This helps the perishable product last longer and increases there shelf lives. The trucks use the route of National Highway 8 for the transportation of Amul Products The truck after leaving from Plant opt NH8 and then take a turn to Vasai Phata and through Evershine Road, they
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enter into Nallasoapara. Trucks Drivers don’t come from Nallasopara Phate so as to avoid the expenses of toll. From vasai phate they can freely enter into the city and then they move to Nallasopara Area. For calculating loading and unloading time of the crates I went and calculated the time with the stop watch of my cell phone. It normally varies as the drivers are only responsible for the same process. If the driver is strong enough to pick the filled crates and put them to the place and it take less time. I also collected all the required information for the process of Area Mapping. I took the Trucksheet from every distributor and mapped them accordingly. I used google map for this purpose.
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OBSERVATIONS AND FINDINGS
The distribution Channel of Amul is Strong in nature. I visited at the Biosar Plant of Amul – Vasundhara Dairy. In this plant the products which are produced are as follows:• Amul Tazza • Amul Masti Dahi • Lassee • Flaavyo The Production of Amul Gold is not done in Boisar plant. It is produced in Vashi plant and then transported here. The requirement of Amul Gold is very limited, as this milk is not used for daily purpose consumptions. It is mostly preferred by sweet makers and a little bit is consumed in house for daily purposes. The cost of production is more and returns are less. Hence the decision for producing Amul Gold at one plant and then transporting it to other plants help the company to maintain their production process effectively. For delivering Amul Products, company has maintained a contract with some truck owners. This truck owners / drivers are responsible for daily transport of goods from plant to the individual drop points of the distributors. The Biosar plants serves to the some areas in Mumbai and are as follows:Zone 1: Biosar to Naigoan Biosar Umroli Palghar Kelve Road Shafale Vaitarna Virar Nallasopara Vasai Naigoan Zone 2: Bhayander to Mira Road
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Bhayander Mira Road Zone 3: Dahisar to Goregoan Dahisar Borivali Kandivali Malad Goregoan Zone 4: Jogeshwari to Andheri Jogeshwari Andheri.
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While the process of loading is on, one of the officers of Vasundhara Dairy keeps an eye as to check the total of crates which needs to be load in the truck and get it matched from the receipt. The truck drivers are responsible for loading and unloading. They do it very well. It require huge amount of manual efforts. They pick the crates and unload them. 1 crate consists of 40 pouches of 500 ml each. It requires huge muscle power as the weight is also high. Some of the Distributor has started their business from scratch and are doing well. Some of them have taken the agencies are not maintaining by own, they hire some people to work for them. Some of the distributors work by their own resources, they don’t have any one to help and this makes more profit as compared to others. The crates need to be returned by the distributors. The crates are kept at the drop point of individual distributors and are taken back by the truck drivers at the time of delivery. Some truck drivers do it on the spot after unloading the filled crates, while some do it later when all the delivery is done. While calculating the loading and unloading time of the crates it was found that for a single filled crate to get unload it takes 20 minutes and the speed of that increases with the decrease in time taken for same. The example is taken of Ashtayinayak Agency in Nallasopara (W). The time in stop watch was 02:17 when the unloading process started and it ended at 02:40 in the night. There were 339 crates at that day. And for unloading they took 6 minutes for 339 crates. Hence they took 1.8 seconds each for unloading the crates from their truck to the individual drop points of the distributors. This is quite an accurate figure as it was calculated with the help of STOPWATCH. It was found that once the crates breaks then it stand of no use. In fact it results in spoilage of pouch milk and results in loss. It affects the productivity of the company. The drivers are fully responsible for it, but the loss is faced by distributors. It is the policy of the company that once the products are delivered than it’s the responsibility of the distributors to face the losses of damage. In case of calculating Kilometers, I travelled through the delivery trucks and found that the routes are standards and they are regular. With the help of SPEEDOMETER, while leaving the Vasundhara Dairy Plant, the time was calculated with the help of trucks speedometer and it was 57675 and while reaching the first drop point of the ADA Datta Sai it was 57748. The overall time taken to reach the first drop point was 2 hours and the Distance is 73 Kilometers. I came to the exact kilometers from the plant to the first drop point. It was also calculated that the overall Nallasopara Market was only 4.5 kilometers and hence the delivery process was short. It was also observed that around 5 trucks are responsible for delivery process in the Nallasopara Area, which comprises of east as well as west regions. In east there are around 3 trucks and in west there are 2 trucks assigned for transportation purposes.
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For every business Returns On Investments plays a crucial role. In the business of Distribution connection are very important. The business of Milk Distribution yields a regular return as no credit is given, and it is never ending business. I observed that Returns on Investments in this business are less as compared to other businesses but are gradual. It is a onetime investment. The Truck many times produces bad smell. This smell is because of the fallen milk. At the time of loading, due to some of the damaged pouch, the milk fells on the truck. These trucks are not washed regularly and hence they produce bad smell. Though the end customer is not aware of the issue, but it is important to check that out. It shows bad impression on the distributors. While communicating to the drivers it was noticed that the water facility was not provided at the plant so that the truck drivers wash their truck. It is also a duty of the truck drivers to maintain hygiene. Certain distributors are not literate enough to understand the billing pattern; they need to be explained properly about what their bill is all about. They don’t even know about crates deductions. Certain distributors maintain milk products of others brands also. This results in losses to Amul Company. The process goes as follows:The customer comes at around 3:00 in the noon time in a kirana stores / milk shop and ask for Amul pouch milk. She gets it from the shop. Later at around 7:30 in the evening another customer enters in a shop and ash for Amul Milk. Till this Amul milk pouch which the retailer had, has sold. The customer is served with some other milk product but not Amul as the quantity of amul which the retailer had was finished. The retailer was given the other brand by same Amul distributor. In this case if the retailer didn’t had the other brand then off course the customer would have been served by Amul and hence the sale of Amul was done. This overall process is affecting Amul company.
