DISTRIBUTION DOSSIER ON

AMUL
Competitor – Britannia

Submitted to:
Prof. Srinivas Govindrajan

Prepared by:
Bishal Saha (BM18013)
Isha Sarayan (BM18020)
Neelanjan Paul (BM18028)
Subhradip Saha (BM18053)
 About AMUL

The Birth of AMUL:

It all began when milk became a symbol of protest
Founded in 1946 to stop the exploitation by middlemen
Inspired by the freedom movement

The seeds of this unusual saga were sown more than 65 years back in Anand, a small town in
the state of Gujarat in western India. The exploitive trade practices followed by local trade
cartel triggered off the co-operative movement. Angered by unfair and manipulative practices
followed by the trade, the farmers of the district approached the great Indian patriot Sardar
Vallabhbhai Patel for a solution. He advised them to get rid of middlemen and form their own
co-operative, which would have procurement, processing and marketing under their control.
In 1946, the farmers of this area went on a milk strike refusing to be cowed down by the cartel.
Under the inspiration of Sardar Patel, and the guidance of leaders like Morarji Desai and
Tribhuvandas Patel, they formed their own co-operative in 1946.
This co-operative, the Kaira District Co-operative Milk Producer Union Ltd. began with just
two village dairy co-operative societies and 247 litres of milk and is today better known as
Amul Dairy. Amul grew from strength to strength, thanks to the inspired leadership of
Tribhuvandas Patel, the founder Chairman and the committed professionalism of Dr. Verghese
Kurien, who was entrusted the task of running the dairy from 1950.
The then Prime Minister of India, Lal Bahadur Shastri decided that the same approach should
become the basis of a National Dairy Development policy. He understood that the success of
Amul could be attributed to four important factors. The farmers owned the dairy, their elected
representatives managed the village societies and the district union, they employed
professionals to operate the dairy and manage its business. Most importantly, the co-operatives
were sensitive to the needs of the farmers and responsive to their demands.
At his instance in 1965 the National Dairy Development Board was set up with the basic
objective of replicating the Amul model. Dr. Kurien was chosen to head the institution as its
Chairman and asked to replicate this model throughout the country.
Amul Product focused on bringing more productive products and expanding the market rapidly.
It was founded in 1946. It has a history of over 75 years and its business has grown
tremendously stepping at higher growth and satisfying consumer needs by giving higher and
superior quality of brands. Their brand name including the features, quality, reasonable price,
would help them in growth of rapid sales and keeping trust of around millions of Indians using
this product every single day by marking it as the best and a reasonable product. Amul cares
for its huge customers and tries to offer them the best products at best price.
Amul and its product

It consists of wide ranges of products which are

outlined below:
• Amul Bread Spreads Range
• Amul Beverage Range / Milk Drinks
• Amul Powder Milk Range
• Amul PRO
• Amul Fresh Milk Range
• Amul Cheese Range
• Amul Cooking Range
• Amul Dahi Range
• Amul Mithai / Desserts Range
• Amul Health Drink
• Amul Chocolates
• Amul Ice-creams
• Amul’s New Products
AMUL Distribution Channel
Milk Producer

Village Dairy Co-operative

Dist. Milk Co-operative Union

State Co-operative Milk Marketing Federation

Distributor
 Wholesaler

Retailer

End Consumer

The Amul model is a three-tier co-operative structure. This structure consists of a Dairy co-
operative 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 setup in order to delegate the various functions, milk
collection is done at the Village Dairy Society, milk procurement and processing at the District
Milk Union & Milk & Milk Products Marketing at the State Milk Foundation.
Village societies run small collection shops which purchase milk from farmers twice a day.
The milk collected is then taken to the milk processing union by special Amul tanker which
have the milk chilling facilities in it and where milk is processed to make different types of
Amul’s product.
The ready products are then sent to the wholesalers, Amul Preferred Outlets (APOs) &
Retailers so that it reaches to the end consumers.
 CHANNEL MEMBER MANAGEMENT
AMUL Supply Chain at Distribution Level
Monetary
The distributor has to deposit an amount of ₹5,00,000 to Amul
CATEGORY MARGIN
DAIRY (Milk, Buttermilk, Ghee, Butter) 2.75% - 3.50%
FRESH (Milk, Curd) 3% - 4%
FROZEN (Ice cream, Chocolates) 9%-10%

