Amul- The Taste of India

Every day Amul collects 447,000 litres of milk from 2.12 million farmers (many illiterate), converts
the milk into branded, packaged products, and delivers goods worth Rs 6 crore (Rs 60 million) to
over 500,000 retail outlets across the country.Its supply chain is easily one of the most complicated in the
world. How do managers at Amul prevent the milk from souring?

Walk in to any Amul or Gujarat Cooperative Milk Marketing Federation (GCMMF) office, and you may or may not
see a photograph of Mahatma Gandhi, but you will certainly see one particular photograph. It shows a long line of
Gujarati women waiting patiently for a union truck to come and collect the milk they have brought in shining
brass matkas.

The picture is always prominently displayed. The message is clear: never forget your primary customer. If you
don't, success is certain. The proof? A unique, Rs 2,200 crore (Rs 22 billion) enterprise.

Organisation structure

It all started in December 1946 with a group of farmers keen to free themselves from intermediaries, gain access
to markets and thereby ensure maximum returns for their efforts.

Based in the village of Anand, the Kaira District Milk Cooperative Union (better known as Amul) expanded
exponentially. It joined hands with other milk cooperatives, and the Gujarat network now covers 2.12 million
farmers, 10,411 village level milk collection centers and fourteen district level plants (unions) under the overall
supervision of GCMMF.

There are similar federations in other states. Right from the beginning, there was recognition that this initiative
would directly benefit and transform small farmers and contribute to the development of society.

Markets, then and even today, are primitive and poor in infrastructure. Amul and GCMMF acknowledged that
development and growth could not be left to market forces and that proactive intervention was required. Two key
requirements were identified.

The first, that sustained growth for the long term would depend on matching supply and demand. It would need
heavy investment in the simultaneous development of suppliers and consumers.

Second, that effective management of the network and commercial viability would require professional managers
and technocrats.

To implement their vision while retaining their focus on farmers, a hierarchical network of cooperatives was
developed, which today forms the robust supply chain behind GCMMF's endeavors. The vast and complex
supply chain stretches from small suppliers to large fragmented markets.

Management of this network is made more complex by the fact that GCMMF is directly responsible only for a
small part of the chain, with a number of third party players (distributors, retailers and logistics support providers)
playing large roles.
Managing this supply chain efficiently is critical as GCMMF's competitive position is driven by low consumer
prices supported by a low cost system.

Developing demand

At the time Amul was formed, consumers had limited purchasing power, and modest consumption levels of milk
and other dairy products. Thus Amul adopted a low-cost price strategy to make its products affordable and
attractive to consumers by guaranteeing them value for money.

Introducing higher value products

Beginning with liquid milk, GCMMF enhanced the product mix through the progressive addition of higher value
products while maintaining the desired growth in existing products.

Despite competition in the high value dairy product segments from firms such as Hindustan Lever, Nestle and
Britannia, GCMMF ensures that the product mix and the sequence in which Amul introduces its products is
consistent with the core philosophy of providing milk at a basic, affordable price.

The distribution network

Amul products are available in over 500,000 retail outlets across India through its network of over 3,500
distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products.

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.

Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch
warehouse to their premises. This just-in-time inventory strategy improves dealers' return on investment (ROI).
All GCMMF branches engage in route scheduling and have dedicated vehicle operations.

Umbrella brand

The network follows an umbrella branding strategy. Amul is the common brand for most product categories
produced by various unions: liquid milk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-cream
and condensed milk.

Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil
products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while fruit
drinks bear the Safal name.

By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union conflicts but also created an
opportunity for the union members to cooperate in developing products.

Managing the supply chain

Even though the cooperative was formed to bring together farmers, it was recognised that professional managers
and technocrats would be required to manage the network effectively and make it commercially viable.

Coordination
Given the large number of organisations and entities in the supply chain and decentralised responsibility for
various activities, effective coordination is critical for efficiency and cost control. GCMMF and the unions play a
major role in this process and jointly achieve the desired degree of control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. The board is drawn from the
heads of all the unions, and the boards of the unions comprise of farmers elected through village societies,
thereby creating a situation of interlocking control.

The federation handles the distribution of end products and coordination with retailers and the dealers. The
unions coordinate the supply side activities.