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Observations in case of Distributors All the processing and billing is done on the system called SAP. The distributors are not satisfied with this introduction as everything is on record. Earlier no perfect record was maintained. In SAP whole transaction between the distributor and the Company gets processed. It include Purchase details, Issued / received of crates, etc. The distributors with huge volumes make more money as their fixed cost remains same for e.g. one distributor who owns a vehicle for transport is bearing a cost of 500 for 30 crates. This cost includes all expenses faced by distributor for one day. If his volumes increases than his profit would also increase and the fixed cost would remain same. Some distributors wanted to shut their business as they were not satisfied with the services provided by GCMMF. The main reason was other distributors in same area and results in loss by both of the distributors. The customer enjoys the benefit. The reason for allowing distributorship in the same area is off course to boost up the profit. Distributors are also facing the problem of dumping. This makes them demotivated
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SUGGESTIONS AND RECCOMENSATIONS
• It was observed that the distributors are facing huge losses because of damages of the pouch milk. For this the people / drivers who are responsible for loading and unloading process should be provided more training so as to decrease the damages. The distributors are also facing the problem of dumping which make it impossible for them to forecast and give order for the next day as they currently have extra stock. Certain distributors are not literate enough to understand the billing pattern; they need to be explained properly about everything. Their doubts need to be cleared. The distributors of Amul should not be allowed to keep other milk products. And even if they maintain the same, they should be punished. The exclusive distributor of Amul needs to be given more attention. Certain schemes needs to entertain to the milk distributors shall be given so as to motivate them and increase our sales. Trucks which are used for transport of Amul Pouch Milk should be washed regularly. The production of Amul Tea Top should be stopped as it is not giving proper returns.
•
• • • • • •
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CONCLUSION
Amul means different things to different people. To a milk producer – A life enriching experience. To a consumer – An Assurance of having wholesome products. To a mother – A reliable source of nourishment for her family. To the country – Rural development and self reliance.
As we know that Amul is very big organization and market leader in dairy products. But there are places where the Amul products are not available so Amul can have a research on this topic and can supply products to that area.
Distribution network has been one of the major strength of Amul Company giving a tough competition to competitors.
Supply chain management can be the back bone of a company at it carries out the most difficult task of distributing the products to different regions and makes them available to consumers.
AMUL, being an FMCG company, attaches a lot of significance to the distribution aspect of its business. The distribution channel of AMUL holds a lot of potential in affecting the demand or sales of AMUL products through delivery on time, delivery of variety of products, the retailer friendliness of the policies being set by the distributors and equitable distribution of products to all the retail outlets in a particular region.
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Amul has successfully maintained very good relations with its stakeholders in the market. Stake holders like Distributors and Customers. Even the small Query of any distributor is solved within the time. Though the profit margin in Amul is less compared to its competitors, the distributors are happy to distribute Amul products. Amul is among one of the FMCG Company in India which help the country which is widely spread and performing for the welfare of the country.
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BIBLIOGRAPHY
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www.amul.com www.wikipedia.org www.googlemaps.com
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doc_205668994.doc
Title: Understanding the Importance of Distribution Channel in Supply Chain Management (Amul Pouch Milk). Organization: “Gujarat Co-operative Milk Marketing Federation (GCMMF), Anand, Gujarat”. Objective: • Calculate the Loading and Unloading Time of the Crates from the Truck. • To Calculate the Kilometers from the Biosar Plant to the Drop Point of the Distributors. • To Analyze the Trucksheet of the Distributors and do Area Mapping. • To Calculate the Transportation Cost of the Distributors. • To Calculate the Returns On Investments of the Distributors. Research Methodology: Research type was First Hand, Explanatory and Descriptive. The research was done through visiting Plant of the Organisation, Travelling along with Trucks, visiting the Distributors drop points and personally meeting them. All the information which has been collected is First Hand. Data Analysis: The data analysis has done region wise. Route mapping for every distributor is set according to the route and timing of delivery to each distributor. Trucksheet of each distributor was used for the purpose of Area Mapping Conclusion: Amul has around 60 percent of milk market share in Nallasopara Area.
