Chapter-1 Industry Profile AND Company Profile: Amul - The Taste of India

AMUL THE TASTE OF INDIA
CHAPTER-1 INDUSTRY PROFILE AND COMPANY PROFILE
SDCIMS, KOLAR-563101
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1. COMPANY PROFILE Industry Profile The Dairy Industry in the 1940s The time line was 1940s. The focal point was Rural Gujarat. At this point of time, the life of an average farmer in Banaskantha District was very much like that of his/her counterpart anywhere else in India. His/her income was derived almost entirely from seasonal crops. The incomes from milk buffaloes were undependable. Milk producers had to travel long distances to deliver milk to the only dairy in banas the banas Dairy. Often milk went sour, especially in summers, as producers had to physically carry milk in individual containers. Private traders and middlemen controlled the marketing and distribution system for the milk. These middlemen decided the prices and the off-take from the farmers by the season. As milk is perishable, farmers were compelled to sell it for whatever they were offered. Often, they had to sell cream and ghee at throw-away prices. In this situation, the private trader made a killing. Moreover, the government at that time had given monopoly rights to Polson Dairy to collect milk from banas and supply to Bombay city in turn (about 400 kilometers away). Hence, India ranked nowhere amongst milk producing countries in 1946. The Dairy Industry in the Present India with 134mn cows and 125mn buffaloes has the largest population of cattle in the world. Total cattle population in the country is an estimated 313mn. More than the transition of the Indian milk industry from a situation of net import to that of surplus has been led by the efforts of National Dairy Development Board's Operation Flood. Programme under the aegis of the former Chairman of the board Dr. Kurien. Presently the market is valued at around Rs 7,00,000 million. According to FAO estimates in last three years Indian milk production increased by 4% and world milk production
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decreased by 2%. The milk production in India accounts for more than 13% of the total world output & 57% of total Asias production.
Launched in 1970, Operation Flood has led to the modernization of India's dairy sector and created a strong network for procurement processing and distribution of milk by the cooperative sector. Per capita availability of milk has increased from 132 gm per day in 1950 to over 220 gm per day in 1998. The main thrust of Operation Flood was to organize dairy cooperatives in the milkshed areas of the village, and to link them to the four Metro cities, which are the main markets for milk. The efforts undertaken by NDDB have not only led to enhanced production, improvement in methods of processing and development of a strong marketing network, but have also led to the emergence of dairying as an important source of employment and income generation in the rural areas. It has also led to an improvement in yields, longer lactation periods, shorter calving intervals, etc through the use of modern breeding techniques. Establishment of milk collection centers, and chilling centers has enhanced life of raw milk and enabled minimization of wastage due to spoilage of milk. Operation Flood has been one of the world's largest dairy development programme and looking at the success achieved in India by adopting the co-operative route, a few other countries have also replicated the model of India's White Revolution. Today, India is 'The Oyster' of the global dairy industry. It offers opportunities galore to entrepreneurs worldwide, who wish to capitalize on one of the world's largest and fastest growing markets for milk and milk products. A bagful of 'pearls' awaits the international dairy processor in India. The Indian dairy industry is rapidly growing, trying to keep pace with the galloping progress around the world. As he expands his overseas operations to India many profitable options await him. He may transfer technology, sign joint ventures or use India as a sourcing center for regional exports. The liberalization of the Indian economy beckons to MNC's and foreign investors alike.
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Indias dairy sector is expected to triple its production in the next 10 years in view of expanding potential for export to Europe and the West. Moreover with WTO regulations expected to come into force in coming years all the developed countries which are among big exporters today would have to withdraw the support and subsidy to their domestic milk products sector. Also India today is the lowest cost producer of per litre of milk in the world, at 27 cents, compared with the U.S' 63 cents, and Japans $2.8 dollars. Also to take advantage of this lowest cost of milk production and increasing production in the country multinational companies are planning to expand their activities here. Some of these milk producers have already obtained quality standard certificates from the authorities. This will help them in marketing their products in foreign countries in processed for. Factors responsible for growth of dairy industry. Market demand factors New technology Low production cost Proper utilization of capacity Government policies. Various steps taken by government 1. De liciensing in 1991. 2. Milk and Milk Products order was issued in 1992 under Essential Commodity Act to regulate production of milk & dairy products. 3. Introduction of one time license to private sector. 4. In 2003, restriction on setting milk processing & milk product manufacturing plants & also the concept of milk-sheds were eliminated. The amended order emphasized on sanitary, hygiene, quality & food safety of milk & milk products.
