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Strategic Management

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1. INTRODUCTION
1.1 DISTRIBUTION
Distribution is the process of making a product or service available for use or consumption by a consumer or business user, using direct means, or using indirect means with intermediaries.
1.2 DISTRIBUTION CHANNEL
It is the chain of businesses or intermediaries through which a good or service passes until it reaches the end consumer. A distribution channel can include wholesalers, retailers, distributors and even the internet. Channels are broken into direct and indirect forms, with a "direct" channel allowing the consumer to buy the good from the manufacturer and an "indirect" channel allowing the consumer to buy the good from a wholesaler. Direct channels are considered "shorter" than "indirect" ones.
Goods and services often pass to consumers through multiple channels. While increasing the number of ways in which a consumer can find a good has the potential to increase sales, it also creates a complex system that can make distribution management difficult. In addition, the longer the distribution channel the less profit a product manufacturer might get from the sale.
Distribution channels are probably the most visible aspect of any company’s marketing efforts. A recent estimate puts the number of retail out lets in India at 5 million. The retail industry provides livelihood to more than 15 million people in the country. If one included in this the number of distributors, wholesalers, agents including the army of life insurance agents, transporters, warehouse keepers, and all other entities involved in the distribution of products and services to the end consumers.
“Distribution channels are sets of interdependent organizations involved in the process of making a product or service available for use or consumption”.
Distribution function is currently undergoing tremendous changes in terms of both its span and productivity.
Intermediaries are required to smoothen the flow of goods and services by engaging themselves in sorting function. The sorting function performed by the intermediaries includes * Breaking down a heterogeneous supply into separate stocks that are relatively homogeneous called ‘sorting out’. * Bringing similar stocks from a number of sources together into a larger homogeneous supply called ‘accumulation’. * Building up of an assortment of products for resale in association with eath other called ‘assorting’.

1.3 DISTRIBUTION STRATEGY
The distribution strategy is a plan for guiding decisions about a product's distribution channel -- the chain of intermediaries that it passes from its creation through to delivery to the end user.
In this context, a channel is one or more intermediary individuals or organizations that perform a role in getting a product or service from the producer to its purchaser. Some intermediaries may be involved in multiple channels. The distribution strategy includes decisions about the type and number of intermediaries that are appropriate for a given product and how the chain of intermediaries will be managed.
The major domains across which distribution strategy is framed includes * Setting distribution objectives in terms of the customer requirements * Organizing the activities so that the responsibility of performing the activities is shared among the entities that are meant to perform these activities * Developing policy guidelines for the smooth functioning of the channel on a day to day basis
In the wake of increasingly complicated supply chains, distribution network design plays a key role in controlling the cost of doing business. And in a world of shrinking margins, controlling the cost of doing business can be the factor that puts one ahead of the competitors.
1.4 BRIEF ABOUT AMUL * Company History
Amul was set up in 1946 and its full form is Anand Milk- producers Union Ltd. The word Amul is derived from the Sanskrit word Amulya, meaning invaluable. The co-operative is also sometimes referred to as Anand Milk Union Limited. The Brand Amul is a movement in dairy cooperative in India. The management of the brand name is done by the Gujarat Cooperative Milk Marketing Federation Ltd(GCMMF) which is a cooperative organization.
Gujarat Cooperative Milk Marketing Federation (GCMMF) is India's largest food products marketing organization. It is a state level apex body of milk cooperatives in Gujarat which aims to provide remunerative returns to the farmers and also serve the interest of consumers by providing quality products which are good value for money. Amul is located in the town Anand which is in the state of Gujarat and it has set up itself as a model for development in the rural areas. The Amul Brand has started the White Revolution in India which has helped to make the country the biggest manufacturer of milk and its by-products in the whole world. Amul has around 2.9 million producer members covering 15,322 village societies and the total capacity for handling milk is around 13.07 million liters every day. The brand's capacity for milk drying is around 647 Mts. each day and its capacity for cattle feed manufacturing is about 3740 Mts. each day. * Achievements
Amul has always been the trend setter in bringing and adapting the most modern technology to door steps to rural farmers. * GCMMF wins the SAP Award for Customer Excellence (SAPACE) 2013 under the category of "Best Run Award in Finance". * ET-Corporate Citizen Award of the Year 2010-11 to GCMMF. * GCMMF receives Srishti's G-Cube Award - 2010. * GCMMF bags Agricultural and Processed Food Exports Development Authority (APEDA) AWARD for 11th year in a row in 2006-07. * Amul Pro-Biotic Ice-cream receives No. 1 Award at World Dairy Summit in 2007. * GCMMF emerged as the top scorer in the service category of the prestigious IMC Ramkrishna Bajaj National Quality Award – 2003. * Amul - The Taste Of India (GCMMF) Receives International CIO 100 Award For Resourcefulness in 2003 * Rajiv Gandhi National Quality Award - 1999 * Amul is the live example of how co-operation amongst the poor marginal farmers can provide means for the socio-economic development of the under privileged marginal farmers.
Amul Brand Umbrella caters several products under broad categories of butter, milk, cheese, ghee, milk powder, curd, ice cream, flavored milk, health beverage, condensed milk, sweets, chocolates and confectionary.

