Amul
is a dairy cooperative based in the Anand district of Gujarat, India. The word
amul is derived from the Sanskrit word amulya, meaning invaluable. The
co-operative was initially referred to as Anand Milk Federation Union Limited
and hence the name AMUL. What interests me to writing this is article about
Amul is that it is an organization that achieves economies of scale through its
simple supply chain while it thrives to redistribute wealth in the society and
creating many opportunities for the rural and weaker sections of India.
Initially,
the producers had to travel long distances to deliver milk to the only dairy,
the Polson Dairy in Anand – often milk went sour, especially in the summer
season, as producers had to physically carry milk in individual containers.
These agents decided the prices and the off-take from the farmers by the
season. In winter, the producer was either left with surplus unsold milk or had
to sell it at very low prices.
Thus the
Kaira District Cooperative was established to collect and process milk in the
district of Kaira. Milk collection was also decentralized, as mos producers
were marginal farmers who would deliver 1-2 litres of milk per day. Village
level cooperatives were established to organize the marginal milk producers in
each of these villages. The first modern dairy of the Kaira Union
was established at Anand (which popularly came to be known as AMUL dairy after
its brand name). The new plant had the capacity to pasteurize 300,000 pounds of
milk per day, manufacture 10,000 pounds of butter per day, 12,500 pounds of
milk powder per day and 1,200 pounds of casein per day.
With
a turn over of $3.2 billion (2013), Amul is the largest food brand in India.
Also, Amul is the largest producer of milk and milk products in India. The
model of Amul is such that it benefits small producers like farmers, who
together form an integrated approach to form an economically large scale
business. The model eliminates middlemen, bringing producers in direct contact
with the customers.
Every
day, Amul collects 447,000 litres of millk from 2.12 million farmers, converts
the milk into branded, packaged products and delivers the goods which are worth
Rs. 60 million to about 500,000 retail outlets across the country.
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| Supply Chain of Amul |
As
shown in the figure, the supply chain of Amul consists of farmers who produce
milk from their cattle. The farmers are organized into cooperatives called
Village Cooperative Societies (VCS). These VCSs supply milk to thirteen different dairy
cooperatives, called Unions, of which Amul is one. The milk or milk products
made at these unions are supplied to the Gujarat Cooperative Milk Marketing
Federation (GCMMF). The GCMMF is the marketing entity for the products of all
the unions in the state of Gujarat. GCMMF has 42 regional distribution centers
in India, serves over 500,000 retail outlets and exports to more than 15
countries. All these organizations are independent legal entities yet loosely
tied together with a common destiny!
The
ultimate goal of the GCMMF is to benefit the farmers through this hierarchical
supply chain that includes different kinds of entities ranging from small
suppliers to large fragmented markets. The success of Amul can be attributed to
the quality of products, the economic pricing and the belief that it has
instilled in its customers.
Sources:
http://www.amul.com/
http://www.slideshare.net/strategian/supply-chain-management-of-amul-supply-chain-management
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