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Amul Logistics

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An overview of Amul Supply Chain Management.

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Amul Logistics

  1. 1. SUPPLY CHAIN MANAGEMENT<br />
  2. 2. Group no. 2<br />AMIT RAI – 10<br />SHUBHANGI CHOUHAN – 61<br />KULVINDER PATHANIA – 27<br />PRATEEK CHHABRA – 16<br />ASHISH SONAWARE – 29<br />GAURAV CHOUHAN – 57<br />
  3. 3. AMUL<br />Type - Cooperative<br />Industry - Dairy<br />Founded - 1946<br />Key people - Dr. Verghesekurien<br />Revenue - INR 67.11billion (2008-2009)<br />Employee - Marketing arm: 735<br /> Milk producers: 2.8 million<br />
  4. 4. KEY FACTS<br />AMUL means priceless in Sanskrit “Amoolya”<br />Brand name managed by an apex cooperation organization –GCMMF<br />World’s biggest vegetarian cheese brand<br />World’s largest pouched milk brand <br />Largest food brand in India<br />Spurred the white revolution in India<br />Accreditation with 9001 and HACCP certification by QAS, Australia. <br />
  5. 5. GCMMF: An Overview<br />Members<br />13 district cooperative milk producers Union<br />No. of Producer Members<br />2.79 million<br />No. of Village Societies<br />13,328<br />Total Milk handling capacity<br />11.22 million liters per day<br />
  6. 6. Cont…<br />Milk collection (Total - 2008-09): 3.05 billion liters.<br />Milk collection (Daily Average 2008-09): 8.4 million liters<br />Milk Drying Capacity: 626 Mts. per day<br />Cattle feed manufacturing Capacity: 3500 Mts. per day<br />
  7. 7. VALUE CHAIN PROCESS<br />
  8. 8. Amul Product’s Diversification<br />
  9. 9. PRODUCTS<br />Bread Spreads <br />Milk Drinks<br />Powder Milk <br />Fresh Milk <br />Cheese <br />For Cooking <br />Chocolate<br />
  10. 10. MARKET SHARE<br />
  11. 11. PRODUCT SHARE<br />Amul butter - 86%<br />Ice cream - 36%<br />Chocolate - 10%<br />Ghee - 20%<br />Skimmed milk powder - 40%<br />
  12. 12. PROBLEMS TO BE ADDRESSED <br />Logistics in collection –<br />6 million liters of milk per day<br />From about 10,600 separate village cooperative societies.<br />Approximately 2.8 million milk producing member.<br />Logistic in coordination of –<br />Storing the milk.<br />Processing the milk.<br />Distributing the milk.<br />
  13. 13. Cont….<br />Supplier logistics –<br />Weighing the milk.<br />Determining of fat content.<br />Calculation of the purchase price.<br />
  14. 14. EVOLUTION of “IT”<br />The evolution of IT in AMUL was took place in the guidance of DR.B.M Vyas.<br />The milk collection center at village cooperative societies, were first automated.<br />Application and utilization of GIS.<br />Data analysis software utilization for milk production estimation and increasing productivity.<br />VATS network between all the level of distribution network and GCMMF.<br />
  15. 15. Shift process<br />The company zeroed in on ERP as means to keep pace with dynamically changing business environment.<br />TCS was hired to guide them in its implementation.<br />The project was named as Enterprise wise integrated application system (EIAS)<br />
  16. 16. IMPLEMENTATION<br />Amul start implementation of ERP in phases.<br />Automatic milk collection system units(AMCUS) at village society were installed in the first phase to automate milk production logistics.<br />AMCUS facilities to capture member information, milk fat content, volume collected, and amount payable to each member electronically.<br />
  17. 17.
