Supply Chain Analysis on Amul

Submitted by:

2018A4PS0481P Kanishk Chaudhary

2018ABPS0601P Shreya Gupta
2017B2A10608P Sharvari Vivek Garge
2018A4PS0548P Ayush Kumar
2018A4PS0523P Rudhir Mehra
2018A4PS0749P Shashwat Singh
2017A4PS0442P Paritosh Ashutosh Sharma
2018ABPS0502P Shwetang Gupta
2018ABPS0755P Srijen Jagdish Gupta
2018ABPS0606P Sanyam Goel
2018A5PS1005P Mrudula Harshawardhan Bhave

Submitted to Prof. Srikanta Routroy, Department of Mechanical Engineering

on 26 April 2021

For the course MF F421 - Supply Chain Management

Birla Institute of Technology and Science, Pilani

Rajasthan – 333031
 Supply Chain Management Amul

Table of Contents

Table of Contents 1

Acknowledgements 2

Student Contributions 3

1. Introduction 4

2. Supply Chain and Product Configuration 6

3. Sustainability in Supply Chain 18

4. Strategic Fit 24

5. Logistical Drivers 33

6. Cross Functional Drivers 42

7. Supply Chain Coordination and Obstacles Faced 47

8. Recent Issues in the Supply Chain 51

9. SWOT Analysis 55

10. Conclusion 60

References 61

Appendix 67

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 Supply Chain Management Amul

Acknowledgements

First, we would like to thank the Director, Dr Sudhirkumar Barai Sir; Dean Administration,
Dr S.K. Verma Sir; the Vice-Chancellor, Dr Souvik Bhattacharyya Sir; Dr M.S. Dasgupta Sir,
Head of Department of Mechanical Engineering - BITS Pilani, Pilani Campus for providing us the
opportunity and motivation to pursue this course.

We are grateful to Prof. Srikanta Routroy, Instructor-in-Charge, MF F421 Supply Chain

Management for allowing us to pursue a read-world project like this as a team and for the constant
guidance provided by him.

We would like to send our sincere thanks to the Managing Director of Amul, Mr Amit
Vyas, and the Operations Head of Amul, Mr Kuldeep Singh Chaudhary for taking time from their
busy schedule to discuss some of the supply chain related information and for verifying some of
the facts.

Last, but not the least, we are thankful to our parents for their blessings and helpful advice.

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Student Contributions

Sections Name BITS ID

1, 2.1, 2.2 Kanishk Chaudhary 2018A4PS0481P

2.3, 2.4 Shreya Gupta 2018ABPS0601P

3 Sharvari Vivek Garge 2017B2A10608P

4.1, 4.2, 4.3, 4.4 Ayush Kumar 2018A4PS0548P

4.4, 4.5, 4.6, 4.7 Rudhir Mehra 2018A4PS0523P

5 Shashwat Singh 2018A4PS0749P

6 Paritosh Ashutosh Sharma 2017A4PS0442P

7 Shwetang Gupta 2018ABPS0502P

8 Srijen Jagdish Gupta 2018ABPS0755P

9.1, 9.2 Sanyam Goel 2018ABPS0606P

9.3, 9.4, 10 Mrudula Harshawardhan Bhave 2018A5PS1005P

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 Supply Chain Management Amul

1. Introduction
The Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF), better known by its
apex organization - Amul, is India's largest food product marketing organisation. Its predecessor,
the Kaira District Cooperative Milk Producers’ Union Ltd, Anand was formed in 1946 to help
farmers combat exploitation by middlemen and private dairies, who were paying low prices to the
farmers for their milk. Amul was created shortly after to market surplus milk in the form of various
dairy products. The Kaira Milk Union was founded by Tribhuvandas Kishibhai Patel but the Amul
brand was pioneered by Dr Verghese Kurien, who was a social entrepreneur. The first Amul milk
processing plant was opened in 1954 and this paved the way for Amul to expand its range of
products in the Indian dairy industry. H.M. Dalaya, a dairy expert and the inventor of the spray
dryer also acted as a founding member of Amul.

Figure 1: The founding trio of Amul. L to R: Dr V. Kurien, Tribhuvandas K. Patel, H.M. Dalaya

Amul got its name as the acronym of Anand Milk Union Limited (The White Revolution
was started by Dr Kurien in Anand). Also, Amulya means priceless or precious in Sanskrit.

Currently, Amul empowers over 36 lakh farmers in Gujarat and 16.6 million farmers all
over India, with over 18,600 village cooperative societies. Over 35 lakh L of milk collection per
day is their processing capability, 9200 MTs of cattle feed is processed every day (Amul, n.d.),
and Amul has over 40 plants located all across India.

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Amul has enjoyed a CAGR (compound annual growth rate) of over 17% for the last 9
years. In 2018-19 it had a turnover of INR 33,150 cr (Sally, 2019) which increased by 16.23% to
INR 38,550 cr in 2019-20 (Sally, 2020). In addition to being the biggest player in the Indian dairy
market it is also the 9th largest milk producer in the world with a global market share of 1.1% in
2018, the largest of any Asian brand (Amul, 2018). In a survey, GCMMF was ranked among the
top 10 FMCG firms in the country (Rupera, 2018) and Amul was recognised as the second most
recognised brand in India (IANS, 2018). Figure 2 shows an almost exponential growth in their
sales turnover.

Figure 2: Sales Turnover of Amul from FY 1994-95 to FY 2019-20 (Amul, n.d.)

“I was convinced that the biggest power in India is the power of its people – the power of
millions of farmers and their families. What if we mobilized them, if we combined this farmer
power with professional management? What could they not achieve? What could India not
become?” - Dr V. Kurien, Father of the White Revolution in India (Srinivasan, 2012).

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2. Supply Chain and Product Configuration

2.1 Supply Strategy

Amul’s goal is to create value for suppliers as well as the customers.

The Amul model of cooperative farming is a system that is collectively owned, operated
and controlled by the farmers. It is an integrated 3-tier organized structure that not just collects and
processes milk like other dairies, but also markets the product. The 3 tiers involved in the model
of dairy farming includes village societies, district milk unions and the milk federations. This
model removes the irrationalities of a traditional dairy model, wherein the processing and
marketing was done by either the middlemen or the private dairies and giving low prices to the
farmers for their milk. This led to a major diversion of profits for the farmer.

In the words of Amul, “The Amul brand is not only a product, but also a movement. It is
in one way, the representation of the economic freedom of farmers. It has given farmers the
courage to dream. To hope. To live.” (Amul, n.d.)

Currently, Amul is able to effectively manage the supply of milk from every farmer in
India with the support of a sound IT infrastructure, mainly the DISK project, which comprises
computerization of village societies, rapid checking of milk quality, and automation of the milk
collection process. 16.6 million member producers across India are all linked to the network along
with accurate data sharing of their produce, and employees can directly check each member or
cooperative’s milk quantity and quality, transfer of profits. (Chanda & Paturkar, 2012). This IT
infrastructure has been created by IBM and contributes to a strong information exchange between
supplier and manufacturer, which is necessary since the supply of milk is erratic and the
manufacturer has to quickly adapt to these sudden changes.

Maintaining good relationships with the farmers is essential for the cooperative model.

1. Cattle feed produced and sold to farmers at zero profit. Amul’s cattle feed manufacturing
capacity is 3600 MT per day (Amul, n.d.), and it ensures that nutritional value is maintained
without any adulteration, to assure good health for the cattle, which in turn provides a good

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quality and quantity of milk for each farmer.

2. 24x7 veterinary services with a fast response using integrated GPS network to each
ambulance. Health care to the animals is provided at very subsidized costs.
3. Rural healthcare, which is also a part of Amul’s CSR policies, help in uplifting poor
farmers, women, and children in rural areas. Also, they ensure adequate education and
training to the farmers in order to improve their cattle’s yield.
4. There is no contractual obligation to the farmers. They are free to sell their milk to other
private dairies as well. (Shah, 2012)

Union Membership

There are certain obligations which each farmer is expected to meet in order to gain the
benefits of Amul’s cooperative model. These are relaxed obligations made to ensure that no
distress is caused to the farmers (Shah, 2012).
● At least 1 L per day of milk should be sold to the collection centre.
● One time membership fees of INR 60

Why do farmers prefer Amul over other dairies?

- The price given to the farmers for the milk is high compared to other private players,
to ensure a sustainable source of income.
- A “loyal farmer” (who is constantly pouring at least 1 L per day of milk) is eligible
for profit sharing at the end of the business year. This profit sharing is in direct
proportion to the quantity of milk poured in that year, ranging around INR 1 to 4
per litre.
- The services provided by Amul, in terms of vet services, rural development, cattle
feed, etc. is much appreciated by every farmer.

All this ensures farmer loyalty, which is essential in such a competitive market.

Essentially, Amul is always focused towards increasing the supply of milk in order to
benefit from economies of scale. This includes scaling their business model by setting up more
village societies and getting more farmers into their model. With their existing practices of
ensuring farmer loyalty, Amul has ensured that they keep increasing their milk collection, and in

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turn produces more products for their consumers.

Village Dairy Cooperative Societies

The VDCS help in collection of surplus milk from the producers of the village and
payment based on quality and quantity.
The structure consists of a dairy cooperative society at the village level affiliated to a
milk union at the district level which in turn is federated into a milk federation at the state level.
Milk collection is done at the village dairy society, milk procurement and processing at the
District Milk Union and milk products marketing at the state milk federation.
The structure was evolved at Amul in Anand, Gujarat and thereafter replicated all over
the country under the Operation Flood programme. It is known as the 'Amul Model' or 'Anand
Pattern' of dairy cooperatives.
As a result of this strong upward supply chain, GCMMF has been seeing a linear increase
in the total milk collection, which more than doubled in the last decade (Figure 3).