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5. contract framing scheme in dairy sector & 10% reimbursement of funds invested by a processor in strengthening the weak linkage, reduction in excise duty on processed foods & reduction in corporate taxes. 6. primary dairy co- operative were exempted from paying tax, district & state level will pay 35% tax. In 2006 government reduced 10% tax for private dairy companies only. 7. Duty draw-backs at varying rate for export of some dairy commodities. 8. In 2007 government suspended export of skimmed milk powder due to domestic price rise and milk shortage as reason. It resulted into losses & it was again permitted to export from October. AMUL COMPANY PROFILE
a. Background & Inception

In the 1940s, in the district of Kaira in the State of Gujarat, India, a unique experiment was conducted that became one of the most celebrated success stories of India. At that time, in Gujarat, milk was obtained from farmers by private milk contractors and by a private company, Polson's Dairy in Anand, the headquarters of the district. The company had a virtual stranglehold on the farmers, deciding the prices both of the procured as well as the sold milk. The company arranged to collect, chill and supply milk to the Bombay Milk Scheme, which supplied milk to the metropolis of Bombay, and to cities in Gujarat. Polson's Dairy also extracted dairy products such as cheese and butter. Polson's Dairy exploited its monopoly fully; the farmers were forced to accept very low prices for their products, and the decisions of the company regarding the quality and even the quantity of the milk supplied by the farmers were final. The marketing and distribution system for the milk was controlled by private traders and middlemen. As milk is perishable, farmers were compelled to sell it for whatever they were offered. Often, they had to sell cream and ghee at throwaway prices. In this situation, the one who gained was the private trader.
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Gradually, the realization dawned on the farmers with inspiration from then nationalist leaders Sardar Vallabhbhai Patel (who later became the first Home Minister of free India) and Morarji Desai (who later become the Prime Minister of India) and local farmer, freedom fighter and social worker Tribhuvandas Patel, that the exploitation by the trader could be checked only if they marketed their milk themselves. In order to do that they needed to form some sort of an organization. This realization is what led to the establishment of the Kaira District Cooperative Milk Producers' Union Limited (popularly known as Amul) which was formally registered on December 14, 1946. The Kaira District Co-operative Milk Producers' Union Limited began pasteurizing milk for the Bombay Milk Scheme in June 1948. By the end of 1948, more than 400 farmers joined in more Village Society, and the quantity of milk handled by one Union increased from 250 to 5,000 liters a day. The success of Amul was instrumental in launching the White Revolution that resulted in increased milk production in India. It is officially termed as Operation Flood by Amul. The breakthrough technology of spray-drying and processing buffalo milk, developed by Mr. H.M. Dalaya, was one of the key factors that contributed to the Revolution. Purely by chance, in 1949, a mechanical engineer named Verghese Kurien, who had just completed his studies in engineering in the USA, came to India and was posted by the Government of India to a job at the Dairy Research Institute at Anand. Settling down in Anand was hardly a part of his career plans; however, a meeting with Tribhuvandas Patel changed his life and changed India's dairy industry. What Mr Patel requested of Dr Kurien was hardly to bring about such a revolution. All he wanted was help in solving various problems with bringing into working order some of the equipment just purchased by his co-operative, especially the chilling and pasteurising equipment. These items of equipment malfunctioned, leading to the rejection of large quantities of milk by the Bombay Milk Scheme.
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Dr Kurien's involvement with the Kaira District Co-operative Milk Producers' Union Limited (KDCMPUL; the registered name of the co-operative) grew rapidly. Initially he merely provided technical assistance in repairing, maintaining and ordering new equipment but subsequently he became involved with the larger sociological issues involved in organising the farmers into co-operatives and running these co-operatives effectively. He observed the exploitation of farmers by the private milk contractors and Polson's Dairy, and noted how the co-operatives could transform the lives of the members. In 1954, Kaira District Co-operative Milk Producers Union built a plant to convert surplus milk produced in the cold seasons into milk powder and butter3. In 1958, a plant to manufacture cheese and one to produce baby food were added. Subsequent years saw the addition of more plants to produce different products. In 1973, the milk societies/district level unions decided to set up a marketing agency to market their products. This agency was the Gujarat Cooperative Milk Marketing Federation (GCMMF). It was registered as a cooperative society on 9 July 1973. On his visit to Anand in 1965, the then Prime Minister of India, Lal Bahadur Shastri, was impressed by what he sawa system that procured, processed and delivered high quality milk to distant markets cost efficiently. Shastri could also see the difference that the income from milk had made to the standard of living of farmers in the area. What impressed him the most was that Amul had done all this without government assistance, in marked contrast to a number of government sponsored dairy programmes that were doing poorly in terms of procuring and marketing good quality milk and boosting farmers' incomes. Shastri asked Dr Kurien to replicate Anand's success all over India. A pattern similar to the Anand Pattern was to be built in other states of India. This was carried out under a programme launched by the Government of India, entitled 'Operation Flood'. The operation was co-ordinated by the National Dairy Development Board (NDDB), a body formed by the Government of India with this specific objective.
