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Distribution Channel AMUL
Distribution Channel AMUL
Distribution Channel AMUL
A PROJECT REPORT ON
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DISTRIBUTION CHANNEL OF AMUL
A PROJECT REPORT ON
SUBMITTED BY
“___________”
“MISS _____________”
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DECLARATION
I, ___________, OF THE _________ COLLEGE OF COMMERCE AND
ECONOMICS, ___________( E ) , HEREBY DECLARE THAT I HAVE COMPLETED
THE PROJECT ENTITLED “DISTRIBUTION CHANNEL OF AMUL” IN PARTIAL
FULFILLMENT OF THE REQUIREMENT FOR THE THIRD YEAR OF THE
BACHELOR OF MANAGEMENT STUDIES COURSE FOR THE ACADEMIC YEAR
2012-2013
DATED: _________
Name of the student
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CERTIFICATE
I MISS ______________ HEREBY CERTIFY THAT ROSHANI PAREKH
_________________ STUDYING IN TYBMS AT ______COLLEGE OF COMMERCE
AND ECONOMICS, __________, HAS COMPLETED A PROJECT ON
“DISTRIBUTION CHANNEL OF AMUL” IN THE ACADEMIC YEAR 2012-2013
UNDER MY GUIDANCE.
DATED:
Place:
_____________________
College Seal PRINCIPAL
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ACKNOWLEDEGEMENT
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TABLE OF CONTENTS
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CHAPTER 1
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Imagine going for a morning walk in the wee hours to a park, making a brief stop-
over and coming back home with a belly-full of tasty flavored milk and hot pizza
topped with cheese! Defeats the purpose of the walk, but may make you feel on top of
the world.
Now, imagine the CEO of a dairy company saying, “Ours is not a food company, it is
an IT company in the food business. The most efficient way of building links between
milk producers and consumers so as to provide the best returns for both is through IT
and innovation.”
Or better still, imagine a cooperative movement that has delivered a Rs. 2746 crore
turnover and has been planning actively to take it up to the 10000 crore mark.
Amul India limited, and its team of energetic professionals have planned to take on
HLL in ice-creams, Cadbury in chocolates, and NDDB in a verbal duel to uphold the
cooperative movement. On top of all this, set up a retailing network that would be the
toast of the town.
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CHAPTER 2
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AMUL is based in Anand, Gujarat and has been a sterling example of a co-operative
organization's success in the long term. It is one of the best examples of co-operative
achievement in the developing economy. "Anyone who has seen ... the dairy
cooperatives in the state of Gujarat, especially the highly successful one known as
AMUL, will naturally wonder what combination of influences and incentives is
needed to multiply such a model a thousand times over in developing regions
everywhere." The Amul Pattern has established itself as a uniquely appropriate
model for rural development. Amul has spurred the White Revolution of India, which
has made India the largest producer of milk and milk products in the world. It is also
the world's biggest vegetarian cheese brand.
Amul is the largest food brand in India and world's Largest Pouched Milk Brand with
an annual turnover of US $1050 million (2006-07). Currently Amul has 2.8 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.
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2.1.1 MASCOT
Since 1967 Amul products' mascot has been the very recognisable "Amul baby" (a
chubby butter girl usually dressed in polka dotted dress) showing up on hoardings and
product wrappers with the equally recognisable tagline Utterly Butterly Delicious
Amul.The mascot was first used for Amul butter. But in recent years in a second wave
of ad campaign for Amul products, she has also been used for other product like ghee
and milk.
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One of the most powerful co-operative movements originating from the birth state of
Mahatma Gandhi is responsible for the birth and growth of the popular FMCG brand-
AMUL. Before the cooperative movement began, middlemen who supplied milk to
the consumers were exploiting the dairy industry in the Kaira District. It began as a
response to this exploitation and put an end to it. It grew because it responded to the
farmers financially as well as with services. It has thrived because farmers who have a
stake in its success, own it. And because it has been managed by capable professionals
and strengthened by dedicated scientists, technologists and workers, it has forged
ahead. Today in India, there are 75,000 dairy cooperative societies, spread all over the
country with a membership of 10 million. The farmer in the village is now assured of
a better future thanks to these cooperatives. Recently one of the European Embassies
in Delhi requested Amul for information on the five biggest "companies" in the dairy
business. The first three are in the cooperative sector - The Gujarat Cooperative Milk
Marketing Federation (GCMMF), The Kaira District Cooperative Milk Producers'
Union Limited and The Mehsana District Cooperative Milk Producers' Union. The
Kaira District Cooperative is the second best in the country. It helped to create
GCMMF, the apex body of all cooperatives in Gujarat.
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labor. Yet, it was they who received the smallest share of the Bombay consumers'
rupee. The arrangement benefited everyone but them.
In 1964, the then Prime Minister Shri Lal Bahadur Shastri came to inaugurate cattle
feed factory owned by Amul near Anand. Impressed by the cooperative's success, he
expressed his wish to "transplant the spirit of Anand in many other places". He
wanted the Anand model of dairy development replicated in other parts of the country.
With institutions owned by rural producers, which were sensitive to their needs and
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responsive to their demands, it was an ideal tool for progress. The National Dairy
Development Board was created in 1965 in response to this call.
