Amul strengthens supply chain using IT

Prerna Sharma

• It is best known as the architect of India's ‘white revolution' and is credited for making the country the largest producer of milk and milk products. But the road to this was not at all easy for Gujarat Cooperative Milk Marketing Federation (GCMMF), known for its dairy products brand Amul, it waded through many troubles and leveraged the power of IT to make a mark for itself. It all started with only 2 village dairy co-operative societies and 247 liters of milk.

• But today, with more than 15 mn milk producers, 1,44,246 dairy cooperative societies, 177 district co-operative unions, and 22 state marketing federations, the company has proved its mettle. Expanding numbers of outlets, diversification of products, and manufacturing capacity are some of the challenges for any traditional company. Such has been the story of GCMMF that we bring to you where a traditional dairy farm used IT to streamliane its supply chain.

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The IT Call• As GCMMF started expanding its operations exponentially, it needed a strong solution that

can provide end-to-end supply chain as per dairy specific functionality, tighter integration between sales and distribution arm, accurate and timely data that needed to be provided to the farmers as they were also facing problems in terms of data discrepancies and inaccuracies.

• All this required a complete overhaul of the entire IT infrastructure. It was difficult for an in-house IT team to keep pace with the fast evolution of technology and stay knowledgeable about all the new solutions which could support their business. So, Amul decided to handover the management of IT to an organization which has competence in IT Infrastructure and application management.

• The management understood the need to focus on their core competence of milk production and distribution and outsource the non-core functions to partners who are knowledgeable in their areas like advertising and logistics management. It was not the first time; GCMMF had gone through multiple rounds of implementation of IT through the traditional route of engaging vendors to provide application solutions and buying infrastructure on their own.

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• Hence, GCMMF leadership thought of partnering with a vendor who could take complete ownership of IT strategy and roadmap for GCMMF and member unions and be ready to work with a result oriented approach rather than selling solutions in bits and pieces.

Scout For the Right Solution• Before evaluating each solution by different vendors, GCMMF team decided to

lay down some parameters which helped them to select the best solution. Following were some of the parameters used while evaluating the strategy-

• Selection of vendor having strong knowledge of dairy operations and success stories

• Experience in successfully executing complex and mission critical projects• Leverage best practices• Functional coverage and integration of solution with member unions• Scalability• Shorter time to deploy but longer life• Quick return of investment-low initial investment

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The Eureka Moment• After screening various solutions, the management identified that the best possible process

was defined within the complete suite of SAP solution. It gave them a complete view of its supply chain and helped to tightly integrate various functions and processes, including sales and distribution.

• "IBM helped us implement SAP ERP system. This system enabled us to have a complete view of our supply chain, have tight integration between GCMMF and our district unions. The system also gave us a view of the sale of our products to our distributors across the country," says R S Sodhi, managing director, GCMMF, Anand.

• Amul also implemented the business intelligence system which provided it a view of movement of all its products across the country. Using this system, various reports were generated which enabled it understand the demand pattern of all the products across the market place.To achieve the objective of C2C (cow to consumers), Amul had 5 initiatives in their roadmap, which were-ERP implementation for GCMMF, ERP implementation for member unions, a uniform automated milk collection system in all 16,000+ village societies in the Amul family, a distributor manage solution, and a retail management solution for Amul preferred outlets (APO).

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The company has set up a state-of-the-art data center and IT infrastructure at GCMMF premises in Anand to support the IT implementation. It has gone live in 2 phases in April 2011 and March 2012. The first phase covered GCMMF and the 4 large milk unions, while the second phase covered the rest of the milk unions.

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The Traditional Mode• Prior to SAP, the company used to work on customized applications which were

decentralized. Data capturing was not structured to provide analysis on transactions with regard to sales, distribution, expenses, etc. The application was also not accessible online. This created a major loophole in decision-making processes for the management. Implementing solutions like SAP ERP provided them tight integration between multiple departments through its integrated modules and also helped automatic execution of various voluminous business transactions like sales invoicing, freight expense booking, recording of purchases, tax accounting, payroll relate transaction, etc.

• In SAP, 100% accuracy of the transactions was achieved by maintaining proper master data in the system which was partly missing in the traditional system. Users were also happy with SAP because now various reports could be generated from SAP in desired formats and facilities for performing mass transactions. The overall solution helped the management to do 3 dimensional analyzes of its business processes. The biggest benefit was to streamline the distribution network across the country and provide real-time data to its partners.

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Achievements• Standard and harmonized processes, enabled by technology, across the

organization enabled the planned growth, with better visibility to enable a faster response to market demand changes, better planning capabilities led to optimization of process efficiencies, better management visibility, and decision support through improved accuracy currency of information. Better knowledge management and effectiveness measures to improve the efficiency of the processes, better audit trials across the organization between DCS and MU/business controls were other achievements.

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