SUPPLY CHAIN AND PRODUCTION PROCESS OF OMFED BHUBANESWAR

A report submitted towards the partial fulfillment of the requirements of the two years full-time Post Graduate Diploma in Management. Submitted to: Submitted by: Debidarshini Nayak Post Graduate Diploma in Management Roll No.: 2k11b38 Session. : 2011-13 S

ASIA-PACIFIC INSTITUTE OF MANAGEMENT 3, Institutional Area, Jasola, New Delhi -110025

SUPPLY CHAIN AND PRODUCTION PROCESS OF OMFED BHUBANESWAR

A report submitted towards the partial fulfillment of the requirements of the two years full-time Post Graduate Diploma in Management.

Submitted by: Debidarshini Nayak Post Graduate Diploma in Management Roll No.: 2k11b38 Session. : 2011-13 Under the guidance of Mr. P.C.Jena Corporate Guide Omfed, Bhubaneswar Mr. Ratnesh Kumar Faculty Guide APIM, New Delhi

ASIA-PACIFIC INSTITUTE OF MANAGEMENT 3, Institutional Area, Jasola, New Delhi -110025

DECLARATION

I do here by declare that this submission is my own work and to the best of my knowledge and belief, it contains no material previously written by another person nor material which has been accepted by the award of any other degree or diploma of the university or other institute of higher learning, except where due acknowledgement has been made to the text.

I also declare that, as required by project rule and conduct, I have fully cited and referenced all materials and results that are not original to this work.

DEBIDARSHINI NAYAK

Roll No.: 2k11b38 Session.: 2011-13

Project title: Supply chain and production process of Omfed, Bhubaneswar

(Signature of Student)

ACKNOWLEDGEMENT

It gives me immerse pleasure taking the opportunity to acknowledge all those whose guardians, emotes and encouragement served as platform for me to this summer project. I do here by express my sincere thanks to Mr. Ratnesh Kumar, Faculty Guide, Omfed, Bhubaneswar, for his active guidance and cooperation in this project work. His guiding words are always a source of inspiration for me. I would also like to thanks Mr. P.C.Jena, Company Guide, Omfed, Bhubaneswar for his inspiration and support throughout the project work. Last but not the least I would like to thank my friends and my wings mates from Omfed, Bhubaneswar who provided me with helping hands and rendered me with their suggestions from time to time. Finally I would like to express my sincere gratitude to my parents for their support and encouragement.

DEBIDARSHINI NAYAK

Roll No.: 2k11b38 Session.: 2011-13

CONTENTS
1. INTRODUCTION

1.1 1.2 1.3 1.4

2.

Brief about the Project Objectives of Project Scope & Uses of project Justification/Relevance of title

PROFILE OF ORGANISATION

2.1 Detail about the organisation 2.2 Development of organisation 2.3 Nature, Structure and Characteristics organisation 2.4 Performance of organisation
3. DETAILS ABOUT THE PRODUCTS, MARKET AND INDUSTRY

3.1 Nature & Characteristics of Product 3.2 Performance of product in the Market & Industry 3.3 Comparative Analysis of Product in the market and Industry
4. REVIEW OF LITERATURE

4.1 Review of document and literature of Company. 4.2 Review of document and literature of similar firm and/or market from secondary data source. 4.3 Review of article related to the project. 4.4 Critical analysis of review and derivation of facts

5.

METHODOLOGY OF PROJECT 5.1 5.2 5.3 5.4 5.5 5.6 About methodology of current project Period of study Types of Data Sample Selection, Sample Design, Sampling area, Sample size Methods of Data Collection - Primary and/or Secondary Techniques/Tools used in classification & analysis

6.

CLASSIFICATION AND ANALYSIS OF DATA.

6.1 Classification of Data 6.2 Analysis of Data 6.3 Findings of study

CONCLUSION OF THE PROJECT 8. RECOMMENDATION TO THE COMPANY

9.

BIBLIOGRAPHY OR REFERENCES

INTRODUCTION

1.1 Brief about the Project:The concept of dairy plant was to integrate the milk producers in rural area with consumers in the urban area, and to give value of their work. Now in current position 13 districts have active OMFED dairy plant.