DISTRIBUTION MANAGEMENT
➢ 7 to 8 people are employed who work under distributor.
➢ Orders are collected from the retailers via phone or visits by the labour employed by
the distributor.
➢ Transportation cost is borne by Amul.
➢ Orders received are placed online with GCMMF (Dewas Naka).
➢ It takes maximum 1-2 days to get materials from warehouse to the distributor.
➢ Robust IT Mechanism helps to collect orders and places them quickly from the
company.
➢ As there is a large demand for goods, frequent checks need to be performed regarding
the stocks in the shops which is done using calculation on basis of sales.
➢ Sometimes clashes with other distributors occur for territory.
➢ If products get expired then claims are refunded within 15days. However, this may
sometimes take a bit longer time also.
➢ Sales Figure: ₹ 10-12 lakhs per month.
AMUL PREFERRED OUTLET (APO)
➢ The APO has to deposit an amount of ₹25,000 to Amul.
➢ Margin of APO is 1%.
RETAILERS
➢ Sales amount ranges from ₹30,000 to ₹35,000 per month
➢ 3% extra margin which is available on goods that have invoices are transferred to the
retailers by the distributors.
➢ 17% margin for all products.
➢ More margin on frozen segment than dairy and fresh segment.
HYPERMARKET
➢ Margins of 3-4% on Amul.
➢ They have a warehouse to stock their goods that they receive and have refrigerators to
keep the SKUs.
➢ Transportation and shipping charges are paid by Amul.
 ➢ 213 SKUs available out of which 144 have very less probability of a stock out.
➢ Cash rewards and related benefits are awarded to outlets based on the EBITDA values.
➢ 480 stores and 18 hypermarkets are used for the calculation of EBITDA.

Non-Monetary
➢ No non-monetary rewards/benefits are given by Amul to any of its channel members.
Secondary Sales Force
➢ The secondary sales force works on the basis of the targets given to them.
➢ The targets depend upon the nature of the demand for the particular product.
➢ If the salesperson exceeds the target given by the company then he/she might get extra
incentives.
➢ Distributors have salesperson who collect orders mostly weekly from retailers and mass
merchandisers.
➢ The order is forwarded to warehouse.
➢ Each distributor has a salesforce of 7 to 8 people who are responsible for collecting
order from various retailers on phone or physically go and collect the orders.

Target Setting Mechanism

➢ Firstly, Amul sets up its targeted sales or sales budget by looking at past sales data.
➢ Then they add CAGR (21%) to its existing trend.
➢ Targets are usually set up by the regional sales manager.
➢ At the distributor level, the distributor gets the target of ₹10-12lakhs sales per month.
➢ Distributors gets the materials from Amul on a credit period of 15days. And he gives
the credit period of 10days to the retailers.
➢ At the retailer level, the sales target given to them is around ₹30,000 - ₹35,000 per
month.

