SUPPLY CHAIN AND PRODUCTION PROCESS OF OMFED

BHUBANESWAR

A report submitted towards the partial fulfillment of the requirements

of the two years full-time Post Graduate Diploma in Management.

Submitted to:

Submitted by: Debidarshini NayakPost Graduate Diploma in Management

Roll No.: 2k11b38Session. : 2011-13

ASIA-PACIFIC INSTITUTE OF MANAGEMENT 3, Institutional Area, Jasola, New Delhi -110025

SUPPLY CHAIN AND PRODUCTION PROCESS OF OMFED

BHUBANESWAR

A report submitted towards the partial fulfillment of the requirements of the

two years full-time Post Graduate Diploma in Management.

Submitted by: Debidarshini NayakPost Graduate Diploma in Management

Roll No.: 2k11b38 Session. : 2011-13

Under the guidance of

Mr. P.C.Jena Mr. Ratnesh Kumar Corporate Guide Faculty Guide Omfed, Bhubaneswar APIM, New Delhi

ASIA-PACIFIC INSTITUTE OF MANAGEMENT3, Institutional Area, Jasola, New Delhi -110025

DECLARATION

I do here by declare that this submission is my own work and to the best of

my knowledge and belief, it contains no material previously written by

another person nor material which has been accepted by the award of any

other degree or diploma of the university or other institute of higher learning,

except where due acknowledgement has been made to the text.

I also declare that, as required by project rule and conduct, I have fully cited

and referenced all materials and results that are not original to this work.

DEBIDARSHINI NAYAK

Roll No.: 2k11b38Session.: 2011-13

Project title: Supply chain and production process of Omfed, Bhubaneswar

(Signature of Student)

ACKNOWLEDGEMENT

It gives me immerse pleasure taking the opportunity to acknowledge

all those whose guardians, emotes and encouragement served as platform for

me to this summer project.

I do here by express my sincere thanks to Mr. Ratnesh Kumar,

Faculty Guide, Omfed, Bhubaneswar, for his active guidance and

cooperation in this project work. His guiding words are always a source of

inspiration for me.

I would also like to thanks Mr. P.C.Jena, Company Guide, Omfed,

Bhubaneswar for his inspiration and support throughout the project work.

Last but not the least I would like to thank my friends and my wings

mates from Omfed, Bhubaneswar who provided me with helping hands and

rendered me with their suggestions from time to time.

Finally I would like to express my sincere gratitude to my parents for

their support and encouragement.

DEBIDARSHINI NAYAK

Roll No.: 2k11b38Session.: 2011-13

CONTENTS

1. INTRODUCTION

1.1 Brief about the Project

1.2 Objectives of Project

1.3 Scope & Uses of project

1.4 Justification/Relevance of title

2. PROFILE OF ORGANISATION

2.1 Detail about the organisation

2.2 Development of organisation

2.3 Nature, Structure and Characteristics organisation

2.4 Performance of organisation

3. DETAILS ABOUT THE PRODUCTS, MARKET AND INDUSTRY

3.1 Nature & Characteristics of Product

3.2 Performance of product in the Market & Industry

3.3 Comparative Analysis of Product in the market and Industry

4. REVIEW OF LITERATURE

4.1 Review of document and literature of Company.

4.2 Review of document and literature of similar firm and/or market from secondary

data source.

4.3 Review of article related to the project.

4.4 Critical analysis of review and derivation of facts

5. METHODOLOGY OF PROJECT

5.1 About methodology of current project

5.2 Period of study

5.3 Types of Data

5.4 Sample Selection, Sample Design, Sampling area, Sample size

5.5 Methods of Data Collection - Primary and/or Secondary

5.6 Techniques/Tools used in classification & analysis

6. CLASSIFICATION AND ANALYSIS OF DATA.

6.1 Classification of Data

6.2 Analysis of Data

6.3 Findings of study

7. CONCLUSION OF THE PROJECT

8. RECOMMENDATION TO THE COMPANY

9. BIBLIOGRAPHY OR REFERENCES

INTRODUCTION

1.1 Brief about the Project:-

The concept of dairy plant was to integrate the milk producers in rural

area with consumers in the urban area, and to give value of their work. Now

in current position 13 districts have active OMFED dairy plant.