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[2]
INTRODUCTION AND HISTORY
The brand name Amul means “AMULYA”. This word derived from the Sanskrit word “AMULYA” which means “PRICELESS”. A quality control expert in Anand had suggested the brand name “AMUL”. The Kaira District Cooperative Milk Producers’ Union Limited was established on December 14, 1946 as a response to exploitation of marginal milk producers in the city of Anand (in Kaira district of the western state of Gujarat in India) by traders or agents of existing dairies. Producers had to travel long distances to deliver milk to the only dairy, the Polson Dairy in Anand – often milk went sour, especially in the summer season, as producers had to physically carry in individual containers. These agents decided the prices and the off-take from the farmers by the season. Milk is a commodity that has to be collected twice a day from each cow/buffalo. In winter, the producer was either left with surplus unsold milk or had to sell it at very low prices. Moreover, the government at that time had given monopoly rights to Polson Dairy (around that time Polson was the most well known butter brand in the country) to collect milk from Anand and supply to Bombay city in turn (about 400 kilometers away). India ranked nowhere amongst milk producing countries in the world in 1946. The producers of Kaira district took advice of the nationalist leaders, Sardar Vallabhbhai Patel (who later became the first Home Minister of free India) and Morarji Desai (who later become the Prime Minister of India). They advised the farmers to form a Cooperative and supply directly to the Bombay Milk Scheme instead of selling it to Polson (who did the same but gave low prices to the producers). Thus the Kaira District Cooperative was established to collect and process milk in the district of Kaira. Milk collection was also decentralized as most producers were marginal farmers who would deliver 1-2 liters of milk per day. Village level cooperatives were established to organize the marginal milk producers in each of these villages. The first modern dairy of the Kaira Union was established at Anand (which popularly came to be known as AMUL dairy after its brand name). The new plant had the capacity to pasteurize 300,000 pounds of milk per day, manufacture 10,000 pounds of butter per day, 12,500 pounds of milk powder per day and 1,200 pounds of Casein per day. Indigenous R&D and technology development at the Cooperative had led to the successful production of skimmed milk powder from buffalo milk – the first time on a commercial scale anywhere in the world.
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The foundations of a modern dairy industry in India had just been laid as India had one of the largest buffalo populations in the world. We move to year 2000. The dairy industry in India and particularly in the State of Gujarat looks very different. India for one has emerged as the largest milk producing country in the world. Gujarat emerges as the most successful State in terms of milk and milk product production through its cooperative dairy movement. The Kaira District Cooperative Milk Producers’ Union Limited, Anand becomes the focal point of dairy development in the entire region and AMUL emerges as one of the most recognized brands in India, ahead of many international brands. Starting with a single shared plant at Anand and two village cooperative societies for milk procurement, the dairy cooperative movement in State of Gujarat had evolved into a network of million milk producers (called farmers) who are organized in 10,411 milk collection independent cooperatives (called Village Societies). These Village Societies (VS) supply milk to thirteen independent dairy cooperatives (called Unions). AMUL is one such Union. Milk and milk products from these Unions are marketed by a common marketing organization (called Federation). Dr Verghese Kurien, former chairman of the GCMMF, is recognised as a key person behind the success of Amul. On 10 Aug 2006 Parthi Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF.
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Figure 1 and 2 together show the structure and the range of activities in this extensive network.
Figure 1: Describes the hierarchical nature of the cooperative structure
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Figure 2: Presents the supply chain linking farmer-suppliers of milk with the Millions of consumers.
GCMMF has 42 regional distribution centers in India, serves over 5,00,000 retail outlets and exports to more than 15 countries. All these organizations are independent legal entities yet loosely tied together with a common destiny.(In a recent survey GCMMF was ranked amongst the top ten FMCG firms in the country while AMUL was rated the second most recognized brand in India amongst all Indian and MNC offerings). Interestingly, the Gujarat movement spread all over India and a similar structure was replicated (all are at different levels of achievement but their trajectory appears to be quite similar). Two national organizations, the National Dairy Development Board (NDDB) and the National Co-operative Dairy Federation of India (NCDFI) were established to coordinate the dairy activities through cooperatives in all the States of the country. The former provides financing for development while the latter manages a national milk grid and coordinates the deficit and surplus milk and milk powder across the states of India. In the early nineties, AMUL was asked by the Government of Sri Lanka to establish a dairy on similar lines in Sri Lanka. Interestingly, while Polson folded up sometimes in 1960s, the cooperatives are
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faced with new competition in liberalizing India – from MNCs who brought in new business paradigms, new and improved product portfolio, international network and immense financial support. The Cooperatives face new challenges that test the robustness of their approach and their commitment to the movement and a new style of management thinking. Today AMUL is a symbol of many things. Of high-quality products sold at reasonable prices. Of developing and coordinating a vast co-operative network. Of making a strong business proposition out of serving a large number of small and marginal suppliers. Of the triumph of indigenous technology. Of the marketing savvy of a farmers' organization. Indian Dairy Industry -- A Profile: India’s dairy sector is expected to triple its production in the next 10 years in view of expanding potential for export to Europe and the West. Moreover with WTO regulations expected to come into force in coming years all the developed countries which are among big exporters today would have to withdraw the support and subsidy to their domestic milk product sector. Also India today is the lowest cost producer of per liter of milk in the world, at 27 cents, compared with the US’ 63 cent The urban market for milk products is expected to grow at an accelerated pace of around 33% per annum to around Rs.83, 500 crores by year 2012. This growth is going to come from the greater emphasis on the processed food sector and also by increase in the conversation of milk into milk products. By 2012, the value of Indian dairy produce is expected to be Rs 10, 00,000 million. Co-Operative Unions:
Backward integration of the process led the cooperatives to advances in animal husbandry and veterinary practice. The system succeeded mainly because it provides an assured market at remunerative prices for producers' milk besides acting as a channel to market the production enhancement package. It does not disturb the agro-system of the farmers. It also enables the consumer an access to high quality milk and milk products. Contrary to the traditional system, when the profit of the business was cornered by the middlemen, the system ensured that the profit goes to the participants for their socio-economic up liftmen and common good. Recently the Indian cooperative movement got a much needed facelift. With competition snapping at its heels, the sector which has been governed by arcane laws until the recent past will see a special provision inserted in the companies Act, 1956.