These include monitoring milk collection contractors, the supply of animal feed and other supplies, provision of
veterinary services, and educational activities.

Managing third party service providers

From the beginning, it was recognised that the unions' core activity lay in milk processing and the production of
dairy products. Accordingly, marketing efforts (including brand development) were assumed by GCMMF. All other
activities were entrusted to third parties. These include logistics of milk collection, distribution of dairy products,
sale of products through dealers and retail stores, provision of animal feed, and veterinary services.

It is worth noting that a number of these third parties are not in the organized sector, and many are not
professionally managed with little regard for quality and service.

This is a particularly critical issue in the logistics and transport of a perishable commodity where there are already
weaknesses in the basic infrastructure.

Establishing best practices

A key source of competitive advantage has been the enterprise's ability to continuously implement best practices
across all elements of the network: the federation, the unions, the village societies and the distribution channel.

In developing these practices, the federation and the unions have adapted successful models from around the
world. It could be the implementation of small group activities or quality circles at the federation. Or a TQM
program at the unions. Or housekeeping and good accounting practices at the village society level.

More important, the network has been able to regularly roll out improvement programs across to a large number
of members and the implementation rate is consistently high.

For example, every Friday, without fail, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at
the closest office, be it a department or a branch or a depot to discuss their various quality concerns.

Each meeting has its pre-set format in terms of Purpose, Agenda and Limit (PAL) with a process check at the
end to record how the meeting was conducted. Similar processes are in place at the village societies, the unions
and even at the wholesaler and C&F agent levels as well.

Examples of benefits from recent initiatives include reduction in 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.
Kaizens at the unions have helped improve the quality of milk in terms of acidity and sour milk. (Undertaken by
multi-disciplined teams, Kaizens are highly focussed projects, reliant on a structured approach based on data
gathering and analysis.) For example, Sabar Union's records show a reduction from 2.0% to 0.5% in the amount
of sour milk/curd received at the union.

The most impressive aspect of this large-scale roll out is that improvement processes are turning the village
societies into individual improvement centers.

Technology and e-initiatives

GCMMF's technology strategy is characterized by four distinct components: new products, process technology,
and complementary assets to enhance milk production and e-commerce.

Few dairies of the world have the wide variety of products produced by the GCMMF network. Village societies
are encouraged through subsidies to install chilling units. Automation in processing and packaging areas is
common, as is HACCP certification. Amul actively pursues developments in embryo transfer and cattle breeding
in order to improve cattle quality and increases in milk yields.

GCMMF was one of the first FMCG (fast-moving consumer goods) 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.

Another e-initiative underway is to provide farmers access to information relating to markets, technology and best
practices in the dairy industry through net enabled kiosks in the villages.

GCMMF 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.

Farmers now have better access to information on the output as well as support services while providing a better
planning tool to marketing personnel.

Careers @ Amul (stuff from company site)

Gujarat Cooperative Milk Marketing Federation Ltd (GCMMF) is the largest Organisation in FMCG
industry engaged in marketing of milk & milk products under the brand names of AMUL and SAGAR
with an annual turnover exceeding Rs 5000 crores.
GCMMF is a unique organisation. It's a body created by Farmers, managed by competent
professionals serving a very competitive and challenging consumer market. It is a true testimony of
synergistic national development through the practice of modern management methods.
We in GCMMF stand for integrity, excellence and quality through innovation. Our roots are
embedded in the phrase " Work is worship ". Those who share these values will find themselves at
home with us.
At GCMMF Ltd, while in pursuit of excellence, we offer a unique career opportunity to unlock your
own potential. If you are looking for a challenging opportunity, you can explore your options with us.
We firmly believe that you will never look back in your career again.
Gujarat Co-operative Milk Marketing Federation

GCMMF: An Overview

Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing
organisation. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative
returns to the farmers and also serve the interest of consumers by providing quality products which are good
value for money.

CRISIL, India's leading Ratings, Research, Risk and Policy Advisory company, has assigned its highest ratings
of "AAA/Stable/P1+" to the various bank facilities of GCMMF.