Milk co-operative have successfully held the dairy development in

India. This development would touch lives of 80% of India’s Population

comprising hard working but poor farmers. India also has the largest

populations of animals producing milk in the world. Yet the milk production

per animal is far less. Farmers sell the milk though local milk vendor or

middlemen. These tenders have always exploited the poor uneducated milk

producers. Most of the dairy farmers live villages. They are organized into

Milk Producers Cooperatives Societies (MPCS). The MPCS collects milk

from farmers, tests it for milk content, and sends it to a milk union.

An MPCS in Orissa collects typically between 50 to 500 liters of milk

per day. The numbers of farmers varies from 30 to 200. All members don’t

supply milk on all day. This is partly because a cow does not give milk

throughout the year. The farmers are required to supply only the surplus milk

after consumption. If they wish to sell milk in the open market, then they may

do so, but in that case they will have to leave the cooperatives.

A milk union (MU) collects milk from the MPCS, and processes it and

sells to consumers or sells it to OMFED. The area of operation of a milk

union is one or more districts.IN 2003 the milk bought by milk union varied

between 60,000(Cuttack) and 50 (Kandhamal).

OMFED buys milk from the milk union, process it and supplies to

retailer. At the beginning of 2003 less than half of the 30 districts were

supplying milk to OMFED. From 1993-2003 milk sale did not show decline.

On the other hand sale of milk rose from marginally from 70,000 LPD to

1, 00,000 LPD. This is possible because OMFED was buying milk power

from outside and was reconstituting milk by adding water to it. It did not

have to deal with the highly perishable liquid milk and the fluctuation in

supply of raw milk by farmers and demand from urban consumers.

PROFILE OF ORGANISATION

2.1 Detail about the Organization :-

OMFED stands for The Orissa State Co-operative Milk Producers

Federation Limited. When integrated approach of dairy development

based on farmer’s milk co-operatives were first adopted at ANAND. The

system includes milk production, procurement, processing and marketing

through farmer co-operatives. When the then Prime Minister, Shri Lal

Bahadur Sastri visited Kaira district in 1964, he studied the Amul co-

operatives and compared it with other Government milk schemes set up

all over the country and decided that “AMUL” should be replicated

nationally. Thus the National Dairy Development Board (NDDB) was set

up in 1965. And OMFED was established in Orissa during the operational

flood programme II, which was launched under the NDDB implemented

in the state of Orissa from 1980, initially covering 4 districts i.e. Cuttack,

Puri, Dhenkanal, Keojhar. The Orissa state Co-operative milk producers

federation came into being from the year 1980-81, after taking over the

Phulnakhara dairy and the functioning was started from 26 January 1981.