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All the cooperative unions will be rechristened cooperative companies; they will come under the purview of the registrar of companies, instead of the registrar of cooperatives. The dairy board's programs and activities seek to strengthen the functioning of dairy cooperatives, as producer-owned and controlled organizations. NDDB supports the development of dairy co-operatives by providing them financial assistance and technical expertise, ensuring a better future for India's farmers. Over the years, brands created by cooperatives have become synonymous with quality and value. Brands like Amul (GCMMF), Vijaya (AP), Verka (Punjab), Saras (Rajasthan). Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur) are among those that have earned customer confidence.
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13 million in India 1,22,534 Villages in India 176 District Unions in India 3.0 million in Gujarat 15,332 villages in Gujarat 13 District Unions in Gujarat 22 State Fedns. in India
GCMMF in Gujarat
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Some of the major dairy cooperative federations include ? Andhra Pradesh Dairy Development Co-operative Federation Ltd
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(APDDCF) ? Bihar State Co-operative Milk Producers Federation Ltd (COMPFED) ? Gujarat co-operative Milk Marketing Federation Ltd (GCMMF) ? Haryana Dairy Development Cooperative Federation Ltd. (HDDCF) ? Himachal Pradesh State Cooperative Milk Producers Federation Ltd (HPSCMPF) ? Karnataka Cooperative Milk Producers Federation Ltd (KMF) ? kerala State Cooperative Milk Marketing Federation Ltd (KCMMF) ? Madhya Pradesh State Cooperative Dairy Federation Ltd (MPCDF) ? Maharashtra Rajya Sahkari Maryadit Dugdh Mahasangh (Mahasangh) ? Pradeshik Cooperative Dairy Federation Ltd (UP) (PCDF) ? Punjab State Cooperative Milk Producers Federation Ltd (MILKFED) ? Rajasthan Cooperative Dairy Federation Ltd (RCDF
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Amul Secret Of Success: Amul has been able to: Produce an appropriate blend of the policy maker’s farmer’s board of management and the professionals: each group appreciating its role and limitations. Bring at the command of the rural milk producers the best of the technology and harness its fruit for betterment. Provide a support system to the milk producers without disturbing their agro- economic systems. Plough back the profits, by prudent use of men, material and machines, in the rural sector for the common good and betterment of the member producers. Even though, growing with time and on scale, it has remained with the smallest producer members. In that sense, Amul is an example par excellence, of an intervention for rural change. The Union looks after policy formulation, processing and marketing of milk, provision of technical inputs to enhance milk yield of animals, the artificial insemination service, veterinary care, better feeds and the like - all through the village societies. Basically the union and cooperation of people brought Amul into fame i.e. AMUL (ANAND MILK UNION LIMITED), a name which suggest THE TASTE OF INDIA. Amul (Anand milk union ltd.) is based on four hands, which are coordinated with each other. The actual meaning of this symbol is coordination of four hands of different people by whom this union is at the top position in Asia.
• • • •
First hand is of farmers, without whom the organization would not have existed. Second hand is of processors, who process the raw material (milk) into finished goods. Third hand is of marketer, without whom the product would have not reached the customers. Fourth hand is of customers, without whom the products would have not carried on.
GCMMF Overview:
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Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) is the largest organization in FMCG industry engaged in marketing of milk & milk products under the brand names of AMUL and SAGAR with an annual turnover exceeding Rs 9000 crores. GCMMF is a unique organization. It's a body created by Farmers, managed by competent professionals serving a very competitive and challenging consumer market. It is a true testimony of synergistic national development through the practice of modern management methods. Vision: GCMMF will be an outstanding marketing organization, with specialization in marketing of food and dairy products both fresh and long life with customer focus and IT integrated. The network would consist of over 100 offices, 7500 stockiest covering at least every taluka. Head quarter servicing nearly 10 lakh outlets with a turnover of Rs.10,000 Cr and serving several co-operatives.GCMMF shall also create markets for its products in neighboring countries.
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Mission: We at GCMMF endeavor to satisfy the taste and nutritional requirements of the customer of the world through excellence in the marketing by our committed team. Through co-operative networking, we are committed to offering quality product that provides best value for money. Organization Structure: Organization Structure is divided into two parts: • • External Organization Structure Internal Organization Structure
? External Organization Structure External Organization Structure is the organization structure that affects the organization from the outside. State Level Marketing Federation. District Milk Product Union Ltd. Village Milk Product Union Ltd. Villager s
As we know, GCMMF is unit of Gujarat Milk Marketing Federation, which is a co-operative organization. The villagers of more than 10000 villages of Gujarat are the bases of this structure. They all make village milk producers union, district level milk producers union and then a state level marketing federation is established. The structure is line relationship, which provides easy way to operation. It also provides better communication between two stages.