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The Amul revolution was started as awareness among the farmers. It grew and matured into a protest movement that was channeled towards economic prosperity. Hence it set an example for other co-operative dairies across the country, which is why, India has become the largest milk producer in the world.
b. Nature of the business carried

The Kaira District Co-operative Milk Producers Union Ltd. was started in 1946 with an aim of bringing together all the farmers of Gujarat to produce the best quality milk and milk products with the right value for money. The basic nature, hence, of AMUL as a whole is to produce milk products and procure milk from the farmers and market it through Gujarat Co-operative Milk Marketing Federation. GCMMF Ltd. manages the brand name AMUL and it is an apex co-operative organization. AMUL is jointly owned by 2.41 million milk producers of Gujarat. Hence it solely depends on the farmers of Gujarat for procurement of milk to produce milk products. Other than the above, it provides value added services like Cattle Feed Artificial Insemination Mobile Veterinarians Fertility Improvement Programme Productivity Enhancement Programme
c. Vision, Mission & Quality Policy

i. Vision
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a. To ensure availability and service of high-quality products at reasonable price. b. To use the brand as a contract to be honored again and again. ii. Mission We, at KDCMPU Ltd. & GCMMF Ltd., endeavor to satisfy the taste & nutritional requirements of the customers of the world through excellence in marketing by our committed team. Through co-operative networking, we are committed to offering quality products that provides value for money.
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iii.
Quality Policy The co-operative structure ensures high standards of quality with the usage of latest technology & innovations from all over the world to maintain stringent norms and policies. It has a dedicated Total Quality Management policy which leads to continuous improvement through vision, mission, strategy & Human Resource Development. Each Dairy has a dedicated Quality Control Department, to update the products and bring them to world class standard level though no Research & Development department exists in any of the dairies.
d. Product Profile
AMUL is a brand developed by the farmers of Gujarat. The basic nature of the business is to gather milk produced by the milch animals and brought in by the farmers and to pasteurize it for selling and also to make it useful for producing milk products. Hence the various diversified products are described below. i. Milk Products AMUL Gold Full Cream Milk consisting of 6% Fat AMUL Shakti Standardized Milk consisting of 4.5% Fat AMUL Taaza Toned Milk consisting of 3% Fat AMUL Slim n Trim Double Toned Milk consisting of 1.5% Fat
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ii.
Convenient Long Life Milk AMUL Gold consisting of 4.5% Fat AMUL Shakti consisting of 3% Fat AMUL Taaza consisting of 1.5% Fat AMUL Slim n Trim consisting of 0.2% Fat
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Infant Milk Food Amulspray Infant Milk Food/Infant Milk Substitute formulated on guidelines set by Codex commission of WHO/FAO
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Dairy Whiteners Amulya, the creamiest among dairy whiteners contains milk fat, protein, Lactose, Sugar & Minerals. AMUL full cream milk powder with vitamins A & D more milk fat (27.5%) as compared to normal milk powders.
v.
Refreshing Drinks AMUL Kool and Kool Caf in Chocolate, Strawberry, Pista & Vanilla Flavors AMUL Lassee flavored homogenized heat-treated Lassi AMUL Masti spiced buttermilk free of color, preservatives, acids and sucrose sugar AMUL Stamina, Instant Energy Drink contains milk solids, sugar, fruity syrup acidity regulators and vitamin C
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vi.
Butter AMUL Pasteurized Butter made from fresh cream by modern continuous Butter Making Machine. AMUL Lite Butter for the health conscious, low fat, low calorie bread spread with 26% lower fat and calorie content. Delicious Table Margarine Cholestrol free with 80% total fat, 2.5% salt and fortified with vitamins A and B
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Cheese AMUL Processed Cheese made from Cow/Buffalo Milk using microbial rennet AMUL Gouda Cheese a traditional hard cheese with a sweet and fruity flavor AMUL Emmental Cheese Cherry sized holes, Hazelnut Aroma and Vacuum packed AMUL cheese spread made from soft cheese, cheddar cheese and common salt in Yummy Plain, Patchy Pepper and Spicey Garlic Flavors AMUL Pizza Mozarella Cheese moist, soft and elastic texture and ability to form strings when hot
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Other products AMUL Fresh Cream containing 25% fat and no preservatives added AMUL sterilized malai paneer the only paneer which becomes soft on thawing AMUL Milk Chocolates, Fundoo, Bindaaz and Fruit & Nut Chocolates Nutramul, the brown beverage powder highest protein content and the only one with BIS Certification Mark
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AMUL Shakti, the health food drink, contains partly skimmed Milk Powder, Sugar, Vitamins & Minerals AMUL utterly delicious Heat & Eat Pizza ready to eat Pizza AMUL Ice-creams made from fresh milk 35% richer and creamier than prescribed standards AMUL Pure Ghee made from fresh cream rich source of vitamins A, D, E&K AMUL condensed milk Mithai Mate made from Milk Solids and sugar AMUL Shrikhand in Badam Pista, Mango, Elaichi and Kesar flavors AMUL Mithae, Khoa Gulab Jamuns just heat and eat, which remains good for 9 months at room temperature AMUL Basundi for the perfect dessert-delight concentrated milk based product with added sugar, flavors and condiments AMUL Yogi, flavored yoghurt, prepared from pasteurized tonned milk in Strawberry, Mango, Pineapple and Mix Flavors AMUL Masti Dahi the smooth flowing curds with smooth taste and pleasant flavor consistency
e. Area of operation
Though AMUL is a brand name, it is a household name throughout India due to its quality and value based products. The dairies across Gujarat State prepare different milk and milk products and GCMMF Ltd. markets them across the country and the world. So we can say, that though the operational level exists at the state/regional level, the area of operation is on a Global scale. All the states of the Indian Union have been connected to the logistical operations of AMUL and hence the supply chain management is regarded as the best in the country.
