Succes Story of Amul

Every day Amul collects 447,000 litres of milk from 2.12 million farmers (many illiterate), converts the milk into branded, packaged products, and delivers goods worth Rs 6 crore (Rs 60 million) to over 500,000 retail outlets across the country.

Its supply chain is easily one of the most complicated in the world. How do managers at Amul prevent the milk from souring?

If we walk tru any Amul or Gujarat Cooperative Milk Marketing Federation (GCMMF) office, we many not see photograph of Mahatma Gandhi, but you will certainly see a photograph of a long line of Gujarati women waiting patiently for a union truck to come and collect the milk they have brought in shining brass matkas.

The picture is always prominently displayed. The message is clear: never forget your primary customer. If you don't, success is certain. The proof? A unique, Rs 2,200 crore (Rs 22 billion) enterprise.

Each failure, each obstacle, each stumbling block can be turned into a success story. In the early years, Amul had to face a number of problems. With every problem came opportunity. A chance to turn a negative into a positive.

Organisation structure

It all started in December 1946 with a group of farmers keen to free themselves from intermediaries, gain access to markets and thereby ensure maximum returns for their efforts.

Amul acknowledged that development and growth could not be left to market forces and that proactive intervention was required. Two key requirements were identified.

• The first, that sustained growth for the long term would depend on matching supply and demand. It would need heavy investment in the simultaneous development of suppliers and consumers.

• that effective management of the network and commercial viability would require professional managers and technocrats.

Based on above they have formed a oranisational structcture which includes both farmers and large markets.

Amul manges this supply chain by low consumer prices supported by a low cost...