Amul dairy operations
- 2. Materials Management Represented by: Annameti Sai Rishi - 001 Ashish Inamdar - 002 Faculty Incharge :- Ankita Bhor - 003 Aravinda Sai Chandana - 004 Harshal Desale - 006
- 3. Birth of AMUL Founded in 1946 to stop the exploitation Backbone of AMUL - Sardar Vallabhbhai Patel Amul grew from strength to strength, thanks to the inspired leadership of Tribhuvandas Patel, the founder Chairman and the committed professionalism of Dr. Verghese Kurien ,who was entrusted the task of running the dairy from 1950. The, then Prime Minister of India, Lal Bahadur Shastri decided that the same approach should become the basis of a National Dairy Development policy
- 4. Amul– A cooperative Amul - A cooperative Gujarat Cooperative Milk Marketing Federation Limited It’s daily milk procurement is approximately 14.85 million lit per day from 18,536 village milk cooperative societies, 17 member unions covering 31 districts, and 3.37 million milk producer members Aims to provide remunerative returns to the farmers and also serve interest of consumers by providing quality products which are good value for money
- 5. Benefits for farmer “The dairy and livestock sectors will help farmers increase their income – it may not just double, it can go up three times” - R.S. Sodhi
- 6. The tie-up with Amul is expected to boost dairy farmers’ economy by providing them remunerative prices, besides showing them a way to avail government support Previously Milk producers used to travel a long distance to deliver milk One sells a liter of milk in cities like Delhi or Mumbai for Rs 50, about Rs 40 goes to the farmers’ account Amul, founded 73 years ago, is an institution that belongs to 36 lakh farmer families of Gujarat, The organization has not just grown consistently over the years. Today, 18,500 villages across the country have cooperative milk societies and about 80 dairy plants are having an annual turnover of Rs 50,000 crore
- 7. a) This model aims to provide ‘value for money to the customers and protect the interests of farmers simultaneously b) The Amul Model is a three-tiered structure that is implemented in its dairy production: • Amul acts as a direct link between milk producers and consumers that removes the middlemen which help them offer products at affordable prices • Farmers (milk producers) control procurement, processing, and marketing • Run by Professional Management c) With this model, Amul has made a significant impact in the market along with taking care of the farmers and providing value for money services to its customers The Amul Model
- 9. Dairy farmers 3.6 million dairy farmers are the core of Amul. On average, each farmer owns 5 cows. These farmers collect the milk from cows and take it to village societies. They do this 2 times a day.
- 10. Village Societies • GCMMF's supply chain activities began at the VCS where the milk was collected • Amul has 18,000 village societies that collect the milk from farmers and pay the farmer instantly. Every society has an "Automatic Milk Collection System", which pasteurizes and chills the milk. Amul collects approx. 3-4 million liters of milk daily like this • An Anand Pattern village dairy cooperative society (DCS) is formed by milk producers. Any producer can become a DCS member by buying a share and committing to sell milk only to the society • Each member's milk is tested for quality with payments based on the percentage of fat and SNF. At the end of each year, a portion of the DCS profits is used to pay each member a bonus based on the quantity of milk poured
- 11. • Union staff train and provide consulting services to support DCS leaders and staff The District Union • A District Cooperative Milk Producers' Union is owned by dairy cooperative societies • The Union buys all the societies' milk, then processes and markets fluid milk and products • Most Unions also provide a range of inputs and services to DCSs and their members : feed, veterinary care, artificial insemination to sustain the growth of milk production and the cooperatives' business
- 12. • Which is responsible for marketing the fluid milk and products of member unions • Some federations also manufacture feed and support other union activities • To ensure quality and timely deliveries, GCMMF and the district unions had several mechanisms i place. • The VCS constantly monitored the deliveries of the milk collected and ensured that the milk was picked up on time. The unions monitored the supplies of milk and the distribution of finished products • They sell the milk to retailers and give 80% of their earnings to farmers • The remaining 20% is Amul’s revenue. In 2020-21, it was Rs 40,000 crores The State Federation
- 13. The distribution network Largest Cold Chain AMUL has the largest cold chain network in India (i.e. 18000 refrigerators) as compared to any other company. In order to avoid wastage AMUL converts the milk into SNF and milk solids by evaporating the water, which comprises up to 60- 70% of milk contents. Distribution channel - well organized Third Party Logistics Services GCMMF takes responsibility for coordinating with the distributors to assure adequate and timely supply of products Simultaneous Development of Suppliers and Customers From the very early stages of the formation of AMUL, the cooperative realized that sustained growth for the long-term was contingent on matching supply and demand
- 14. Managing Third Party Service Providers: This include logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, some veterinary services etc. Inter-locking Control To ensure that the interest of the farmer is always kept at the top of the agenda through its representatives Coordination Agency Unique Role of Federation Its objective is to ensure that all milk that the farmers produce gets sold in the market either as milk or as value added products Supplier Enhancement and Network servicing Their objective is to ensure that producers get maximum benefit and to resolve all their problems
- 15. To gauge the complexity of Amul’s supply chain, consider this the co-operative has a total of: • 3.6 million farmers • 18,700 societies • 5,000 milk tankers • 200 chilling stations • 750 SKUs • 62 branches • 10,000 distributors • 1 million retailers For Amul, the use of technology was critical to its survival as one of India’s biggest FMCG companies.
