Sales and Distribution Management of Amul
Post on 02-Nov-2014
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Group 6:
Swapnil Jindal
Mohit Johri
Souvik Roy
Pravesh Dhavale
Abhinav Shekhar
Sales & Distribution Network
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 2.8 Million Village Milk producers and 13,141 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.
Collects more than 5 lacs litres of milk from >2 million farmers everyday
Delivers goods worth Rs 6 crore to over 5,00,000 retail outlets across country
Aim is to transform lives in rural India & contribute to development of society.
Amul’s advertising and marketing spend has never exceeded 1% of its revenues.
Distribution & value-for-money are the major strengths on which the brand’s popularity rests.
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 Portfolio
The Channel Network
Procurement Channel
(Upstream Flow)
Dairy cooperative society at village level
Member union at district level
Milk federation at state level
Procurement Network An average of 1,000 Farmers sell milk at a Local
Cooperative society.
Each Farmer has plastic cards for identification.
The Identification Number is fed into a computer.
The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine.
The Computer then calculates the amount due to a farmer on the basis of the fat content in the milk.
The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window.
Village Dairy Cooperative Society (VDCS) Collection of surplus milk & payment based on
quality & quantity.
Providing support services to the members.
Selling liquid milk for local consumers of the village.
Supplying milk to the District
Milk Union
Member Unions or Depots Procurement of milk from the VDCS
Providing input services to the producers.
Conducting training on Cooperative development
Providing management support & regular supervision to the VDCS.
Establish Chilling Centers & Dairy Plants for processing the milk.
Selling liquid milk & milk products within the District.
Process milk into various milk & milk products.
Decide on the prices of milk to be paid to milk producers.
Distribution channel (Downstream Flow)
First leg Manufacturing units to company depots using 9 and 18 MT trucks
Amul has 65 depots across major cities of India
Frozen food-below 18C
Dairy wet-0-4C
Second leg Depots to Wholesale Dealers
Network of over 5000 distributors
The margins offered to the distributors range between 3-5%
Wholesaler incentives – yearly set group targets, on achieving which they get some amount on every additional kg sold
Transport through insulated 3 and 5 MT TATA 407’s
Third leg WDs to retailers
Transport through rickshaws according to the beat
plan
Milk procured twice a day.
Payment is made under twelve hours of procurement.
The C&F agents are not fixed and are decided by the local company offices.
The milk procured per day is 5 million liters
Total capacity of operation is 7 million liters per day
The peak processing till date has been 6 million liters per day
These co-operative societies are bound to supply there produce only to GCMMF
Channel Management
Authentication by way of identity.
Proof of solvency-details of the bankers.
Safety of inventory by getting the company stock insured.
Proper storage space in forms of refrigerators.
The company requires the dealers to furnish any Advertising & Sales initiative undertaken by them on behalf of the company.
Selection Criteria for the Channel Members
Details of delivery vehicles.
Competent salesman.
Details of the product kept of other companies have to be provided.
Dealers of the company must carry a good reputation.
Market coverage of distributors need to be defined.
1. Distributors
Margins
Trade marketing
Total quality management
Vision and mission statements
Amul yatras
2. Retailers
Trade schemes
Glow boards
Schedule of the salesman
Infrastructure of facilitation
Motivation of Channel Members
Beat plan
Cumulative performance
Target versus achievement
Other criteria
Evaluation of Channel Members
• Ownership of assets
• Stocking issues
• Replacement of products
• Credit policy
• Packaging
• Replenishment
• Margins
Conflicts among channel members
Amul quality circles
Pilot salesman scheme
Scheduling of sales
Agreement defining rights
Cooperation among channel members
Service Output Demanded
Product LineLOT SIZE ASSORTMENT/
VARIETYDELIVERY/ WAITING TIME
Kids Women Youth Kids Women Youth Kids Women Youth
Ice CreamL H L L H M NA H M
ChocolatesL H L L M M NA H M
BeveragesM L L M M L NA H H
Fresh MilkH H L L M L NA H M
Milk PowderL H M L H M NA H M
CheeseL H M M H L NA H M
Bread SpreadH L L L L L NA H H
GheeH H M L H M NA H M
Corporate Office Functions Marketing of milk & milk products.
Establish distribution network.