Milk co-operative have successfully held the dairy development in India. This development would touch lives of 80% of Indias Population comprising hard working but poor farmers. India also has the largest populations of animals producing milk in the world. Yet the milk production per animal is far less. Farmers sell the milk though local milk vendor or middlemen. These tenders have always exploited the poor uneducated milk producers. Most of the dairy farmers live villages. They are organized into Milk Producers Cooperatives Societies (MPCS). The MPCS collects milk from farmers, tests it for milk content, and sends it to a milk union. An MPCS in Orissa collects typically between 50 to 500 liters of milk per day. The numbers of farmers varies from 30 to 200. All members dont supply milk on all day. This is partly because a cow does not give milk throughout the year. The farmers are required to supply only the surplus milk after consumption. If they wish to sell milk in the open market, then they may do so, but in that case they will have to leave the cooperatives.

A milk union (MU) collects milk from the MPCS, and processes it and sells to consumers or sells it to OMFED. The area of operation of a milk union is one or more districts.IN 2003 the milk bought by milk union varied between 60,000(Cuttack) and 50 (Kandhamal). OMFED buys milk from the milk union, process it and supplies to retailer. At the beginning of 2003 less than half of the 30 districts were supplying milk to OMFED. From 1993-2003 milk sale did not show decline. On the other hand sale of milk rose from marginally from 70,000 LPD to 1, 00,000 LPD. This is possible because OMFED was buying milk power from outside and was reconstituting milk by adding water to it. It did not have to deal with the highly perishable liquid milk and the fluctuation in supply of raw milk by farmers and demand from urban consumers.

PROFILE OF ORGANISATION

2.1

Detail about the Organization:OMFED stands for The Orissa State Co-operative Milk Producers Federation Limited. When integrated approach of dairy development based on farmers milk co-operatives were first adopted at ANAND. The system includes milk production, procurement, processing and marketing through farmer co-operatives. When the then Prime Minister, Shri Lal Bahadur Sastri visited Kaira district in 1964, he studied the Amul cooperatives and compared it with other Government milk schemes set up all over the country and decided that AMUL should be replicated nationally. Thus the National Dairy Development Board (NDDB) was set up in 1965. And OMFED was established in Orissa during the operational flood programme II, which was launched under the NDDB implemented in the state of Orissa from 1980, initially covering 4 districts i.e. Cuttack, Puri, Dhenkanal, Keojhar. The Orissa state Co-operative milk producers federation came into being from the year 1980-81, after taking over the Phulnakhara dairy and the functioning was started from 26 January 1981.

SALIENT FEATURE OF OMFED DAIRY:INSTALLED CAPACITY- 50,000 LITRES PER DAY PROJECT EXECUTED BY-NATIONAL DAIRY DEVELOPMENT BOARD INITIAL PROJECT COST- 66.80 LAKH EXPANSION PROJECT COST- 1.5 CRORES TRIAL RUN STARTED ON -1ST JANUARY, 1990 MARKETING AREA- SAMBALPUR, BURLA, DEOGARH, RENGALI, REDHAKHOL, BARGARH, PADAMPUR, SONEPUR, TITILAGARH, NUAPADA MILK SHED AREA- DEOGARH, SAMBALPUR, BARGARH, BOLANGIR

SL.NO 01 02 03 04 05 06 7 08 09 10 11 12 13

DESCRIPTION S.S. Storage tanks Pasteuriser Homogeniser Tripurpose separator Reconstitution tank Packaging unit Refrigeration compressor Air compressor D.G sets Boilers (coal fired) Bore well Substation Effluent treatment plant

QUANTITY 06 02 01 02 01 04 05 02 02 02 02 01 01

CAPACITY 50,000 Lts 2,000 LPH each 2,500 LPH 2500 LPH, 2000 LPH 1000 Ltrs 5000 Ltrs/ hr 30 Ton 06 M3/Hr 63 KVA/ 50 KVA 300 kg/ hr 800 LPH each 200 KVA 30000 Ltrs