SALIENT FEATURE OF OMFED DAIRY:-

INSTALLED CAPACITY- 50,000 LITRES PER DAY

PROJECT EXECUTED BY-NATIONAL DAIRY DEVELOPMENT BOARD

INITIAL PROJECT COST- 66.80 LAKH

EXPANSION PROJECT COST- 1.5 CRORES

TRIAL RUN STARTED ON -1ST JANUARY, 1990

MARKETING AREA- SAMBALPUR, BURLA, DEOGARH, RENGALI, REDHAKHOL,

BARGARH, PADAMPUR, SONEPUR, TITILAGARH, NUAPADA

MILK SHED AREA- DEOGARH, SAMBALPUR, BARGARH, BOLANGIR

SL.NO DESCRIPTION QUANTITY CAPACITY

01 S.S. Storage tanks 06 50,000 Lts

02 Pasteuriser 02 2,000 LPH each

03 Homogeniser 01 2,500 LPH

04 Tripurpose separator 02 2500 LPH, 2000 LPH

05 Reconstitution tank 01 1000 Ltrs

06 Packaging unit 04 5000 Ltrs/ hr

7 Refrigeration compressor 05 30 Ton

08 Air compressor 02 06 M3/Hr

09 D.G sets 02 63 KVA/ 50 KVA

10 Boilers (coal fired) 02 300 kg/ hr

11 Bore well 02 800 LPH each

12 Substation 01 200 KVA

13 Effluent treatment plant 01 30000 Ltrs

2.2 Development of the Organization :-

OMFED was established in Orissa during the operational flood

programme II, which was launched under the NDDB implemented in the state of

Orissa from 1980, initially covering 4 districts i.e. Cuttack, Puri, Dhenkanal,

Keojhar. The Orissa state Co-operative milk producers federation came into

being from the year 1980-81, after taking over the Phulnakhara dairy and the

functioning was started from 26 January 1981. Milk purchase from farmers more

or less stagnated in the long-term perspective. Milk purchase by OMFED from

farmers declined between 1993-1996, 1997-2000, and 2001-2003. These are the

macro indicators. He micro details are more disturbing. On Saturdays and

Sundays, Messages went to the MPCS through MU that supply of milk should

be reduced because sell of the milk declines on these days. The reason is that

these days are holidays for salaried employees, and they were the major

consumers of milk from tea shops. In short bulk of the OMFED milk went to tea

shops or making tea and not to consumers of milk.

Throughout this decade, milk sale did not show any decline. On the other

hand sale of milk rose marginally from 70,000 LPD to 1, 00,000 LPD. This was

possible because OMFED was buying milk power from outside and was

reconstituting milk by adding water to it. This was a safe financial arrangement

for OMFED, it did not have to deal with the highly perishable liquid milk and

the fluctuation in supply of raw milk by farmers and demand from urban

consumers. In June 2003, it was decided that milk holidays are abolished. This

was also published in the newspapers.

A lot of people working in other area were moved out to

marketing.

Most of the managers felt that OMFED is going to incur loss.

It was decided that surplus milk will be sold outside the state even

after incurring a loss. It was estimated that there will be a surplus

of 30,000 LPD.

The new order was: We do not have to make profit out of every

liter of milk. We will make profit in case of 1,00,000 liters and

incur loss in case of 30,000 liters.

This has been going on in OMFED, and was not particularly introduced after

2003. There were few changes like curd which cost Rs.30 per kg earlier is now

Rs.20 per kg. The new curd in pouches, an entire in-house innovation of

OMFED has practically no free lactose. Besides, this is aseptically packed and

fermented.

The following graph bears testimony to the success of the new product

X-axis represents as years.Y-axis represents the no of products.

The procurement in these districts at the time of takeover and in 2005 October is tabulated below.

Milk union 2003 2005LPD Milk solids LPD Milk solids

CUTTACK 75914 9792 100836 13008PURI 17598 2253 23819 3049DHENKANAL 2014 257 2445 308SAMBALPUR 26306 3367 35358 4526GANJAM 3840 480 5795 724KEONJHAR 5070 639 5945 749BALASORE 3330 413 9759 1210

2.3 Structure and Characteristics organisation

EMPLOYEES HIERARCHY IN THE ORGANISATION

General body

Board of Directors

Chairman

Managing director

Chief General Manager

General Manager

Deputy General Manager

Manager

Deputy Manager

Assistance Manager

Junior manager

Site Engineer/Supervisor

Assistant/Marketing Assistance

Mechanical Grade-I

Typist/Junior Plant Operator

Attendant/Helper

NAME OF THE UNITS HEADS AND PERIOD OF THEIR WORKING

SL.NO NAME OF THE UNITS NAME OF UNIT HEADS DESIGNATION

1 Bhubaneswar Dairy2 OMTDC3 OMPAC4 Dhenkanal Dairy5 Balasore Project6 Berhampur Dairy7 Keonjhar Dairy8 Rourkela Dairy9 Bhabanipatna Dairy10 Central Dairy, Jeypore11 Sambalpur Dairy12 Cattle Field Plant

