AMUL FACILITY LOCATION AND

LAYOUT
 PREFACE

AMUL is the pride not only of Gujarat but also of entire country. It is a

Matter of great pleasure in preparing this project on such esteemed

Organization. A person aspiring to enter in management profession must

Have practical knowledge of the subject. The objective of industrial visit

Is to gain insight into practical knowledge in a student to supplement the

Theoretical study of management as well as industrial.

This project is been prepared under course objective of the subject

Operations Management under guidance of DR. ANSHU SARNA

(Faculty Guide).It has been a great learning experience visiting Amul

plant at Anand.

I have tried my best to present all the aspects related with the topics of
operations management. However I accept the sole responsibility of any

possible error of omission and will be grateful to the readers of this

project who bring mistakes to my notice.

 CONTENTS

 Facility Location

 Factors That AMUL Management Keep in Mind

during Facility Location Analysis

 Facility Location Techniques

– Method of Factor Rating
– Cost-Profit-Volume Analysis

 Facility layout

 Factors that influence layout

 Advantage of AMUL Good Layout

 AMUL Process Layout Map

 Conclusion And Recommendation

 Reference
Facility Location:
The facility location problem, also known as location analysis is a branch
of operations research concerned with the optimal placement of facilities to
minimize transportation costs while considering factors like avoiding placing
hazardous materials near housing, and competitors' facilities.

AMUL’s Facility Location

The brand name "Amul," from the Sanskrit "Amoolya," (meaning Precious) was
suggested by a quality control expert in Anand.), formed in 1946, is a dairy
cooperative in India. It is a brand name managed by an apex cooperative
organization, Gujarat Co-operative Milk Marketing Federation Ltd. (GCMMF),
which today is jointly owned by some 2.8 million milk producers in Gujarat,
India.

AMUL is based in Anand, Gujarat and has been an example of a co-operative

organization's success in the long term. It is one of the best examples of co-
operative achievement in the developing economy. "Anyone who has seen the
dairy cooperatives in the state of Gujarat, especially the highly successful one
known as AMUL, will naturally wonder what combination of influences and
incentives is needed to multiply such a model a thousand times over in
developing regions everywhere.” The Amul Pattern has established itself as a
uniquely appropriate model for rural development.
Amul has spurred the White Revolution of India, which has made India the
largest producer of milk and milk products in the world. It is also the world's
biggest vegetarian cheese brand. 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 Unions making up GCMMF have 2.8 million
producer members with milk collection average of 10.16 million liters per day.
Besides India, Amul has entered overseas markets such as Mauritius, UAE,
USA, Bangladesh, Australia, China, Singapore, Hong Kong and a few South
African countries. Dr. Verghese Kurien, former chairman of the GCMMF, is
recognized as a key person behind the success of Amul.
Factors that amul management keeps in mind during
facility location layout

The location of an industry is determined by taking into consideration the

following factor:

• Primary Factors:
– Supply of raw materials
– Nearness to the market
– Transport Facilities
– Supply of Labour
– Availability of power
– Supply of Capital

• Secondary factors:

(1)Proximity to customers: AMUL Management during facility location analysis

keeps in mind the proximity of tar g et c u s to mer s an d tar g et mar k et,
s o th at th e tar g et c u s to mer c an b e ap p r o ac h ed easily to outlets.

(2) Policies of management: AMUL managerial policies relate to future volume

of production and expansion, size of the plant, integration of production
processes; facilities to employees, sales and marketing policies and purchasing
policies etc.

(3) Plant location: Location of a plant greatly influences the layout of the
plant. Topography, shape, climate conditions, and size of the site selected
will influence the general arrangement of the layout and the flow of work in
and out of the building.
 (4) Total Cost: The core objective of the KFC is to select a site with the
lowest total cost include land, labor, constructions, taxes and energy cost. By
minimizing the total cost they can be able to reduce the product cost

(5) Volume of production: Plant layout is generally determined by taking into

consideration the quantum of production to be produced.

(6) Availability of floor space: Availability of floor space is other decisive factor
in adopting the mode of layout. If there is a scarcity of space, product layout
may be undertaken. On the other hand more space may lead to the adoption
of process layout.

(7) Nature of manufacturing process: The type of manufacturing process

undertaken by a business enterprise will greatly affect the type of layout to be
undertaken

Facility Location Techniques

There are two types of techniques which followed by AMUL:
1) Factor Rating
2) Cost-Volume-Profit Analysis

Factor Rating

In the factor rating system, factors that are important in the location decision
are identified. Each factor is weighted from 0 to 1.00 to prioritize the factor and
reflect its importance. A subjective score is assigned (usually between 0 and
100) to each factor based on its attractiveness compared with other locations,
and the weighted scores are summed. Decisions typically will not be made
based solely on these ratings, but they provide a good way to organize and rank
factors.
EXAMPLE:

Following table gives you various factors considered for location decisions of
AMUL along with factor rating and location ratings based on the merits of each
location in the factors considered:

Location factor Factor rating Location Rating Product Rating

Location 1 Location 2 Location 1 Location 2

Suitable of labour 8 3 3 24 24
skill
Proximity to 5 4 5 20 25
customers
Adequacy of 6 4 7 24 42
water
Land and 3 6 5 18 15
construction cost
Availability of 5 5 2 25 10
space

TOTAL 111 116

Since score of Location 2 is higher than the Location 1. So, the ideal location for
AMUL is Location 2.