Figure 3: Statistics of GCMMF’s average milk collection over the last decade (Markets Guruji, 2018)

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Figure 4: Amul’s upward supply chain (Farmers to Manufacturer) (Prasad & Satsangi, 2013)

2.2 Manufacturing

Amul is also involved in the core activities of milk processing, research and development,
and manufacturing of various milk-based products like butter, ice cream, etc. The product
configurations of Amul are mentioned in detail in Section 2.4. All this information related to the
manufacturing activities have been obtained through an on-ground industry immersion at Amul
Dairy, Anand, and stored in an internship report (Chaudhary, 2019).

They procure machinery from some of the top companies in India and Germany. They
outsource their plant designs, setting up, and maintenance through process engineering firms.
These machineries and plants are specialized to produce one product, but they can be modified
and expanded to cater to various flavours or subtypes of the same product.

The milk processing pathway is the most important process which serves as the bases for
any activities of Amul. The farmers send the milk to the cooperative society. An initial check of

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the milk is done in the cooperative using

scanning devices to ensure that the
quality of milk is up to the standards.
The milk is stored in a “bulk milk
cooler” which keeps the milk at
temperatures below 5℃. A tanker
carries the cold milk to the Raw Milk
Reception Dock, which is within the
dairy. A sample of the milk is collected
and tested in the labs for a final check. If
the check renders a positive result, the
milk is unloaded. Amul Dairy at Anand
has a high unloading capacity of 1.2
lakh litres of milk per hour. The
flowchart of the milk pathway is given
in Figure 5.

The milk is then sent to a

deaeration tank, where gases from milk
are removed. It is then passed through a
disc filter. In order to keep the milk
chilled, it is passed through a Plate Heat
Figure 5: Milk Processing Pathway
Exchanger (PHE) which cools the milk
using chilled water as the cold fluid. After getting stored in an intermediate buffer tank, it is sent
to the clarifier which separates dust particles and other minute impurities. Finally, it is then stored
in the silos as “raw milk”. In Anand, there are 5 silos with a total capacity of 8.1 lakh litres. A
flowchart of this process is shown in the figure.

Pasteurisation is an important process to ensure that milk is free of any pathogens which
may cause diseases. From the silos, raw milk is sent through the PHE, where it undergoes heating
in different sections. In between, it passes through the bactofuge (which kills bacterial colonies),
separator (which removes cream from the milk) and the homogeniser. After heating till 78°C, it is

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kept in a holding tube for 15 seconds. The milk is then chilled by the chilling section of the
pasteuriser, and then sent to pasteurised milk silos.

Amul is effectively able to meet the rising demand of various milk products because of
their constantly expanding manufacturing and storage capacities. The milk received is always in
excess, and this facilitates scaling up their production of butter, milk powder, chocolate and ice
cream.

Their R&D Department is constantly innovating to make more milk-based products.

Recently, they launched Amul Tru, which is a milk-based aerated drink. They expanded their line
of chocolate to make “luxury chocolate flavours” to tap into a different market of high-end
chocolate consumers. This was made possible by their sound milk collection and processing, which
ensures that they find new methods to utilise excess milk, which would have become a waste.

An effective transportation network is needed to send milk from village cooperatives to the
union, since milk is perishable. Moreover, the processed milk also needs to be sent to the chocolate
factory and other plants used for manufacturing other milk products, and then ultimately to the
distributors all over India. Amul outsources its transportation, with the main mediums being trucks
(10 lakh in number) and special train compartments (all chilled and heavily insulated).

2.3 Distribution Network

Before looking into the distribution network of Amul it is essential for us to understand the
Indian Dairy Industry. India accounts for 13% of the world’s total milk production. India is also
the world’s largest consumer of Dairy products. The compounded annual growth rate (CAGR) is
about 7%.

Amul strategies to keep a very unique supply chain network, which has helped it to
maintain its leading position in the industry.

Like any major company the distribution network of Amul is in Figure 6:

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Manufacturer

Company Depot

Wholesaler

Retailer

Customer

Figure 6: Distribution Roadmap of Amul

Amul has uniquely positioned itself and differentiated its distribution strategy at the
Manufacturer level itself.

The Gujarat Cooperative Milk Marketing Federation (GCMMF) is 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. Currently Amul has 18 District Cooperative
Milk Producers’ Unions (16 Members & 1 Nominal Members), 3.6 Million No. of Producer
Members, 18,600 No. of Village societies (Amul, n.d.).

Gujarat Cooperative Milk Marketing Federation (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.

Organisational Structure of Amul

To understand the distribution strategy, it first becomes necessary to understand how the
organisation is divided:

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1. External Organization Structure: External Organization Structure is the organization

structure that affects the organization from the outside

Figure 7: External Organisational Structure of Amul

2. Internal organisational structure of Amul: It is the organisational structure that only the
members of the Amul follow.

Figure 8: Internal Organisational Structure of Amul

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Through GCMMF, Amul wants to benefit the farmers through this hierarchical supply
chain that includes different kinds of entities ranging from small suppliers to large fragmented
markets. Amul’s success can be attributed to various reasons like the quality of products, the
economic pricing and the belief that it has instilled in its customers.

Downstream Flow of the Distribution Channel:

The Distribution Channel of Amul follows a downstream flow with 3 distinct legs. The
downstream flow has been divided into different legs.

1. First Leg:
● Manufacturing units to company depots using 9 and 18 Metric Tonne trucks
● Frozen food below -18 degree Celsius
● Dairy wet 0-4 degree Celsius

2. Second Leg:
● Deports to Wholesale Distributors
● Transport through insulated 3 and 5 Metric Tonne trucks

3. Third Leg:
● Wholesale Distributors to retailers
● Transport through rickshaws

Wholesalers 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. Like any FMCG company, Amul concentrates on breaking the bulk. It supplies
in huge amounts to its C&F, who is required to have the right arrangements to store Amul products
in bulk. This C&F then transfers the products to distributors who in turn give it to retailers. These
are a few other strategies followed by Amul other than the downstream 3 leg model. The reasons
why distributors prefer Amul over any other cooperative/private players include:
1. High customer demand
2. High profit margins and steady sources of income
3. Better schemes

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4. Good distribution, chilling and processing service (Chanda & Paturkar, 2012)

Amul Parlours

The 3-leg distribution model allows the products to reach safely and with agility up to the
retail stores. Amul products are available in over 800,000 retail outlets across India through its
network of over 4,500 distributors. There are 54 depots with dry and cold warehouses to buffer
inventory of the entire range of products. For the purpose of retailing, Amul has come out with a
unique concept of Amul Parlours. They have classified those under four types namely:

Centre for excellence: These Amul Parlours are specifically at a place like an Institute of
eminence. We can find such parlours at the BITS Pilani, Infosys, IIMA, NID Ahmedabad etc.

On the Move: These parlours which can be found at different railway stations and at different
state bus depots across different cities.

Amul Parlours: These parlours can be seen at different gardens across different cities or any
significant shopping centre.

Amul Preferred Outlets: These are private shops that keep the entire product range of Amul.
They also agree not to keep any competitor brands in the outlets. They are allowed to keep non-
competitor brand products in them.

One reason that Amul is a giant is because it’s built on the back of a co-operative
movement. Amul and its co-operatives encourage 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 and save costs at the
same time (Chandra & Tirupati, 2002).

Increased cooperation among network members has resulted in a number of changes at all
levels -right from operational, tactical to strategic difference, and has led to the emergence of
practices and strategies for improving the chain's performance. Most prominent among these
include the following:

(i) Information sharing through various technological advancements, often dynamically, to

improve planning and execution. Sharing of data is a classic example for minimizing the

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distortions due to bullwhip effect (increase in levels of information distortion from the lower to
the higher levels) and reducing perceived variability of demand by the partners in the chain.

(ii) Focus on core competence of each player in the supply chain. The objective of Amul has been
to ensure that each task is performed by the entity best suited for it. As a result, firms have become
willing partners in sharing control to a network partner for improving performance. Similarly,
there has been a difference in the role of third parties for providing specific expertise such as
logistics has grown substantially with emphasis on supply chain.

(iii) Capacity improvement: Capacity Movement helps network partners in improving their
capability and making them competitive. Improving the capacity helps in managing the costs as
well as look at the demand cycle in a reasonable manner.

2.4 Product configuration

Amul diversified into various dairy products such as milk powders, ghee, butter, cheese,
yogurt, ice creams and a number of other variations specific to the Indian market. It has managed
to capture significant market share in others (as shown in the table later). This move was highly
strategic in improving the brand image (quality at affordable prices) and distribution chains that
further helped in successful horizontal integrations.

The products of Amul have been diversified into 2 major categories- Dairy and Non-Dairy:
● Dairy Products:
1) Cheese products
2) Bread Spreads
3) Powder Milk
4) Chocolate
5) Fresh Milk
6) Desserts (e.g., Ice Cream)
7) Other Milk Products
● Non-Dairy
1) Instant Food
2) Snacks

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3) Vegetable Oils

Current Market Position of Amul products

The brand trust among the customers is clearly visible through the market position that
each of the Amul products hold. The same is given in Table 1.

Category Market Share Market Position

Butter 85% 1

Milk Powder 40% 1

Cheese 50% 1

Ice-cream 68% 1

Chocolate Drink 90% 1

Chocolate 10% 3

Table 1: Market share and position of various Amul products (updated - 2021)

Amul has seen an exponential rise in the market share of Ice-creams from 25% to 68%.
Over the years Amul has also seen the failure of Amul Mithai that was launched by them in the
sweet category. Amul has also launched a new line of products called Amul Tru which are in the
product line of Aerated drinks and juices. Roti Softener is also a new product that has been
launched. As of 2021, Amul Tru occupies a market share of 10% in the total of Drinks and
Beverages market. Amul also launched cooking recipes books like the Amul Cookbook like the
Cheese recipes, Ghee recipes, Paneer Recipes etc.
Amul is always experimental at heart, with the different varieties of product launches it has
every year.

