Distribution channel

of milk in India
 First leg
• Manufacturing units to company depots using 9 and 18 MT
trucks
• depots across major cities of India
• Frozen food-below 18C
• Dairy wet-0-4C
• Second leg
• Depots to Wholesale Dealers
• Network of over 5000 distributors
• The margins offered to the distributors range between 3-5%
• Wholesaler incentives – yearly set group targets, on achieving
which they get some amount on every additional kg sold
• Transport through insulated 3 and 5 MT TATA 407’s
• Third leg
• WDs to retailers
• Transport through rickshaws according to the beat
plan
Conflicts among channel
members
• Ownership of assets
• Stocking issues
• Replacement of products
• Credit policy
• Packaging
• Replenishment
• Margins
 Structure
 The milk is procured by GCMMF dairy from the farmers
on a daily basis. Subsequent to this it is subject to a process
of pasteurisation at the dairy.
 A major portion of the pasteurised milk is packaged for
distribution. Out of the remaining some of it is routed to
various divisions within the dairy for producing derived
products such as butter, ghee, cheese etc.
 Also, a significant portion is distributed to various ice
cream manufacturers. It is the distribution channel from
the dairy to the Havmor ice cream plant (HIP) which is the
primary subject of this report. A quantity ranging from
about 5000-10000 litres of pasteurised milk is distributed
daily from the dairy to the plant. A similar quantity is
distributed to other ice cream manufacturing factories.
 Terms and conditions of different
intermediaries:
• HIP requires GCMMF to supply the milk at their plant site through
refrigerated trucks every day for which they pay Rs 35 per liter, which is at
a premium over the wholesale market price of milk. The reason for this
premium is the fact that the terms of purchase are free on board (FOB)
which implies the responsibility lies with the dairy for the delivery of the
milk at the ice cream plant. HIP informs GCMMF everyday about its
requirement for milk for the next day and pays GCMMF every Saturday for
the value of milk delivered for that week. The price of milk is fixed by
GCMMF and remains constant for long periods of time. Revisions in price
are infrequent.
Ice cream plants have a high set of standards for measuring the quality of
milk they procure from many agencies as it is the quality of milk that has a
huge impact on their final output. Also, the milk suppliers are paid
according to the quantity of fat content in the milk. Hence, the ice cream
manufacturers have a pre-processing equipment that not only checks
whether the milk is rancid or not but also checks for the fat content in the
milk.
 Relationships and expectations of
various stakeholders
SUPPLIERS

These are essentially a number of co-operatives who obtain milk from a large number -of farmers
and represent their interests. Their key expectations from the dairy are as follows
* A fair price for the milk supplied
* A reliable customer who can be depended upon to purchase their milk regularly
* Transfer of knowledge and new technologies to enhance the productivity of the farmers

CUSTOMERS

This is the ice cream plant which sources its milk requirement from the dairy. Its key expectations
from the dairy are.
* High quality milk supplied with the required pre-specified fat content
* Regular daily delivery of differing quantities as per the daily requirement
* Doorstep delivery of the milk at the plant premises
The milk dairies compete amongst themselves to become the primary supplier of ice cream plants.
Since there is not much flexibility