Name – SASWAT MOHANTY

ROLL NO – 20DM035
SECTION: PGDM
TERM: III
SUBJECT: Sales and Distribution Management
BATCH: 2020 – 2022
TOPIC: An analysis on the distribution channel for / of OMFED
(Industry / Organization) in /at BHUBANESWAR (location).
 AN ANALYSIS ON THE DISTRIBUTION CHANNEL OF
OMFED
BHUBANESWAR

Under the Guidance of:

Prof. Supratim Pratihar

TERM – 3
SALES AND DISTRIBUTION MANAGEMENT
Subject Code – C 306
Submitted By:
Saswat Mohanty
20DM035

Institute of Management & Information Science, Bhubaneswar

-751 002
 ACKNOWLEDGEMENT

I express my appreciation and thanks to all those with whom I

have had the opportunity to work and whose thoughts and
insights have helped me in furthering my knowledge and
understanding of the subject.
Every page of this report reminds me about the moral support
and guidance that was bestowed upon me by esteemed Guide,
professors, friends and family members throughout the duration
of the project.
My sincere gratitude goes to my project guide Prof. Supratim
Pratihar without him valued guidance, encouragement and
inspiration the completion of this report would have never been
possible
I am thankful to all who directly or indirectly helped me and
encouraged me in completing the project.
TABLE OF CONTENT

1. EXECUTIVE SUMMARY
2. INTRODUCTION
3. INDUSTRY PROFILE
4. COMPANY PROFILE
1) OMFED VISION
2) OMFED MISSION
3) OBJECTIVES OF OMFED
4) SALIENT FEATURES OF BHUBANESWAR DIARY
5. MILK MARKETING IN INDIA
6. PRODUCT DISTRIBUTION OF OMFED
7. CHANNEL DESIGN
8. Primary Activities of OMFED (The 5 P’s)
9. SWOT ANALYSIS
10. EXISTING DISTRIBUTION PROCESS OF OMFED
11. COMPETITORS
12. FINDINGS OF THE RESEARCH
13. SUGGESTIONS AND RECOMMENDATIONS
14. CONCLUSION
1-EXECUTIVE SUMMARY
The first part of our project involved the study of existing distribution
channel of OMFED
and Identification of problem areas.
The second part of our project was the study of minimizing the routes
of distribution and
the cost minimization of supply chain process. For this we conducted
a detailed study of
vehicle utilization by OMFED by interview method along with some
previous data
related to no. of vehicles used for transportation and its capacity with
the no. of routes.
OMFED must take initiative in aggressive marketing by applying
various product
distribution policies like;
1. Distribution route merging
2. Establishment liquid milk vending machines
3. Giving service of liquid milk vending van
4. Home Delivery for customers
2-Introduction
The product abundance is visible in the overcrowded shelves. There is
virtual product explosion in various categories. The reality is only few
of them win consumer’s heart and soul. The rest languish to be later
on pulled out. The product may start as product and die at store
shelves as products. But successful product starts as product in the
factory and goes on to become brands in consumer’s hearts and
minds. Brands are bridges between the factories where assembly take
place and the consumer who seek end goals and values. It is this
connection makes them true generator of corporate wealth and power.
The value of a business is now determined by the brands it holds
rather than the conventional assets it possess.

 The Milk Union was established in the year 1978.