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It operates/prepares/manufactures in the 25 dairy plants of 13 District Unions in Gujarat and supplies on the national level to various retail stores across the country. Their most prestigious customers are the Indian Army. It supplies to various countries across the world like Gulf, SAARC region, USA, Singapore, Hong Kong, The Philippines, Cambodia, Japan, Vietnam, China & Australia. It also exports to African Markets like Sudan & Algeria.
f. Ownership Pattern
AMUL Anand Milk Union Limited consists of a co-operative structure, with the owners being the 2.2 million farmers of Gujarat. Hence though some people cite the structure as bottom up i.e. the farmers decide who will be the Managing Director as well as the board of directors of the company. The ownership selection process starts from the village co-operative society level and goes on to the Board of Directors Level. The process is depicted in steps as below: i. ii. iii. iv. The village dairy co-operative society is a voluntary association of milk producers; anyone owning a cow/buffalo can become a member Every member is entitled to one vote in the society The managing committee of the village society is elected by the members by taking their votes The managing committee so elected elects the chairman and hires employees to manage the society and for milk collection testing for milk fat, sale of cattle feed, etc. The total number of village societies in Gujarat hast touched 12,340 with 2.5 million members v. Primary Milk Producers Societies i.e. the village societies are affiliated to a district union for example, villages in the Kheda District are affiliated to the Kaira District Co-operative Milk Producers Union Ltd. vi. The district union owns and operates a feeder/balanced dairy plant and their main task is fixing milk prices for village co-operatives
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vii. viii. ix.
Chairpersons of village societies elect Board of Directors and the Board in turn elects the Chairman of the District Union. The unions are managed by a professional team led by the Managing Director; the number of district unions are 13 The final body is the national level federation which is the apex body of district co-operative milk unions where their main task is to market the milk/milk products of member unions
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The chairmen of the district unions are the members of the Board of Directors who elect the Chairman of the Federation. The CEO and the MD is thereby hired on a professional basis.
g. Competitors Information
There are various competitors to AMUL in various product lines; the most fiercely competed being the butter and milk segment. Some of the most bullish competitors are listed below. i. Britannia Industries Limited With the motto, Eat Healthy, Think Better, the biscuit major is a big stumbling block for AMUL in the butter and cheese segment, with its cheese products competing on the same level of AMUL. Though AMUL does not have any biscuit product lines, the quality of Britannia butter can be compared with AMUL with some critics placing the butter and cheese products high above AMULs. ii. Hindustan Lever Limited
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With the mission, to add vitality to life, meet everyday needs for nutrition, hygiene and personal care with brands that help people feel good, look good and get more out of life, this MNC is a thorn in the roses for AMUL. The only competing product from their stable is the Kwality Walls ice-creams which is actually much better than AMUL ice-creams. iii. Cadbury With the vision, Life full of Cadbury and Cadbury full of life, this chocolate major is a major competitor in the national and international markets for chocolates of AMUL. Also, it has recently locked horns with Cadbury, for the malt based drink Bournvita, though it is a long way for AMUL to gain ground to come on par with Cadbury. iv. Nestle With the motto, Good food, good life, it has competed with AMUL on the product lines of chocolates and beverages. Milo is a huge competitor along with Bournvita, to Nutramul. Essentially all Nestle chocolates are liked along with Cadbury to push AMUL out of the segment. v. Dabur With the motto, Celebrate Life, dedicated to the health and well-being of every household, this is a major competitor in the baby care and beverages segment with its baby care milk powder and its Real and Active juice products. It is a known product all over the country and provides stiff competition in spite of his questioned quality.