Cost-Volume-Profit Analysis

When the fixed and variable costs for each site differ, Cost-volume-Profit Analysis
can be used to identify the location with the lowest cost.

EXAMPLE:

AMUL is considering 3 alternatives location considered for new plant. The

annual operating cost are given below

Location 1: Laxmi Nagar

Location 2: Sahadra
Location 3: Preet Vihar
The Annual Production Cost associated with each alternative is a linear
function of the production volume.
Assume that, the expected annual production volume is 250units
And further assume that:
(X: production volume = 250)
For Location 1: Prod. Cost = 10,000+ 250 x
For Location 2: Prod. Cost = 25,000 + 150 x
For Location 3: Prod. Cost = 60,000+ 50 x
Based on this information which Location has the lowest cost?

Sol. Total Production Cost = (Fixed Cost) + (variable unit cost) x (annual
production volume)

At a production volume of 250units Location 2 has the lowest cost, because

For Location 1: Prod. Cost = 10,000 + 250 (250) = 72.500
For Location 2: Prod. Cost = 25,000 + 150 (250) = 62.500
For Location 3: Prod. Cost = 60,000 + 50 (250) = 72.500

This graph shows that annual production cost changes with different
production volumes. If the expected annual production volume is below
150units, then choose Location 1. If the expected annual production volume is
between 150and 350 units, then choose Location 2. If the expected annual
production volume is over 350 units, then choose Location 3.

Facility Layout
Facility layout is an arrangement of different aspects of manufacturing in an
appropriate manner as to achieve desired production results. Facility layout
considers available space, final product, safety of users and facility and
convenience of operations.

An effective facility layout ensures that there is a smooth and steady flow of
production material, equipment and manpower at minimum cost. Facility
layout looks at physical allocation of space for economic activity in the plant.
Therefore, main objective of the facility layout planning is to design effective
workflow as to make equipment and workers more productive.
AMUL plant is indigenously worked out with facilitation of various production
processes and production of multi products under one plant. The total plot is
nearly about 2.27 kms. Separate buildings are provided with required
arrangements of machine tools handling and computers connection through
the control room to fit for varying product manufacturing departments.

Factors that influence layout

 Volume, weight of items to be produced.

 Nature of the service to be provided.

 Cost of the building to house the operation.

 The fragility of the product or component

AMUL facility layout:

The plant is engaged in producing milk, ice creams, milk powder and ghee.
Entire department is uniquely provided with facilities for the processing each
Product. There are 4 production departments and packaging departments
pertaining to each product respectively.
IMAGES OF FACILITIES AT AMUL PLANT
THE THREE-TIER “AMUL MODEL”

DAIRY COOPERATIVE SOCIETY AT VILLAGE LEVEL

MILK UNION AT DISTRICT LEVEL

MILK FEDERATION AT STATE LEVEL

The Amul Model is a three-tier cooperative structure. This structure consists of

a Dairy Cooperative Society at the village level affiliated to a Milk Union at
the District level, which in turn is further, federated into a Milk Federation at
the State level. The above three-tier structure was set-up in order to delegate
the various functions, milk collection is done at the Village Dairy Society, Milk
Procurement & Processing at the District Milk Union and Milk & Milk
Products Marketing at the State Milk Federation. This helps in eliminating not
only internal competition but also ensuring that economies of scale are
achieved. As the above structure was first evolved at Amul in 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.

Advantages of amul good layout

1. Labour cost

 Increase in productivity with more units being produced per man hour.
 Reduction in the number of workers.
 Minimization of motions between operations.

2. Production control

 Increased production rate.

 Providing convenient and adequate storage points.
 Increased production rate.
 Improved ability of forecasting manufacturing time.

3. Supervision

 Lesser requirement of supervision.

 Reduction in time spent on inspection.
 Reduction in cost of inspection.

4. Other manufacturing costs

 Reduced consumption of power.

 Minimization of scrap and defectives.
 Better quality due to reduced handling.
 Reduced costs of maintenance.
 Improved utilization of materials

AMUL Process Layout Map

 CONCLUSION
Reasons for Amul’s success are its Robust Supply

Chain, Low Cost Strategy, Diverse Product Mix, Strong

Distribution Network, Technology advancements & an

Initiatives and service availability. Because of all these

competences. Amul is the largest producer of milk

and milk products in the world. It has set world best

practices for dairy producers.