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3. Sustainability in Supply Chain

When it comes to FMCG like Amul, we have to consider the massive amount of Food and
consumable products their supply chain handles on a daily basis. Since their major share of
products comes under dairy the products, they are perishable. Sustainability in their supply chain
can bring about a very profitable change in their profits and turnovers. Sustainability in the supply
chain can be defined as changes to the socioeconomic system, both structural (such as redesigning
transportation systems and taxation systems) and cultural (such as attitudes to consumption and,
economic growth and wellbeing), are required to facilitate firm-level and system-level
sustainability. Processes, organisational types and systems, and corporate practises are all
structural characteristics. Norms, beliefs, behaviours, and attitudes are all examples of cultural
characteristics. The line between structural and cultural differences, as well as internal and
socioeconomic differences, is not always clear. These domains have some overlap. Some
characteristics, for example, can be partly accomplished by internal capacities, but they also
necessitate improvements in the socioeconomic climate, such as waste and pollution elimination
and the implementation of closed-loop systems. At both the organisational and socioeconomic
levels, a long-term emphasis is needed (Nisa, 2021).

Amul was awarded with the best environmental initiative in the “sustainability category”
during the 4th Global Dairy Conference held from 27th April to 29th April 2010 at Salzburg
Congress Centre, Austria. Amul has also won the “Green Globe Foundation Award” in a 4th Green
Globe Awards ceremony at the 12th Delhi Sustainable Development Summit 2012.

We have covered 3 initiatives by Amul which were successful in incorporating sustainable

approaches in the Amul supply chain.

3.1 AMCS Initiative

AMCS (Automatic Milk Collection System) is an initiative by GCMMF (#Gujarat

Cooperative Milk Marketing Federation). The initiative is one of its kind biggest which
accommodates around 36 lakh members of the supply chain. It has successfully included all the
milk producers as well in the ecosystem of the digital world making the “cow-to- consumer”
supply chain more wholesome and inclusive. Each and every farmer is provided with a mobile

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application which provides a daily dynamic data which includes the litres of milk the farmer has
provided, accounting the money and daily updating Fat and Cattle feed purchased data. This
project not only brings credibility and trust for the firm among the manufacturers, and it has also
helped in maintaining the transparency within the system. It has successfully developed a
sustainable cashless transaction system. With bank accounts linked to the app, producers can see
daily cash payments reflected in their bank accounts. Since the quality of product has always been
the topmost priority for Amul, this app can facilitate them in one-to-one mapping of the source of
raw materials to the product that is being sold anywhere in India. It has also provided a platform
to maintain a centralised data all over Gujarat and is equipped to provide analytical data right from
Fat concentration in milk to seasonal variation in the production of milk to future prediction of
production as well.

Figure 9: Automatic Milk Collection Unit

3.2 Tetra Pak Initiative

Amul was one of the few FMCGs to introduce Tetra Paks in India. Previously before 2018,
all post-consumer Tetra Pak cartons, along with other non-recyclable products, were sent to

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landfills. However, under the current partnership, oppressed women staff (from SEWA an NGO
in Gujarat) are collecting, sorting, and processing consumed and discarded Tetra Pak cartons from
approximately 42 Amul dairy parlours. Before being sent to the Daman Ganga paper mill, the
biggest Paper mill in Gujarat, for recycling, the waste is separated, washed, and wrapped. The
processed content yields around 75% paper pulp and the rest are aluminium + plastic aggregate
(25%). Daman Ganga Mills recycles waste to make: a) Indoor furniture and materials for the
building industry, such as roofing sheets: Dried and washed Tetra Pak and plastic material is spread
between two polythene sheets and placed on a hot press bed. Once the sheets emerge from the
press, they are given a wave-form shape and left to dry. These Tuff Roof sheets are waterproof,
rustproof, and absorb much less heat – and are better than conventional fibro cement and
corrugated G.l. sheets (Nisa, 2021). In 2013, 36,000 tonnes of Tetra Pak cartons were sold in India.
This created a large market opportunity for recycling to recycle products that would otherwise be
thrown away in landfills. Through a collaboration with an approved recycler, the Tetra Pak
recycling model has now been replicated in Mumbai. Post-consumer Tetra Pak packages are
processed by marginalised social sectors. This provides them with a source of income as well as
access to healthcare. Tetra Pak provides information and assistance to other Indian organisations
involved in collecting and recycling post-consumer Tetra Pak packets.

Figure 10: Roofing Sheets made out of Tetra Pak Figure 11: Bags and stationery made out of Tetra Pak

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Although this model has been introduced successfully in Gujarat, the main challenge now
is to scale it up nationally – the model's success is highly dependent on finding the right partners,
recyclers with suitable technology, and a high level of market awareness (to ensure segregation at
source).

3.3 Effluent Treatment Plant

Operations is a very big part of Supply Chain and the way effluents from plants are treated
are big contributing factors for sustainability of the supply chain. In terms of water use, the dairy
sector is one of the most polluting of all the food sectors. Every day, dairy industries generate
nearly tens of thousands of litres of effluent waste. These companies manufacture wastewater
containing high chemical oxygen demand (C.O.D.), biological oxygen demand (B.O.D.),
nutrients, and organic and inorganic material. This waste, which has a strong foul odour, pollutes
the ecosystem and groundwater, posing a health risk. To counteract the effects, a variety of pre-
treatment approaches are available. Dairy wastewater contains fats, nutrients, lactose, as well as
detergents and sanitising agents, and has high biological-oxygen demand (BOD) and chemical
oxygen demand (COD) concentrations. Detergents have an effect on marine life. The milk-
processing industries that discharge untreated/partially treated wastewater pose significant
environmental problems due to the high emission load of dairy wastewater. Anaerobic treatment
is used in Amul Milk processing plant for Wastewater and sludge treatment. Septic tanks have
been used to handle anaerobic dairy waste in many small dairy plants. The effluent consistency
from anaerobic processing, on the other hand, has typically been below the norm for surface water
discharge. Compared to more widely used aerobic systems, the process is more vulnerable to shock
loading and low temperatures.

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Figure 12: Flow diagram for Effluent treatment plant

Dairy wastewater contains fats, and the fat's inhibitory effect on anaerobic treatment
prevents the fat from being removed quickly and efficiently. This problem could be solved by
using enzymatic hydrolysis of fats as a pre-treatment. The equalisation tank is divided into two
parts, each of which performs the same function. As one section becomes overburdened, the
second section is called upon. In the tank, there are floating agitators. To keep oxidation going,
aeration tanks are used.

Figure 13: Biogas generation plant in Surat

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Surat Union has built the India's first Dung Bank in Bhitbudrak, Uchchhal taluka, with the
aim of making Amul’s milk business more productive by collecting and using dung obtained from
animals in one place, thereby producing biogas and distributing it at uniform pressure through
pipelines laid out similarly to those used in cities to supply 121 beneficiaries. They were able to
complete the village cleaning and environmental development programme in this manner. The
dung slurry produced by this process could be used directly to simplify the worm composting
process. Members will receive an additional income of Rs. 15 lacs per year as a result of this
programme. Amul has completed this beautiful and guiding work to demonstrate its commitment
to social and moral duty, even without income from agriculture. Milk producers in the district
could spend their lives respectfully with the milk industry,' which is taking shape today. Instead
of using cow dung as a fuel, our milk producers use it as a fertiliser. If it is used as a fuel, time can
be saved by cooking food quickly, gas cylinders can be saved, and methane gas emitted from cow
dung can be avoided, which is harmful to the environment. So, in the last seven years, the union
has activated about 700 family-size biogas plants with the aim of collecting methane gas in a tank
and using it as biofuel in the kitchen. They have provided Rs. 1000 in addition to government
assistance to encourage each and every milk producer to take advantage of this project at home.
During the year 2019, approximately 320 biogas plants were activated (Sumul Ltd., 2019).

In essence, Amul truly embodies the phrase: “A Sustainability Business Model requires
that organizations treat sustainability as a business strategy in itself, rather than as an add-on”
(Stubbs & Cocklin, 2008).

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 Supply Chain Management Amul

4. Strategic Fit

Strategic fit means aligning the supply chain strategy with the competitive strategy of the
company. All companies target a particular customer segment and design strategies to fulfil the
requirements of the selected segment. These strategies are also designed based on the offerings of
the competitor and thus the key differentiators of the company. This strategy needs to be matched
with the capabilities and resources of the company. Achieving this unique combination is known
as the strategic fit for the company.

● Amul’s competitive strategy is to make its product available to all sections of the society
i.e., rich poor middle class at a very low price.
● The supply chain strategy of Amul focuses on its product availability across India in all the
remote locations.

4.1 Strategic Challenges faced by Amul

● Threat of entry of foreign retail giants, competition from international and national brands
like Nestle, Godrej, ITC, Nilgiris etc. in non-milk products with superior qualities.
● Increasing competition in milk and milk products from local state co- societies like
MILMA at lower cost.
● Farmers are more influenced towards higher prices given by private local diaries.
● Low-income consumers
● Milk is a highly perishable good
● Highly fragmented, small scale supplier base (Radhakrishnan, 2018)

4.2 Amul Model

The Amul model is a three-tier cooperative structure which A well planned and executed
logistics and supply chain model (enParadigm, 2014).

● At the village level, there were cooperative societies producing milk

● At the district level, there were milk unions with processing centres
● At the state level, there were milk federations responsible for consolidation

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Their success has been built around combining the advantages of a cooperative and a
corporate model. Its core strength lies in its stated principles of
● Linking milk producers and consumers directly and eliminating the middleman,
● Ensuring milk producers also control up-stream activities like processing and marketing,
● Professional, commercially-sound management to keep them competitive.

Amul from the customer’s viewpoint:

● Wide variety of products (most comprehensive dairy portfolio by far)
● Unparalleled reach (available across the country)
● Affordable prices (products at all price points beginning with the lower end)

Pricing is a major source of advantage for Amul. With its lean processing and distribution
and scale of operations, it has the ability to balance surplus and deficit in supply – a critical
advantage in extremely perishable goods. Amul also exploits its social capital, as a successful co-
op and a source of pride for India – which means it needs to spend less than its competitors to
generate the same demand for its products.

Amul from a company’s viewpoint:

● Massive, loyal supplier base (profit-distributing cooperative model)
● Lean processing and distribution (outsource non-core activities)
● Focus on research and development (appropriate reinvestment of profits)

Amul manages its R&D professionally, reinvesting its profits in quality and yield- focused
research, which ensures they stay abreast of large dairy corporations, while miles ahead of other
cooperatives.