2.2

Development of the Organization:OMFED was established in Orissa during the operational flood

programme II, which was launched under the NDDB implemented in the state of Orissa from 1980, initially covering 4 districts i.e. Cuttack, Puri, Dhenkanal, Keojhar. The Orissa state Co-operative milk producers federation came into being from the year 1980-81, after taking over the Phulnakhara dairy and the

functioning was started from 26 January 1981. Milk purchase from farmers more or less stagnated in the long-term perspective. Milk purchase by OMFED from farmers declined between 1993-1996, 1997-2000, and 2001-2003. These are the macro indicators. He micro details are more disturbing. On Saturdays and Sundays, Messages went to the MPCS through MU that supply of milk should be reduced because sell of the milk declines on these days. The reason is that these days are holidays for salaried employees, and they were the major consumers of milk from tea shops. In short bulk of the OMFED milk went to tea shops or making tea and not to consumers of milk. Throughout this decade, milk sale did not show any decline. On the other hand sale of milk rose marginally from 70,000 LPD to 1, 00,000 LPD. This was possible because OMFED was buying milk power from outside and was reconstituting milk by adding water to it. This was a safe financial arrangement for OMFED, it did not have to deal with the highly perishable liquid milk and the fluctuation in supply of raw milk by farmers and demand from urban consumers. In June 2003, it was decided that milk holidays are abolished. This was also published in the newspapers. A lot of people working in other area were moved out to marketing. Most of the managers felt that OMFED is going to incur loss.

 It was decided that surplus milk will be sold outside the state even after incurring a loss. It was estimated that there will be a surplus of 30,000 LPD.
The new order was: We do not have to make profit out of every

liter of milk. We will make profit in case of 1,00,000 liters and incur loss in case of 30,000 liters. This has been going on in OMFED, and was not particularly introduced after 2003. There were few changes like curd which cost Rs.30 per kg earlier is now Rs.20 per kg. The new curd in pouches, an entire in-house innovation of OMFED has practically no free lactose. Besides, this is aseptically packed and fermented.

The following graph bears testimony to the success of the new product

250 200 150 100 50 0 200 1-200 2 200 2-200 3 200 3-200 4 200 4-200 5 200 5-200 6

X-axis represents as years. Y-axis represents the no of products.

The procurement in these districts at the time of takeover and in 2005 October is tabulated below.

Milk union CUTTACK PURI DHENKANAL SAMBALPUR GANJAM KEONJHAR BALASORE

2003 LPD Milk solids

2005 LPD Milk solids

75914 17598 2014 26306 3840 5070 3330

9792 2253 257 3367 480 639 413

100836 23819 2445 35358 5795 5945 9759

13008 3049 308 4526 724 749 1210

2.3

Structure and Characteristics organisation

EMPLOYEES HIERARCHY IN THE ORGANISATION

General body Board of Directors Chairman Managing director Chief General Manager General Manager Deputy General Manager Manager Deputy Manager Assistance Manager Junior manager Site Engineer/Supervisor Assistant/Marketing Assistance Mechanical Grade-I Typist/Junior Plant Operator Attendant/Helper NAME OF THE UNITS HEADS AND PERIOD OF THEIR WORKING
SL.NO NAME OF THE UNITS NAME OF UNIT HEADS DESIGNATION

1 2

Bhubaneswar Dairy OMTDC

3 4 5 6 7 8 9 10 11 12

OMPAC Dhenkanal Dairy Balasore Project Berhampur Dairy Keonjhar Dairy Rourkela Dairy Bhabanipatna Dairy Central Dairy, Jeypore Sambalpur Dairy Cattle Field Plant

LIST OF DAIRIES AND ITS CAPACITY

NAME OF DAIRY
BHUBANESWAR ROURKELA SAMBALPUR DHENKANAL KEONJHAR BALASORE BHABANIPATNA JEYPORE RAYAGADA BEHRAMPUR 3,00,000 1,00,000 60,000 20,000 30,000 60,000 10,000 30,000 20,000 50,000

CAPACITY(LPD)

NUMBER OF BRANCHES AND PLACE OF FUNCTIONING

SL NO 1 2

NAME OF BRANCH UNIT Bhubaneswar Dairy

OMTDC

: :

PLACE OF FUNCTIONING Chandrasekharpur, Bhubaneswar Jaganathapur, Blianta

3 4 5 6 7 8 9 10 11 12

OMPAC Dhenkanal Dairy Balasore Project Berhampur Dairy Keonjhar Dairy Rourkela Dairy Bhabanipatna Dairy Central Dairy, Jeypore Sambalpur Dairy Cattle Field Plant

: : : : : : : : : :