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The mighty Ganges at its origin is but a tiny stream in the Gangotri ranges of the
Himalayas. Similar is the story of Amul, which inspired 'Operation Flood' and
heralded the 'White Revolution' in India. It began with two village cooperatives and
250 liters of milk per day, nothing but a trickle compared to the flood it has become
today. Today Amul collects , processes and distributes over a million liters of milk and
milk products per day, during the peak, on behalf of more than a thousand village
cooperatives owned by half a million-farmer members. Further, as Ganga-ma carries
the aspirations of generations for moksha, Amul too has become a symbol of the
aspirations of millions of farmers, creating a pattern of liberation and self-reliance for
every farmer to follow.
The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June 1948.
An assured market proved a great incentive to the milk producers of the district. By
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the end of 1948, more than 400 farmers joined in more village societies, and the
quantity of milk handled by one Union increased from 250 to 5,000 liters a day.
To meet the requirement of milk powder for the Defense, the Kaira Union was asked
by the Government of India in 1963 to setup additional milk drying capacity. A new
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dairy capable of producing 40 tons of milk powder and 20 tons of butter a day was
speedily completed. It was declared open in 1965. The Mogar Complex where high
protein weaning food, chocolate and malted food are being made was another
initiative by Amul to ensure that while it fulfilled the social responsibility to meet the
demand for liquid milk, its members were not deprived of the benefits to be had from
the sale of high value-added products.
The Kaira Union broke the cycle by not only taking upon themselves the
responsibility of collecting the marketable surplus of milk but also provided the
members with every provision needed to enhance production. Thus the Kaira Union
has full-fledged machinery geared to provide animal health care and breeding
facilities. As early as late fifties, the Union started making high quality buffalo semen.
Through village society workers artificial insemination service was made available to
the rural animal population. The Union started its mobile veterinary services to render
animal health care at the farmers' doorstep. Probably for the first time in the country,
veterinary first aid services, by trained personnel, were made available in the villages.
Fully qualified staff mans the Union’s 16 mobile veterinary dispensaries. All the
villages are visited bi-monthly, on a predetermined day, to provide animal health care.
A 24-hour Emergency Service is also available at a fee (Rs. 35 for members and Rs.
100 for non-members). All the mobile veterinary vans are equipped with Radio
Telephone.
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The Union runs a semen production center where it maintains high pedigreed Surti
buffalo bulls; Holstein Friesian bulls, Jersey bulls and 50 per cent crossbred bulls. The
semen obtained from these bulls is used for artificial breeding of buffaloes and cows
belonging to the farmer members of the district. The artificial insemination service
has become very popular because it regulates the frequency of calving in cows and
buffaloes thus reducing their dry period. Not only that, a balanced feed concentrate is
manufactured in the Union's Cattle Feed Plant and sold to the members through the
societies at cost price.
Impressive though its growth, the unique feature of the Amul sagas did not lie in the
extensive use of modern technology, nor the range of its products, not even the rapid
inroads it made into the market for dairy products. The essence of the Amul story lies
in the breakthrough it achieved in modernizing the subsistence economy of a sector
by organizing the rural producers in the areas.
What's more, 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 upliftment and
common good.
Looking back on the path traversed by Amul, the following features make it a pattern
and model for emulation elsewhere. Amul has been able to:
Produce an appropriate blend of the policy makers farmers board of management and
the professionals: each group appreciating its roles and limitations
Bring at the command of the rural milk producers the best of the technology and
harness its fruit for betterment
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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 and
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.
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CHAPTER 3
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Gujarat Cooperative Milk Marketing Federation (GCMMF) is the India’s largest food
product marketing organization. It is a state level apex body of milk cooperatives in
Gujarat, which aims to provide remunerative returns to the farmers.
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V
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a
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e
r
s
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.
V
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l
l
a
g
e
r
s
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A systematic & well-defined organizational structure plays a vital role & provides
accurate information to the top-level management. An organisation structure defines a
clear-cut line of authorities & responsibilities among the employees of GCMMF. The
Organisation structure of Amul is well-arranged structure. At a glance a person can
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completely come to know about the organization structure. Amul is leaded by the
director under him five branches viz. Factory, Marketing, Accounts, Purchase, Human
Resources Department.
Factory department has a separate general manager under him there are six braches
viz. Production, Stores, Distribution, Cold Storage, Quality, and Deep-freezing. This
department takes care of the factory work.
Marketing department has regional senior marketing manager and under him there is a
regional manager. This department takes care of the marketing aspects of Amul.
Accounts department takes care regarding accounts i.e. day-to-day work. Under the
accountant there is one clerk. Purchase department takes care regarding the purchase
of raw materials and many other things.
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It began with two village co-operatives and 250 liters of milk per day -- anything but a
trickle compared to the flood it has become today. Today AMUL collects processes
and distributes over 9 lakh liters of milk per day during the peak on behalf of 962
village co-operatives owned by 5.42 lakh farmer members. AMUL has become the
sign and symbol of the aspirations of millions of farmers, and the pattern of liberation
and self-reliance for every farmer.
The Kheda District Co-operative Milk Producers' Union Limited (popularly known as
AMUL) was formally registered on December 14, 1946.
