Project Report: Amul DairyFrom: Vipul VyasSub: Resource and value chain
Introduction: THE TASTE OF INDIA, AMUL comes from the Sanskrit word Amoolya, means priceless. It was suggested by a quality control expert in Anand and it was chosen because it was a perfect acronym for Anand Milk Union Limited . AMUL was formed under the dairy cooperative movement in India in 1946. Gujarat Cooperative Milk Marketing Federation (GCMMF) is Indias largest food products marketing organisation. 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. AMUL is the brand under this organization. Amul is the largest food brand in India and worlds Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.6 million producer members with milk collection average of 10.16 million litres per day. Besides India, Amul has entered overseas markets such as Mauritius, UAE, USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries. Its bid to enter Japanese market in 1994 had not succeeded, but now it has fresh plans of flooding the Japanese markets .Other potential markets being considered include Sri Lanka. Dr Verghese Kurien, former chairman of the GCMMF, is recognised as the man behind the success of Amul. On 10 Aug 2006 Parthi G Bhatol, chairman of the Banaskantha Union, was elected chairman of GCMMF.
1. Discuss Amuls Umbrella Branding and Distribution network strategy. An umbrella brand is a brand that covers diverse kinds of products which are more or less related. It applies also to any company that is identified only by its brand and history. It is contrasted with individual branding in which each product in a portfolio is given a unique identity and brand name. Amul has high brand equity and umbrella branding of Amul has helped the company in bigger sense. Amuls‟s brand name has helped its other brands also like Mitahi made, Amul Ice creams, chocolates, Amul Kool etc. So umbrella Brand, Amul is used to build and offer value to customers in bigger sense. In literal sense, a company has high brand equity if it has multi dimensions. Amul has explored various available opportunities to reach to mass customers. It has opened a community on public forums like orkut, sponsored events like Amul voice of India etc. The brand value of Amul will surely help company to maintain the status of largest food brand in India at least for sometime in future. Amul‟s strategy of using “umbrella branding” has really paid off. Amul‟s advertising and marketing spend has never exceeded 1% of its revenues. Amul‟s creatives—in the form of billboards or the Taste of India campaign—have always managed to evoke a larger-than-life brand feel, consistency and spirit of Indian culture in a contemporary way.
Distribution NetworkConsumers expect marketers to deliver products in the locations and forms theyrequire. To meet expectations of such demanding consumers, alignments of ourfour Distribution Highways of Fresh, Chilled, Frozen and Ambient products werealready made by introducing Project DIL. Subsequently, a major initiative wastaken to enhance distribution network to smaller towns. About 1200 distributors insmall towns across India were added during this initiative. Today about 3000Distributors ensure availability of our products across India, whether it is in Leh orLakshadweep, in Kutch or Arunachal. Simultaneously, to augment fresh milkdistribution in various markets of India, approximately 1400 exclusive MilkDistributors have been inducted. Distribution Process Company Dealer Franchisee Wholesaler Retailer Shopkeeper Consumers GCMMF’s Supply Chain ***Source: IIM(A), Working Paper No. 2002-05-06
AMUL has the largest cold chain network in India (i.e. 18000 refrigerators) ascompared to any other company. The chemical components of milk are water,SNF and solids. Milk is very perishable product so it has to be consumed within24 hours. In order to avoid wastage AMUL converts the milk in to SNF and milksolids by evaporating the water, which comprises up to 60-70% of milk contents.This is possible only if the distribution channel right from the producer to theconsumer is well organized. It will be surprising to know that AMUL makes eventhe „Sarpanch‟ to eat pizza i.e. it supplies pizzas even to rural market.Last year, theye divided the retail market into 14 specific segments to achievefurther distribution efficiency. This year our focus was on inducting distributorshaving expertise in servicing such specific market segments. This initiative isyielding results by way of ensuring wider availability of our product range.The role of distributors in our business process has never been more diverse ormore important, as it is today. As a matter of fact, we consider our Distributor tobe the real “Marketing Manager” of our organization. To enhance businessperformance of our Distributors, a workshop on Marketing and Sales Managementwas designed in collaboration with a premier business school. The objective of theentire initiative was to upgrade the knowledge of our Distributors in terms ofcontemporary Business Management Practices, so that they can perform well notonly as our business partner but also as Marketing Managers. During the year, 659Distributors have undergone this programme in 39 locations. Cold Storage is anextremely essential component in the Federation‟s distribution process.Unfortunately, availability of efficient cold storage facilities is grossly inadequatein our country. To cope up with the increasing need of suitable cold stores closerto our markets, we have continued our endeavour of creating the Federation‟s owncold stores this year in various locations across the country. We now own 24 state-of- the art cold rooms of different sizes.To get an exposure to our cooperative structure, our culture as well as operationalsystems and processes, every year we invite our distributors, major retailers andother business partners to Anand, for Amul Yatra. So far, about 7000 Distributorsand other business partners have participated in this Amul Yatra.