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h. Infrastructural Facilities
AMUL is widely known for the updated and cut-throat technological machinery it uses for its productive purposes. The following points depict the infrastructural facilities right from the village level to the dairy level. i. ii. iii. iv. v. It has 12,340 village co-operative societies, with 2.5 million members bringing in about 5.08 million liters/day. It has 25 fully functional dairies within the 13 District unions, with world class milk chilling machines and other product manufacturing machines It has 3000 automatic milk collection system units for the village unions for supply of milk twice a day They have a supply of mobile veterinarians, who reach the village for a sick animal, faster than a normal doctor does for a sick human They have artificial insemination units, which has so far succeeded in performing the best practices due to which the progeny of buffaloes have increased thereby leading to increase in milk production vi. vii. At villages they have bulk milk chilling systems to ensure milk does not get spoilt by the time it reaches the dairy for further processing The total milk handling capacity is 9 million liters per day; there are 5 plants with 1 mlpd capacity; the milk drying capacity is 600 tpd; the peak milk handled is 9 mlpd; Cattle feed manufactured is 2000 metric tonnes. viii. Huge cream silos at the Anand Dairy for making butter and storage of pasteurized milk
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PRODUCTION DEPARTMENT AT THE KDCMPU LTD. ix. x. They outsource milk from 9 dairies across the country for more milk production and processing. Each village has a small unit working depending on the size of the village, and every morning and evening, there is a line of farmers/women standing outside the unit to deliver the milk which goes into the cream remover and the pure milk goes into the special truck to be delivered to the dairy.
i. Achievements/Awards
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AMUL has a lot of achievements/awards to its credit, mostly for its uncompromising quality and superb innovations. The kudos it has received has attracted a lot of attention all over the world, and it has a subject of study at premier business schools including the Indian Institute of Management, Ahmedabad and also as a case study. The innovations include the following: Producing Milk powder from buffalo milk was the biggest achievement AMUL could ever have done, with it being the first to pursue the effort and succeed. V Kurien and H M Dalaya were the people to do it before anyone in the world; at a time when the top brass in the world was saying it was impossible Brought in new machines, and updated machinery every time at the hour of need. With such world class machinery, with the funding and support of the farmers, AMUL is where it is now.
AMUL has received various awards in recognition to its unerring commitment to customers and farmers. They are as follows: GCMMF Ltd. bagged the Rajiv Gandhi National Quality Award, 1999, in Best of All Category
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The IMC Ramkrishna Bajaj National Quality Award, 2003, for adopting noteworthy quality practices for logistics and procurement APEDA Export Award 2004-05 for best performance in exports of dairy products.
j. Work Flow Model (end to end)

The work flow model i.e. how one step in the process leads to the other can be aptly described by the diagram below. It describes the steps in the process of milk procurement, processing and production of the milk products at the Kaira District Cooperative Milk Producers Union Ltd. otherwise known as the AMUL dairy, Anand, Gujarat. The steps can be explained as follows:
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WORK FLOW MODEL AT THE KDCMPU LTD. i. The process at the village level occurs with the milch animals, farmers and village units being the main protagonists. The milk is taken from buffaloes and cows by the farmers. ii. iii. iv. The milk is delivered to the village bulk milk chilling system where it will be stored to be put onto the special trucks The milk quantity is measured as also is the fat content in the milk and the price is given to the farmer accordingly; the rate of one kilo of fat, is Rs. 255/The milk is loaded onto special trucks with cooling facility to ensure it reaches the dairy, on proper time and in proper condition
VILLAGE LEVEL PROCUREMENT OF MILK FROM VILLAGERS v. The milk truck transfers the milk procured to the dairy and the logistical part begins by unloading the milk SDCIMS, KOLAR-563101 Page 23
vi. vii. viii. ix.
The milk is unloaded, and sent it to the pasteurizer section to be pasteurized The milk is heated at 70-80C with the help of hot vapors The milk is then cooled at 3-4C for one minute The next step involves separating the milk by sending it through the separator for cream and powder preparation; here the process deviates into cream production and powder preparation
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After cream is separated from the separator, it is stored at the cream silo; half of the milk without cream separated is passed through 119C hot air and sugar & vitamins are added; the other half of the milk is sent to the refrigeration section, passed through ammonia gas and water, cooled at 3-4C
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The cream is sent to the butter blender where TATA salt and food color is added for the yellow color of butter; milk powder produced for consumption due to hot air pass and milk produced due to cooling process
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For butter, weighing & packing is done in 15 kilo capacity cartons or wrapped in wrapping machine in terms of 100g/50g/10g/5g packets and 400g tins especially for the Indian Army. For powder, it is done in terms of 1 kilo/500g/100g and for milk, it is 500g pouches
MILK RECEIVING STATIONS AND THE CREAM AND MILK SILOS AT KDCMPU LTD.
