Supply Chain Management at GCMMF

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Case Details:

Case Code : OPER057
Case Length : 14 Pages
Period : 1991 - 2006
Organization : GCMMF, AMUL
Pub Date : 2006
Teaching Note :Not Available
Countries : India
Industry : Dairy Products

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Amul is a supply chain which has taken the form of a cooperative association. It has developed the technology and methods to store surplus stocks of milk and dairy products in the form of powered milk and to reconstitute and distribute products made from the powered milk during seasons of the year when dairy farm yields fall below demand levels."¹

- Ron Kopicki, Lead Private Sector Development Specialist, World Bank in 1999.

"Amul, the showcase for the cooperative sector in developing countries, encompasses the poor farmer with two buffaloes and world-class processing facilities and distribution system with a national and increasingly global reach."²

- CK Prahalad³ in The Fortune at the Bottom of the Pyramid.

Introduction

For Jayashree Parmar (Parmar), a 35-year-old housewife from Samarkha in Kheda District in the state of Gujarat, Western India, the day began at 5.00 am. Every morning, she collected milk from the cows her family owned and delivered it to the village cooperative society (VCS). Even at such an early hour, the society would be abuzz with activity; several people would be waiting in a queue carrying containers of milk. When it was Parmar's turn, the milk she had brought would be tested for its fat content and measured. The VCS would collect the milk and give her a slip, which she would exchange for money at the next counter. Evenings would see a rerun of the same process. She earned Rs. 120⁴ a day, a useful supplement to her family's income.

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And what was more remarkable was the fact that the milk that Parmar and others like her supplied and the products made from it, could eventually find their way to the shelves of Wal-Mart stores in the US as Amul (Anand Milk Union Limited) products. Amul, one of the most successful brands in India, was the brand name for the dairy products marketed by the Gujarat Co-operative Milk Marketing Federation (GCMMF).

GCMMF collected 5.71 million liters of milk a day from vendors like Parmar. Its revenues were Rs. 29.22 billion in the financial year 2004-05 (Refer to Exhibit I for GCMMF's revenues between 1995 and 2005).

GCMMF's supply chain activities began at the VCS where the milk was collected. Chilling units, processing plants, and packaging also formed part of the supply chain.

GCMMF with its range of products that included butter, cheese, milk powder, sweets, ice creams, and buttermilk, managed to successfully compete with multinationals like Unilever's subsidiary Hindustan Lever, and Nestlé in the Indian market.

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1] "Government Support of Efficient Supply Chains," at Regional Technical Workshop on Transport and Trade Facilitation in Bangkok, in collaboration with the UN Economic and Social Commission for Asia and the Pacific, April 19-21, 1999.

2] "The Fortune at the Bottom of the Pyramid," Wharton School Publishing, 2004.

3] Harvey C. Fruehauf Professor of Corporate Strategy and International Business, The University of Michigan Business School.

4] 1 US$ = Rs.45.02 as of April 14, 2006.