Group 6:

Swapnil Jindal

Mohit Johri

Souvik Roy

Pravesh Dhavale

Abhinav Shekhar

 Sales & Distribution Network

Overview

• The Brand ‘Amul’ is owned by The Gujarat Cooperative Milk Marketing Federation.

• GCMMF is Largest Food Products Marketing organization of India, with a revenue of $1.5 Billion.

• It links 2.8 Million Village Milk producers and 13,141 Cooperative Societies across 13 Districts to milk and dairy consumers across India.

• White revolution of India was an initiative under the Umbrella of Amul.

• Amul sells its products around the world in 40 countries.

Collects more than 5 lacs litres of milk from >2 million farmers everyday

Delivers goods worth Rs 6 crore to over 5,00,000 retail outlets across country

Aim is to transform lives in rural India & contribute to development of society.

Amul’s advertising and marketing spend has never exceeded 1% of its revenues.

Distribution & value-for-money are the major strengths on which the brand’s popularity rests.

Key Elements of Business Model

• Operations that are low cost, high quality and high efficiency (Competitive Edge).

• Strict margins at retail and distribution ends, utilizing economies of scale to remain competitive.

• High Sharing of profits with Farmers, to develop long-term relationships with them.

Product Portfolio

The Channel Network

Procurement Channel

(Upstream Flow)

Dairy cooperative society at village level

Member union at district level

Milk federation at state level

Procurement Network An average of 1,000 Farmers sell milk at a Local

Cooperative society.

Each Farmer has plastic cards for identification.

The Identification Number is fed into a computer.

The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine.

The Computer then calculates the amount due to a farmer on the basis of the fat content in the milk.

The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window.

Village Dairy Cooperative Society (VDCS) Collection of surplus milk & payment based on

quality & quantity.

Providing support services to the members.

Selling liquid milk for local consumers of the village.

Supplying milk to the District

Milk Union

Member Unions or Depots Procurement of milk from the VDCS

Providing input services to the producers.

Conducting training on Cooperative development

Providing management support & regular supervision to the VDCS.

Establish Chilling Centers & Dairy Plants for processing the milk.

Selling liquid milk & milk products within the District.

Process milk into various milk & milk products.

Decide on the prices of milk to be paid to milk producers.

Distribution channel (Downstream Flow)

First leg Manufacturing units to company depots using 9 and 18 MT trucks

Amul has 65 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

Milk procured twice a day.

Payment is made under twelve hours of procurement.

The C&F agents are not fixed and are decided by the local company offices.

The milk procured per day is 5 million liters

Total capacity of operation is 7 million liters per day

The peak processing till date has been 6 million liters per day

These co-operative societies are bound to supply there produce only to GCMMF

Channel Management

Authentication by way of identity.

Proof of solvency-details of the bankers.

Safety of inventory by getting the company stock insured.

Proper storage space in forms of refrigerators.

The company requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.

Selection Criteria for the Channel Members

Details of delivery vehicles.

Competent salesman.

Details of the product kept of other companies have to be provided.

Dealers of the company must carry a good reputation.

Market coverage of distributors need to be defined.

1. Distributors

Margins

Trade marketing

Total quality management

Vision and mission statements

Amul yatras

2. Retailers

Trade schemes

Glow boards

Schedule of the salesman

Infrastructure of facilitation

Motivation of Channel Members

Beat plan

Cumulative performance

Target versus achievement

Other criteria

Evaluation of Channel Members

• Ownership of assets

• Stocking issues

• Replacement of products

• Credit policy

• Packaging

• Replenishment

• Margins

Conflicts among channel members

Amul quality circles

Pilot salesman scheme

Scheduling of sales

Agreement defining rights

Cooperation among channel members

Service Output Demanded

Product LineLOT SIZE ASSORTMENT/

VARIETYDELIVERY/ WAITING TIME

Kids Women Youth Kids Women Youth Kids Women Youth

Ice CreamL H L L H M NA H M

ChocolatesL H L L M M NA H M

BeveragesM L L M M L NA  H H

Fresh MilkH H L L M L NA H  M

Milk PowderL H M L H M NA  H M

CheeseL H M M H L NA  H M

Bread SpreadH L L L L L NA  H H

GheeH H M L H M NA  H M

Corporate Office Functions Marketing of milk & milk products.