4.3 How it Achieves its Strategic Fit

Each independent variable in Figure 12 is discussed below:

Massive Loyal Supplier Base: Amul ensures that all its supplier base is loyal to it by providing a
range of benefits to the farmers. This includes services like Financial security, Health Benefits,
subsidized cattle feed, veterinary services etc. This makes sure that the farmers stay happy and
loyal to AMUL even in the presence of stiff competition from local dairy companies.

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 Supply Chain Management Amul

Figure 14: Amul’s Strategic Fit (enParadigm, 2014)

Quality: Amul makes sure that the quality of raw materials that it obtains as well as the products
it serves are of top-notch quality. This is facilitated by adequate investment into R&D studies and
cattle check on a regular basis.

Product Variety: Amul has a range of products including cheese, butter, paneer, ice creams, and
drinks etc. that are widely available at almost every small store across India. This way, Amul
makes sure that the customer has a wide variety of products to choose from which is made possible
because of the strong massive supplier network.

Affordability: The products from Amul are priced in such a way as to cater to the needs of the
general public of the country. Its products range from Rs.5 for a pack of butter to anywhere around
Rs.100 for a pack of ice creams. This is done so that even the lower sections of the society can
afford Amul products on a daily basis.

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 Supply Chain Management Amul

Reach & Availability: Amul has a strong distribution network that makes it possible to avail its
products across the country ranging from hill tops to remote villages at almost the same cost.

Decentralized, Networked Supply Chain: The decision making in Amul is sufficiently

decentralized that even the famers get to say what kind of strategies the firm should work upon.
The presence of a networked supply chain makes it easier for Amul to keep a balance of the
surplus/deficit of products and maintain profitability.

Lean Processing and Distribution: By maintaining a tight control over inventory and
distribution, Amul also outsources its non-core activities to other firms thereby not wasting any
material resources (enParadigm, 2014).

4.4 Competitive Analysis

Porter’s Five Forces Analysis: Amul is battling with various companies at multiple fronts. Some
of the companies are leaders in their segment while some may be very strong at a given
geographical location or state. On doing a Porter’s Five Forces Analysis for Amul we can deduce
the following:

1. Threat of New Entrant: (Moderate) Since it is not difficult to come up with one’s own
brand in this segment, we can see new players coming up in this area with milk and milk based
derivatives. However, since Amul has significant control over the sourcing channels of the
supply chain it is difficult to beat Amul there.

2. Threat of new substitutes: (High) We have seen alternative industries on the rise such as
Oat based milk, Soya based milk derivatives, Westerly disturbances that may lead to
substitution of animal based products.

3. Bargaining Power of Suppliers: (Low) Amul has had very strong backward integration
with the various cooperatives involved in its supply chain. This helps ensure continuous
production and inventory in the pipeline.

4. Bargaining Power of Retailers: (Moderate) With the onset of COVID-19 and otherwise
the general trend e-commerce platforms have taken a lead as compared to conventional retail

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stores. This means that there is lesser control over product display and integration with the
retailer. Amul however still maintains its Amul Parlours and Booths that give it better access
to the consumers and bring them closer.

5. Industry Analysis: (Moderate) The market is an oligopolistic one, mostly dominated by

MNCs and bigger corporations. There are small scale local level players as well within states.
Mostly the consumer base lies in the urban parts of the city since rural areas have ease of access
to cattle. End mile delivery is still a hassle as in many areas is not integrated fully well. Shelf
life of products is small so continuous production all-round the year takes place.

Amul has some good competitors who have entered the market in the last decade and are
growing strong. Most of these ice creams entered regionally but then held on to the regional market
share. Thus, even though individually these brands might not be a worthy adversary, combined
and with their total net aggregate, all of them together are giving a very tough competition to Amul.

Some of these competitors are Kwality Walls, Vadilal, Havmore, Dins haws, Arun Ice
cream, Baskin Robbins, London dairy, and others. Many of these ice cream products have their
own niche or geographic targets. Arun ice cream is strong in the south whereas Havmore and
Vadilal are strong in the west. Besides these organized players, there are many unorganised local
players who also give competition to Amul by having their own outlets and their own variants of
ice cream. However, the competition in Butter and Cheese and other dairy products is far lesser.

4.5 Marketing strategies

This section discusses the various strategies which Amul’s Marketing Team has adopted
(Giant Marketing Strategies, 2019).

4.5.1 Segmentation, Targeting and Positioning

Segmenting: The segmentation of Amul is the mass population and in general, you will find
people of all different age groups and demography enjoying Amul products. This is because Amul
is not only present in Ice cream, but also in Milk, Butter, Cheese, and other such products.

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Figure 15: STP Analysis for Amul

Amul’s target audience can be divided into 3-4 major segments: Economic Class, Location
of the consumer, B2B/B2C client, age etc.

Positioning: Amul has tried to target the larger mass market segment - middle class consumers,
more B2C clients, consumers across the age spectrum and mostly urban parts of India or even the
rural poor in urban areas.

Targeting: Amul has always positioned itself as the “Taste of India” which makes it a commodity
product instead of a luxury that has had a mass appeal associated with it. It has products priced
from as low as Re. 1 to that of thousands of rupees as well for bulk buyers or B2B clients. This
makes Amul a choice for all kinds of consumers.

4.5.2 Pricing strategy

Amul always catered to the needs of all economic segments without any compromise on
their product quality. Products that cover a huge market segment and are used on a daily basis like
milk, ghee, ice-cream, cheese, butter are tried and provided at rates lesser than that of their
competitors. With the rise in the Indian economy, transportation cost, storage cost, labour cost etc
have piled up but still, Amul provides quality products at a fair and affordable price in comparison

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to its competitors, thus emerging as the most preferred brand (Giant Marketing Strategies, 2019;
Dua, 2020).

The third aspect is product pricing. It is one of the best promotional strategies adopted by
Amul. It opted for a low-cost pricing strategy for products that are consumed regularly. This
pricing strategy of Amul made it affordable for its target audience. Increasing the price of goods
proportional to their audience’s increase in income helped them retain their customer base. A
competitive pricing strategy, such as a one-on-one offer and everyday low pricing was adopted for
products facing heavy competition.

One such product line is ice cream. As Amul is a co-operative, it aimed to get the best price
for the producer as well as the consumer, unlike certain companies that focused only on profit. But
being an FMCG company surely involved a well-planned production, storage, and distribution
network which is expensive. Yet Amul sold goods at affordable prices which is because of the 3-
tier model of the Amul. This transparent model led to maximum returns for the suppliers- the
farmers. As the prices increased, their income accordingly increased as well. Also, co-operatives
are one big family. Surplus products were sent to areas with high demand and vice versa.

4.6 BCG Matrix

We used a BCG Matrix to study the product portfolio strategy for Amul (Bhoir & Mokashi,
2016). The BCG Matrix uses the combined score of Market Size and Market share to help rank
products in the following categories presented as <name> (Market Size, Market Share): Dog (low,
low); Cash Cow (low, high); Question Mark (high, low) and Star (high, high)

Star Product Line

Amul Ghee, Amul Butter, Amul Cheese are the star products with very high market share in the
respective verticals and have been major revenue generators.

Cash Cow

Amul Beverages- Cool Coco, Lassi, Chhach etc come in this category. While there hasn’t been
much product development since many years in this domain and the market size has seen moderate

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growth but Amul has hijacked paramount market share here and hence the focus can be on
governing prices and extracting maximum revenue/customer if the demand seems fairly inelastic
for the change in price.

Question Mark

This is important to note since these products operate in high growth markets but face stiffer
competitions and lower market share. So, these are mostly in the chocolates and ice-cream
segments. Amul has faced great competition from brands like Cadbury, Dairy Milk, Kwality Walls
etc. The focus here is to spend more on branding and marketing to acquire maximum users.

Dog: poor performers

These are products that have not been able to capture a good share in the market and may prove to
be liabilities on the companies. For Amul this is mostly the Mithai, Puffles segment where the
brand has not been able to gain much recognition and faces stiff competition from brands like
Haldirams etc.

4.7 The 4 P's of Amul

Product: Tracks consumer needs & their changing lifestyles, & accordingly develops products to
suit their needs. Amul uses 100% real milk in its products that help in creating a strong brand
image. Packaging needs to be sustainable and attractive at the same time.

Pricing: Amul has low and constant pricing as its greatest moat. It has backward integration with
sourcing units and farmers which helps balance supply and demand in adverse conditions as well
making sure that price remains attractive for the consumers. Some of the popular initiatives that
Amul has taken are Strategic Calf Rearing programme, Strategic Productivity Enhancement,
Ethnoveterinary Programme etc.

Place: Amul also has a strong forward integration with its franchise-based models of having its
own Amul Parlours, Amul Booths that offer as a great place to sell products. At the same time
within its supply chain as well it has well connected cold storage facilities and checkpoints that

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make sure that there is no wastage. For B2B clients the distribution centres happen to be the place
for selling items.

Promotion: Amul has not been very proactive in exploring multiple channels for promoting its
various products. The Amul girl, the co-operative has been able to get away with spending just
one percent of its revenues on advertising, which is its USP, however apart from that use of social
media, tying up with influencers is limited. Hence access to youth heavy channels is what Amul
can focus on. Amul positioning is “Value for Money'' that can help appeal to the mass market
very easily (Bhoir & Mokashi, 2016).

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5. Logistical Drivers

5.1 Inventory

1. Warehouse
a. The replenishment Process is pull in nature.
b. Order is placed weekly, but in case of shortage, orders are placed on the due date.
c. Optional Replenishment System1 is used for inventory control. In such systems,
stock levels are reviewed on a periodic basis, but orders are placed only when
inventories have fallen to a predetermined reorder level. At that time, an order is
placed to replenish inventories to the level that is sufficient for buffer stocks plus
the expected requirements for one cycle, as in the periodic system (Rao, 2009).
d. Lead time is 3 days.
e. Orders are grouped and dispatched based on the locations of distributors.
f. Wastage rate is less than 10%.