Monitoring Mechanism used by Amul

AMCUS Business Model
Amul has taken computer initiative initially with the SKEPL (Shree Kamdhenu Electronics
Private Limited). The company provides integrated solutions, marketed under the brand name
“Akashganga”. This is called AMCUS Business Model. AMCUS business model is centered
on providing technology-based products and services to help milk cooperatives become more
efficient and productive. AMCUS provides complete Computer-enabled solutions that
automate the milk collection process at local milk cooperatives. Its high-end system, selling
for about US$3,300 (Rs 151,800), incorporates an electronic weighing system, a milk analyser
to test milk quality, a personal computer, and accounting and management software. That
means milk can be sent on to the cooperative union for processing more quickly, reducing
spoilage; farmers can see for themselves the weight and quality of their milk via a display and
printed receipt, increasing their trust in the cooperative process. In addition, farmers are paid
immediately, rather than sometimes days later as under manual procedures; and local
cooperatives need fewer employees and have better records and reports for planning purposes.
Automatic Milk Collection Systems
The traditional process of milk collection in India begins with dairy farmers bringing their milk
to the local village-level dairy cooperative society where the milk is poured into metal buckets
(aluminium or stainless steel) and weighed on a steel scale. After weighing, the fat content of
the milk is measured using electronic testers. Once these measurements are completed, the
transaction details (the quantity and quality of milk) are manually recorded in the dairy
cooperative’s paper register and on the farmer’s membership card. Farmers are paid for the
collected milk usually a day or two after it is initially sold; because the calculations for payment
must be done manually from the data in the register, it typically occurs at a later time to avoid
further delays while milk collection is going on and people are in line. Payments are made
based on the information previously recorded on the farmers’ membership cards.
Enterprise-wide Integrated Application System (EIAS)
Accordingly, 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 planning, advertising and
promotion, distribution network planning, 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 Amul’s 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 Web-enabling the entire supply chain so that it can capture key information at the
source, 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.
This has proved to be extremely effective in streamlining the supply versus demand data
activity on a continuous basis.
Geographic information systems (GIS)
In addition to the EIAS, Amul has also been using Geographic Information Systems (GIS) in
an innovative way. The company uses GIS in its head office and key marketing offices. Using
the Indian map in GIS, the company is in a position to plot zone/depot boundary as well as a
pointer for zone, depot and distributor locations, which are superimposed by product-wise sales
data. This data is then used for sales and distribution planning according to the various zones.
This has enabled Amul to decipher information regarding milk production and productivity of
animals, region wise in Gujarat. This ultimately helps in forecasting milk production according
to the region and suggests remedies, if any, for a region that has a lower milk production rate.
The same GIS system can also be used for monitoring veterinary health and controlling the
outbreak of diseases.
Distribution Management System
The Distributor has the DMS facilitated by the company which is installed in his computer.
This system helps the company to keep a track of the number of products a particular distributor
is selling over the year and this helps in distribution of incentives and benefits to the distributor
at the end of the year.
Accounting and Management Software
Accounting and Management Software user interfaces have been developed in local languages
and have localization features. Functionality Accounting and Management Software includes
bookkeeping, user-defined report generation, profit and loss calculation, and forecasting. Raw
Milk Receiving Docks (RMRD) software is marketed to district unions. This software provides
district unions with information and analysis of district-level milk collection and other
operations. Reports detail milk collections data on a per-session basis, trends of milk collection
from different societies, employee time sheets, efficiency of operations, and more. Accounting
and Management Software also integrates different milk collection centers by providing a data-
exchange and sharing capability. AMCUS is an example of how computer application is being
used as a catalyst for synergies between social development and business objectives. It is clear
that how the development benefits of improved efficiency and transparent and fair prices for
dairy farmers can be combined with the business objectives of growth and profitability in a
sustainable and mutually beneficial relationship.

TRAINING AND HR MANAGEMENT

Training and Development programme of Amul is an ongoing programme since its inception
as it believes the development of the institution lies in the development of the people – producer
members. It organizes various training programmes based on the need and a few of these are
as follows:
i. VMS Workshops: This programme aims at to create a document on Vision, Mission
and Strategy for Village Dairy Co-operative Societies. This process has helped to
involve and develop dairy farmers for their future planning and review of the growth
thereby improve their income and quality of life .
ii. Milk Day Celebration: This programme aims at bringing together all members,
including Chairman, Management Committee Members and respective producer
members of Dairy Co-operative Societies to identify and solve their problems. This
programme is attended by the respective Board of Director and Chairman from the
District Union, Internal Consultant of Co-operative Department of District Union.
iii. Amul Darshan: This programme aims at exposing producer members to various facets
of dairy operations to keep them informed and aware of the development and adopt to
good management practices in production of milk. The exposure visits include visit to
Cattle Feed Plant, Dairy Plant, Chocolate Plant, Dairy Demonstration Farm and
presentation by the Co-operative Development Group.
iv. Management Development Programme: This programme aims at capacity building
of Secretaries of Dairy Co-operative Societies in better management and maintenance
of ISO standards. For the Management Committee Members it imparts training on
management strategies, co-operative laws and their roles and responsibilities .
 v. Zonal Meeting: This programme aims at review of internal audit on Quality
Management System and Cleanliness of Dairy Co-operative Societies for continuous
improvement. This helps in knowing achievements and identifying grey areas for
improvement.
vi. Village Group Discussion: It aims at encouraging discussion among dairy farmers on
scientific animal husbandry practices and its application. The discussions are facilitated
by the Internal Consultant of District Union.
vii. Awareness and Refreshers Training: It aims at training of Dairy Co-operative
Society personnel on Quality Management System in order that the ISO is effectively
followed.
viii. Dairymen Training: This programme aims at building managerial skills of
progressive farmers who have more than five milch animals to bring more success in
their dairy husbandry.
ix. Development Review: This programme aims at District Union’s review of the
comparative progress of five-year programme of Dairy Co-operative Societies and
suggests remedial measures.
x. Self-Managing Leadership Programme: Amul undertakes Self Managing
Leadership Programme for women resource persons through Brahma Kumari Iswariya
Vishwa Vidyalaya at Mt. Abu to bring a value-based approach in development process.
xi. Amul Patrika: It is an in-house Newsletter distributed monthly to producer members
to strengthen their knowledge on scientific animal husbandry practices, quality of milk
and sharing success stories.
 FIELD FORCE MANAGEMENT
➢ Amul’s distributors does not use any kind of application for supply of dairy products.
➢ All transactions are recorded through SAP.
➢ The distributor places order as per requirement and then its recorded in SAP.
➢ An invoice of the same is given with the delivery of the products.