 At the village level :Primary Dairy cooperative society
 At the district level :District milk union.
 At the state level the State Cooperative Milk Producers
Federation
 OMFED was registered in 1980.
 OMFED started to work since 1981.
 Took over OMPAC in 1988.
3-INDUSTRY PROFILE
This project work is undertaken in the OMFED, Bhubaneswar
division. This division of
OMFED is the highest revenue generated one among all other
branches. This has also highest
capacity all among other branches.
FLAVORED MILK is one of the best products of OMFED among all
other products. It‟s
popularity remains unbeaten among the people of Orissa till today. It
is a soft drink cum
health drink product of OMFED, which is very proteinus,
homogenized, sterilized and a
healthiest product of OMFED.
OMFED has seven dairy plants at Bhubaneswar, Rourkela,
Sambalpur, Balasore, Dhenkanal,
Keonjhar, and Jeypore to process milk received from approximately
1-lakh farmers through
10 chilling centers of District Milk Producers Union. Under the brand
"OMFED" these
dairies are involved in processing of milk products in various packing
sizes for marketing the
same inside and outside the state of Orissa. OMFED as a brand name
has become an integral
part its existence.
OMFED is organizing marketing facilities for whatever milk is
produced in villages and
hence to give the farmers and incentive to produce more milk. The
farmer producer is paid on
the basis of quality of milk i.e. two axis milk pricing structure based
on fat (Ghee) and Solid
not fat (cheese) contain of milk.
4- COMPANY PROFILE
The Orissa State Co-operative Milk Producer's Federation Ltd.
(OMFED), started in 1980. Its
affiliated to District Co-operative Milk Producers Union and hundreds
of village Milk
Producers Co-operative Societies provide a three tier co-operative
organizational setup for
milk enlarge scale
OMFED is organizing marketing facilities for whatever milk is
produced in villages and
hence to give the farmers and incentive to produce more milk. The
farmer producer is paid on
the basis of quality of milk i.e. two axis milk pricing structure based
on fat (Ghee) and Solid
not fat (cheese) contain of milk.
OMFED has seven dairy plants at Bhubaneswar, Rourkela,
Sambalpur, Balasore, Dhenkanal,
Keonjhar, and Jeypore to process milk received from approximately
1-lakh farmers through
10 chilling centers of District Milk Producers Union. Under the brand
"OMFED" these
dairies are involved in processing of milk products in various packing
sizes for marketing the
same inside and outside the state of Orissa. OMFED as a brand name
has become an integral
part its existence.
Thus its effectiveness as a co-operative organization in handling rural
milk procurement,
processing and marketing has been proved beyond doubt in the state
of Orissa. OMFED is
providing good, fresh pasteurized, homogenized and vitaminized
clean milk, both toned and
double toned in hygienic polythene sachets of half liter and one liter
to the consumer at
reasonable price from their modern hygienic dairy plants.
OMFED is practicing high ethical standards in its business. OMFED
milk and milk products
are very nutritive, tasteful, delicious, digestive, and adds to satiety. It
is sweet and appetizing
and can be consumed directly. The chilled OMFED milk helps in
prevention of hyper acidity,
stomach disorders and eye ailments. It is also good for brain
development of growing
children.

4.1 - OMFED VISION

To be a leading milk producing organization at international level of
efficiency with widest
and satisfied customer base , maximizing wealth of stake holders and
contributing to the state
economy.
4.2- OMFED MISSION
1. Increase in capacity of milk processing facilities.
2. Change in urban markets from traditional raw milk supplies to
modern dairies
milk supplies.
3. Resettlement of city base cattle in rural areas.
4. Development of long distance milk transport and storage facilities.
5. Improvement in Dairy Farming Standards.
6. To be learning organization and responsive to changing
environment

4.3 - OBJECTIVES OF OMFED

To carry out activities for promoting production, procurement,
processing and marketing of milk and marketing products.
Improvement and protection of animals and economic betterment of
those engaged in milk production.
Provide veterinary aid and artificial insemination services and to
undertake animal husbandry activities so as to improve animal health
care disease control facilities.

4.4- SALIENT FEATURES OF BHUBANESWAR DIARY

INSTALLED CAPACITY - 60,000 liters per day
PROJECT EXECUTED BY - National diary development board.
INITIAL PROJECT COST - Rs.2.80 crores
FUNCTIONED FORM - 6th December 1985
INAGURATED BY Hon‟ble President of India Late Giani Zail Singh
on 9th February 1986.
EXPANSION 75,000 liters per day
PROJECT EXECUTED BY Projects division of OMFED (2nd phase
expansion of
1.25 lakh liters per day already started on)
ANNUAL TURNOVER Rs.40 crores
EMPLOYEE‟S STRENGTH 1500 (Regular) 1200 (Temporary)
SECURITY By Private Agency
LAND 19.25 Acres
MACHINES Pasteurizer, Homogenizer, Sterilizer, Automatic-
packing machines