2. Distributor
a. Replenishment process is pull in nature.
b. Order is placed three times a week.
c. Periodic review system2 is used for inventory control.
d. Lead time is 24 hrs.
e. Orders are grouped and dispatched based on the locations of retailers.
f. Wastage rate is more than 10%.

3. Retailers
a. Replenishment process is pull in nature.
b. Order is placed once a week.
c. Periodic review system is used for inventory control.
d. Lead time is one week.
e. Excess inventory is dumped to the lower legs as in to retailers.

1
Optional replenishment systems are the control systems that combine regular review cycles and order points are also encountered in practice.
2
A classic inventory system where the inventory level is reviewed at a regular time interval (e.g., once a week), whereupon th e decision is made as to
how much to order to bring the inventory level up to a given amount.

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f. Wastage rate is more than 10%

The just-in-time inventory technique (pull at all levels) is used by Amul. Wholesalers keep
only enough inventory on hand to cover the time it takes to get from the branch warehouses to
their place. This approach increases the return on investment for dealers (ROI).

Amul products have their own life cycles. Since perishable goods like packaged milk and
flavoured milk have a limited shelf life (a week or less), they cannot be kept for long periods of
time and must be eaten right away. Often, during the short product life cycle from manufacture to
distribution to the end consumer, these products must be kept refrigerated. Packed milk/flavoured
milk (30 to 40 units) is placed in plastic crates in a cold storage facility before being sold to all
retailers. Each plastic crate containing packed milk can be handled by workers, and packaging,
collection, packing, and unpacking do not necessitate the use of mechanised machinery. Since the
products can be placed vertically (i.e., 6 to 8 crates stacked on top of each other), the amount of
space required is reduced, resulting in lower storage costs. To store goods vertically, no pallets or
steel racks are needed. The plastic crates can be stacked on top of each other to enable the worker
to achieve the highest height without difficulties. The empty crates are returned to the Amul
company warehouse (known as Reverse Logistics3) for potential milk packet dispatch.

5.2 Transportation

The supply chain relies heavily on transportation. This regulates the flow of products
among the different members of the supply chain.

● Procurement Cycle (Upstream flow)

Upstream procedures are those that take place before a commodity or service is turned into
a deliverable product or service, such as having raw materials from manufacturers. The
procurement cycle involves two steps:

○ Step 1: Farmers deliver small amounts of milk to the VCS on foot or by bicycle.

3
Reverse logistics is for all operations related to the reuse of products and materials. It is the process of moving goods from their typical final
destination for the purpose of capturing value, or proper disposal.

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○ Step 2: Special trucks with tankers transport milk from cooperatives to processing
units.

Figure 16: Procurement Cycle

● Distribution cycle (Downstream channel)

The processes that exist after manufacture or processing, usually those devoted to bringing
products and services to retailers and consumers, are referred to as downstream. The
distribution cycle has 3 steps:

○ Step 1: 9 and 18 MT trucks deliver manufacturing units to customer depots (frozen

foods and wet dairy are transported in cold storage trucks).
○ Step 2: Insulated 3 and 5 MT trucks transport depots to wholesale distributors
○ Step 3: Other motorized vehicles and motorcycles are used by wholesale dealers to
transport goods to stores.
Milk is a perishable material, so adequate storage is important. To protect the milk's
consistency, the society uses a Bulk Milk Cooling system that keeps it below 40 degrees Celsius.
It also saves money on transportation because the community that owns this machine only collects
milk once a day. Furthermore, to keep milk from spoiling, the union has its own chilling centres,
which assist in the preservation of milk procured from distant communities.

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Figure 17: Distribution Cycle

5.3 Facilities

The overall picture:

Farmers 3.6 million

Village Milk Cooperative Societies 18700

District Cooperative Milk Unions 18

Total Districts 33

Milk Tankers 5000

Chilling Stations 200

Stock Keeping Units (SKUs) 750

Total Branches 62

Total Dealers 10000

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Total Retailers 10 lakh

Total milk handling capacity (per day) 35 Million litres per day

Milk Collection daily average 23 Million litres per day

Cattle Feed manufacturing capacity 9200 MTs per day

Sales turnovers (2019-20) Rs. 38550 crores (US $5.1 Billion)

Table 2: Facilities Statistics

Milk processing can be divided into the following steps:

1. Collection of Raw Milk: Raw milk is obtained from various Gujarat co-operatives and
screened for FAT and SNF content.

2. Testing and raw milk: Following the collection of milk samples, the samples are taken to
a laboratory where two forms of tests are performed:

a. Electronic Milk Test: Phosphate solution is used to verify the proportion of FAT
and SNF in an automated milk tester. Pasteurization is performed as the colour of
the milk turns yellow.

b. Methylene Blue Reduction Test: This test is used to determine if the milk is still
fresh. To test this, take 10 mL of milk and add 1 mL of METHYL solution to it. It's
then held at 57 degrees Celsius under water. The solution is called fresh if it stays
the same after 5 hours.

3. Pasteurizing and standardizing:

a. Pasteurization refers to the process of killing germs in milk using a specific tool.
The pathogenic bacteria found in raw milk are destroyed using the pasteurisation
process, which involves heating the milk from 72 to 76 degrees Celsius for 15
seconds and then cooling it to below 4 degrees Celsius.

b. Following this method, some milk is sent to a separator unit, while the rest is
proportionately sent to be standardised. The standardisation process divides milk

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into three divisions based on SNF and FAT quality. OSTA is the equipment's name.
The FAT is immediately adjusted by Auto Standardization. The machine just needs
to know if gold or regular milk should be rationed, and it will be delivered with the
necessary contents.

4. Separation Process: A separator system

divides two types of items, skimmed milk
and cream. The separator machine has 100
discs that spin at 5000 rpm (revolution per
minute). It is transported to the 20000 litre
tanks. When milk from the tank is needed, it
is measured in the laboratory and the FAT
deficit proportion is applied by mixing
cream. This process takes 24 hours.

5. Packing and Quality Check:

a. Pasteurized milk is submitted to the

dairy plant's quality assurance
facility. The FAT and SNF
proportions for 30 litres of milk are
obtained in 14 seconds. Only the
Figure 18: Milk Processing Facilities
powder, milk, and ghee are tested
and analysed in the laboratory. A separate ice cream testing facility is available.

b. After that, the milk is transported to the dairy plant's milk packing station. Big
pipelines run through the milk packaging stations, with a polyfill system behind
them dispensing the milk packaging content. One hundred pouches are packed in
one minute from each of these 12 units.

6. Cold Storage: The milk is then sent to the dairy's cold storage, where it will be held until
it is dispatched. The milk is held at a temperature of 5 to 10 degrees Celsius, which is
sustained with the aid of exhaust fans with silicon chips.

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Managing the dynamic logistics requires providing extra facilities as well, such as:

● Farmers have received various support from unions, including cattle feeds, mineral mixture
powder, veterinarian care, and artificial insemination for improved cattle breeding. Many
of these inputs have been discovered to have aided in the processing of milk.

● Village societies in Gujarat have made such a profit that they now have a fund from which
they can donate funds to the progress and development of their village, such as establishing
a school or constructing a hospital. This has a positive effect on the villagers and
encourages them to join the cooperative. These village societies serve as a bond between
the union and its members.

● The co-operative assists producers in receiving a just price for their milk as well as a steady
demand. They get a boost from the organization's earnings at the end of the year in addition
to the milk price.

● Per society has its own computerised system for measuring milk and calculating payments
based on quantity and quality.

5.4 Pre-Covid Conditions

As per a news article (BQ Desk, 2020),

“Amul is not just a dairy products brand but a supply-chain company that connects 3.6 million
milk producers in India to 135 crore Indians.” - R.S. Sodhi (CEO, GCMMF Ltd.) (BQ Desk,
2020)

1. There has been no slowdown in the milk consumption. Instead Amul has significantly
gained packed dairy products traction from Tier-II towns and small villages making their
demand no longer limited to the metros and big cities.
2. The procurement prices from the farmers increased 30-40 percent after remaining largely
flat for nearly four years.
3. Consumer price hikes for milk products are less than 3 percent in the last three years.
4. The processors’ and intermediaries’ margin has now reduced from hefty levels.

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5. Time has come for any new player or marketer to focus on their supply chains.
6. The revenue growth was 18% out of which half of the revenue growth this fiscal is due to
price hikes while the rest is on account of volume growth.
7. Their expectations on future volume growth seemed positive.

5.5 Floating Through Covid Times

"The pandemic situation was extremely critical for us since this is an essential service. But thanks
to our integrated IT infrastructure, during the lockdown ... Technology is being used every day by
everyone, but during the lockdown, it was very critical for us," - R.S. Sodhi (CEO, GCMMF Ltd.)
(Singal, 2020).

1. Prompt - Amul Logistics App:

The Amul Logistic App is an Android-

based app that helps the Milk Union track
milk collection data and milk quality at
the union and society levels. The primary
goal of developing this IoT-based
application was to gain control over the
management of the dairy supply chain.
The software digitises the tracking of
truck sheets, automates data recording,
generates complex files, manages truck
assignments, stores pictures alongside
data, and controls data anomalies. It also
Figure 19: The Prompt network
has an offline mode for adding truck sheet
data at the society level, such as GPS coordinates and photographs. To prevent malpractices
and adulteration, it offers complete monitoring of truck drivers and milk processing.
Through securing all required data over the cloud, the logistic app has digitized the milk
supply chain management format and made it paperless. It is cost-effective when it limits
the number of malfunctions that occurred at different levels.

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Supply Chain Management Amul

a. The covid situation brought in a sudden surge in the demand along with a decline
in the demand of frozen products. The pressure on the supply chain is also
increased.
b. GCMMF expanded its 10-year relationship with IBM with the goal of integrating
all its affiliates and federation on a common corporate network and enabling end-
to-end integration of its supply chain, all while promoting business development. It
included Digital Transformations, which included ERP deployment for the
GCMMF and 14 Member Unions, as well as Infrastructure and Application
Management Services. GCMMF commissioned IBM to conduct an IT architecture
and policy analysis and develop an IT strategy roadmap.