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xiii. xiv.
For all three products, price & batch numbers label pasted on all the wrapped products by the pasting machine Later GCMMF Ltd. comes into picture, and along with the Federation it markets, distributes and sells the products.
k. Future growth & prospects

The milk procurement for 2006-07 was 6.7 million kg/day thus posting a growth of 4.5% over the past year. The total sales was Rs. 42.77 billion thereby setting a growth of 13.4%. Considering this, the following points are the future prospects of AMUL. i. ii. iii. iv. To increase the membership for farmers which is as of now 2.5 million and increasing; this is being done to include all the villages A huge prospect is the development of pro-biotic products like ice-creams, etc thereby increasing market share in health products Exploring prospects of offering traditional milk products such as khoa Ensuring sale of popular products in western India to other parts too, especially South India, where availability of AMUL products are becoming less
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CHAPTER-2 McKINSEYS 7S FRAME WORK AND ORGANIZATIONAL STRUCTURE

SDCIMS, KOLAR-563101 Page 26
McKINSEYS 7S FRAMEWORK Mckinseys & Co.s 7S framework provides a useful tool for analyzing the strategic attributes of an organization. The Mckinseys consulting firm identified strategy as one of the seven elements exhibited by the best managed companies.
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MCKINSEYS 7S FRAMEWORK The figure on the previous page illustrates the multiplicity interconnection between the elements that define the organizations ability to change. The theory helped the managers thinking about how companies could be improved. It says that it is not just a matter of devising a new strategy and following it through nor is it matter to setting up new system & letting them generate improvements. The 7s model is an anthropological way to understand the culture. The model shows that corporate success requires the development of both hard Ss (Strategy, System, & Structure) and soft Ss (Skill, Staff, Shared value, & Style of leadership). It helps the leader as a Mental model to understand culture Guide for change in management strategy Tool to design initiative holistically Reminder of hard & soft assets to integrate align & measure.
The 7ss are i. Structure Strategy the route that the organization has chosen for its future growth, a plan an organization formulates to gain sustainable competing advantages.
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ii.
System--the formal & informal procedure including Innovation system, Quality control system, management information system, capital acceleration system, that govern everyday activities.
iii.
Style- the leadership approach of the top management and the organizations overall approach. Also the way in which the organizations employees present themselves to the outside world, to supplier & customer.
iv.
Staff the organizations human resources refers to how people are developed, trained, socialized, integrated, motivated & how their carrier are managed.
v.
Skill- what the company does best, the distinctive capabilities & competencies that reside in the organization.
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Shared value- originally called super ordinate goals, the guiding concept, & principles of the organizations value & aspiration often unwritten that go beyond the conventional statement of the corporate objectives, the fundamental ideas around which a business built; the things that influence a group to work together for a common aim.
MCKINSEYS 7S FOR AMUL A. Structure i. Overall Organization Structural Details
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CHAPTER-3 FUNCTIONAL AREAS
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ORGANIZATIONAL STRUCTURE OF AMUL AND THE DAIRIES
ii. Departments There are various departments across each dairy in the state. They can be described as follows Quality Control o The main purpose is to design & develop product o Also responsible for obeying government norms, label designing, rules and regulations o One person from Federation is always present at every QC o Check for quality problems in the prepared products o Check Competitors products o Checking entire chain of cold storage in market o Checking of housekeeping in godowns, temperature, quality of goods storage o Helps in government liaison o Presence of Prevention of Food Adulteration Nominee Accounts o To keep in compliance with accounting standards and procedures at every stage at every level and at each unit
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o To oversee and collect and tabulate data regarding collection of sales, billing, pricing, credit notes, debit notes, payments, carry-forwards, etc. o The people in charge are Depo Accountant in Charge and Zonal Accountant in Charge Administration o Human Resource related activities are performed here, including employees welfare, promotion, appraisal, pay hike, leave, etc. Marketing o Deals with third party, logistics, distribution, sales and marketing, promotion, pricing, etc. Co-operative Society Department o To increase number of co-operative societies in villages o To educate farmers o To support and provide animal husbandry o To support and provide artificial insemination Information Systems Division o To control the ERP system called the Entrepreneur Integrated Application System EIAS
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o Basically being the computer department; handles the technical part of the entire organization
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Purchase Department o Involved in purchasing of material, equipment and machines and other basic physical machinery requirements for daily running of the dairy
Production Department o Involved in the pasteurization of milk, processing and preparation of milk products like cream, powder, butter, cheese, etc. by a refined process and updated machinery