Members: 13 district cooperative milk producers' Union

No. of Producer Members: 2.79 million

No. of Village Societies: 13,328

Total Milk handling capacity: 11.22 million litres per day

Milk collection (Total - 2008-09): 3.05 billion litres

Milk collection (Daily Average 2008-09): 8.4 million litres

Milk Drying Capacity: 626 Mts. per day

Cattlefeed manufacturing Capacity: 3500 Mts per day

Sales Turnover Rs (million) US $ (in million)

1994-95 11140 355
1995-96 13790 400
1996-97 15540 450
1997-98 18840 455
1998-99 22192 493
1999-00 22185 493
2000-01 22588 500
2001-02 23365 500
2002-03 27457 575
2003-04 28941 616
2004-05 29225 672
2005-06 37736 850
2006-07 42778 1050
2007-08 52554 1325
2008-09 67113 1504

List of Products Marketed:

Breadspreads:

• Amul Butter
• Amul Lite Low Fat Breadspread
• Amul Cooking Butter

Cheese Range:
 • Amul Pasteurized Processed Cheddar Cheese
• Amul Processed Cheese Spread
• Amul Pizza (Mozarella) Cheese
• Amul Shredded Pizza Cheese
• Amul Emmental Cheese
• Amul Gouda Cheese
• Amul Malai Paneer (cottage cheese)
• Utterly Delicious Pizza

Mithaee Range (Ethnic sweets):

• Amul Shrikhand (Mango, Saffron, Almond Pistachio, Cardamom)

• Amul Amrakhand
• Amul Mithaee Gulabjamuns
• Amul Mithaee Gulabjamun Mix
• Amul Mithaee Kulfi Mix
• Avsar Ladoos

UHT Milk Range:

• Amul Shakti 3% fat Milk

• Amul Taaza 1.5% fat Milk
• Amul Gold 4.5% fat Milk
• Amul Lite Slim-n-Trim Milk 0% fat milk
• Amul Shakti Toned Milk
• Amul Fresh Cream
• Amul Snowcap Softy Mix

Pure Ghee:

• Amul Pure Ghee

• Sagar Pure Ghee
• Amul Cow Ghee

Infant Milk Range:

• Amul Infant Milk Formula 1 (0-6 months)

• Amul Infant Milk Formula 2 ( 6 months above)
• Amulspray Infant Milk Food

Milk Powders:

• Amul Full Cream Milk Powder

• Amulya Dairy Whitener
• Sagar Skimmed Milk Powder
• Sagar Tea and Coffee Whitener

Sweetened Condensed Milk:

• Amul Mithaimate Sweetened Condensed Milk

Fresh Milk:

• Amul Taaza Toned Milk 3% fat

• Amul Gold Full Cream Milk 6% fat
• Amul Shakti Standardised Milk 4.5% fat
• Amul Slim & Trim Double Toned Milk 1.5% fat
 • Amul Saathi Skimmed Milk 0% fat
• Amul Cow Milk

Curd Products:

• Yogi Sweetened Flavoured Dahi (Dessert)

• Amul Masti Dahi (fresh curd)
• Amul Masti Spiced Butter Milk
• Amul Lassee

Amul Icecreams:

• Royal Treat Range (Butterscotch, Rajbhog, Malai Kulfi)

• Nut-o-Mania Range (Kaju Draksh, Kesar Pista Royale, Fruit Bonanza, Roasted Almond)
• Nature's Treat (Alphanso Mango, Fresh Litchi, Shahi Anjir, Fresh Strawberry, Black Currant, Santra
Mantra, Fresh Pineapple)
• Sundae Range (Mango, Black Currant, Sundae Magic, Double Sundae)
• Assorted Treat (Chocobar, Dollies, Frostik, Ice Candies, Tricone, Chococrunch, Megabite, Cassatta)
• Utterly Delicious (Vanila, Strawberry, Chocolate, Chocochips, Cake Magic)

Chocolate & Confectionery:

• Amul Milk Chocolate

• Amul Fruit & Nut Chocolate

Brown Beverage:

• Nutramul Malted Milk Food

Milk Drink:

• Amul Kool Flavoured Milk (Mango, Strawberry, Saffron, Cardamom, Rose, Chocolate)
• Amul Kool Cafe
• Amul Kool Koko
• Amul Kool Millk Shaake (Mango, Strawberry, Badam, Banana)

Health Beverage:

• Amul Shakti White Milk Food

Amul ads are the longest running campaign about to be a part of Guinness
Book of Records for the same.