The Kheda Union began pasteurizing milk for the Bombay Milk Scheme in June
1948. An assured market proved a great incentive to the milk producers of the district.
By the end of 1948, more than 400 farmers joined in more village societies, and the
quantity of milk handled by the Union increased from 250 to 5000 litres a day. In the
early years, AMUL had to face a number of problems. The response to these provided
stimulus for further growth. For example, as the movement spread in the district, it
was found that the Bombay Milk Scheme could not absorb the extra milk collected by
the Kheda Union in winter, when the production on an average was 2.5 times the
summer. Thus, even by 1953, the farmer-members had no assured market for the extra
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milk produced in winter. They were again forced to sell a large surplus at low rates to
the middlemen.
The remedy was to set up a plant to process milk into products like butter and milk
powder. A Rs. 5 million plant to manufacture milk powder and butter was completed
in 1955. In 1958, the factory was expanded to manufacture sweetened condensed
milk. Two years later, a new wing was added for the manufacture of 2500 tons of
roller-dried baby food and 600 tons of cheese per year, the former based on a formula
developed with the assistance of Central Food Technological Research Institute
(CFTRI), Mysore.
It was the first time anywhere in the world that cheese or baby food was made from
buffalo milk on a large, commercial scale. Another milestone was the completion of a
project to manufacture balanced cattle feed. The plant was donated by OXFAM under
the Freedom From Hunger Campaign of the FAO. To meet the requirement of milk
powder for the Defense, the Kheda Union was asked by the Government of India in
1963 to set-up additional milk drying capacity.
A new dairy capable of producing 40 tons of milk powder and 20 tons of butter a day
was speedily completed. It was declared open in 1965. The Mogar Complex where
high protein weaning food, chocolate and malted food are being made was another
initiative by AMUL to ensure that while it fulfilled the social responsibility to meet
the demand for liquid milk, its members were not deprived of the benefits to be had
from the sale of high value-added products. The Mogar complex also started
manufacturing Amullite a substitute for butter in 1994. Amul has also set up a new
Dairy Plant to handle 6.5 lakh liters per day with facilities to produce 60 tonnes of
powder and 70 tonnes of butter in a highly automated plant. It has recently set up a 20
MT Cheese plant at Khatraj near Memdabad.
Impressive though its growth, the unique feature of the AMUL sagas did not lie in the
extensive use of modern technology, nor the range of its products, nor even the rapid
inroads it made into the market for dairy products. The essence of the AMUL story
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Since its inception, the Kheda Union also believed that the responsibility to collect the
marketable surplus of milk should be coupled with the provision of making the
production enhancement inputs reach the members. The Kheda Union has thus a full-
fledged machinery to provide animal health care and breeding facilities. As early as
late fifties, the Union started making high quality buffalo semen and the artificial
insemination service available to the rural animal population through the village
society workers. The Union started its mobile veterinary services to render animal
health care at the door steps of the farmers. Probably for the first time in the country,
the veterinary first aid service was made available in the villages through trained
village-society workers.
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The Union's 16 mobile veterinary dispensaries have fully qualified staff. All the
villages are visited bi-monthly on a pre-determined day, to provide animal health care.
A 24-hour Emergency Service is also available at a fee (Rs.35 for members and
Rs.100 for non-members). All the mobile veterinary vans are equipped with Radio
Telephones.
The Union runs a semen production centre where it maintains high pedigreed Surti
buffalo bulls, Holstein Fresian bulls, Jersey bulls and 50 per cent cross-bred bulls to
cater to the need of semen for artificial breeding of buffaloes and cows belonging to
the farmer members of the district. Artificial insemination service has become very
popular and effective because it regulates the frequency of calving in cows and
buffaloes and thus reduces their dry period. A balanced feed concentrate is
manufactured in the Union's Cattle Feed Plant and sold to the members through the
societies at cost price.
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yield of animals: artificial insemination service, veterinary care, better feeds and the
like, all through the village societies.
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CHAPTER 4
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AMUL means "priceless" in Sanskrit. The brand name "Amul," from the Sanskrit
"Amoolya," was suggested by a quality control expert in Anand. Variants, all meaning
"priceless", are found in several Indian languages. Amul products have been in use in
millions of homes since 1946. Amul Butter, Amul Milk Powder, Amul Ghee,
Amulspray, Amul Cheese, Amul Chocolates, Amul Shrikhand, Amul Ice cream,
Nutramul, Amul Milk and Amulya have made Amul a leading food brand in India.
(Turnover: Rs. 37.74 billion in 2005-06). Today Amul is a symbol of many things. Of
high-quality products sold at reasonable prices. Of the genesis of a vast co-operative
network. Of the triumph of indigenous technology. Of the marketing savvy of a
farmers' organisation. And of a proven model for dairy development.
Powder Milk
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Fresh Milk
Amul Fresh Milk Amul Gold Milk
This is the most
hygienic milk
available in the
market. Pasteurised
in state-of-the-art
processing plants
and pouch-packed
for convenience.