2. GCMMF has also implemented several high-end IT point technologies, including milk
sourcing, milk testing, warehouse administration, and also point-of-sale (POS) solutions.

3. A highly adaptable, responsive, and scalable cloud-based platform capable of giving them
full control and real-time insight over their dynamic 24-hour logistics operation. Given the
perishable existence of the materials in question, a total disaster recovery solution is
constructed.

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6. Cross Functional Drivers

Having discussed the logistic drivers, it is paramount to look at the cross functional drivers
in the supply chain of Amul for the simple reason that it is one of the most complex supply chains
which involves multitude of stakeholders at both up and downstream.

6.1 Pricing

Amul, since the inception, has followed a low-cost pricing strategy. It was one of the
founding vision points of Amul. Although it had an opportunity to gain more profits, being the
largest and sole pan-India dairy conglomerate, it had shaped its supply chain on this low-cost
strategy with the aim of providing the end-customer with most affordable milk products with best
quality. This is one of the most important drivers for Amul because it decides how other drivers
shall be altered to achieve the company’s pricing objectives. Amul is yet unmoved on its
commitment to provide cheapest and best quality products and is a benchmark in the industry for
managing the supply chain so well, despite this strategy and rising prices of other facilities, etc.

What price to set is decided by Amul, like by any other company implementing pricing
strategy, by considering the internal factors, namely, the marketing strategy, production costs,
organisational structure and long-term goals of the company, and external factors, namely,
competitors and the customer demand pattern. These considerations pan out differently for
different product categories and Amul makes sure that the prime motive of the product and the
company at large work in tandem with the overall supply chain objectives.

The weightage of such factors also varies greatly over the product range. Just for example,
the price of milk (all kinds of processed packaged milk) and spreads (for example various kinds of
butter, cheese spread, etc.) is largely determined by competition, also because the demand does
not vary greatly; this being unlike the flavoured drinks (Amul Kool range) where price is largely
determined by demand and not so much by competition. Of course, all factors are looked at to
optimally arrive at a price which is low enough to be in line with company vision and one that sells
profitably and is also feasible for the supply chain to sustain (even if it is by innovating positively,
other drivers for better efficiency).

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6.2 Information

This driver is at the heart of Amul’s supply chain because of the various stakeholders
involved and has evolved a lot, is ever more important in the current times (2010 decade and post
COVID era). As a former Managing Director of Amul, B. M. Vyas puts it:

“Amul is not a food company, it is an IT company in the food business.”

shows how important information (and the innovation around information systems) is for Amul.
Due to the kind of structure Amul operates in, there are some challenges innate to implementation
of effective information system(s) implementation and information flow. The farmers’ interaction
with the co-operative and the adoption of latest technology was only a gradual process which Amul
brought about, starting in late 1980s.

One of the landmark implementations till date in the dairy industry in India is the
Automatic Milk Collection Unit System (AMCUS). This was the start of database creation and
a systematic integration of the supply chain. Through this, the farmers could transparently interact
with the GCMMF and there could be kept a centralised track of finances (of individual farmers
and of the various stages of the supply chain), inventory, milk quality (volume, fat content, etc).
AMCUS brought down the processing time from procurement to finished product to around 10%
of what it was before that. (Gandhi & Jain, 2011) This was the great power of this information
integration.

Amul was the first Indian co-operative to go to the internet (1996) for B2B and B2C sales
(though the Amul CyberStore). The Enterprise wise Integrated Application System (EIAS)
customized Enterprise Resource Planning (ERP), set up with the expertise from TATA
Consultancy Services (TCS), was implemented in such a way that it could be selectively
implemented (in parts or wholly) into various points of the supply chain. GCMMF has also web-
enabled various processes of the EIAS so that a remote viewing and analysis and data collection
at the key sources which could be commonly used throughout the supply chain.

The Dairy Information and Services Kiosk (DISK) is another very remarkable initiative
that is implemented by GCMMF with IIM Ahmedabad. ‘DISK’ model has built upon the existing
application(s) and data (which Amul already has) by expanding the database of the milk societies

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to include a more complete history of milk cattle owned by the member farmers. The details such
as the breed and a history of diseases, inoculation, and artificial insemination are maintained in the
system. The data history on milk production by individual farmers is also available in the database
at the collection centres. This information is used for various mutually benefiting causes such as
establishment of Service Kiosks in villages and providing the latest breeding techniques for
maximizing production. DISK has led to computerization of more than 70,000 villages and led to
automation of milk collection processes, furthering the motive of AMCUS (Chanda & Paturkar,
2012). In 2009, Amul partnered with IBM to transform their inventory management systems and
have achieved good waste-reduction since.

The Amul Yatra program aims at connecting the farmers with the production facilities and
letting them understand how their milk is being used. There are visits conducted to production
facilities and a long-term engagement with farmers and the co-operative societies is sought after
here for these are the basic suppliers on which Amul stands.

A relatively new information technology is the Geographical Information System (GIS)

through which Amul can trace the movements of products and even generate patterns of business
and identify key bottlenecks in less time. Such systems have hubs at warehouses and depots and
the information on movement of goods thus collected is analysed to determine the location and
size of new facilities, direct the product development based on need and regional profitability,
enhance logistic decisions, enable the farmers better information to use their cattle wisely and to
allow them to adopt better techniques (which are again many times sponsored by GCMMF, such
as veterinary help, milk testing, VSAT, etc.) (Ghosh, 2010).

The recent Amul Application is a key step in ensuring effective monitoring. Along with
the Integrated Child Development Services - Common Application Software (ICDS-CAS), it has
ensured transparency and safety of products while ensuring less need for manual interventions and
checks. The data is also stored on a cloud server which enables quick and supply chain wide
selective access when needed.

The idea is to see the trend and optimize the supply chain along the lines that need most
attention. This approach has multiple benefits of time reduction, less pilferage, less wastage, more
accurate forecasts and thus less inventory, transparency, and overall operational integration of the

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supply chain. Both efficiency and responsiveness have significantly improved for Amul since the
1980s because of these.

Figure 20: Structure of the Information Systems at Amul (Pathania, 2010)

6.3 Sourcing

Amul sources its milk requirements from 16 million+ farmers (4 million directly
associated) in around 19,000 co-operative societies at village level. It is, thus, important for Amul
to devise a sourcing strategy that is sustainable to manage such a diverse lot and at the same time
ensure low prices. Amul does it by their approach of ‘bringing each individual farmer as close as
possible to the consumer’ and by participative management which makes each supplier a part of
the whole endeavour not only on paper but in essence.

The effective IT systems help Amul here in selecting from, and integrating well, the ever-
expanding suppliers’ base for best lead time, flexibility, performance. Amul aims to provide value
to both customers and the farmers. It is strikingly different from other companies in that the focus
is also equally on development of capabilities of suppliers (farmers) who can do better, and fair
help is provided both ways. For example, although most procurement happens from downstream
on an advanced demand draft basis, payments to farmers are done mostly in cash or direct
transfers, literacy programs are run for better supplier practices which are in mutual good, regular

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dividends are paid out for long term engagement, vital decisions about how the company should
run are taken only with everyone’s participation.

For an individual farmer, the process looks something like the following: Each farmer is
given a plastic card as ID which is associated with a collection centre. Each collection centre has
around 1200-1300 farmers. The farmer scans the ID at the centre and a number is generated by
machine and the request is queued. The milk is weighed, and fat content is checked by machines.
All this data is recorded in the database and a pay slip is generated based on it. The farmer collects
the slip and redeems it at the next kiosk inside the collection centre. The whole process is
streamlined, and swift. The rate charts are well communicated, and the contract terms are mostly
uniform throughout the region of collection.

Figure 21: Organisational Structure of Amul which is vital for Sourcing Considerations (Deshpande et
al., 2016)

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7. Supply Chain Coordination and Obstacles Faced

Coordination in the supply chain is one of the most important factors to enable the efficient
working of the supply chain as well as to ensure maximum surplus and efficiency. The actions in
the supply chain should be synchronised with each other so that every stage considers every action
it performs. Lack of coordination due to conflicting objectives of the stages or due to information
gaps across the supply chain can have some adverse effects, such as the bullwhip effect creating
unnecessary fluctuations.

7.1 Coordination in Supply Chain of AMUL

To tackle service to more than 4000 distributors and 5 lakh retail outlets, the coordination
in Amul’s supply chain is followed by the unique GCMMF (Gujarat Cooperative Milk Marketing
Federation Ltd) model, which is structured at a three-tier level, including cooperative dairy
societies at the village level which then comes under a milk union at the district level. Then these
constitute a federation of member unions at the state level. (Tirupati & Chandra, 2002)

To facilitate proper coordination and ensure farmers get what they derived along with
millions of retailers and suppliers, the following are the mechanisms employed at Amul:

Figure 22: The GCMMF value chain

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1. Interlocking Control

To ensure the interest of farmers is always voiced properly and to further enhance the
coordination between working professionals and the farmers, every village society operating under
Amul selects a chairperson and secretary. Further nine such chair people from different village
societies form the board of directors of the Union. These Union contain highly trained managers
to assist the members in their operations. Further, the chairperson selected from these Union forms
the Board of directors of the GCMMF. This committee consists of the managing directors who
directly report to the board of directors of Amul. (Tirupati & Chandra, 2002)

2. Coordination Agency: Unique Role of Federation

It has two primary objectives. One is to ensure that farmers sell milk at the best price or as
a value-added product and, the other is to match the demand of different unions in proportion to
their capacity. Since Amul is based out of Gujarat, GCMMF acts as a coordinator by ensuring
balance in demand vs capacity in Gujarat as well as coordinating with other states and their unions.
Some of the roles are: (Tirupati & Chandra, 2002)

i) Allocation of Product across the unions: With around 22 total types of products
produced by Amul, it is not feasible to supply all the products everywhere which will create
multiple tailored supply chain increasing complexities. Hence GCMMF here plays the major role
in allotting the products to different unions based on the demands. The seasonal, festival demand
and general demand is forecasted by a hierarchical fashion. The annual demands are first made for
each product based on plan and strategy. Then these are further divided in 16 sub-plans to match
the forecasted demand with the available supply at each union. The mishaps in supply - demand
for various products is countered by allotting more supply to the products in preference to its
importance, e.g. milk (liquid) gets highest priority since it is the largest consumed product. In the
second stage of planning, the unions break these annual plans into monthly as per their convenience
and the market.

ii) Pricing of the products: Amul follows daily low - pricing strategy and tries to maintain
homogeneity across all unions. If the pricing strategy of a Union varies, it forces other unions to

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adopt the same price in proportion to the capacity as it equally pays all the unions. This promotes
a healthy atmosphere as in the end the profits are equally shared by all the unions.