  18. 18. Cont….<br />Amul also connected its zonal offices, regional offices and member’s dairies through VSATs.<br />The customized ERP- EIAS has been implemented across the organization integrating various operational departments.<br />Amulis also using Geographic Information Systems (GIS) for business planning and optimization of collection processes.<br />
  19. 19. Cont…<br />Indian Institute of Management – Ahmedabad supplemented Amul’s IT strategy by providing an application software – Dairy Information System Kiosk(DISK) to facilitate data analysis and decision support in improving milk collection. <br />The kiosk would also contain an extensive database on the history of cattle owned by the farmers, medical history of the cattle, reproductive cycle and history of diseases.<br /> Farmers can have access to information related to milk production, including best practices in breeding and rearing cattle. <br /> As a large amount of detailed history on milk production is available in the database, the system can be used to forecast milk collection and monitor the produce from individual sellers.<br />
  20. 20. Cont…<br />The kiosk would also contain an extensive database on the history of cattle owned by the farmers, medical history of the cattle, reproductive cycle and history of diseases.<br /> Farmers can have access to information related to milk production, including best practices in breeding and rearing cattle. <br /> As a large amount of detailed history on milk production is available in the database, the system can be used to forecast milk collection and monitor the produce from individual sellers.<br />
  21. 21. Automatic Milk Collection System Units (AMCUS)<br />
  22. 22. REAPING RETURNS <br />Radical changes in business processes - eliminating middlemen .<br /> Improved delivery mechanisms and transparency of business operations.<br /> Due to this process, AMUL is able to collect six million litres of milk per day. <br />Huge reduction in processing time for effecting payments to the farmers from a week to couple of minute.<br />Processing of 10 Million payments daily, amounting to transactions worth USD 3.78 million in cash.<br />
  23. 23. Cont..<br />Movement of 5000 trucks to 200 dairy processing plants twice a day in a most optimum manner.<br />Practicing just in time supply chain management with six sigma accuracy. <br />Online order placements of Amul’s products on the web. <br />Distributors can place their orders on the website. <br />Amulexports products worth around US$ 25 million to countries in West Asia, Africa and USA.<br />
  24. 24. Total Quality Management Model<br />There is improvement in quality of milk in term of acidity and sour milk.<br />Sabor milk union records show 2% reduction in the amount of the sour milk received from the union.<br />Improved microbiological quality of upcoming raw milk in the form of methylene blue reduction.<br />This gives better shelf life to the product.<br />Program like Red Tag Day was launched for cleaning the milk collection center.<br />
  25. 25. AMUL PATTERN<br />A three tier cooperative structure:<br />Dairy cooperative society at village level <br />Milk union at district level <br />Milk federation at state level<br />
  26. 26. ORGANIZATION STRUCTURE<br />DECISION-MAKING<br />LEVEL<br />MEMBERS<br /><ul><li> Price paid to district unions (fixed across unions)
  27. 27. Product mix and quantity</li></ul>State Federation<br /><ul><li> Price paid to village co-operative societies</li></ul>District<br /><ul><li> Membership
  28. 28. Price paid to milk suppliers</li></ul>Village<br />
  29. 29. Village Dairy Cooperative Society (VDCS)<br />Collection of surplus milk & payment based on quality & quantity.<br />Providing support services to the members.<br />Selling liquid milk for local consumers of the village.<br />Supplying milk to the District Milk Union<br />
  30. 30. District Cooperative Milk Producers’ Union (Milk Union)<br />Procurement of milk from the Village Dairy Societies of the District.<br />Arranging transportation of raw milk from the VDCS to the Milk Union.<br />Providing input services to the producers.<br />Conducting training on Cooperative development<br />
  31. 31. Cont..<br />Providing management support & regular supervision to the VDCS.<br />Establish Chilling Centers & Dairy Plants for processing the milk.<br />Selling liquid milk & milk products within the District.<br />Process milk into various milk & milk products.<br />Decide on the prices of milk to be paid to milk producers.<br />