Samantarapur, Bhubaneswar Baladiabandha, Govindpur, Dhenkanal Januganj, Remuna square, Balasore Ankushpur, Berhampur Silisuan, Keonjhar Near air strip, Rourkela Bhabanipatna, Kalahadi Umuri, Jeypore Gosala Chowk, Kalamati,Sambalpur Radhadamodarpur, Athagarh, Cuttack

Physical Achievements of Omfed as on March 2012

Sl. Particulars No. 01 Organized D.C.S. (No.) Farmer Membership (No.) Milk Procurement (KPD) 1339 1358 1415 1430 1483 2069 2604 3377 3822 4387 4625 4684 4835 5022 199899 19992K 200001 200102 2002- 200303 04 200405 200506 200607 200708 200809 200910 201011 201112

02

10153 11129 11513 14345 22400 24429 105287 112934 166135 204013 236199 246410 253343 260611 6 2 1 7 2 5

03

72650 70740 93929 105746

10659 13867 26654 29882 188965 249369 288270 294383 342663 370179 9 3 8 3

SALE OF MILK & MILK PRODUCTS

Particulars Sl.NO 1998- 1999- 2000- 200199 2K 01 02 200203 2003- 200404 05 200506 200607 200708 2008- 2009- 2010- 201109 10 11 12

01

Milk Sale (LPD)

99941

99170

10383 1

10593 4

118299 148390

17427 2

195009

22660 8

252400

27739 4

34189 0

38030 420100 2

02

Ghee Sale (MT)

358.34 346.77 443.39 435.54 306.56 327.96 367.38 389.61 309.91 577.49 433.52 447.824 403.704 395.334 0 0 6 7 2 8 8 0 6 9 2

03

SFM Sale (Bottle)

34529 6

33100 2

58119 4

11781 13266 1667009 72 67

15103 14764 16359 1621766 1579778 84 38 86

19509 06

20137 190875 57 6

04

Sweet Curd sale (MT)

123.19 141.59 307.17 338.11 283.91 348.58 596.83 739.10 585.75 645.65 727.39 372.252 547.296 752.290 6 7 6 5 2 1 9 5 0 9 1

05

Butter Sale (MT)

10.996

5.499

5.770

5.155

3.442

6.831

8.453

10.030

6.879

11.147

12.160

6.843

8.153

5.69

06

Plain Curd Sale (MT)

4.856

25.660 80.309

145.99 596.38 1388.6 2265.85 2374.1 2870.88 3802.1 5522.0 7469.9 6888.8 319.647 3 8 00 0 83 6 26 73 49 53

07

Butter Milk (Pkts)

55958

42510 7

84846 4

13785 17559 2043340 58 08

19473 33646 59471 4176558 4545185 90 84 18

74920 35

77755 561057 00 2

08

Paneer (MT)

2.199

1.530

1.880

11.788 155.203

198.57 304.25 231.39 545.81 464.98 510.62 411.67 352.045 332.042 6 6 2 1 3 3 1

09

Chhenapoda (MT)

0.000

0.000

0.000

0.000

46.841

48.810 41.976

32.828

16.400

17.073

38.732 79.893 47.474

33.956

10

Lassi (Pkts)

214510

54978 8

71321 15036 24789 1382556 1886983 4 06 10

39203 00

49129 560115 00 3

DETAILS ABOUT THE PRODUCTS, MARKET AND INDUSTRY

3.1

Nature & Characteristics of Product

The Orissa State Cooperative Milk Producers' Federation Limited

(OMFED) is an apex level Dairy Cooperative Society registered under

Cooperative Society Act 1962. It has come into existence to integrate the milk producers in rural areas with consumers in the urban areas with an enterprising aptitude. OMFED's main activities include promoting, production,

procurement, processing and marketing of milk & milk products for economic development of the rural farming community in Orissa.

MILK AND MILK PRODUCT SOLD BY OMFED

Full cream milk Toned milk Double toned milk Flavored milk Ghee Sweet curd Plain curd Table butter Butter milk Paneer Lassi

Product added during 2003-04

Kheera Khua Chhenapoda

 Whipping cream Sugar free tomato sauce Lemon ginger

Product added during 2004-05

Strawberry flavored milk Palm milk Chocolate milk Sweet curd Plain curd Rasabali Pickle in 5kg jar Mustard sauce

3.2

Performance of Product in the Market & Industry