? Internal Organization Structure:
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The following is internal organization chart of Amul: Organization Structure Chart
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Production Function:Explosion of the production technology and changes in technical field is going to bring out revolution in the industry sector which eventually gives stand to study and favors the come backing subject i.e. production and management. Production and operation management is planning, organizing, staffing, directing and controlling of all the production system those portions of organization that convert inputs into products and services. In general production system takes raw material, personnel, machines, buildings and other resources and produce products and services. The core of production system is its conversion subsystem where in workers; raw materials are used to convert inputs into products and services. This production department is at heart of the firm, as it is able to produce low cost products and superior quality in timely manners. Thus, there arises enormous need of giving due importance to this department as a whole and a strong concrete base being foundation pillars of a manufacturing organization, if the intention is to succeed domestically and globally. Distribution Network: Most producers work with marketing intermediaries to bring their products to market. The marketing intermediaries make up a marketing channel also called distribution channel. Distribution channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption. The Head Office of GCMMF is located at Anand. The entire market is divided in 5 zones. The zonal offices are located at Ahmedabad, Mumbai, New Delhi, Kolkata and Chennai. Moreover there are 49 Depots located across the country and GCMMF caters to 13 export markets.
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A zero level of channel also called a direct marketing channel consists of a manufacturer selling directly to the final customers. A one level channel; contains one selling intermediary such as retailer to the final customers. A two level channel two intermediaries are typically wholesaler and retailer. A three level channel are typically wholesaler, retailer and jobber in between. GCMMF has an excellent distribution. It is its distribution channel, which has made it so popular. GCMMF’s products like milk and dahi are perishable. It becomes that much important for them to have a good distribution.
Distribution Channel
Product s | Age nts | Wholesal er | Retail er | Consum er
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We can see from above figure that GCMMF distribution channel is simple and clear. The products change hands for three times before it reaches to the final consumer. First of all the products are stored at the Agents end who are mere facilitators in the network. Then the products are sold to wholesale dealers who then sell to retailers and then the product finally reaches the consumers. GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other major FMCG companies. This practice is consistent with GCMMF's philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. This just-in-time inventory strategy improves dealers' return on investment (ROI). All GCMMF branches engage in route scheduling and have dedicated vehicle operations. Upstream Channel in which milk is procured from the farmers to the manufacturing units.
•
In the first step, the milk is taken to the VCS by the farmers on foot or bicycles in small quantities. The second step involves the transportation of milk from the cooperatives to the manufacturing units this is done in special trucks which are equipped with tankers to carry milk.
•
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21
Downstream Channel, it is the distribution part of the supply chain. From the manufacturing units to the retailers: • First leg of transport is from the manufacturing unit to the company depots.
• Frozen food the temperature of these trucks is kept below -18?C • Dairy wet the temperature of these trucks is kept between 0-4?C
•
Second leg is from the depot to the WD’s, this transport is carried out in insulated 3 and 5 MT TATA 407’s here a permanent dispatch plan (PDP) is prepared where the distributor plans out the quantity of various products to be ordered on a particular date.
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• Third leg this is the flow of good from WD’s to retailers, a beat plan is prepared and transportation is done on auto-rickshaws, rickshaws and bicycles.
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Managing Competition: The Indian market is dominated by a large number of small local and regional players. There are an estimated 150 manufacturers in the organized segment, which accounts for 30-35% of sales and about 1000 units in the unorganized segments of the market. In the organized segment the significant brands are Kwality Walls , Vadilal, Amul, Havmor, Mother dairy and Baskins & Robbins. GCMMF is facing very tough competition from both in and outside India. Amul combats competition from its competitors by providing quality products at a price which its customers value. Along with good quality products and reasonable price the packaging is also very good. Most of its products are available in many flavors. Excellent advertising backs its products and helps GCMMF (AMUL) to leave its competitors a tough time. Also Amul has come out with Amul Parlours to cater to various segments of customers. Amul has a very strong Brand Image in the Domestic market. Many products are exported by GCMMF. Sales Turnover: Sales turnover of GCMMF from 2000 to 2012:Sales Turnover Rs. (Million)
2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12
22588 23365 27457 28941 29225 37736 42778 52554 67113 80050 90000 11200
Areas Operation:
of
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Besides India, AMUL has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African nations. Other potential markets being considered include Sri Lanka. Achievement & Awards: Amul: Asia’s largest dairy co-operative was created way back in1946 to make the milk producer self-reliant and conduct milk- business with pride. Amul has always been the trend setter in bringing and adapting the most modern technology to door steps to rural farmers. Amul created history in following areas:
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First self motivated and autonomous farmers “organization comprising of more than 5000000 marginal milk producers of Kaira District” Created Dairy co-operatives at village level functioning with milk collection centers owned by them. Computerized milk collection system with electronic scale and computerized accounting system. The first and only organization in world to get ISO 9000 standard for its farmer’s co-operatives. First to produce milk from powder from surplus milk. Amul is the live example of how cooperation amongst the poor marginal farmers can provide means for the socio-economic development of the under privileged marginal farmers.