Arranging transportation from the Milk Unions to the market.
Creating & maintaining a brand.
Providing Technical Inputs, management support & advisory services.
Decide on the products to be manufactured at various Milk Unions (product-mix).
Conduct long-term Milk Production, Procurement, Processing & Marketing Planning.
Conflict Resolution & keeping the entire structure intact.
Policies Differential Prices: Lower prices in state of Gujarat due
to less transportation cost. Unused Milk: Milk, once, supplied to retailer is not
taken back. Amul adopted a low-cost price strategy to make its
products affordable. GCMMF transacts on an advance demand draft basis
from its wholesale dealers instead of the cheque system
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.
Effective coordination is critical for efficiency and cost control.
Buy-in from the unions is assured as the plans are approved by GCMMF's board.
The boards of the unions comprise of farmers elected through village societies
Marketing efforts are assumed by GCMMF.
Logistics of milk collection, distribution of dairy products, sale of products through dealers and retail stores, provision of animal feed, and veterinary services were done by 3rd party
Coordination & 3rd Party Services
Establishing Best Practices The federation and the unions have adapted
successful models from around the world including group activities, quality circles at the federation.
Every Friday, between 10.00 a.m. and 11.00 a.m., all employees of GCMMF meet at the closest office to discuss their various quality concerns.
Examples of benefits from recent initiatives include reduction in transportation time from the depots to the wholesale dealers, improvement in ROI of wholesale dealers, implementation of Zero Stock Out.
• Retailer Forecasting.
• Backend Data.
• Festivals and Special Occasions.
• Seasonal demand.
Sales Forecasting
Communication & Advertising Corporate campaign: The Taste of India
Amul butter girl is one of the longest run ad campaigns in the country (44 years!!!)
Umbrella Branding
Institutional Advertising
Controversial issues and Social Messages
Amul Greetings
Newsletter and publication
Competitions , Recipes, Cricket Rankings
Media
• Hoardings/billboardOutdoor
• TelevisionBroadcast
• CinemaNon-broadcast
• Newspaper• General interest magazinePrint
• Independent website• Social Networking SitesInternet
Recruitment & Selection
Recruitment forms the first stage in the process.
Selection and placement of the Sales force in the company.
The selection process starts with the intent for recruitment by the sales department head.
These intents specify the reasons why recruitment is to be made.
Requirement for Recruitment
New expansion
New planning
Retirement
Recruitment @ Amul
Internal Sources
Present permanent employee
Employee Referrals
Former Employees
External Sources
Advertisement
Campus recruitment
Employment exchange
Unsolicited applicants
Sources of Recruitment
Application
Initial interview of the candidate
Employment tests
Interviews
Checking references
Physical / Medial examination
Final interview
Induction (Internal & External)
Steps of Recruitment
Identification of need of Training
Module Preparation
Selection of employee for training
Training
Feedback
Training & Development
1. Need
Introduction of new technology
Increase quantity & quality of product
To meet organization need at all time
For better economic use of materials
To prepare present employees for bigger role
2. Effect
Increased effectiveness of work
Increased dedication to work
Higher productivity
Need & Effect of training
On the job training
Coaching
Job rotation
Off the job training
Lecture method
Conference method
Seminar
Outhouse training
In this method the new recruits are sent to different training centers outside the organization for training purposes. generally used for top management recruits.
3 methods of Training @ Amul
Motivation is the process of indoctrinating people with the unity of purpose to maintain a harmonious relationship among each other in the sales organization
2 types of motivators used:
Financial motivators
Non-financial motivators
Motivational Strategy
Ad hoc
HRA
LTC (once in 4 years)
Medical
Bonus
Production Bonus
Performance allowance
Advance
Financial Motivators
1. Promotion (Criteria)
Seniority
Vacancies
Opinion of div. head, past record, behavior
Skill & Knowledge
Experience
Loyalty
2. Seminar
3. Conference
4. Fun @ Work
Non-Financial Motivators
Strength in its procurement
Leverage on the relationship
Strength in transport channel
No promotional schemes undertaken
Non profit driven organization
Push strategy
Observations
Amul should go in for exclusive outlets
Push carts
Trade promotions
Home delivery
Increase margins
Additional salesman on field
Comments and Suggestions
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