Over recent years, the Federation has successfully introduced new product lines.This year, in order to leverage their distribution network strengths, to optimizemarket supervision expenditures, to achieve increasing efficiency while keepingthe distribution infrastructure lean, focused and productive, the Federationamalgamated its different distribution networks. Today, they operate an efficientdistribution infrastructure consisting of 46 sales offices, catering to 3,000distributors and five lac retailers. Almost every Federation stockist has visitedAnand to participate in a unique programme called Amul Yatra. During thisprogramme, stockists are exposed to the Federation Philosophy, the culture ofCooperation, as well as operational Systems and Processes. The Federation hasalso invited distributors salesmen from all over the country to Anand for a trainingprogram focused on the Federations philosophy and developing their sellingskills.
2. How do you spell out the importance of establishing the Best Practices by Amul to have competitive advantage? Amul has Competitive sustainable advantage (CSA) over its competitors. Amul‟s CSA lies in its procurement part ,the ability to collect 447,000 litres of milk every day from 2.12 million farmers ,convert them into goods worth Rs 6 crore and distribute them to 5,00,000 retailers across country ,is not easy. No other dairy in India has such a sustainable procurement network. Managing the large scale supply chain of Amul which begins from milk producer and ends with supply to customer from retailer is very critical job. It requires lot of dedication and hard work from all members of the corporation and also distributors and retailers across country It is not that Amul had a successful campaign, many of its ads backfired. One ad meant to target Marathi segment during Ganpati festival had to be removed under political pressure. In another incident on advertisement in which Amul girl was wearing Gandhi cap had to be again removed. In one another incident Amul had aired an ad portraying Hussain as “Heroine addiction”, for this Amul was taken to court. Most of Amul‟s communication is based on latest happenings in the country. That is why its ads are termed different from what is that of its nearest rival, Mother dairy. Most of Mother dairy ads are directly targeted to children where as Amul‟s ad are on current affairs, in which adults are also involved. The key to retaining their competitive advantage lies in keeping focused on the basic business principles: Be Customer-Driven Adapt quickly to the changing environment. Anticipate change and act today to meet tomorrows challenges. The Federation has invested substantially over the last few years in improving the quality of its products and services, keeping in mind the emerging challenges of globalization. In recognition of its achievements in Quality Management Initiatives. Their core business is marketing branded food products to household consumers. Their success has been grounded in two strengths :- Distribution network, serving more than five lac retail outlets. Superior product quality - Value for money
The key to maintaining these two competitive advantages rests on their abilityto attract and retain the very best manpower. In this age of intensivecompetition, only dedicated and committed professionals can successfullymanage their business.