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•
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Awards:
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Magsaysay award for community leadership presented in manila, Philippines to Shri Tribhuvandas Patel, Shri D N Khurody and Shri V. Kurien 1965: “Padmshri” awarded was given to V. Kurien, general manager, by the president of India. 1987: “Best Productivity” awarded by national productivity council for the year 1985-86 awarded to Amul dairy.
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•
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1988: “Best Productivity” awarded for the second successive year 198687 by the president of India, Mr. R. Venkatrao to kaira union.
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1993: “ICA” Memento towards genuine and self sustaining cooperative worldwide ICA regional office for Asia and pacific, New Delhi, 1996. 1999: G.B.Birla award. Moreover the Amul union has achieved the prestigious ISO 9001-2000 HACCP Certificate and effects are got to obtain ISO 14000. 1999: Best of All" Rajiv Gandhi National Quality Award for the year. 2003: The Gujarat Co-operative Milk Marketing Federation Ltd. has emerged as the top scorer in the service category of the prestigious IMC Ramakrishna Bajaj National Quality Award. 2006-07: GCMMF has bagged award for excellent performance in exports of dairy products from Agricultural and Processed Food Exports Development Authority (APEDA).
•
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•
•
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2007: Amul Pro-Biotic Ice-cream gets No. 1 Award at World Dairy
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Summit.
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OBJECTIVES AND SCOPE OF THE PROJECT
Objectives of the Project
• To Calculate the Loading and Unloading Time of the Crates from the Transporting Vehicle. • To Calculate the Kilometers from the Biosar Plant to the Individual Drop Points of the Distributors. • To Calculate Returns On Investments of all the Distributors in Nallasopara Area. • To Analyze the Trucksheet of the Retailers and do an Area mapping accordingly.
Scope of the Project
• It gives the Information about the Distributors Channel of the Company. • It threw some lights on the Distributors Investments. • Distributors act as the mediators for the Supply of the Milk Products to the Local Area. • It gives Information about the Time Consumed by each truck to deliver the Products to each Different Distributor. • It provides suggestions to the company to improve their distribution techniques. • It will help to calculate the time to delivery and give the distributor proper timing to deliver the product.
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BREIF INTRODUCTION TO DISTRIBUTORS
For taking an agency of Amul an individual needs to have a basic initial investment of Rs. 10000. This sum of amount is kept with the company as bank Guarantee on which a Distributor earns Interests. With some additional basic paper work an individual may gets the distributorship of Amul, once everything is verified and trustworthy, he would start receiving the Amul products. Anyone can become the distributor of Amul. At morning around 5.00 the distributors get his ordered products. For receiving the order a fixed place is selected and is called as drop point. He can then start delivery of milk and after the end of the day, he need to accumulate all the empty crates and keep them at the same drop point. On second day the truck driver would drop unload the ordered crates and will load the empty crates. This process goes on and on. Amul has three different Amul products departments and are as follows:• Dairy • Ice-cream • Dairy Products. There are overall 17 Distributors of Amul pouch milk and are situated at different places. In Nallasopara W. we have Following Distributors:• Mahalaxmi Distributors • Bhoomi Distributors • Ashtavinayak Distributors • Jai Jivdani • Datta Sai • Siddhakala Agency In the East region of Nallasopara we have following Distributors. • Yash • Deva • 2D • Thakkar Enterprises • Thakkar Dairy • Riddhi Siddhi
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• Central Park Dudh Vitralak Kendra • Riddhi Raj • Santoshi Dudh • Mourya Milk • Om Sai Collection.
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RESEARCH METHODOLOGY
The research was conducted from 21st May to 21st July, 2012. The research includes meetings with the Distributors, Truck drivers, Retailers and Biosar Plant Staff. It included Sheets provided by the Vimal Riaz (GCMMF) which has to be answered by Distributors. I went with the trucks to know the route and noted down the timing of reaching to each distributor and delivering and then again leaving for another distributor. I noted down the route which truck was following. The views of the above parties are mentioned in the Report. I visited Vasudhara manufacturing plant located at boisar, Mumbai. I saw the overall process of Milk, lassee, Dahi Production. I also studied the loading of products in refrigerated trucks and which was going to the Distributors and also saw the unloading Process. I also calculated the time of loading and unloading of the crates. For Calculation of Returns on Investments, I went to all the Distributors and asked for the required Information and calculated their Returns.
The Business Model.
The objective of the network was to deliver profitable and equitable returns to a large number of farmers for a long period of time. This follows rather directly from the fact that the member farmers own essentially the network of cooperatives. An additional objective was to develop the supplier over the long term through social change. Consequently, the business model had to include both the costs and benefits of services that would be needed to deliver milk with high productivity as well as to assist farmers in improving their social environment. The success of the network depended on high collection rate of milk. This required increasing membership with more VSs, raising the number of members per VS, and improving the milk yield (i.e., better cattle management), constant concern about the cost to farmers in the network and delivering quality to customers at low prices. The cooperative had decided as part of its value: • To charge for each service provided to the supplier. • To purchase all milk that member farmers produced • To sell liquid milk at affordable prices so as to serve a large number of consumers.
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• To develop and deliver services that will improve lives of people in the network. • To hire professional managers, to run the federation and unions, whose values included upliftment of rural poor class. It is noteworthy that from the very beginning, in the early 1950s, Amul adopted the network as the basic model for long-term growth. Two aspects of this network deserve special attention. First, the network explicitly includes secondary services to the farmersuppliers. Second, several of the entities in the network are organized as cooperatives linked in a hierarchical fashion.