Amul Taaza Amul Lite Slim
Double Toned and Trim Milk
Milk
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Amul cheese
Amul Pasteurised Amul Cheese
Processed Cheese Spreads
100% Vegetarian Tasty Cheese Spreads
Cheese made from in 3 great flavours.
microbial rennet
Amul Emmental Amul Pizza
Cheese Mozzarella
The Great Swiss Cheese
Cheese from Amul, Pizza cheese...makes
has a sweet-dry great tasting pizzas!
flavour and hazelnut
aroma
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Gouda Cheese
For Cooking
Amul / Sagar Pure Cooking Butter
Ghee
Made from fresh
cream. Has typical rich
aroma and granular
texture. An ethnic
product made by
diaries with decades of
experience.
Amul Malai Paneer Utterly Delicious
Ready to cook paneer Pizza
to make your favourite
recipes!
Health Drink
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Desserts
Amul Ice Creams Amul Shrikhand
Premium Ice Cream A delicious treat,
made in various anytime.
varieties and flavours
with dry fruits and
nuts.
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Amul Basundi
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This framework assumes that an increase in relative market share will result in an
increase in the generation of cash. This assumption often is true because of the
experience curve; increased relative market share implies that the firm is moving
forward on the experience curve relative to its competitors, thus developing a cost
advantage. A second assumption is that a growing market requires investment in
assets to increase capacity and therefore results in the consumption of cash. Thus the
position of a business on the growth-share matrix provides an indication of its cash
generation and its cash consumption.
It is observed that the cash required by rapidly growing business units could be
obtained from the firm's other business units that were at a more mature stage and
generating significant cash. By investing to become the market share leader in a
rapidly growing market, the business unit could move along the experience curve and
develop a cost advantage. From this reasoning, the BCG Growth-Share Matrix was
born.
Here, we shall consider the products of GCMMF (Amul India). The products to be
placed in the BCG matrix for the study are, Amul Butter, Amul Ice – cream, Amul
Kool and Amul Chocolates.
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For Amul brand, Amul Kool and Amul Chocolates are a perfect example of a
Question mark product or a problem child. Question marks business are wait and
watch business. Amul kool and the chocolates.are businesses the company entered
because it felt that both these product category have high growth potential.
Stars - Stars generate large amounts of cash because of their strong relative market
share, but also consume large amounts of cash because of their high growth rate;
therefore the cash in each direction approximately nets out. If a star can maintain its
large market share, it will become a cash cow when the market growth rate declines.
The portfolio of a diversified company always should have stars that will become the
next cash cows and ensure future cash generation.
Amul Ice – cream, is a star generating huge amounts of cash for the company. No
doubts it demands huge amount of investments as well but at the same time has
enormous growth rate. It has still maintained its large market share in competition
with other large brands like ‘Kwality Walls Ice – cream’ and ‘Dullops’ etc. It has
earned very high returns compared to its investments and continues to be so. The
company hopes to cash on this product in future.
Cash cows - As leaders in a mature market, cash cows exhibit a return on assets that
is greater than the market growth rate, and thus generate more cash than they
consume. Such business units should be "milked", extracting the profits and investing
as little cash as possible. Cash cows provide the cash required to turn question marks
into market leaders, to cover the administrative costs of the company, to fund research
and development, to service the corporate debt, and to pay dividends to shareholders.
Because the cash cow generates a relatively stable cash flow, its value can be
determined with reasonable accuracy by calculating the present value of its cash
stream using a discounted cash flow analysis.
Amul Butter is one of the unbeatable product in the product profile of the company. It
is primarily their most successful product with hardly any competitors in the market.
The pricing of this product is absolutely strategic so as to avoid further competitors
from entering this segment of the product consumers. The advertisements and
billboards of this product is major contributor to the sales. It is the oldest in the
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market and hence still enjoys the First Mover Advantage, as per the law of marketing.
This product has been a thorough cash cow from the beginning since it gave huge
returns with lowest investments which made it easy for the company to plough those
profits for other products, i.e the Question Mark and the Star segments.
Dogs - Dogs have low market share and a low growth rate and thus neither generate
nor consume a large amount of cash. However, dogs are cash traps because of the
money tied up in a business that has little potential. Such businesses are candidates for
divestiture.
The unfortunate product for any company is when it enters the Dog segment. The
most unsuccessful product for the company has been Amul – Ready to eat Pizza. The
company had to call off the product from its list of products. Inspite of all the
marketing strategies the company undertook to make this product a success it proved
to be futile. Somehow, the company could not induce the idea of ready –to-eat pizza
in the minds of the consumers. With tough competitors like ‘Pizza Hut’ and ‘Dominos
Pizza’ it was wise for them to withdraw the product from the market to avoid further
losses for the company
4.3.1 - STRENGTHS
Demand profile : Absolutely optimistic. Milk being a necessity product, the
demand will stay and the sales at GCMMF are bound to increase over a period of
time.
Margins: Quite reasonable, even on packed liquid milk. The margins are enough to
limit the entry of potential entrants.
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4.3.2 WEAKNESSES
Perishability: Pasteurization has overcome this weakness partially. UHT gives
milk long life. Still perishability is there at the milk vendors end. This does result in
loss of some production. But Amul Dairy is taking steps to store milk at the vendors
end. Surely, many new processes will follow to improve milk quality and extend its
shelf life.
Lack of control over yield : Theoretically, there is little control over milk yield.