LIST OF DAIRIES AND ITS CAPACITY

NAME OF DAIRY CAPACITY(LPD)BHUBANESWAR 3,00,000

ROURKELA 1,00,000

SAMBALPUR 60,000

DHENKANAL 20,000

KEONJHAR 30,000

BALASORE 60,000

BHABANIPATNA 10,000

JEYPORE 30,000

RAYAGADA 20,000

BEHRAMPUR 50,000

NUMBER OF BRANCHES AND PLACE OF FUNCTIONING

SL NO NAME OF BRANCH UNIT PLACE OF FUNCTIONING1 Bhubaneswar Dairy : Chandrasekharpur, Bhubaneswar2 OMTDC : Jaganathapur, Blianta3 OMPAC : Samantarapur, Bhubaneswar4 Dhenkanal Dairy : Baladiabandha, Govindpur, Dhenkanal5 Balasore Project : Januganj, Remuna square, Balasore6 Berhampur Dairy : Ankushpur, Berhampur7 Keonjhar Dairy : Silisuan, Keonjhar8 Rourkela Dairy : Near air strip, Rourkela9 Bhabanipatna Dairy : Bhabanipatna, Kalahadi10 Central Dairy, Jeypore : Umuri, Jeypore11 Sambalpur Dairy : Gosala Chowk, Kalamati,Sambalpur12 Cattle Field Plant : Radhadamodarpur, Athagarh, Cuttack

Physical Achievements of Omfed as on March 2012

Sl.

Particulars1998-99

1999-2K

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

No.

01Organized D.C.S. (No.)

1339 1358 1415 1430 1483 2069 2604 3377 3822 4387 4625 4684 4835 5022

02Farmer Membership (No.)

101536

10528711129

2112934

115131

143457

166135 20401322400

2236199 246410

244295

253343 260611

03Milk Procurement (KPD)

72650 70740 93929 10574610659

913867

3188965 249369

266548

288270 29438329882

3342663 370179

SALE OF MILK & MILK PRODUCTS

Sl.NO

Particulars1998-99

1999-2K

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08

2008-09

2009-10

2010-11

2011-12

01Milk Sale (LPD)

99941 9917010383

110593

4118299 148390

174272

19500922660

8252400

277394

341890

380302

420100

02Ghee Sale (MT)

358.340

346.770

443.396

435.547

447.824306.56

2327.96

8403.704

367.388

395.334389.61

0309.91

6577.49

9433.52

2

03SFM Sale (Bottle)

345296

331002

581194

1178172

16670091326667

1510384

16217661476438

15797781635986

1950906

2013757

1908756

04Sweet Curd sale (MT)

123.196

141.597

307.176

338.115

372.252283.91

2348.58

1547.296

596.839

752.290739.10

5585.75

0645.65

9727.39

1

05Butter Sale (MT)

10.996 5.499 5.770 5.155 3.442 6.831 8.453 10.030 6.879 11.147 12.160 6.843 8.153  5.69

06Plain Curd Sale (MT)

4.856 25.660 80.309145.99

3319.647

596.388

1388.600

2265.850

2374.183

2870.886

3802.126

5522.073

7469.949

6888.853

07Butter Milk (Pkts)

5595842510

784846

41378558

20433401755908

1947390

41765583364684

45451855947118

7492035

7775500

5610572

08 Paneer (MT) 2.199 1.530 1.880 11.788 155.203198.57

6304.25

6352.045

231.392

332.042545.81

1464.98

3510.62

3411.67

1

09Chhenapoda (MT)

0.000 0.000 0.000 0.000 46.841 48.810 41.976 32.828 16.400 17.073 38.732 79.893 47.474 33.95

6

10 Lassi (Pkts) 0 0 0 0 21451054978

871321

41382556

1503606

18869832478910

3920300

4912900

5601153

DETAILS ABOUT THE PRODUCTS, MARKET AND INDUSTRY

3.1 Nature & Characteristics of Product

The Orissa State Cooperative Milk Producers' Federation Limited

(OMFED®) is an apex level Dairy Cooperative Society registered under

Cooperative Society Act – 1962. It has come into existence to integrate the milk

producers in rural areas with consumers in the urban areas with an enterprising

aptitude. OMFED®'s main activities include promoting, production,

procurement, processing and marketing of milk & milk products for economic

development of the rural farming community in Orissa.

MILK AND MILK PRODUCT SOLD BY OMFED

Full cream milk

Toned milk

Double toned milk

Flavored milk

Ghee

Sweet curd

Plain curd

Table butter

Butter milk

Paneer

Lassi

Product added during 2003-04

Kheera

Khua

Chhenapoda

Whipping cream

Sugar free tomato sauce

Lemon ginger

Product added during 2004-05

Strawberry flavored milk

Palm milk

Chocolate milk

Sweet curd

Plain curd

Rasabali

Pickle in 5kg jar

Mustard sauce

3.2 Performance of Product in the Market & Industry