The sales persons co-ordinate with their immediate superior manager through e-
mail if they face any problem regarding products and distribution.
 TRANSPORTATION AND LOGISTICS
Amul’s Transportation and Logistics
Amul follows a distinctive transportation model as far as its transportation is concerned. The
major production units of Amul are located in Gujarat. Major distribution hubs are located in
and around the periphery of the production units. Since Amul produces majorly perishable
goods, it becomes mandatory to follow a proper and smooth transportation of goods. Physical
distribution is a very important part of the whole business. Milk is procured from the villages
and collected at the Village Co-operative societies (VCS). From there milk is taken to the
manufacturing units where the milk is processed into various products. The products are then
transported to the company depots located in various parts of the country. The products are
then sent to the wholesale distributors (WD) and the distributor have an area assigned to them
which is done by the company itself and they use area mapping system depending on the
population and distance from the warehouse. The distributor not only sells to retailers but also
sells to large mass merchandiser and other outlets who order in large quantities. The distributor
has the DMS(Distributor Management System) facilitated by the company which is installed
in his computer. This system helps the company to keep a track of the number of products a
particular distributor is selling over the year and this helps in distribution of incentive and
benefits to the distributors at the end of the year. and from there to the retailers. It is then
available in over 1,000,000 retail outlets across India through its network of over 3600
distributors. While for Amul pouch milk, there are 17 distributors. The wholesale distributors
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 the distributors’ ROI. There
are two channels involved in the supply chain of Amul.

1. Upstream channel
i.e. the procurement channel for milk from the farmers to the manufacturing units.
a) First the milk is taken to the VCS by the farmers on foot or bicycles in small quantities.
The new VCS in Maharashtra have rapid milk chillers.
b) Then milk is transported from co-operatives to the manufacturing units via special
trucks equipped with tankers to carry milk once a day. A tanker carries three to four
societies’ milk together which helps in achieving economy in transportation of milk.
Geo-remote sensing-based vehicle tracking system has been put in use for efficient
handling of Road Milk Tankers carrying milk to Dairy Plant.

