Sales and Distribution network of

Amul
Submitted by: Group 2

Overview
The Brand Amul is owned by The Gujarat Cooperative Milk Marketing Federation.

GCMMF is Largest Food Products Marketing organization of India, with a revenue of $1.5 Billion.

It links 2.9 Million Village Milk producers and 15,322 Cooperative Societies across 13 Districts to milk and dairy consumers across India.

White revolution of India was an initiative under the Umbrella of Amul.

Amul sells its products around the world in 40 countries.

Key Elements of Business Model

Operations that are low cost, high quality and high efficiency (Competitive Edge).

Strict margins at retail and distribution ends, utilizing economies of scale to remain competitive.

High Sharing of profits with Farmers, to develop long-term relationships with them.

Product Classification

Dairy Products Butter Cheese VHT Kool Frozen Paneer Ice Cream Liquid Milk

Different Products for different people

 Product for youth Amul launched Chocolate milk under brand name of Amul Kool Koko targeting the youth.  Product for diabetic people Indias First Pro-Biotic Wellness Ice cream & Sugar Free Delights For Diabetics  Product for the health conscious Amul Launched low fat, low cholesterol bread spreads  Product for the price sensitive India Low Priced Amul Ice Creams and affordable sagar whitener  Product for the urban class Amul launched emmental, gouda and pizza mozzarella cheese Thus Amul ensures that it caters to the need of every segment of the market

Supply Chain at Amul

Farmers 2.1m households VCs 11,000 MUs(13) 12000 employees

Out of the entire milk procured, approximately 40 per cent is sold as liquid milk and 60 per cent is converted to value added products.

GCMMF

Consumers

Retailers 500,000

Distributors 3,666

GCMMF = Gujarat Co-operative Milk Marketing Federation; MUs = Member Unions; VCs = Village Co-operatives.

Distribution Channel
Amul products are available in over 800,000 retail outlets across India through its network of over 5,000 distributors. First Leg From manufacturing units to Depots: Amul has 65 depots across major cities of India. Second Leg From Depot to Wholesale Dealers: Amul has a network of over 5000 distributors . The margins offered to the distributors range between 35%.On every crate there is a margin of Rs 5.5 . Third Leg - This is the flow of good from WDs to retailers, a beat plan is prepared and transportation is done on auto rickshaws, rickshaws and bicycles.

Distribution Contd..
Wholesale dealers 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 dealers' return on investment (ROI) All GCMMF branches engage in route scheduling and have dedicated vehicle operations If product crosses the shelf life, the retailer bears the costs. If the product gets spoilt during the transportation or if there is any customer complaint, Amul bears costs. Unsold goods are not returned to the manufacturer. No reverse logistics

Assets in Distribution
With 40 product categories 300 stock keeping units 47 depots 100,000 retailers with refrigerators 18,000-strong cold chains 500,000 non-refrigerated retail outlets Decentralized facilities

Expanding Reach

Amul Parlors

Amul parlors have been classified into 5 categories: Centre for excellence On the move Amul Parlors: Fully owned by Amul Amul Preferred Outlets : Franchise Scooping parlors

Other Outlets
Caf Amul for urban areas At various kirana shops and retail outlets.

 Amul has used all the available channels to sell its products.  So its distribution channel can be termed as extensive.  Company constantly explores the new innovative channels like Amul Parlors.  The main objective of the company is to ensure availability of its product at every corner of the country.

OBSERVATION
The companys strength is more in its procurement then in its distribution Amul has loyal cooperatives that provide milk only to them, over time the relationship of trust has built up with these people that amul leverages now Transport channel is another strength as the transporters have grown with the company overtime the bonding with them enables the company to give least margins when it comes to the distributors in the industry, lowering the costs. The company believes that there is an ongoing demand in the market and therefore no promotions are needed to increase the sales, also the fact this would affect the cost of the product the company doesnt undertake many promotion schemes.

CONT
The not being a profit driven organization, is able to provide products at the least price in the industry, and is able to give least channel margins as the channel members earn through volumes and not through high margins. The company is enabled to push its new products into the market by hooking them onto the fast moving products like Amul butter; they force the channel members to carry the new products as well.

Suggestion
 Amul should go in for exclusive outlets in at least all the shopping malls coming up these days and any location where footfalls are large in number. The advantages of this channel will be:  Full range display  Easier to promote new products  Easy to push impulse purchase products  Brand building will be facilitated  Pushcarts should be increased in number in order to increase the market reach this can provide with very effective channel for ice creams and flavored milks.

CONT .
Trade promotion should be formulated for newly launched products instead of just tagging them onto best sellers. In order to motivate the channel members it is also very essential for the company to increase the margins for the hard selling items e.g. Amul dahi where it faces competition from Nestle & Mother dairy. In order to remain sensitive to market demand, it is essential for the company to place additional salesmen on the field since the brand as such commands a high demand in the market but fails to match it with the supply.