- 16. • Strategic partnership that was established between AMUL and IBM in 2009 • AMUL invested of 80 crores transforming the information technology landscape of the compan • IBM would develop a full-fledged digital system and it would track every small detail of operatio that is being carried out in the supply chain of AMUL • The key objective was to ensure flexibility and scalability across the complex chain • IBM developed a private cloud with a data centre and a disaster recovery system that has automatic back-ups in place. • Whenever there are issues the disaster recovery kicks in, ensuring zero down time
- 17. • It could tell you how many plants are working at full capacity, how many trucks are engaged, and in which areas • Most importantly, it also tells you when and how many trucks or plants are at idle capacity so that they can divert the workload to them to make optimum utilization of every element of the supply chain • In the past decade Amul’s digital transformation has helped it gain a 10x growth in business • By improving data accuracy and integration with the distributor management system, processes are seamless now
- 18. 24th March 2020
- 19. On this day PM Modi declared a nationwide lockdown because of pandemics. In addition to that, a nightmare came with it, for which our nation was not prepared The lockdown costed the Indian economy more than 10 lakh crores. Many billion-dollar industries came into a dilemma One such industry was the dairy industry. The impact was so heavy that it costed the milk producers of India more than 112.3 crores of rupees every day
- 20. 20% of the revenue of the dairy industry came from hotels, catering businesses, and restaurants for the organized dairy sector When the dairy company saw this massive fall in demand, they quickly pulled down the milk procurement decreased their logistics, slowed down their production up to a large extent As an outcome of this, many farmers were left in a helpless state. Many workers such as truck drivers and factory workers Lost their daily bread because less milk meant less operation of factories which means less transportation of milk
- 21. • This end-to-end digitalization gave them so much clarity about their operations that AMUL was even able to provide incentives to the ground staff • During the lockdown , Amul was able to divert idle resources overnight and ensure steady supply of dairy products. • Due to the IBM system, the AMUL team was able to accurately oversee the entire operation of the supply chain • This system turned out to be a game-changer for AMUL during the lockdown • Coupled with mobile applications and automations that efficiently manage applications, Amul not only has better operations, but also gained much-needed insight into the logistics-side of things
- 22. Amul’s growth amidst Covid-19 challenges • Amul procured 14 per cent more milk during the pandemic in 2020- 21 • Turnover grew by a sluggish pace of 2 per cent • Crossed ₹53,000 crore for the fiscal 2020-21, a 2-per cent rise over last year’s ₹52,000 crore • The milk procurement during 2020-21 at all member unions under GCMMF rose by 14 per cent • Cooperative handled extra 35-40 lakh liters' of milk every day during the pandemic period • The consumer pack business of Amul grew by 8.1 per cent, while bulk dairy commodities, as well as sales from restaurants and hotels suffered a decline in 2020-21, due to Covid-19
- 23. When most of the dairy industry was preparing for a loss in demand, AMUL prepared for a surge in demand. AMUL launched 33 new products in the market and got hold of additional 35 lakh liters of milk every day 1. Change in consumer’s behavior Although there was no demand from restaurants and hotels, but the consumption of milk products in houses took a massive shoot up as more and more people began to stay at home and this also gave rise to the homemade food trend 2. People became more health-conscious and moved on from buying loose milk to packaged milk. While other companies misjudged consumer demand and started decreasing their supplies Mr. R. S. Sodhi, M. D. of AMUL insisted that they should keep the supply chain running at full capacity
- 24. e-commerce AMUL used third part e-commerce sites like • Flipkart, Big Basket, Dunzo, Swiggy and Zomato to sell butter, milkshake, and paneer • According to Mr. R. S. Sodhi, they got more than 60,000 orders through Zomato and they sold AMUL products of almost 3 crores in more than 200 cities.
- 25. Use of Railways Demand for milk products increased • For cheese by 80% • For cottage cheese by 40% • For condensed milk it doubled AMUL was running at its full capacity of 115% The demands were so massive that they had to hire other plants from other companies that were lying vacant They also realized that moving of trucks through the country would be very difficult because of the shortage of labor and the lockdown restrictions They started using railways for the transportation of products quickly throughout the country.
- 26. Marketing • AMUL increased its advertisements volumes by 316% compared to 2019 • Their ads were so aggressive that they were viewed 10 times more than the IPL itself • The Amul ads were so popular that they crossed all the barricades of TRP • When Door darshan started broadcasting the epic Ramayana and Mahabharata during the lockdown AMUL started running their old ads to resonate with the nostalgic moods of the audience creating an even better impact on the audience’s mind • They even made immunity-boosting products
- 27. Advantages • Provides job securities to employees and labor • Provide salary with incentives • Generate income source and open market to sold the milk to farmers • When AMUL realized that the cattle feed was not sufficient to meet the needs. They made extra arrangements for cattle feeds for farmers • AMUL procured 3.5 million liters of milk every day and even paid 800 crores of rupees extra to rural milk producers of India
- 28. Business Lessons 1.While good leaders prepare to face risk, great leaders prepare to embrace them with open arms 2.No matter how big your organization is, resourcefulness is one attribute that will always save you during crisis 3. During such a crisis, either choose to see it as an obstacle or you can see it as a golden opportunity to get ahead of your competitors This is how AMUL became an opportunist during times of crisis and established a benchmark from brands, all across the world to learn from