2. Downstream channel
i.e. the distribution channel from manufacturing units to retailers.
a) First the products are taken from manufacturing units to the depots. This is done by
using 9 to 18 MT trucks. The frozen food is kept at a temperature below -18C, while
milk is kept between the temperatures of 0-4C.
b) From depots to the WD’s the transportation is done using insulated 3-5 MT TATA
407’s. A permanent dispatch plan (PDP) is prepared as per the demand of various
products.
c) Finally, the goods are to be transported from the WD’s to the retailers. The beat plan is
prepared and the transportation is done by auto-rickshaws, rickshaws and bicycles. The
vehicles have a carrying capacity of 750-850 crates and one crate consists of 40 pouches
of500ml each. The vehicles start leaving the plant at 19:00. All the crates which are
placed in the vehicles have some ice cubes in them, so as to increase their shelf life.
The truck drivers are responsible for the loading and unloading of the crates. Aside
from using the fleet of trucks, Amul has also integrated their transport system with
railway cooling units to improve transport cost and its supply to Delhi. It has tied up
with Adani Logistics to have a dedicated train to transport milk daily from Dudhsagar
Diary of Mehsana to Delhi. This train transport uses 50 wagons with a capacity of
24,000 litres each Amul has more than 49 depots with dry and cold warehouse for entire
storage of products and the largest cold chain network in India with 18000 refrigerators
Milk is a product which has time band for consumption; hence it needs to reach the
retailers early morning. For up-country distribution, the dispatch time of milk is
between 3-8pm, depending on the location, while for local distribution in Ahmedabad
the dispatch timings are between 8pm to midnight. The location of the trucks is
monitored through cell-phones. While distribution, is the transportation vehicle breaks
down, it is the transporters responsibility and he arrange for a back-up to minimize
delay.
 THE FINANCIAL ASPECT

AMUL
Particulars AMUL (in lakhs)

Power and fuel 10,507.55

Travelling, conveyance and Vehicle Expenses 469.32

Insurance expenses 363.32

Postage and telephone expenses 186.51

Freight expenses 2626.88

Sales and Distribution Expenses 14,153.58

Advertisement/sales promotion 5005.00496

Market Spend 19,158.58

From the above figure we can infer that sales and distribution expenses for Amul
is high i.e. 73.9% of the total market spend whereas for Advertisement /Sales
promotion is 26.1% of the total market spend

Britannia
Particulars AMT(in lakhs)

Power & fuel 9,498

Carriage, freight and distribution 46,769

Insurance 2,565

Provision of Doubtful Debts 646

Commission 606

Sales and Distribution Expenses 60,084

Advertisement / promotional Expenses 61543

Market Spend 181,711

From the above figure we can infer that sales and distribution expenses for
Britannia is 33.1% of the total market spend whereas Advertisement/Promotion
expenses is 66.9% of total market spend.

The Advertisement/Sales Promotion expenses are high in Amul because Amu

always spends less than 1% of its turnover In Advertising expenses. Despite the
limited spends they successfully create enough buzz about their products.
Another noteworthy point is, Amul follows umbrella branding. All of their
products are promoted under the ‘Amul’ umbrella, so they have to take care of
only one child. While other brands, which have for instance 10 sub-brands are
spending on 10 children. If the focus is on one brand, one can nurture it better.
Whereas Britannia spends approximately 10%of its turnover in
advertisement/sales promotion. Britannia has high advertising spends for
products like Good day and Bourbon which are almost stars for the Britannia
brand. However, the investment for marketing of Dairy products is minimal
because a lot of expenses have to be done for the distribution of the products.
Britannia has enough brand and clout in the market, because of its constant
presence in the last few decades, that its product receives a natural pull from the
market. Britannia wants to make people aware of their products by putting catchy
ad campaigns and pull more consumers.
 CONCLUSION
As a conclusive note we can inferred that
➢ AMUL is the India largest milk producer.
➢ AMUL product portfolio is comprised mainly of dairy products, AMUL BUTTER,
AMUL CHEESE and AMUL ICE-CREAM.
➢ Almost every consumer of India uses Amul products.
➢ Advertisement/Sales promotion of AMUL is less than 1% of the total market spent.
➢ AMUL brings customer satisfaction on all the products at reasonable price which are
sold in the malls/markets and shops.
➢ AMUL concentrates more on umbrella branding.

BIBLIOGRAPHY AND REFERENCES

➢ http://shodhganga.inflibnet.ac.in/bitstream/10603/32575/5/07_chapter%204.pdf
➢ https://www.scribd.com/document/248686739/Amul-Transport
➢ https://amul.com/
➢ http://www.amuldairy.com/
➢ http://britannia.co.in/pdfs/annual_report/Annual-Report-Britannia-2018.pdf
➢ http://www.amuldairy.com/pdf/FY%2017-18%20Chairman's%20Speech.pdf
➢ https://www.indiastudychannel.com/resources/157161-Various-categories-of-
products-from-Amul.aspx