A Project report on distribution network of AMUL

Submitted to: Prof. ATUL SHARMA

Submitted by: Shivani singh 10PGDM104 Sec-B

Introduction
Amul is the largest food brand in India and world's Largest Pouched Milk Brand with an annual turnover of US $1050 million (2006-07). Currently Amul has 2.6 million producer members with milk collection average of 10.16 million litres per day. Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. AMUL is the brand under this organization.

Amul's Umbrella Branding and Distribution network strategy.

An umbrella brand is a brand that covers diverse kinds of products which are more or less related. It applies also to any company that is identified only by its brand and history. It is contrasted with individual branding in which each product in a portfolio is given a unique identity and brand name. Amul has high brand equity and umbrella branding of Amul has helped the company in bigger sense. Amulss brand name has helped its other brands also like Mitahi made, Amul Ice creams, chocolates, Amul Kool etc. So umbrella Brand, Amul is used to build and offer value to customers in bigger sense. In literal sense, a company has high brand equity if it has multi dimensions. Amul has explored various available opportunities to reach to mass customers. It has opened a community on public forums like orkut, sponsored events like Amul voice of India etc. The brand value of Amul will surely help company to maintain the status of largest food brand in India at least for sometime in future. Amuls strategy of using umbrella branding has really paid off. Amuls advertising and marketing spend has never exceeded 1% of its revenues. Amuls creativesin the form of billboards or the Taste of India campaignhave always managed to evoke a larger-than-life brand feel, consistency and spirit of Indian culture in a contemporary way

Distribution Network
Consumers expect marketers to deliver products in the locations and forms they require. To meet expectations of such demanding consumers, alignments of their ftheir Distribution Highways of Fresh, Chilled, Frozen and Ambient products theyre already made by introducing Project DIL. Subsequently, a major initiative was taken to enhance distribution network to smaller towns. About 1200 distributors in small towns across India theyre added during this initiative. Today about 3000 Distributors ensure availability of their products across India, whether it is in Leh or Lakshadtheyep, in Kutch or Arunachal. Simultaneously, to augment fresh milk distribution in various markets of India, approximately 1400 exclusive Milk Distributors have been inducted.

Distribution Process
Company Dealer Wholesaler Retailer Shopkeeper Consumers Franchisee

Over the years, they have created an unique combination of their distribution highways for their ambient, chilled, frozen and fresh products. They have already started 30 super distributors across 8 states, covering 520 smaller towns. In the year 2011-12, they

need to increase the number of super distributors to 150 and cover as many as 3000 small towns. To integrate distributors in their strategic needning process and also to develop selfleadership amongst each distributor so that they have the capability of managing their own business, their Self Leadership Development Programme (SLDP) continued during the year. Distributors and Amul Parltheir franchisees from across India continued to visit Anand as part of their Amul Yatra Programme. Through this initiative, their channel partners get exposed to their cooperative institutions and are able to understand their role as true partners towards the socio economic development of rural India. AMUL has the largest cold chain network in India (i.e. 18000 refrigerators) as compared to any other company. The chemical components of milk are water, SNF and solids. Milk is very perishable product so it has to be consumed within 24 htheirs. In order to avoid wastage AMUL converts the milk in to SNF and milk solids by evaporating the water, which comprises up to 60-70% of milk contents. This is possible only if the distribution channel right from the producer to the consumer is theyll organized. It will be surprising to know that AMUL makes even the Sarpanch to eat pizza i.e. it supplies pizzas even to rural market. Last year, they divided the retail market into 14 specific segments to achieve further distribution efficiency. This year their focus was on inducting distributors having expertise in servicing such specific market segments. This initiative is yielding results by way of ensuring wider availability of their product range. The role of distributors in their business process has never been more diverse or more important, as it is today. As a matter of fact, they consider their Distributor to be the real Marketing Manager of their organization. To enhance business performance of their Distributors, a workshop on Marketing and Sales Management was designed in collaboration with a premier business school. The objective of the entire initiative was to upgrade the knowledge of their Distributors in terms of contemporary Business Management Practices, so that they can perform theyll not only as their business partner but also as Marketing Managers. During the year, 659 Distributors have undergone this programme in 39 locations. Cold Storage is an extremely essential component in the Federations distribution process. Unfortunately, availability of efficient cold storage facilities is grossly inadequate in their country. To cope up with the increasing need of suitable cold stores closer to their markets, they have continued creating the Federations

own cold stores this year in various locations across the country. They now own 24 stateof- the art cold rooms of different sizes. To get an exposure to their cooperative structure, their culture as theyll as operational systems and processes, every year they invite their distributors, major retailers and other business partners to Anand, for Amul Yatra. So far, about 7000 Distributors and other business partners have participated in this Amul Yatra. Over recent years, the Federation has successfully introduced new product lines. This year, in order to leverage their distribution network strengths, to optimize market supervision expenditures, to achieve increasing efficiency while keeping the distribution infrastructure lean, focused and productive, the Federation amalgamated its different distribution networks. Today, they operate an efficient distribution infrastructure consisting of 46 sales offices, catering to 3,000 distributors and five lac retailers. Almost every Federation stockist has visited Anand to participate in a unique programme called 'Amul Yatra'. During this programme, stockists are exposed to the Federation Philosophy, the culture of Cooperation, as theyll as operational Systems and Processes. The Federation has also invited distributor's salesmen from all over the country to Anand for a training program focused on the Federation's philosophy and developing their selling skill

The Best Practices by Amul to have competitive advantage

Amul has Competitive sustainable advantage (CSA) over its competitors. Amuls CSA lies in its procurement part ,the ability to collect 447,000 litres of milk every day from 2.12 million farmers ,convert them into goods worth Rs 6 crore and distribute them to 5,00,000 retailers across country ,is not easy. No other dairy in India has such a sustainable procurement network. Managing the large scale supply chain of Amul which begins from milk producer and ends with supply to customer from retailer is very critical job. It requires lot of dedication and hard work from all members of the corporation and also distributors and retailers across country Most of Amuls communication is based on latest happenings in the country. That is why its ads are termed different from what is that of its nearest rival, Mother dairy. Most of Mother dairy ads are directly targeted to children where as Amuls ad are on current affairs, in which adults are also involved.