B. Skill The skills refer to how the training will be given to the employees. Usually the training program lasts 2 months, depending on the requirement. At GCMMF Ltd., it takes continuous training through the career. They use both on-the-job and off-the-job training. They are described as follows. On-the-job training Here two skills are imparted to the newly joined employee which are 1. Salesmanship This skill basically trains the employee on how to approach, how to open/close calls and retailing skills. He should be able to convince any retailer. The skill stresses on listening first as a more important characteristic. It stresses on paying respect and importance to indifferent people. It also pays attention for fast decision making, competitors information and environmental scanning
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2. Distributor Handling This skill develops the inner characteristic of enforcing the employees thinking, giving salespersons their space, motivate the distributors and controlling them. Off-the-job training Here two programs are held to develop the skills employee like presentations and data work. They are 1. AMUL Yatra This Yatra is a basic training program and tour to any dairy in particular for the employees to get a feel of belongingness to the organization. This includes a visit to the village society and interaction with the farmers to get a feel of the basic roots of the organization. 2. Competency Development Program This program develops the other skills like presentations and data work so each employee feels he is treated as a valuable asset to AMUL and not only GCMMF Ltd. C. Style McKinsey framework suggests that the style of working in each organization depends on the information flow from top management to bottom level and vice versa. The aspects of business most emphasized by the members of the top
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management tend to be given no attention by people down in the organization reporting relationships may also convey the style of the organization. At GCMMF Ltd. and KDCMPU Ltd., a transparency scheme is followed, wherein each employee has access to all the records of the company, and all information is shared across the wide levels of the organization. They follow the following styles: Top-Down Style This style is followed at a point when information is needed to be followed down the order, from the top brass/management to the operational level. Hence this is applied in two cases. The first is when there is a product launch i.e. a new product designed is entering the market, and as such the entire organization is familiar with the new product. The second case of the top-down style functioning occurs when, expectations of the employees are looked into, and also the survey results are tabulated and sent downwards to the operational level. Bottom-up Style This style is followed at a point when information is needed to be shared to the top management about the working of the operational level and the major problems outside the scope of the middle managers. It also is followed when the demand of certain products, have to be known. The production department sends an estimate of the number of units manufactured and thereby depending on the sales and supply, the top management makes a decision on the demand required. Authoritative Style
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This style is followed when there is aggressive participation of the top management to ensure the rules and regulations are strictly abided by, and when there is slow moving of products or when a particular product is not selling well in the market. Participative Style This style is followed in cases of problem-solving and feedback when necessary. It is actively followed during meetings when there is a major/minor decision to be taken amongst the employees to run machinery/to capture new markets/ to launch a new product. Mostly the operational level and middle level operates on participative style basis.
D. Strategy The main and core strategy of GCMMF Ltd. and AMUL on a whole is simply Value for Money Products. The reason for this is that AMUL stresses on quality rather than gaining profits. When the co-operative society started, it was clearly stated that all the profits belong to the farmers and other milk providing members. This was due to Tribhuvandas commitment to the farmers, and his unwavering maintenance of the fact that this would be an organization with quality as the sole motto. As the motto reads, The taste of India, it stresses on the taste and nothing else. As far as certain product lines are concerned, like butter and milk, AMUL is unrivalled due to its continuous research and quality control. It has so far ensured the prices remain at a low rate, for even the basic consumer. The price for a milk packet of AMUL Taaza of 500g is around Rs. 8.50 which is affordable for any level of consumer. The popularity of the product solely depends on the quality hence
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AMUL has a separate TQM policy of maintain records of quality control and working in tandem with the QC department. The farmers are directly involved in the process, which makes no flaw in the taste and experience. The AMUL ready-to-eat pizzas, were an instant hit in Ahmedabad and various cities across Gujarat, when it was launched. At a rate of Rs. 10/- per pizza, it penetrated the market fiercely and thereby edging out the local competitors, hence leading to a price war. The strategy here was simple, value for money, as the pizza was meant for stop-and-go food, and it was tasty. This was the same case with AMUL ice-creams in the party pack and family pack segment. The rates were pretty cheap compared to Kwality Walls and Vadilals ice-creams, which led to people citing low prices and quality as picking AMUL for the ice-creams. Another important product, was the cheese based one. The advertisement, Amul Cheese Yes Please was a national hit, and led to extensive rethinking of strategies for the leading MNCs including Britannia. This was because the value for money was ensured to the consumers and the lingering taste invoked the consumers to buy more of the same product. E. System The various systems developed in the course of the growth of AMUL have been a source of inspiration for other co-operative structures or rather a good example for them. Some of the important systems developed at AMUL are as under i. Inventory Control System ii. Order Execution System iii. EIAS Entrepreneur Integrated Application System iv. Distribution System
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Out of these, the distribution system was studied to the last detail. It is described below.