  32. 32. State Cooperative Milk Federation (Federation)<br />Marketing of milk & milk products<br />Establish distribution network <br />Arranging transportation from the Milk Unions to the market.<br />Creating & maintaining a brand<br />Providing Technical Inputs, management support & advisory services.<br />Decide on the products to be manufactured at various Milk Unions (product-mix)<br />Conduct long-term Milk Production, Procurement, Processing & Marketing Planning<br />Conflict Resolution & keeping the entire structure intact<br />
  33. 33. GCMMF’s Supply Chain<br />
  34. 34. Distribution Process<br />Company<br /> Dealer Franchisee<br />Wholesaler<br />Retailer<br />Shopkeeper<br />Consumers<br />
  35. 35. THE CHANNEL NETWORK<br />Procurement channel- upstream flow<br />Distribution channel- downstream flow<br />
  36. 36. Procurement<br />Activities at the village level comprised developing and servicing the VCSs.<br />Increasing milk collection, procuring milk, and transporting it to the chilling and processing units twice a day.<br />The VCSs provided the farmers with good quality animal feed, fodder, and other services like veterinary first aid.<br />
  37. 37. PROCURNMENT CHANNEL<br />On an average around thousand farmers come to sell milk at their local co-operative milk collection center.<br />Each farmer has been given a plastic card for identification.<br />At the milk collection counter, the farmer drops the card into a box and the identification number is transmitted to a personal computer attached to the machine.<br /> The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine. <br />Both these details are recorded in the PC. The computer then calculates the amount due to farmer on the basis of the fat content.<br /> The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window. <br />
  38. 38.
  39. 39. COLD STORAGE NETWORK<br />Chillers in proximity of villages<br />Prompt transport to district facilities for further dispatch to consumers/ processing units.<br />Chilled trucks to transport processed products<br />Delivery to local chillers by insulated rail tankers and chilled trucks.<br />Refrigerators and freezers with retailers and departmental stores to retain freshness.<br />
  40. 40. Distribution<br />GCMMF coordinated with various unions to get a regular supply of milk and dairy products.<br />The processed milk and dairy products were procured from district dairy unions and distributed through third party distributors.<br />To ensure quality and timely deliveries, GCMMF and the district unions had several mechanisms in place.<br />The unions monitored the supplies of milk and the distribution of finished products.<br />
  41. 41. DOWNSTREAM FLOW<br />First leg<br />Manufacturing units to company depots using 9 and 18 MT trucks<br />Frozen food-below 18C<br />Dairy wet-0-4C<br />Second leg<br />Depots to WDs<br />Transport through insulated 3 and 5 MT TATA 407’s <br />Third leg<br />WDs to retailers<br />Transport through rickshaws according to the beat plan<br />
  42. 42.
  43. 43. Reverse logistics<br />MILK CHURN<br /><ul><li>from dairy to VCS</li></ul>POUCH MILK TRAY <br /><ul><li>from retailer to dairy</li></ul>BOTTLE<br /><ul><li>from retailer to dairy</li></ul>DAMAGED PRODUCTS <br /><ul><li>from customer to retailer then to dairy</li></li></ul><li>Lessons for managing large networks<br />Long term perspective<br />Simultaneous development of markets and suppliers.<br />Network partnership Vs. ownership<br />Cost leadership and value for money <br />Technology and Information Sharing <br />
  44. 44. Direct retailing<br />Amul has recently entered into direct retailing through "Amul Utterly Delicious" parlors created in major cities.<br />Amul has plans to create a large chain of such outlets to be managed by franchisees throughout the country.<br />More than 2000 parlor with a turnover of 200 crore.<br />
  45. 45. Expansion plan<br />Tie up with the WalMart<br />Export is in 15 countries.<br />Plan to open 10000 Amulparlor by the end of the 2010.<br />
  46. 46. Mission 2020<br />Very ambitious future plan –<br />Turnover of 27000 crore.(three fold increase in the group turn over.)<br />Milk production 33.1 million liter/day.<br />Milk drying capacity 200 mt/day<br />
  47. 47. Amul (Recently in news)<br />Milk via milk train.<br />Tie up with Adani Logistics. <br />50 wagon each capacity 24k liter.<br />Initial transport cost was 40 crores,reduce it to half.<br />
  48. 48. Thank you………..<br />

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