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DATA COLLECTION AND ANALYSIS
All data which were collected was Firsthand. For the same I visited the Biosar Plant and travelled through the same truck which was responsible for the delivery of Amul Products. With this trip I got an experience of the route of the drivers and also about the time taken by them to reach the first Drop point of the ADA. I was responsible for the Following products: • Amul Tazza 500X20 • Amul Tazza 1000X10 • Amul Tazza 5000X2 • Amul Gold 500X20 • Amul Gold 1000X10 • Amul Gold 5000X2 All this products starts loading after 17:45 from the Biosar plant so that can leave the Plant for Mumbai and drop the Milk to ADA’s on Time. The Vehicles have a Capacity of around 750 crates to 850 crates each. The Vehicles start leaving the Plant at 19:00. The Vehicles for Nallasopara area leaves around 22:00 because the distance from the Plant to the Nallasopara is approx 80 KMs. In Biosar Plant only Amul Tazza is produced. Amul Gold is produced at Vashi Plant and is transported to Biosar Plant, and from Biosar plant it gets transported to Biosar Zone. In between, drivers tend to have a small break of around 20 minutes. Many drivers have a small meet at that place and stops for talk and tea. The Overall Nallasopara Area comprises of 4.5 kms in all. This includes the East and West regions. All the Crates which are placed in the vehicles have some ice cubes in it. This helps the perishable product last longer and increases there shelf lives. The trucks use the route of National Highway 8 for the transportation of Amul Products The truck after leaving from Plant opt NH8 and then take a turn to Vasai Phata and through Evershine Road, they
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enter into Nallasoapara. Trucks Drivers don’t come from Nallasopara Phate so as to avoid the expenses of toll. From vasai phate they can freely enter into the city and then they move to Nallasopara Area. For calculating loading and unloading time of the crates I went and calculated the time with the stop watch of my cell phone. It normally varies as the drivers are only responsible for the same process. If the driver is strong enough to pick the filled crates and put them to the place and it take less time. I also collected all the required information for the process of Area Mapping. I took the Trucksheet from every distributor and mapped them accordingly. I used google map for this purpose.
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OBSERVATIONS AND FINDINGS
The distribution Channel of Amul is Strong in nature. I visited at the Biosar Plant of Amul – Vasundhara Dairy. In this plant the products which are produced are as follows:• Amul Tazza • Amul Masti Dahi • Lassee • Flaavyo The Production of Amul Gold is not done in Boisar plant. It is produced in Vashi plant and then transported here. The requirement of Amul Gold is very limited, as this milk is not used for daily purpose consumptions. It is mostly preferred by sweet makers and a little bit is consumed in house for daily purposes. The cost of production is more and returns are less. Hence the decision for producing Amul Gold at one plant and then transporting it to other plants help the company to maintain their production process effectively. For delivering Amul Products, company has maintained a contract with some truck owners. This truck owners / drivers are responsible for daily transport of goods from plant to the individual drop points of the distributors. The Biosar plants serves to the some areas in Mumbai and are as follows:Zone 1: Biosar to Naigoan Biosar Umroli Palghar Kelve Road Shafale Vaitarna Virar Nallasopara Vasai Naigoan Zone 2: Bhayander to Mira Road
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Bhayander Mira Road Zone 3: Dahisar to Goregoan Dahisar Borivali Kandivali Malad Goregoan Zone 4: Jogeshwari to Andheri Jogeshwari Andheri.
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While the process of loading is on, one of the officers of Vasundhara Dairy keeps an eye as to check the total of crates which needs to be load in the truck and get it matched from the receipt. The truck drivers are responsible for loading and unloading. They do it very well. It require huge amount of manual efforts. They pick the crates and unload them. 1 crate consists of 40 pouches of 500 ml each. It requires huge muscle power as the weight is also high. Some of the Distributor has started their business from scratch and are doing well. Some of them have taken the agencies are not maintaining by own, they hire some people to work for them. Some of the distributors work by their own resources, they don’t have any one to help and this makes more profit as compared to others. The crates need to be returned by the distributors. The crates are kept at the drop point of individual distributors and are taken back by the truck drivers at the time of delivery. Some truck drivers do it on the spot after unloading the filled crates, while some do it later when all the delivery is done. While calculating the loading and unloading time of the crates it was found that for a single filled crate to get unload it takes 20 minutes and the speed of that increases with the decrease in time taken for same. The example is taken of Ashtayinayak Agency in Nallasopara (W). The time in stop watch was 02:17 when the unloading process started and it ended at 02:40 in the night. There were 339 crates at that day. And for unloading they took 6 minutes for 339 crates. Hence they took 1.8 seconds each for unloading the crates from their truck to the individual drop points of the distributors. This is quite an accurate figure as it was calculated with the help of STOPWATCH. It was found that once the crates breaks then it stand of no use. In fact it results in spoilage of pouch milk and results in loss. It affects the productivity of the company. The drivers are fully responsible for it, but the loss is faced by distributors. It is the policy of the company that once the products are delivered than it’s the responsibility of the distributors to face the losses of damage. In case of calculating Kilometers, I travelled through the delivery trucks and found that the routes are standards and they are regular. With the help of SPEEDOMETER, while leaving the Vasundhara Dairy Plant, the time was calculated with the help of trucks speedometer and it was 57675 and while reaching the first drop point of the ADA Datta Sai it was 57748. The overall time taken to reach the first drop point was 2 hours and the Distance is 73 Kilometers. I came to the exact kilometers from the plant to the first drop point. It was also calculated that the overall Nallasopara Market was only 4.5 kilometers and hence the delivery process was short. It was also observed that around 5 trucks are responsible for delivery process in the Nallasopara Area, which comprises of east as well as west regions. In east there are around 3 trucks and in west there are 2 trucks assigned for transportation purposes.