The key to retaining their competitive advantage lies in keeping focused on the basic business principles:

Be Customer-Driven Adapt quickly to the changing environment. Anticipate change and act today to meet tomorrow's challenges.

The Federation has invested substantially over the last few years in improving the quality of its products and services, keeping in mind the emerging challenges of globalization. In recognition of its achievements in Quality Management Initiatives. Their core business is marketing branded food products to household consumers. Their success has been grounded in two strengths:

Distribution network, serving more than five lac retail outlets. Superior product quality - 'Value for money'

The key to maintaining these two competitive advantages rests on their ability to attract and retain the very best manpotheyr. In this age of intensive competition, only dedicated and committed professionals can successfully manage their business.

The role and importance of Technology and E- Initiatives by GCMMF

Amul assigned the ERP software development project named as Enterprise-wide integrated application system (EIAS), on a turnkey basis to Tata Consultancy Services. At present, the EIAS system covers a plethora of operations like market needning, advertising and promotion, distribution network needning, stock control, sales and accounting, budgetary control, quality control management and co-operative service management. Amul has also connected all its zonal offices, regional offices and members dairies through VSATs for seamless exchange of information. Each of Amuls offices is connected by e-mail and all of them send a daily report on sales and inventory to the main system at Anand. Also, sales offices, C&F points and wholesale distributors of GCMMF have been connected through the Internet for timely exchange of information. The customized ERP EIAS is designed in such a way that it can

be plugged into various points of the supply chain and external system. Moreover, the software is platform independent and can work on any operating system. Amul is also in the process of Theyb-enabling the entire supply chain so that it can capture key information at the thrice, and use the same for decision-making. This would include the likes of transporters, member-manufacturing units, oil packing stations, suppliers, depots and the entire field force. The country-wide operations through successful implementation of the "Enterprise-wide Integrated Application System". They believe that introduction of similar integrated ERP systems at their Member Unions will help them ensure that the IT revolution serves their members better. The Federation is among the Top 100 IT Users in the country. Currently, there are more than 3,000 computers installed in their village societies, which support the Automated Milk Collection System. Their goal is to install computers in all their village societies and to integrate them with their respective unions. On the market side, their distributors have responded enthusiastically to their suggestion of computerizing their operations and getting email connectivity for better communication with their sales offices. The distributors can now place their orders on their internet theybsite www.Amulb2b.com. They continue to receive a good consumer response to their theybsite www.Amul.com which is noted for its distinct features like cyber store for ice-cream and other milk products, cricket rankings and the recently launched e-greetings site. To strengthen business linkages with the business partners, GCMMF has enhanced its Amul e-Groupware System by adding more features like e-mailing the invoices and ledgers to business partners, announcing various schemes online, calendar facility etc. Video conferencing is rapidly gaining in popularity, which provides business with the ability to meet and to work with others over a distance. For real time communication, better brainstorming, knowledge sharing and information gathering, they have installed and implemented Video conferencing System at Head Office, Zonal Offices and a few Sales Offices. The history of Amul shows that it radically changed the way business was doneby eliminating the middleman and bringing the producer closer to the consumerresulting in benefits for both. Incidentally, it was also one of the first Indian companies to have a Theyb presence. Distributors can place their orders on the theybsite, amulb2b.com, especially meant for accepting orders from stockists and promoting Amuls products via e-commerce. Currently, the company receives queries from overseas agents for

distributing its products in countries like the US, Britain, New Zealand, Singapore and Thailand. As a result of the online initiatives, today, Amul exports products worth around Rs 100 crore, to countries in Theyst Asia, Africa and the US. Amul has also launched sites like amulgreetings.com and amulkids.com to extend the brand identity to kids and teenagers who are its target market for its ice-cream and chocolates products. Also, as a strategy, Amul has a customer feedback channel which uses e-mail like cheese@amul.com for cheese products and butter@amul.com for butter products. In addition, the organizations corporate intranet site contains all the companys updates including policies, procedures, functional role and responsibilities of each person in the organization. Their main emphasis is to increase competency at the end user level with the help of IT. Their all employees have undergone computer training according to the departmental needs so that they can take charge of their responsibilities in an effective way at the respective supply points. Amuls success in leveraging IT to its advantage lies in the simple fact that the organization has a clear IT vision. For example, after developing the Amul.coop Theyb portal, the organization will be in a position to communicate with other similar cooperative movements. As co-operatives can interact with each other with similar organisations sharing this domain, knowledge can be shared, which can lead to further productivity benefits. While it has always been argued that investments related to information technology made in rural India are a disaster, the case of Amul proves that where there is a will, there is a way.

RECOMMENDATION
They need to focus on expanding category penetration and enlarging consumer base of most of the product categories that they operate in. This will enable them to tap the huge un-touched potential for branded, packaged, value-added dairy products in urban, semi-urban and rural India. In terms of product innovations, they need to focus on value-added derivatives, moving further up the value chain. They have to work simultaneously on the supply side as well as the demand side so that the demand-supply equation can be effectively managed. They must also ensure that their farmers continue to receive remunerative price for their milk.