A lot depends upon the monsoon in the country. This is because of the quality of
cattle feed that would be available will not have the required nutritional content. Steps
are taken to provide awareness regarding these and the penetration of quality feed is
being increased. Moreover, increased awareness of developments like embryo
transplant, artificial insemination and properly managed animal husbandry practices,
coupled with higher income to rural milk producers should automatically lead to
improvement in milk yields.
Logistics of procurement : Woes of bad roads and inadequate transportation
facility make milk procurement problematic. All these factors lead to perishability of
the procured milk. But with the overall economic improvement in India, these
problems would also get solved.
Erratic power supply : The erratic power supply would cause harm in the
processing of milk.
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4.3.3 OPPORTUNITIES
"Failure is never final, and success never ending”. Dr Kurien bears out this
statement perfectly. He entered the industry when there were only threats. He met
failure head-on, and now he clearly is an example of ‘never ending success’! If dairy
entrepreneurs are looking for opportunities in India, the following areas must be
tapped:
Addition of cultured products like yoghurt and cheese lend further strength - both in
terms of utilization of resources and presence in the market place.
Yet another aspect can be the addition of infant foods, geriatric foods and nutritional.
Export potential: Efforts to exploit export potential are already on. Amul is
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exporting to Bangladesh, Sri Lanka, Nigeria, and the Middle East. Following the new
GATT treaty, opportunities will increase tremendously for the export of agri-products
in general and dairy products in particular. There is a strong basis of cost efficiency,
which GCMMF can leverage in the world market.
Markets: The market for the traditional as wells as processed dairy products is
expanding both at the domestic and international front.
IT support: Software is now available for project formulation for dairy enterprise. It
has also computerized its production processes. Mother Dairy was the first fully
computerized dairy in India. In its Anand plant all products are processed
computerized, which does not have any hand touch during any stage of process.
4.3.4 THREATS
Milk vendors, the un-organized sector: Today milk vendors are occupying the
pride of place in the industry. Organized dissemination of information about the harm
that they are doing to producers and consumers should see a steady decline in their
importance.
Infestation: There are increasing incidents of chemical contaminants as well as
residual antibiotics in milk.
Quality: The quality of the milk is found to be poor as compared to the international
standards. One of the reasons for these according to the EU and America is the
method of milching the milk. In these nations the milk is hands by the farmers owning
the cattle do milched with the help of machines, while in India.
Subsidy by Western Nations: There have been incidences wherein the Western
nations subsidizing the dairy products by a few means like transportation. Because of
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such reasons the final price of the product goes below the prices prevailing in the
Indian Market. Hence it proves a threat to GCMMF’s and other Indian dairy products.
Creation of Non Tariff Barriers by Developed Nations: The Developed Nations have
created Non Tariff Barriers related to Quality of the milk specifically. They want that
the milk be processed with potable Air and Water. They also want that the milching of
cattle be done with the help of machines. However this type if system is yet to evolve
in India. Because of these reasons they are reducing the market potential of Indian
made products, where GCMMF holds a lions share.
The study of this SWOT analysis shows that the ‘strengths’ and ‘opportunities’
far outweigh ‘weaknesses’ and ‘threats’. Strengths and opportunities are
fundamental and weaknesses and threats are transitory. Any investment idea can
do well only when you have three essential ingredients: entrepreneurship (the
ability to take risks), innovative approach (in product lines and marketing) and
values (of quality/ethics).
According to Porter (1980) a firm must be analyzed in relation to its industry. Factors
outside the industry tend to influence all the industry’s firms in the same way and are
thus not as important to study.
To a large extent, industry structure governs the strategies open to the firms. The
profitability and attractiveness of an industry is dependent of the level of competition.
Competition in an industry originates from industry structure and goes well beyond
the behavior of individual competitors.
According to Porter, each industry has a potential profitability and the profitability for
the firms is dependent on the competitive forces in the industry. Porter identifies five
competitive forces that derive from the ambition to obtain as large share of the
profitability as possible. The five forces are the foundation of the five-force model.
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Milk Gayatri
4.4.1 PORTER’S
FIVE-FORCE Royal MODEL
The major Sardar competitors
of the Amul Uttam dairy
include: Shreshtha
Havmor
The success of the national
Kwality Walls Max
and local competitor’s
brands includes Local & Regional players effective
distribution system,
advertising, Gayatri good pricing
Ghee
policy etc. The Nestle factors
ascribed by porter are:
Threats of new entrants
Milk Powder Nestle
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Chocolate Nestle
Cadbury
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Cost and Resource advantages: Amul dairy is co-operative society. That means
“cooperation among competitive” is the fundamental principle. Amul dairy is
managed under the norms of GCMMF and market the products under the brand name
‘Amul’, which has a very good reputation at domestic and international level. Here,
the raw material procurement is very difficult for the new entrants. Consequently
Capital requirement is also high. Still new entrants are emerging such as domestic and
international players. So the threats of new entrants are moderate.
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art technology. To get this technology in India, a firm would require a huge amount of
resources.
Capital Requirements: The total investment required in the industry is huge and is a
decision worth considering even for MNC’s. The investment decisions cover the
processing costs as well as the marketing costs. To compete with the brand Amul in
India is difficult as Amul is synonymous to Quality.