3. Supplier Enhancement and Network servicing

This department present at each level ensures that producers get the maximum profit, and
their problems are resolved. Besides this, they also manage the procurement of milk from the
trucks and tankers from the village societies. (Tirupati & Chandra, 2002)

7.2 Total Quality Management (TQM)

It was introduced in 1994 to tackle the increasing competition, create better structure in
organisation by promoting transparency, leadership. This structure included all business partners
including farmers. The factories were standardised, and Amul further created a TQM of
international standard and was accredited with ISO 901 and ISO 2200:2005 certifications. One of
the most prominent TQM strategies is the Kaizen strategy (Sharma, 2014), which aims constant
improvement. It has helped to reduce acidity in the milk of Amul. The regular quality checks at
every level ensure that customers get what the company promises, which has helped Amul
establish it as a trustworthy brand (Amul Dairy, n.d.).

7.3 Obstacles faced in the supply chain

Some of the obstacles faced by Amul are:

1. Information Processing Obstacles: These obstacles are faced due to a lack of forecasting,
information sharing in the supply chain. In Amul, diseased animals are sometimes not
reported timely leading to decreased quality of milk. One of the major reasons for this is
the unavailability of veterinary hospitals in rural areas and lack of awareness.

2. Pricing Obstacles: Obstacles arising due to the pricing of products can lead to forward
buying. From 2004 to 2012, Amul has seen a 90% increase in the pricing of Milk products,
leading to fierce competition from private firms, fake milk production.

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3. Issues faced in Processing of the milk: Due to bogus infrastructure and handling, the milk
quality deteriorates a lot in the journey from farm to factory. It is due to the lack of
electricity in rural areas affecting the cooling centre. The unhygienic condition in which
cattle are kept and due to lack of proper nutritious diet, the quality of milk gets affected.

4. Fodder Problem: Though the GCMMF assures that all the farmers are treated equally, the
rich farmers get the upper hand in getting proper water supply, leading them to provide
best quality of fodder to the cattle while the poor farmers struggle with getting proper
fodder hence the yield of milk decreases. The growing globalisation and real estates have
led to the loss of a significant number of grazing land, decreasing the grazing lands. Also,
the farmers prefer to grow food grains on their land and according to the estimations only
4% of the lands are used to grow fodder. (Mrunal, 2013)

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8. Recent Issues in the Supply Chain

The effect of the COVID-19 pandemic and the lockdown imposed in India served as a
challenging situation for the supply chains. Amul has also witnessed significant issues and has
tried to tackle them positively. The significant problems observed in the Amul Supply Chain are
given below.

1. Excess of Supply from Small producers

When the Covid-19 lockdown was announced, the government had instructed GCMMF
and 18 member unions to buy milk from desperate private milk producers who were unable to sell.
This step made by the government ensured that those local milk producers who could not connect
with distributors could get help. But then it had led to a 15 per cent increase in milk procurement
by Amul (Nair, 2020).

As per the instructions, Amul purchased 35-40 lakh litres of additional milk daily. This led
to an excess of 90,000 metric tonnes of skimmed milk powder (worth Rs 1850 crore) (Bera, 2020).
Amul then tried to export these additional amounts to ensure these products don’t end up as waste
and could earn revenue. Nearly 60,000-70,000 metric tonne of milk powder gets sold every month
in the international markets (Nair, 2020).

2. Shutting down of Hotel, Restaurants and Catering (HoReCa) Sector

The HoReCa (Hotel, Restaurant and Catering) sector was among the first to shut down
even before the implementation of Covid-19 Lockdown. This sector is a major consumption of
food products. Over 15% of the daily revenues were almost ripped off during the lockdown period.
In major cities like Mumbai, Delhi, HoReCa accounted for nearly 40% of the consumption and
greatly affected the major revenues (Shashidhar, 2020). Amul products like milk powder, ice-
creams, frozen foods saw a significant dip (approximately 80% dip for ice-creams) in their
demand. This further created a problem of excess inventory of these products.

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Even though this affected the revenue, the loss could be compensated by the increase in household
consumption by 20% (Shashidhar, 2020). Amul understood the situation and made its marketing
strategy more focusing on the Dishes that could be made with the Amul products (Laghate, 2020).

3. Low Labour Restrictions

Lack of public transport, complete lockdown led to restricted movement of supply chain
workers. At the same time, India also witnessed a significant exodus of migrant workers travelling
on foot across the nation. This deficiency of manpower caused delaying both the production and
delivery of products. Adding to the problem, the rule of 50% working staff was imposed. Amul
MD & Chairman Mr R S Sodhi has mentioned acute shortages of staff at the company’s
warehouses (Seetharaman, 2020). The staff was trained about the safety protocols. Arrangements
for accommodation and food supply closure to warehouses were made. Few labourers didn’t show
up because of the sudden outbreak of the pandemic and the chaotic situations surrounding them.

Amul provided incentives to the labours and made all the necessary arrangements within
their factories to ensure their safety. They even offered labours of Ayurvedic medicines in the
initial days of the lockdown to boost their immunity (Singh, 2020). This made labourers believe
that they would be taken care of and safety would be ensured above work (WARC, 2020).

4. Sudden Surge in Demand of Essential Items

During the very early lockdown stage, the panic situation among consumers surged demand
for products like milk, butter, cheese, and curd. The retailers and distributors faced acute shortage
for a few days. Warehouses even encountered situations where many people gathered at the door
to ask for milk and other products. (Seetharaman, 2020)

Amul tackled this issue with a quick movement of products through different mediums of
transport and even provided margin to the distributors so that the crowd didn't shift to the local
milk providers (Seetharaman, 2020; Mathew, 2020). It quickly diverted its distribution networks
for ice-creams to other segments. Since consumer movement was restricted and demand for
essential products were still at a higher end, Amul took a step forward and altered its last mile
delivery chain. It focused upon delivering products at the door of the consumer (Amul, 2020). This

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was achieved by partnering with online food delivery platforms like Swiggy, Zomato which now
included Amul products at discounted prices. An update of AMUL CART App made it easy for
distributors and retailers to place orders immediately as the stocks are off the shelves. (Amul,
2020).

5. Excess Inventory of Ice-cream/frozen products

Value-added products like ice-creams, flavoured milk witnessed a remarkable fall in

demand. This led to the accumulation of these products in the inventory. This further created a
setback in the production of these products. The ice-cream plant was closed for about one and a
half months and later started operating at 30-40% capacity. (Shashidhar, 2020)

Amul has a great brand. It advertised the different products through the media and
emphasized that Amul products could be trusted for safety. They, in fact, doubled their marketing/
advertising spends to ensure that consumers are aware of different products and prefer Amul over
other brands. By the time lockdown restrictions were uplifted, many regions also increased demand
for these products. Different products like “Tulsi Doodh”, “Haldi Doodh” were introduced to adapt
to the changing mindset of consumers, which were now focusing upon immunity booster products
(Amul, 2020). These soon proved to be successful in place of existing products like flavoured milk
ice-creams.

6. Unavailability of trucks and transport restrictions

In the initial 2 weeks, the government had allowed trucks with the essential products like
food or milk, but the problem is in entering as empty lorries that were not allowed to move. Adding
to this, lakhs of drivers abandoned their vehicles as they could not enter some areas because of the
residents. The shortage of labour created a problem of unloading the trucks. Trucks were lying
unloaded outside of other factories or warehouses. Only 20-25% of the required labour was
available in big cities, and thus movement of goods could not stay at par with the required
frequency. (ET Now, 2020a)

Amul reacted to the issue quickly and arranged passes for its truck drivers to bring back
the empty truck. Close to 45% of its products were moved via freight trains, which cut down transit

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time. Amul announced cash incentives for dairy plant workers, drivers, sales executives,
distributors, and retailers (Seetharaman, 2020). Amul also collaborated with Resident Welfare
Associations (RWA’s) to provide a large group of customers with products directly from the
distributor. This helped them keep the trust of people and made them wait for Amul products.

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9. SWOT Analysis
SWOT analysis is a framework which is used to evaluate a company's competitive position
and to develop strategic planning. It assesses the internal and external factors, as well as current
and future potential. It facilitates a realistic, data driven and fact-based analysis of the strengths
and weaknesses of an organization within an industry. It is also used for assessing the performance,
potential and risks involved in the business and can help in guiding towards strategies which are
likely to be more effective.

9.1 Strengths

● Production Capacity: Amul is among the largest manufacturers of milk and dairy
products in the world. It is managed by the GCMMF which supplies Amul with about 21.59
million kg of milk every day (Amul. 2020). Amul has also seen its procurement rise by
138% over the last ten years.

● Brand Value: Amul is among the most valuable and recognizable brands in the Indian
market, allowing it to maintain pressure on its competitors. Over the years, Amul has
invested considerably in marketing and advertising, and its mascot, the Amul girl, remains
one of the most iconic symbols in the market. These factors have positioned Amul firmly
in terms of brand recall and equity.

● Quality: Over the years, Amul has maintained a good level of transparency with respect
to its operations and quality control practices which have enabled it to form a good
relationship with the health department and the government. Validation and appraisal from
these authorities have added to its credibility and helped develop trust with the consumers.
Furthermore, it has never faced any significant concerns regarding product quality in the
Indian market.

