AMUL D AIRY

E-Commerce Case Study

Presented by:

Rajiv Bhatnagar
Chairman cum Managing Director
National Small Industries Corporation
India
 AMUL DAIRY

• The Kaira District Co-operative Milk Producers Union

Limited, popularly known as Amul Dairy is a US $ 500
million turnover institution

• It is a institution built up with a network of over 10000

Village Co-operative Societies and 500,000 plus
members
 AMUL DAIRY

• The product range includes milk, butter, cheese,

chocolates, ice creams and pizzas

• Amul has been accredited with ISO 9001 and HACCP

Certification by QAS, Australia – the first food company
in Asia and one of the 100 companies in the world to
receive the HACCP Certification
 AMUL DAIRY Contd..

• Formed in 1946, Amul initiated the dairy cooperative

movement in Indian through an apex cooperative
organization called the Gujarat Cooperative Milk
Marketing Federation (GCMMF)
• Today this movement is being replicated in 70,000
villages in over 200 Districts in India, transforming the
life of Indian villagers
• Amul was chosen to show case successful e-commerce
cases in India for setting an example for building an
online bridge to its customers
 PROBLEMS TO BE ADDRESSED
• Logistics in collection of :
– 6 million liters of milk per day
– from about 10600 separate Village Cooperative
Societies
– Approximately 2.1 million milk producing
members

• Logistics in coordination of :
– Storing the milk
– Processing the milk
– Distributing the milk
PROBLEMS TO BE ADDRESSED
Contd..
• Supplier logistics:
– Weighing the milk
– Determination of fat content
– Calculation of the purchase price

• Strong challenge from large organized dairies due to

globalization

• Considerable time (One Week) to test the milk and work

out the purchase price through pass book system
resulted in delayed payments to farmers
 THE NEED
• A need was felt to look for a strategy to make its
operations competitive and streamline the collection
and production processes of Milk products with the
help of ICT tools.

• Amul decided to leverage on the strengths of an ERP

System and took major initiatives in this direction in
1994.

• Amul studied its existing functions and operations to

formulate an IT plan for spearheading its growth in the
long term perspective
 THE NEED Contd…

• Thrust was given to integrate the existing applications

with ICT Tools through redesign/re-organisation of
existing software applications.
• The focus was to provide a seamless flow of
information leveraging for the enterprise’s decision
making process.
• Amul also recognized the need to connect its regional
and field offices through e-media.
 SHIFT PROCESS
• Company zeroed in on ERP as means to keep pace
with dynamically changing business environment.

• Tata Consultancy Services was hired to guide them in

its implementation.

• The implementation project was named as Enterprise-

wise Integrated Application System (EIAS).
 IMPLEMENTATION

• Amul started implementing the ERP in phases

• Automatic Milk Collection System units (AMCUS) at

village societies were installed in the first phase to
automate milk producers logistics.

• AMCUS facilitated to capture member information,

milk fat contents, volume collected and amount
payable to each members electronically.
 IMPLEMENTATION
Contd…

On an average, around thousand farmers come to

sell milk at their local co-operative milk collection
centre.
Each farmer has been given a plastic card for
identification.
 IMPLEMENTATION
Contd…
• At the milk collection counter, the farmer drops the
card into a box and the identification number is
transmitted to a personal computer attached to the
machine.

• The milk is then weighed and the fat content of the

milk is measured by an electronic fat testing machine.
Both these details are recorded in the PC.

• The computer then calculates the amount due to

farmer on the basis of the fat content. The value of the
milk is then printed out on a slip and handed over to
farmer who collects the payment at adjacent window.
 IMPLEMENTATION
Contd..

• Amul also connected its zonal offices, regional

offices and member’s dairies through VSATs for
seamless exchange of information.

• The customized ERP- EIAS has been implemented

across the organization integrating various
operational departments.
 IMPLEMENTATION Contd..

• In addition to EIAS, Amul is also using Geographic

Information Systems (GIS) for business planning
and optimization of collection processes.

• Indian Institute of Management – Ahmedabad

supplemented Amul’s IT strategy by providing an
application software – Dairy Information System
Kiosk(DISK) to facilitate data analysis and
decision support in improving milk collection.
 IMPLEMENTATION Contd..
• The kiosk would also contain an extensive database
on the history of cattle owned by the farmers, medical
history of the cattle, reproductive cycle and history of
diseases.
• Besides this, farmers can have access to information
related to milk production, including best practices in
breeding and rearing cattle.
• Using the same system, the farmers can even have
access to a multimedia database on innovations
captured by Srishti, an NGO working with IIMA. As a
large amount of detailed history on milk production is
available in the database, the system can be used to
forecast milk collection and monitor the produce from
individual sellers.
 IMPLEMENTATION
Contd..

• Going forward, there are plans to introduce features

like Internet banking services and ATMs which will
enable milk societies to credit payments directly to
the seller’s bank account.

• In line with this vision, officials at Amul are looking at

upgrading the plastic cards which are being currently
used only for identification purposes, to smart cards
which can be used to withdraw cash from ATMs.
 AMUL’S IT ROADMAP
• Uses automated milk collection system units for
collection of milk
• Customized ERP system which is used in
conjunction with GIS
• Use of data analysis software for forecasting milk
production and increasing productivity
• All zonal, regional and member diaries connected
through VSAT
• One of the first five Indian organization to have web
presence
• Made IT education compulsory for all its
employees.
• Opted for the .coop domain to position its brand in
a distinct way.
 REAPING RETURNS
• Radical changes in business processes - eliminating
middlemen and bringing the producers closer to the
customers.

• Improved delivery mechanisms and transparency of

business operations.

• Due to this process, AMUL is able to collect six million

litres of milk per day.
 REAPING RETURNS Contd…
• Huge reduction in processing time for effecting
payments to the farmers from a week to couple of
minutes after implementing the ERP.

• Processing of 10 Million payments daily, amounting to

transactions worth USD 3.78 million in cash.

• Controlling the movement of 5000 trucks to 200 dairy

processing plants twice a day in a most optimum
manner.

• Practicing just in time supply chain management with

six sigma accuracy.
 REAPING RETURNS Contd…

• Online order placements of Amul’s products on

the web.
• Distributors can place their orders on the website
www.amul2b.com especially meant for accepting
orders from stockists and promoting Amul’s
products via e-commerce.
• Company has started receiving queries from
overseas agents for distribution of its products in
countries like US, Britain, New Zealand,
Singapore and Thailand.
• As a result of on-line initiatives, today, Amul
exports products worth around US$ 25 million to
countries in West Asia, Africa and USA
 REAPING RETURNS Contd…

• The decision making process has rapidly

improved since real time data is available
on the click of a button.

• Easy monitoring of crucial management

practices like demand versus supply with
the help of ERP .
 ACKNOWLEDGEMENT

Matter in this study has been sourced

from Express Computers
Thank you