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For every business Returns On Investments plays a crucial role. In the business of Distribution connection are very important. The business of Milk Distribution yields a regular return as no credit is given, and it is never ending business. I observed that Returns on Investments in this business are less as compared to other businesses but are gradual. It is a onetime investment. The Truck many times produces bad smell. This smell is because of the fallen milk. At the time of loading, due to some of the damaged pouch, the milk fells on the truck. These trucks are not washed regularly and hence they produce bad smell. Though the end customer is not aware of the issue, but it is important to check that out. It shows bad impression on the distributors. While communicating to the drivers it was noticed that the water facility was not provided at the plant so that the truck drivers wash their truck. It is also a duty of the truck drivers to maintain hygiene. Certain distributors are not literate enough to understand the billing pattern; they need to be explained properly about what their bill is all about. They don’t even know about crates deductions. Certain distributors maintain milk products of others brands also. This results in losses to Amul Company. The process goes as follows:The customer comes at around 3:00 in the noon time in a kirana stores / milk shop and ask for Amul pouch milk. She gets it from the shop. Later at around 7:30 in the evening another customer enters in a shop and ash for Amul Milk. Till this Amul milk pouch which the retailer had, has sold. The customer is served with some other milk product but not Amul as the quantity of amul which the retailer had was finished. The retailer was given the other brand by same Amul distributor. In this case if the retailer didn’t had the other brand then off course the customer would have been served by Amul and hence the sale of Amul was done. This overall process is affecting Amul company.
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Observations in case of Distributors All the processing and billing is done on the system called SAP. The distributors are not satisfied with this introduction as everything is on record. Earlier no perfect record was maintained. In SAP whole transaction between the distributor and the Company gets processed. It include Purchase details, Issued / received of crates, etc. The distributors with huge volumes make more money as their fixed cost remains same for e.g. one distributor who owns a vehicle for transport is bearing a cost of 500 for 30 crates. This cost includes all expenses faced by distributor for one day. If his volumes increases than his profit would also increase and the fixed cost would remain same. Some distributors wanted to shut their business as they were not satisfied with the services provided by GCMMF. The main reason was other distributors in same area and results in loss by both of the distributors. The customer enjoys the benefit. The reason for allowing distributorship in the same area is off course to boost up the profit. Distributors are also facing the problem of dumping. This makes them demotivated
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SUGGESTIONS AND RECCOMENSATIONS
• It was observed that the distributors are facing huge losses because of damages of the pouch milk. For this the people / drivers who are responsible for loading and unloading process should be provided more training so as to decrease the damages. The distributors are also facing the problem of dumping which make it impossible for them to forecast and give order for the next day as they currently have extra stock. Certain distributors are not literate enough to understand the billing pattern; they need to be explained properly about everything. Their doubts need to be cleared. The distributors of Amul should not be allowed to keep other milk products. And even if they maintain the same, they should be punished. The exclusive distributor of Amul needs to be given more attention. Certain schemes needs to entertain to the milk distributors shall be given so as to motivate them and increase our sales. Trucks which are used for transport of Amul Pouch Milk should be washed regularly. The production of Amul Tea Top should be stopped as it is not giving proper returns.
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CONCLUSION
Amul means different things to different people. To a milk producer – A life enriching experience. To a consumer – An Assurance of having wholesome products. To a mother – A reliable source of nourishment for her family. To the country – Rural development and self reliance.
As we know that Amul is very big organization and market leader in dairy products. But there are places where the Amul products are not available so Amul can have a research on this topic and can supply products to that area.
Distribution network has been one of the major strength of Amul Company giving a tough competition to competitors.
Supply chain management can be the back bone of a company at it carries out the most difficult task of distributing the products to different regions and makes them available to consumers.
AMUL, being an FMCG company, attaches a lot of significance to the distribution aspect of its business. The distribution channel of AMUL holds a lot of potential in affecting the demand or sales of AMUL products through delivery on time, delivery of variety of products, the retailer friendliness of the policies being set by the distributors and equitable distribution of products to all the retail outlets in a particular region.
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Amul has successfully maintained very good relations with its stakeholders in the market. Stake holders like Distributors and Customers. Even the small Query of any distributor is solved within the time. Though the profit margin in Amul is less compared to its competitors, the distributors are happy to distribute Amul products. Amul is among one of the FMCG Company in India which help the country which is widely spread and performing for the welfare of the country.
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BIBLIOGRAPHY
• • •
www.amul.com www.wikipedia.org www.googlemaps.com
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doc_205668994.doc