● Consumer Base: Amul has a distinctive advantage over its competitors in that its reach
spreads across the urban demographic as well as the rural areas. It maintains its presence
in almost every corner of the country and has a very loyal consumer base that trusts the
brand to provide quality products at reasonable prices.

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● Investment in Technology: The company is continually investing in adaptive and

revolutionary technologies within the dairy industry. It has been using SAP ERP to get
benefits in its business transactions and has also introduced Amul Distribution
Management Software (DMS) at various distributor points all over the country.

● Product Portfolio: Amul offers a wide variety of products to its customers, which is one
of its advantages. It provides various products in different product categories and has
attempted to grow its ice cream portfolio by launching standalone ice cream stores all over
the country. Its flavoured milk and cheese products are also expected to grow in the market.

● Supply Chain and Distribution Network: Even though it started in a remote area of
Gujarat, over the years, Amul has managed to build a robust supply chain and distribution
network for acquiring the raw materials for its products and then taking the finished goods
to the consumers.

9.2 Weaknesses

● Cost of Operations: The operational cost for Amul is enormous due to its massive size
and complex structure. This becomes a liability for the company as and when it faces
variable demand. Amul is heavily dependent on its farming unions and community, whose
needs are changing rapidly. Amul does not have an effective mechanism to face these
challenges due to which their operational costs increase, driving down the profit margins.

● Portfolio Expansion: Amul has diversified its product portfolio by adding additional
products such as buttermilk, flavoured milk, ice cream, chocolates, cheese, creams, sweets,
and more. However, some of their products have not experienced great success, and
consumers do not have much awareness about them. Products like Amul chocolate, Amul
mithai, etc., have enjoyed very little success.

● Legal Issues: The brand faced an internal crisis after choosing to advertise its products by
disparaging its rival competitors. This led to Hindustan Unilever filing a lawsuit against
Amul in the Bombay High Court. The verdict was passed in favour of HUL which caused

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a lot of embarrassment for Amul and tarnished its image as an elitist, utilizing arrogant and
unfair methods to beat its competition.

● Foreign Competitors: With so many foreign brands competing with Amul it is now
finding its operating costs difficult to manage. And so, particularly in international markets,
they are facing huge competition.

9.3 Opportunities

1. Product:
● Amul is considered more as a milk and milk products brand. It has a conspicuous presence
in the home state of Gujarat for its Sweets and Shrikhand product line. Amul has a great
opportunity in the Mithai line as it can be modified and extended to more states keeping in
mind the local flavours and preferences. Mithai is largely a local brand market but brands
like Haldiram have proven that it can be taken to a national level. Amul can improve this
with a revamped distribution strategy.
● Similarly, Amul has recently introduced processed food products into the market like chips
and fries but it has not been established well as of now, so we see scope of expansion there.

2. Technology:
● Amul is already at an advantage due to its higher penetration in cities and its franchise
model which places Amul booths in various areas across a large number of cities. However,
as the hyperlocal delivery market expands and players like Dunzo and Swiggy, Super
Stores become popular. Amul could adopt a more tech-driven approach through an app-
based system where people can book products online in advance before having to go to the
booth to buy it. The pandemic has especially led to this system proving to be advantageous.
This ensures forward integration of Amul with its retail hubs.

3. Place:
● Amul has the product range and proven quality to venture in overseas markets especially
where there is a large Indian population like the middle east and south-east Asia. Local tie
ups for sourcing and distribution will be important for this to be achieved. This will also

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help Amul develop and market internationally acclaimed yet niche products like camel
milk and goat milk which are fine-tuned to the local taste.
● Amul could also act as a supplier of raw material to the brands in other countries making
it a joint venture. Here, it has the scope to expand its B2B tie-ups.
● Amul operates with its retail model and does not have a foundation of an e-commerce
platform like other companies (e.g., Big Basket) have so it can expand on that end and
make its supply chain more flexible.
● Other than that, Amul functions on a B2C basis currently but they can set up a marketplace
on a B2B basis where contracts between Amul and restaurants would ensure full-fledged
supply of daily milk products or related requirements to the restaurants. This will give
Amul more margin.

4. Promotion:
● Amul definitely needs to create a place in the minds of the youth. Being a traditional
marketer, its recall is high but limited to a certain section. It must invest either through a
sub-brand with a name which will connect more naturally or design a new Gen Z sensitive
campaign designed to attract and retain clients from the hi-tech universe. Promoting health
initiatives and highlighting its importance through the branding of their products is what
Amul can work on to build that image in today’s youth.
● Amul also needs to be more present on the screen. Not all products that it offers are
promoted thoroughly through advertisements, hence aren’t very popular. For example,
Cadbury Bournville is more popular than Amul dark chocolate mostly due to Amul’s lack
of advertising. The convenience of buying through digital media and more so in current
times the need for it has made digital presence vital.

Amul has the right brand image to extend its reach and connect with the new India.

9.4 Threats

1. Increasing Competition:
● Amul which was known for its butter for many years, specifically outside its home state of
Gujarat has done well to enter neighbouring states with milk and milk products. However,

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the typical pattern of milk brands is that of dominance of local players. Amul needs to
carefully draft its strategies for pricing and product offerings to break the loyalty of local
brands who themselves have invested in developing new product offerings to attract and
retain their loyal customers. Though Amul has expanded its product segment, it competes
with well-established brands like Cadbury Dairy Milk when it comes to chocolates or
Mother Dairy, Nandini, etc. for milk products and with Kwality Walls and the likes for ice-
cream.
● In addition to this, some of the start-ups have made efficient use of the digital platform and
social media to build an all-India presence within a short time through attractive price
schemes and convenience of buying. Amul needs to be more agile and swift to make
relevant changes and beat the competition.

2. Growing Threat of Substitution:

● The new emergence of health-conscious strata in society has put some resistance to milk
consumption. Amul has to provide necessary impetus to position milk as a nutrient in
achieving health goals. Oat-based or soya- based milk is gaining popularity even in India
along with the western countries due to the rise and awareness of veganism. Amul has
brought in some range of such products but its inability to market through a pharma channel
alternative has limitations to its acceptance as a health alternative. The nutrition-based
product range will also provide an improved margin.

3. Threats imposed by COVID-19:

● COVID-19 has brought a strain on disposable incomes. While this will pass through, it is
likely that more such growth distracting events could come up in future. While milk will
always be an essential commodity, the other products like mithai and chocolates will have
to survive such onslaught in future. Amul as an organization should always keep up the
pace of introducing new product classifications which would help them circumvent any
such distractions in future. More products that can leverage the Amul brand and can be
placed through the pharma channel will surely give the brand a better return.

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10. Conclusion

Amul is considered to be one of the most trusted and influential brands in India. Having
had a presence of multiple decades in India, it has been able to strengthen its brand equity across
many states. Amul completes 75 years by 2021.

By keeping a strong hold on their logistical and cross-functional drivers as well by devising
unique distribution strategies, Amul has managed to retain customers as well as expand their
product line. What started off with milk and milk products, now includes Amul sweets, chocolates,
and packaged foods. Amul has overcome most of the hurdles which COVID-19 brought in and
ensured enough supply of essential commodities like milk even in tough times. Amul has a scope
of expansion and improvement in certain areas like advertising, overseas market, tech-driven
approach, and their product line.

With increasing competition among brands and a growing threat of substitution of milk
and its products, Amul is taking measures and implementing changes to mould with today’s health-
conscious youth.

Since its inception from 1946, Amul has seen a drastic growth from being a small
cooperative to now being the 9th largest dairy company in the world. Amul continues to stick to
its roots, i.e., providing economic independence to any farmer who becomes a member, while also
broadening its horizons through effective supply chain practises and marketing. Unlike many other
corporates out there, Amul has been successful in not putting any kind of bureaucracies within its
system. It’s still a true pioneer to Dr Kurien’s vision. Effective IT implementation, expansion
strategies, constant R&D in making new products which consumers need, and at the same time,
adopting sustainable supply chain practises which is the need of the hour. Researchers continue to
look into the Amul Model and entrepreneurs all over the world take inspiration to start a similar
cooperative in their own countries.

“Working with Tribhuvandas and Kaira’s dairy farmers, I saw that when you work merely
for your own profit, the pleasure is transitory; but if you work for others, there is a deeper sense
of fulfilment and if things are handled well, the money, too, is more than adequate.” - Dr V Kurien.

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Appendix

A. Minutes of the meets:

Meet 1: https://meet.google.com/buq-gafa-izh 10.30pm-11.30pm on Feb 15, 2021

Agenda- Getting to know each other. This meet was primarily meant for team engagement and to get
comfortable with each other. Everyone introduced themselves, talked about their past experiences,
discussed their strengths and area of comforts, and based on a consensus the topics for research were divided
among the team. This was followed by communication via WhatsApp including frequent updates from the
entire team.

Meet 2: http://meet.google.com/snr-hohq-ozf 7pm-8pm on March 20, 2021

Agenda- The second meeting was mostly centred around the progress check that the individual teams had
made in the last one month. Teams had mostly collected 2 research articles and papers each and had started
gaining perspective on Amul. Everyone discussed their findings to help connect the dots better. We made
sure that all facts and articles were up to date, consistent and in alignment with each other.

Meet 3: https://meet.google.com/skq-wdnw-isx 12pm-1pm on April 11, 2021

The team started working on the research report and started subdividing broader topics into subtopics. This
was followed by a brief round of display of the work done in the class.

Timeline: 12th April to 18th April- Consolidation of the report (Individual teams’ deadline)
18th April to 22nd April- Building of the pitch deck (Individual teams’ deadline)

Meet 4: http://meet.google.com/mhv-eqxy-mda 8-9pm on April 23, 2021

The teams met together with the individual decks and tried to put that into one common themed presentation
to make the project more unified. This was followed by rearrangements, bridging differences, setting up
individual storylines for the deck and working on pitches. Finally, the teams broke to record their individual
decks via Zoom.

Meet 5: http://meet.google.com/jhn-zaaz-cgf 12pm - 8pm on April 25, 2021

The recordings were put together and the report was given a final touch with good design.

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