Establish distribution network.

Arranging transportation from the Milk Unions to the market.

Creating & maintaining a brand.

Providing Technical Inputs, management support & advisory services.

Decide on the products to be manufactured at various Milk Unions (product-mix).

Conduct long-term Milk Production, Procurement, Processing & Marketing Planning.

Conflict Resolution & keeping the entire structure intact.

Policies Differential Prices: Lower prices in state of Gujarat due

to less transportation cost. Unused Milk: Milk, once, supplied to retailer is not

taken back. Amul adopted a low-cost price strategy to make its

products affordable. GCMMF transacts on an advance demand draft basis

from its wholesale dealers instead of the cheque system

Wholesale dealers carry inventory that is just adequate to take care of the transit time from the branch warehouse to their premises. 

This just-in-time inventory strategy improves dealers' return on investment (ROI).

All GCMMF branches engage in route scheduling and have dedicated vehicle operations.

Effective coordination is critical for efficiency and cost control.

Buy-in from the unions is assured as the plans are approved by GCMMF's board. 

The boards of the unions comprise of farmers elected through village societies

Marketing efforts are assumed by GCMMF.

Logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services were done by 3rd party

Coordination & 3rd Party Services

Establishing Best Practices The federation and the unions have adapted

successful models from around the world including group activities, quality circles at the federation.

Every Friday, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at the closest office to discuss their various quality concerns.

Examples of benefits from recent initiatives include reduction in transportation time from the depots to the wholesale dealers, improvement in ROI of wholesale dealers, implementation of Zero Stock Out.

• Retailer Forecasting.

• Backend Data.

• Festivals and Special Occasions.

• Seasonal demand.

Sales Forecasting

Communication & Advertising Corporate campaign: The Taste of India

Amul butter girl is one of the longest run ad campaigns in the country (44 years!!!)

Umbrella Branding

Institutional Advertising

Controversial issues and Social Messages

Amul Greetings

Newsletter and publication

Competitions , Recipes, Cricket Rankings

Media

• Hoardings/billboardOutdoor

• TelevisionBroadcast

• CinemaNon-broadcast

• Newspaper• General interest magazinePrint

• Independent website• Social Networking SitesInternet

Recruitment & Selection

Recruitment forms the first stage in the process.

Selection and placement of the Sales force in the company.

The selection process starts with the intent for recruitment by the sales department head.

These intents specify the reasons why recruitment is to be made.

Requirement for Recruitment

New expansion

New planning

Retirement

Recruitment @ Amul

Internal Sources

Present permanent employee

Employee Referrals

Former Employees

External Sources

Advertisement

Campus recruitment

Employment exchange

Unsolicited applicants

Sources of Recruitment

Application

Initial interview of the candidate

Employment tests

Interviews

Checking references

Physical / Medial examination

Final interview

Induction (Internal & External)

Steps of Recruitment

Identification of need of Training

Module Preparation

Selection of employee for training

Training

Feedback

Training & Development

1. Need

Introduction of new technology

Increase quantity & quality of product

To meet organization need at all time

For better economic use of materials

To prepare present employees for bigger role

2. Effect

Increased effectiveness of work

Increased dedication to work

Higher productivity

Need & Effect of training

On the job training

Coaching

Job rotation

Off the job training

Lecture method

Conference method

Seminar

Outhouse training

In this method the new recruits are sent to different training centers outside the organization for training purposes. generally used for top management recruits.

3 methods of Training @ Amul

Motivation is the process of indoctrinating people with the unity of purpose to maintain a harmonious relationship among each other in the sales organization

2 types of motivators used:

Financial motivators

Non-financial motivators

Motivational Strategy

Ad hoc

HRA

LTC (once in 4 years)

Medical

Bonus

Production Bonus

Performance allowance

Advance

Financial Motivators

1. Promotion (Criteria)

Seniority

Vacancies

Opinion of div. head, past record, behavior

Skill & Knowledge

Experience

Loyalty

2. Seminar

3. Conference

4. Fun @ Work

Non-Financial Motivators

Strength in its procurement

Leverage on the relationship

Strength in transport channel

No promotional schemes undertaken

Non profit driven organization

Push strategy

Observations

Amul should go in for exclusive outlets

Push carts

Trade promotions

Home delivery

Increase margins

Additional salesman on field

Comments and Suggestions