Distribution System This system is applicable to the city of Ahmedabad on a whole, and to some extent, the neighbouring districts of Vadodara, Surendranagar, Himmatnagar, etc. a. There are four godowns of AMUL at Ahmedabad namely, Security, Bhoomi, Sachin & Padmavadi. Security is based at Narol village, Bhoomi and Sachin at Aslali village and Padmavadi at Naroda village. b. Sachin and Padmavadi are cold storage warehouses storing Butter, Cream and Shrikhand. Security and Bhoomi are warm storage warehouses storing Cool Drinks, Tetrapack Milk, Amul Masti, Powders, etc. c. The Manufacturing date & date of expiry is necessary to be considered. d. GCMMF Ltd. gives an order to Godhra town warehouse; while ordering Delivery Number is to be given, which comes from Anand Headquarters e. If goods are available, then an invoice number is made, and goods are dispatched to Clearing and Forwarding Agents. f. Goods are received till octroi post, where the octroi has to be paid. Octroi is levied only on flavored substance. So for 1200 boxes, 3% octroi is levied.
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g. Goods are received at Security warehouse. An entry is to be made into the incoming register. h. Any cases of defective products, the particular batch is not to be sold, and the batch number is noted down i. Requirement for Security is decided at GCMMF Ltd. and if it requires 100 cartons, then a bill of 100 cartons is made. Information is given to Security and Bhoomi and transporters are contracted. j. Two duplicate copies of the bill is filed with Mr. Simon, the warehouse-in-charge and C & F employee goes to take invoice from GCMMF Ltd. transporter makes an Lorry Reciept. k. Transporter reaches where the stock is more in accordance to whom the bill is made l. He pays octroi and goes to Security Warehouse with Lorry Reciept m. A duplicate copy is served to the transporter and the entry is made in the dispatch register for outward dispatch. F. Staff The staff of AMUL as an organization is huge, concerning the 13 district unions covering 25 dairies. The staff is described as under in the various levels.
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CONSUMERS 10 MILLION HH
2.5 MILLION FARMERS
THE STAFF/MEMBERS OF THE ORGANIZATION
GCMMF Ltd. has 750 employees across the accounting, marketing, personnel departments. It is such a vast organization and it is surprising to know that only 750 employees handle the workload of 25 state-of-the-art dairies across 13 district unions.
There are 13 member unions at the district level, with 10,000 employees There are 3,600 distributors handling AMUL products and storing and distributing them There are 400,000 retailers selling AMUL products to 10 million households There are village co-operative societies in the number of 10,000 and above 5000 employees The owners, the farmers are 2.5 million in number, and still increasing.
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G. Shared Value AMUL has so far always promised on its values and has delivered on time, value for money products. The shared values can be described below: Customer Orientation AMUL always focuses on the customer, hence it has opened the AMUL dairy at Anand from 3 P.M. to 6 P.M. solely for visitors/customers/farmers to have a look at the world class dairies. Commitment to producers Quality ensured Innovation all the way
o Creation of AMUL butter girl in 1966 o Topical tone from 1967 o Starting Amul Preferred Outlets to come closer to the customer Co-operative structure maintained Excellence in production and delivery Leadership maintained; no autocratic situations Sense of belongingness maintained Employees have pride in working for organization Employee Satisfaction
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CHAPTER-4 SWOT ANALYSIS

SWOT ANALYSIS Strengths o Sizeable population of cows & buffaloes o Huge domestic market for products o Absolute Monopoly in traditional milk products o Market leader in major milk & milk products like cheese, dairy whiteners & icecreams o Availability of all kinds of machinery and equipment at most competitive rates in the world o Excellent network of Artificial Insemination Centres in the world o Good infrastructural and institutional support for dairying
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Weaknesses o Co-operative structure - complexity o Not more than 12% dividend o Fights between district unions o FIFO not handled properly o Financial benefits not available o Socio-cultural constraints on culling on less/non-productive animals o Competition between man & animal for scarce land & water resources o Government working is seen all departments
Opportunities o Global markets like Africa, South America o Rural markets for sale of cheese and related products o Potential for increasing the productivity of milch animals o Scope for reforms by restructuring Animal Husbandry Departments in states o Good scope for privatization of animal health care services in selected areas
Threats
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o Unregulated competition from national and multinational private companies o Dumping of cheap dairy products on Indian markets by developed countries o Unethical practices by unscrupulous private dairy operators o Inadequate public and private investment in modernization of the sector
CHAPTER-5
FINDINGS CONCLUSIONS SUGGESTIONS AND RECOMMENDATIONS
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CHAPTER-6 BIBLIOGRAPHY
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wikipedia.org www.amul.tv www.amul.com Case studies from Indian Institute of Management, Ahmedabad Online Resource Centre The story of AMUL Manthan the movie Mamooliram the small big man, a movie about Verghese Kurien
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Chapter-1 Industry Profile AND Company Profile: Amul - The Taste of India

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