There is appropriate bargaining power of the supplier. In olden days there were not
any kind of cooperative societies as the farmer was exploited. But, nowadays the
farmer’s rights are protected under the cooperative rules and regulations, which
ultimately results in moderate power of bargaining from the supplier.
Large no. of buyers: Milk is a necessity product and hence is a mass product. It has
a considerable share of the rupee spent by any Indian. Moreover the buyers are spread
evenly over the country and do not have any bargaining power.
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Threats of Substitute
Availability of attractive priced substitutes: Different substitutes are available for
different category of products. There is ample availability of low priced substitutes
from local vendors and retailers. This is a front where GCMMF is still finding hard to
combat.
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Not immediate substitutes: Distant substitutes are present in many of the categories
of business of GCMMF. For example in the Masti Buttermilk category it faces
competition from cold drinks and ice cream.
These 5 forces interact among themselves at different degrees over a period of time.
Moreover it will get intense or loosen up depending upon the moves of its
competitors, buyers, suppliers, etc. However GCMMF has been able to outperform on
almost all fronts excluding a few lines of business.
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CHAPTER 5
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5.1 PRODUCTION
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.
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Baroda Dist Coop Milk Producers’ Union Ltd, Baroda. Soc: 783, Mems: 156,691.
Av Milk Proc: 225,000 lpd.
Bharuch Dist Coop Milk Producers’ Union Ltd, Bharuch. Soc: 289, Mems:
37,900. Av Milk Proc: 38,000 lpd.
Bhavnagar Dist Coop Milk Producers’ Union Ltd, Bhavnagar. Soc: 190, Mems:
25,532. Av Milk Proc: 23,000 lpd.
Gandhinagar Dist Coop Milk Producers’ Union Ltd, Gandhinagar. Soc: 56, Mems:
13,000. Av Milk Proc: 46,500 lpd.
Junagadh Dist Coop Milk Producers’ Union Ltd, Junagadh. Soc: 400, Mems:
41,500. Av Milk Proc: 73,000 lpd.
Kaira Dist Coop Milk Producers’ Union Ltd, Amul Dairy, Anand. Soc: 943,
Mems: 513,280. Av Milk Proc: 740,000 lpd.
Kutch Dist Coop Milk Producers’ Union Ltd, Kutch Dairy, Madhapar. Av Milk
Proc: 25,000 lpd.
Mehsana Dist Coop Milk Producers’ Union Ltd, Dudhsagar Dairy, Mehsana. Soc:
1,020, Mems: 292,800. Av Milk Proc: 704,402 lpd.
Panchmahal Dist Coop Milk Producers’ Union Ltd, Godhra. Soc: 1,133, Mems:
126,510. Av Milk Proc: 112,000 lpd.
Rajkot Dist Coop Milk Producers’ Union Ltd, Rajkot. Soc: 193, Mems: 29,620.
Av Milk Proc: 50,000 lpd.
Sabarkantha Dist Coop Milk Producers’ Union Ltd, Sabar Dairy, Himatnagar. Soc:
1,315, Mems: 200,482. Av Milk Proc: 322,346 lpd.
Surat Dist Coop Milk Producers’ Union Ltd, Sumul Dairy, Surat. Soc: 864, Mems:
160,000. Av Milk Proc: 300,000 lpd.
Surendranagar Dist Coop Milk Producers’ Union Ltd, Surendranagar. Soc: 486,
Mems: 31,000. Av Milk Proc: 30,000 lpd.
Valsad Dist Coop Milk Producers’ Union Ltd, Vasudhara Dairy, Valsad. Soc: 348,
Mems: 35,900. Av Milk Proc: 74,400 lpd.
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factory. These arrangements are pre-planned with the results that the building has
been constructed to fit a layout of a given process.
The plant is engaged in producing milk, ice creams, milk powder and ghee. Entire
department is uniquely provided with facilities for the processing each product. There
are 4 production departments and packaging departments pertaining to each product
respectively.
Thus, plant layout encompasses all production and service facilities and provides for
the most effective utilization of the men, materials and machines constituting the
process. It is the master blue print of coordinating all operations.
A good layout results in elimination or minimization of accidents and hazards and
cost while increases the output. Thus a good layout specifically is observed to be
beneficial on the following grounds:
Efforts minimization
Fewer material handling will be provided manufacturing units cost will be lover
Bottlenecking of production will be eliminated
Total item in process will be less
Specialization of operations is facilitated
Less inspection will be required
Production control will be easier to achieve
Plant investment can be held to the necessary minimum
Plant and equipment obsolescence may be less
Wastage space will be eliminated
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Thus, a true beneficiary is provided to the plant through good and sound planning for
plant layout.
Collection of Raw-Milk
Electronic Milk Test
Separation Process
Quality Check
Packaging Process
Cold Storage
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After collecting the samples of milk, they are taken to the laboratory, where two types
of tests are conducted.
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After laboratory gives green signal and confirming the raw milk at the reception dock
is brought in to the house connected with the pump is sent to the milk processing
plant. This is than chilled below 4 degree C. and then stored in milk silos. After that
milk is processed this has two steps i.e. pasteurizing and standardizing.