3. What is the role and importance of Technology and E- Initiatives by GCMMF? Amul assigned the ERP software development project named as Enterprise- wide integrated application system (EIAS), on a turnkey basis to Tata Consultancy Services. At present, the EIAS system covers a plethora of operations like market planning, advertising and promotion, distribution network planning, stock control, sales and accounting, budgetary control, quality control management and co-operative service management. Amul has also connected all its zonal offices, regional offices and members dairies through VSATs for seamless exchange of information. Each of Amul‟s offices is connected by e-mail and all of them send a daily report on sales and inventory to the main system at Anand. Also, sales offices, C&F points and wholesale distributors of GCMMF have been connected through the Internet for timely exchange of information. The customised ERP EIAS is designed in such a way that it can be plugged into various points of the supply chain and external system. Moreover, the software is platform independent and can work on any operating system. Amul is also in the process of Web-enabling the entire supply chain so that it can capture key information at the source, and use the same for decision-making. This would include the likes of transporters, member-manufacturing units, oil packing stations, suppliers, depots and the entire field force. The federation has now integrated its country-wide operations through successful implementation of the "Enterprise-wide Integrated Application System". They believe that introduction of similar integrated ERP systems at their Member Unions will help them ensure that the IT revolution serves their members better. The Federation is among the Top 100 IT Users in the country. Currently, there are more than 3,000 computers installed in their village
societies, which support the Automated Milk Collection System. Their goal isto install computers in all their village societies and to integrate them with theirrespective unions. On the market side, their distributors have respondedenthusiastically to their suggestion of computerizing their operations andgetting email connectivity for better communication with their sales offices.The distributors can now place their orders on our internet websitewww.Amulb2b.com. They continue to receive a good consumer response totheir website www.Amul.com which is noted for its distinct features likecyberstore for ice-cream and other milk products, cricket rankings and therecently launched e-greetings site.To strengthen business linkages with the business partners, GCMMF hasenhanced its “Amul e-Groupware System” by adding more features like e-mailing the invoices and ledgers to business partners, announcing variousschemes online, calendar facility etc.“Video conferencing” is rapidly gaining in popularity, which provides businesswith the ability to meet and to work with others over a distance. For real timecommunication, better brainstorming, knowledge sharing and informationgathering, we have installed and implemented Video conferencing System atour Head Office, Zonal Offices and a few Sales Offices.The world is moving towards virtual reality by creating virtual world on theInternet. Our Federation has taken the initiatives towards virtual commerce bycreating an online virtual Amul Parlor in the Second Life, an online virtualworld. GCMMF has further advanced the use of Geographical Informationsystems by implementing GIS based Sales Analytics solution across variousoffices.The history of Amul shows that it radically changed the way business wasdone—by eliminating the middleman and bringing the producer closer to theconsumer—resulting in benefits for both. Incidentally, it was also one of thefirst Indian companies to have a Web presence. Today, Amul‟s cyberstoregifting service is capable of servicing consumers in more than 125 cities. SaysHegde, “We have also linked our distributors to our network and alsoincorporated Web pages of top retailers in our site, amul.com, as part of ourB2B initiatives.” Distributors can place their orders on the website,amulb2b.com, especially meant for accepting orders from stockists andpromoting Amul‟s products via e-commerce. Currently, the company receivesqueries from overseas agents for distributing its products in countries like the
US, Britain, New Zealand, Singapore and Thailand. As a result of the onlineinitiatives, today, Amul exports products worth around Rs 100 crore, tocountries in West Asia, Africa and the US. Amul has also launched sites likeamulgreetings.com and amulkids.com to extend the brand identity to kids andteenagers who are its target market for its ice-cream and chocolates products.Also, as a strategy, Amul has a customer feedback channel which uses e-maillike email@example.com for cheese products and firstname.lastname@example.org for butterproducts.In addition, the organisation‟s corporate intranet site contains all thecompany‟s updates including policies, procedures, functional role andresponsibilities of each person in the organisation. Another example that putsAmul in a league of its own, is its recruitment policy. For instance, for any newrequirement in different functional areas, candidates have to compulsorilyundergo a computer literacy test, where the minimum passing mark is 80percent. Explains Vyas, “Our main emphasis is to increase competency at theend user level with the help of IT. All our employees have undergone computertraining according to the departmental needs so that they can take charge oftheir responsibilities in an effective way at the respective supply points.”Amul‟s success in leveraging IT to its advantage lies in the simple fact that theorganisation has a clear IT vision. For example, after a top-level domain co-operative was made available, Amul embraced it with gusto. Hegde says thatby developing the „Amul.coop‟ Web portal, the organisation will be in aposition to communicate with other similar co-operative movements. As co-operatives can interact with each other with similar organisations sharing thisdomain, knowledge can be shared on a pro-active basis, which can lead tofurther productivity benefits.While it has always been argued that investments related to informationtechnology made in rural India are a disaster, the case of Amul proves thatwhere there is a will, there is a way. From catchy billboards to being ae-commerce success story, Amul is truly rural India‟s flag-bearer in the ITrevolution.