5 - MILK MARKETING IN INDIA

Dairy farming is a source of supplementary income for millions of
small/marginal
farmers and landless laborers in India. Market oriented smallholder
dairying provides
significant scope for diversification and thus helps in enhancing
income and generating
employment for the farmers. How profitable a dairy enterprise is
depends upon cost
structure and the price. Milk is procured, processed and sold by
various agents involved
in the dairy business from the point of production to consumption
either as fresh liquid
milk or processed milk products. These agents engaged in milk
marketing have been
classified into ‘Organized or Formal’ and ‘Unorganized or Informal’
although a clear
definition of organized and unorganized does not exist.
In this paper, an ‘informal’ pathway is defined as where some or all
the actors
involved in the whole milk supply chain operate outside the sector
that is regulated and
where in practice, taxes and subsidies are applicable. Broadly, the
dairy cooperatives,
milk producing units run by Government and large private dairies
such as Nestle,
SmithKline, and Heritage are classified as ‘Formal’ sector where as
village vendors,
local halwais, tea shops, curd shops, small-scale private dairies and
contractors are
classified as ‘Informal’ segment. Despite the steady increase in the
share of organized
market over the last four decades, a very large proportion of marketed
milk in the
country is still accounted for in the informal sector.
The key factor that sustains informal market in India is the poor
willingness of the
customers to pay the extra costs for formal processing and packaging.
Usually these
costs are not incurred by the informal sector agents and hence the
market margins
between farmer and consumer would logically be smaller. This means
that the informal
market can offer higher prices to farmers and lower retail prices to
consumers. Smallscale processors (halwais, etc.) also prefer to buy
from the informal channel. These buyers do all the processing of
value added products (sweets, curd, etc.) and are usually not willing
to pay for primary processing. On the other hand the formal
processors incur expenditures not only on quality control and
packaging but also on trade taxes. This makes them capable of
catering to the urban segment only. The share in total marketable
surplus of different agencies, from various parts of the country is
presented below.

Major milk marketing channel in india

6 - PRODUCT DISTRIBUTION OF OMFED
Distribution is the process of making a product or service available
for use or consumption by a consumer or business user, using direct
means, other indirect means with intermediaries. Products are
distributed through channels which are sets of interdependent
organizations (called intermediaries) involved in making the product
available for consumption. Merchants are the intermediaries which
buy and resell products. Agents and brokers do not take title to the
product but are intermediaries that act on behalf of the producer.
7 - CHANNEL DESIGN
A firm can design any number of channels. Channels are classified
based on the number of intermediaries between producer and
consumer. A level zero channel is typical of direct marketing, which
has no intermediaries. A level one channel has a single intermediary.
The typical flow is from manufacturer to retailer to consumer.
OMFED strictly follows level one channel for liquid milk and its
products distribution.

retail
omfed shop/milk consumer
booths
8 - Primary Activities of OMFED (The 5 P’s)
1. Procurement of milk
2. Providing technical inputs to milk producers
3. Providing training in new and scientific methods to increase
productivity of milk in the state.
4. Proper storing/chilling of milk
5. Processing and marketing of milk

9 - SWOT ANALYSIS
STRENGTHS: WEAKNESS:
Price is quite reasonable. Lack of control over yield.
Flexibility of product mix is Inadequate transportation
tremendous with balancing facility make milk procurement
equipment. problematic.
Availability of raw material is Encounter of new entrants.
abundant.
OPPORTUNITIES: THREATS:
Adding products to existing Milk vendors possess an
product line. unorganized structure.
Export potential. Different competitors
Always build a good Same products are being
relationship with customers. supplied by different
companies at same price
10 - EXISTING DISTRIBUTION PROCESS OF OMFED
For the smoother distribution of OMFED products, company divided
Bhubaneswar region into 25 major routes. The retail points are coded
like ‘B100’
for ‘Route-1’.
There are 41 dedicated vehicles used for distribution of products from
production
unit to retailer points.
 25 vehicles engaged during morning hours.
 12 vehicles engaged during evening hours.
 3 mobile vans used for distribution.
 1 vehicle used for backup supply.
There is a whole day long milk distribution functional for
Bhubaneswar region.
1. Morning OMFED milk delivery starts from 2.30 am to 3.30 am.
2. OMFED milk delivery starts from 10.30 am through Mobile
van.
3. Evening OMFED milk delivery starts from 2.30 pm to 3.30 pm.