3. Separation Process
Separator machine separates two kinds of products, skimmed milk & cream, through
channels. There are 100 disks fixed in separator machines, which revolve at 5000 rpm
(revolution per minute). It is taken to the tanks, which has the capacity of 20000 litres.
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Whenever the milk is needed from the tank, it is tested in the laboratory and the
deficit proportion fat is added by mixing cream. This process continues for 24 hours.
4. Quality Check
Pasteurized milk is sent for a quality check in the Quality Assurance laboratory of the
dairy plant. Within 14 seconds FAT and SNF proportion is received regarding 30 lack
litres of milk. The total investment put into the lab by the Dairy plant is of Rs. 6
crores.
This laboratory only checks and analyses the powder, milk and ghee. There is a
separate ice-cream analysing laboratory.
5. Packing Process
After this the milk is sent for packing to the milk packing station in the dairy plant. In
the milk packaging station there are huge pipelines and behind each of them there is
polyfill machine from which the material to pack milk comes out. There are 12 such
polyfill machines in the packaging station from which the materials to pack milk
comes out. From each of these 12 machines 100 pouches are packed in one single
minute.
6. Storage
Then the milk is sent to the cold storage of the dairy where the milk is stored until it is
dispatched. Here the milk is stored at temperature ranging from 5 C to 10 C, it is
maintained with the help of exhaust fans having silicon chips. About 40000 litres of
milk is dispatched from the cold storage of the dairy plant everyday. The damaged
pouches are kept a side and the milk is once again put to the tank.
7. Milk Powder
For converting milk powder first of all water content is evaporated in condensing
plant. By this process they get condensed milk, it is used as a raw material. There after
the milk is sent to the drying plant. The spray drying plant is huge in size with a
height of 70 feet. The plant is divided into many floors to enable easy use of the plant.
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First of all the raw material i.e. condensed milk is put into the first floor of the plant
along with air at 200 C. By this process the remaining water, which the condensed
milk might have retained is also evaporated and milk comes as powder but this is not
the last stage.
This powder is again put in to a machine called milk calendaria, where it is turned in
to real milk powder. Its capacity is 1000 litres per 15 minutes. Then again this milk
powder is put into a Dense Waise Vessel. Here the lumps are removed and uniform
milk powder is sent up.
After processing the powder is sent for quality checking at quality assurance
laboratory. After the quality confirms, this milk powder is differentiated, by adding
different flavors to them like elaichi, chocolate & sugar free milk powder. Thereafter
they are packed in tins and boxes. Afterwards it is stored at storage department.
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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
cannel. 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.
GCMMF has an excellent distribution. It is its distribution channel, which has made it
so popular. GCMMF’s products like milk and milk products are perishable. It
becomes that much important for them to have a good distribution.
Products
5.2.2 DISTRIBUTION CHART
Agents
Wholesaler
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Consumer
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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.
Amul Parlors
Amul has come out with a unique concept of Amul Parlours. They have classified
those under four types namely:
Center for excellence
On the Move
Amul Parlours
Amul Preferred Outlets
Center for Excellence: These Amul Parlours are specifically at a place, which has a
class of excellence of its own. We can find such parlors at the Infosys, IIMA, NID
Ahmedabad etc.
On the Move: These parlors are at the railway stations and at different state bus
depots across different cities.
Amul Parlours: These parlors can be seen at different gardens across different cities.
These are fully owned by Amul.
Amul Preferred Outlets: These are the private shops that keep the entire of product
range of Amul. They also agree not to keep any competitor brands in the outlets. They
can keep other brands that are in the non-competitor category.
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Amul has more than 200 such outlets right now. It wants to have 1,00,000 parlors by
the end of the year 2010.
Exports: GCMMF is India's largest exporter of Dairy Products. It has been accorded a
"Trading House" status. GCMMF has received the APEDA Award from Government
of India for Excellence in Dairy Product Exports for the last 9 years.
The major export products are:
Consumer Packs
Amul Pure Ghee
Amul Butter
Amul Shrikhand
Amul Mithaee Gulabjamun
Nutramul Brown Beverage
Amulspray Infant Milk Food
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Amul Cheese
Amul Malai Paneer
Amul UHT Milk (Long Life)
Amul Fresh Cream
Bulk Packs
Amul Skimmed Milk Powder
Amul Full Cream Milk Powder
The products are exported to 18 countries namely, USA, Kuwait, Qatar, UAE, Yemen,
Bahrain, Muscat, Saudi Arabia, Tanzania, Madagascar, Sri Lanka, Singapore, Nepal,
Bangladesh, Nepal Thailand and Australia.
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GCMMF
700 Emp
One reason that Amul is the giant it is because it’s built on the back of a co-operative
movement. It encourages women and farmers to collect milk from their cows and pass
it on to them for a price. By managing milk supplies from the cattle farmer and
sending it straight to the factory, it’s been able to eliminate the middleman.
Complexity and dynamics of the supply chain make it very difficult to assess the
interaction effects.
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(ii) Focus on core competence of each player in the chain. The objective is to
ensure that each task is performed by the entity best suited for it. As a result, firms
have become willing partners in ceding control to a network partner for improving
performance. VMI in many industries is a direct result of such change in management
thinking. Similarly, the role of third parties for providing specific expertise such as
logistics has grown substantially with emphasis on supply chain.
Milk procurement
Total milk procurement by our Member Unions during the year 2012-13 averaged
93.02 lakhs kilograms (9.30 million kgs) per day representing a growth of 6.68% over
87.19 lakhs kgs (8.7 million kgs) per day achieved during the year 2008-09. The
highest procurement as usual was recorded during January, 2012 at 122.5 lakhs kgs
per day
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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.
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CHAPTER 6
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100 respondents
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AGE GROUP
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SEX
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OCCUPATION
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CONSUMPTION
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BRAND IDENTIFICATION
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PURCHASE
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FREQUENCY
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23 % respondent says that taste act as a prime factor for purchase factor
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36 % respondent says that product trust act as a prime factor for purchase.
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10 % respondent says that habitual consumption act as a prime factor for purchase of
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Taste, Trust, Habitual are the prime reasons for consumption of the product
6.6 RECOMMENDATION
Trust has to be maintained through out as people are purchasing only due to trust
More retail outlets to be explored for Avaibility
Should be supplied as daily product like milk and news paper
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CHAPTER 7
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Following are the major issues analyzed with respect to the SCM of Amul:
SUPPLIERS:-
The member-suppliers were typically small and marginal farmers with severe
liquidity problems, illiterate and untrained. AMUL and other cooperative Unions
adopted a number of strategies to develop the supply of milk and assure steady
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growth. First, for the short term, the procurement prices were set so as to provide fair
and reasonable return. Second, aware of the liquidity problems, cash payments for the
milk supply was made with minimum of delay.
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Amul was one of the first FMCG firms in India to employ Internet technologies to
implement B2C commerce. Today customers can order a variety of products through
the Internet and be assured of timely delivery with cash payment upon receipt. It has
also implemented a Geographical Information System (GIS) at both ends of the
supply chain, i.e. milk collection as well as the marketing process.
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Manpower should be more than 18 years of age. (in some of the areas, we have
observed small children engaged in loading & unloading the trays from the truck)
Before offering any extra benefits or schemes to their retailers, Amul should
aware them in advance, so that the incentives can be reached in the right hands at
right time. Otherwise distributors enjoy the benefits of retailers.
Codification of raw material should be done in an easily understand manner.
Reduce the solving time of the consumer/retailers’ complaints.
Payment to the milk suppliers should be made on time to ensure the proper inflow
of milk.
Amul should also launch certain schemes for households. It has schemes for
retailers but not for households. This section being the major user of milk and in
order to enter into a new area such starting schemes can be very helpful.
For refrigerated and frozen food distribution, a world class cold chain would help
in providing quality assurance to the consumers around the region.
Logistics and transportation services should be professionally managed to avoid
wastes.
Use of internet for exploring the unknown terrain.
Active customer feedback should be taken regularly for increasing product line.
Employees of GCMMF should involved actively in all activities of the member
unions.
Relationship with business associates like wholesaler should be made closer and
deeper.
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The company should take initiative to reduce transportation time from the depots
to the wholesale dealers, improvement in ROI of wholesale dealers,
implementation of Zero Stock Out through improved availability of products at
depots and also the implementation of Just-in-Time in finance to reduce the float.
Completely in tune with the ground reality an enquiry is initiated on the
organizational climate. This gave detail about the core competencies and most
importantly gave details about the handicaps and inadequacies.
Have recognized “change” as an essential factor governing business needs and
hence incorporates changes in every form at every stage. employees, suppliers and
distributors also “change ready” always
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CHAPTER 8
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8.1 CONCLUSION
Following factors have given us the insight to conclude, why Amul is thriving with
success today:
Emphasis on Quality: All the products of Amul are of highest grade. Consumers
were very quick to perceive this and the sales success that followed reflected the
public’s stamp of approval.
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The system has succeeded mainly because of involvement of people on such a large
scale, providing assured market at remunerated prices for milk producers, enables the
consumers access to high quality milk and milk products, ploughing back the profit to
the members, part of the profit is used by the society for common good and
community development.
Amul has established itself as a uniquely appropriate model for rural development.
Amul has spurred the white revolution of India, which has made India the largest
producer of milk and milk products in the world. Amul products have been in use in
millions of homes since 1946. Today Amul is a symbol of many things like of high-
quality products sold at reasonable prices & the genesis of a vast co-operative
network. Its supply chain is easily one of the most complicated in the world. The
supply chain linking farmer-suppliers of milk with the millions of consumers. Amul
encourages women and farmers to collect milk from their cows and pass it on to them
for a price directly eliminating cost of middleman. Introduction of just-in-time
inventory strategy improves dealers' return on investment (ROI).Amul was one of the
first FMCG firms in India to employ Internet technologies to implement B2C
commerce. Today customers can order a variety of products through the Internet and
be assured of timely delivery with cash payment upon receipt. It has also implemented
a Geographical Information System (GIS) at both ends of the supply chain, i.e. milk
collection as well as the marketing process.
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8.2 BIBLIOGRAPHY
WEBSITE VISITED
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www.amul.coop
www.indiadairy.com
www.indianmilkproducts.com
BOOKS
White revoltion - Dr. Kurien
Management of Co-Operatives - Romeo S Mascarenhas
Management of Co-Operatives - Ramkison
Tapping of Rural India
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