OMFED
RETAILERS

CUSTOMERS
11- COMPETITORS
1. MILKY MOO
2. KAMDHENU
3. AMUL
4. LOCAL MILK VENDORS

12 - FINDINGS OF THE RESEARCH

From the research it is found that ;
 OMFED follows the, “Cooperatives = Retailer = Consumer”
type of distribution channel, where retailer plays an important
role.
 The retailers are getting less profit due to high price.
 There are several routes or retail points which are repeated in the
distribution routes.
 There are no alternate ways available for the distribution of milk
and milk products direct to the consumer.
 Some of the distribution routes cover very less distance, which
causes a low profit generating routes for the company.
 Customer must leave home to buy and come to the retail points
for their need. There is no facility available for customer to get
the product at their door step.
 OMFED does not give emphasis about the promotion of the
products.
 Presence of strong competitors like Kamadhenu, Milky Moo,
Amul, Nava Jeevan, Priviraj are the greatest threat for OMFED.
 Less awareness of products in the market.
 Distribution channel is not up to the mark.
13 - SUGGESTIONS AND RECOMMENDATIONS
In order to survive in today's market environment, companies
should make sure that
their products reach the market effectively at minimal cost.
Single method of distribution
of a company's products is not self-sufficient to survive in the
market.
There are several suggestions given below for the alternate ways
off distributions;
1. Establishment Liquid Milk Vending Machines.
2. Providing Service Of Liquid Milk Vending Van
3. Home Delivery For Regular Customers

1 Establishment Liquid Milk Vending Machines

A system of retailing pasteurized milk through automatic
vending machines has been
introduced successfully in two countries, India & Mexico. It is a
system which does not
involve retail packaging by the milk plant as the consumer
provides his own container
and so eliminates one of the substantial items of cost in
providing the consumer with
packaged safe milk. Another important characteristics tending to
reduce cost are that
the milk plant sells direct to the consumer and that the milk is
handled in bulk up to the
point of retail sale. This fresh milk vending machine is ideal for
city squares or locations
which would house this more permanent structure. It also helps
to deduct the packaging
cost.
 2 Providing Service of Liquid Milk Vending Van
The European mobile van as shown in the figure below, has a
fresh milk vending
machine on the side, and can travel to different select
destinations. It says "True Raw
Milk" on the van’s side. It can be driven to Streets, festivals,
village markets, and fairs
where consumers eagerly await for its appearance. It can travel
to events where people
would love to have a fresh glass of enlivening raw milk bursting
with friendly bacteria
and highly prized enzymes. In fact, these vans will even make
most selling street distributions.
3 Home Delivery for Customers
OMFED has retail points all over Bhubaneswar, but the booth
does not deliver products to consumers. Consumers have to go
and buy the products from retailers. Home Delivery aims to
provide the direct to home channel for OMFED milk and milk
products. People can sit at home and order from home instead of
visiting the booths. The various consumer, those are purchasing
milk for their family on daily basis they can get benefited. Also
by applying this techniques OMFED can able deduct retailer’s
margin and dependency on retailers will also be decrease.
14- CONCLUSION
OMFED is one of the prominent organizations in cooperative
sector in the state of Odisha which is running on profit year after
year. The Bhubaneswar diary has proved itself to be a profit
making plant of OMFED. OMFED’s distribution of milk and
related product is undoubtedly clear-cut to its kind. The
company is also taking utmost care of its various customers. The
milk and related products are highly accepted among the
consumers. As OMFED is losing a considerable amount of
retailers and customers to its competitors, it has become
imperative to sick out alternate distribution channels. If
implemented successfully these alternate channels would not
only result in reducing overall cost but also give OMFED a new
and improved edge in this cut throat competition era.