2. DISTRIBUTION STRATEGY OF AMUL

A true marketing genius, Dr. Kurien created brand 'Amul' and shaped it into one of India's strongest brands through innovative distribution, branding, advertising and marketing initiatives. While he spent his entire life working for the interests of the farmers, he always kept the interests of consumers in mind. There is a famous quote from Dr. Verghese Kurien which has inspired generations of leaders associated with the Amul cooperative movement “We have traversed a path that few have dared to. We are continuing on a path that still fewer have the courage to follow. We must pursue a path that even fewer can dream to pursue. Yet, we must, we hold in trust the aims and aspirations of millions of our countrymen."

2.1 DISTRIBUTION NETWORK
The distribution network Amul products are available in over 500,000 retail outlets across India through its network of 3,500 distributors. There are 49 depots with dry and cold warehouses to buffer inventory of the entire range of products. * GCMMF has its distribution network in the form of zonal network. * As it is know that the head office of the GCMMF is located in ANAND and its entire network is divided into 5 zones. * These zonal offices are located at Mumbai, Chennai, Ahmedabad, Kolkata and New Delhi. * Moreover there are 49 Depots located across the country and GCMMF caters to 13 Export markets. GCMMF has an excellent distribution.

GCMMF transacts on an advance demand draft basis from its wholesale dealers instead of the cheque system adopted by other FMCG companies. This practice is consistent with GCMMF’s philosophy of maintaining cash transactions throughout the supply chain and it also minimizes dumping. 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 dealer’s ROI. All the branches of GCMMF are engaged in route scheduling and have dedicated vehicle operations.
Umbrella brand
The network follows an umbrella branding strategy. Amul is the common brand for most product categories produced by various unions: liquid milk, milk powders, butter, ghee, cheese, cocoa products, sweets, ice-cream and condensed milk.
Amul's sub-brands include variants such as Amulspray, Amulspree, Amulya and Nutramul. The edible oil products are grouped around Dhara and Lokdhara, mineral water is sold under the Jal Dhara brand while fruit drinks bear the Safal name. By insisting on an umbrella brand, GCMMF not only skillfully avoided inter-union conflicts but also created an opportunity for the union members to cooperate in developing products.

2.2 DISTRIBUTION STRUCTURE FOR DAIRY PRODUCT:
Member Union/
(Manufacturer)

Company Depot
Distributor
Retailer
Customer

2.3 DISTRIBUTION STRUCTURE FOR ICE-CREAM:
Member union
(Manufacturer)
Company Hub
Company Depot
Distributor
Retailer
Customer

2.4 THE CHANNEL NETWORK * Distribution channel- downstream flow * Procurement channel- upstream flow

DISTRIBUTION CHANNEL

* FIRST LEG * Manufacturing units to company depots using 9 and 18 MT trucks. * Frozen food-below 18C. * Dairy wet-0-4C. * SECOND LEG * Depots to WDs. * Transport through insulated 3 and 5 MT TATA 407’s . * THIRD LEG * WDs to retailers. * Transport through rickshaws according to the beat plan.
PROCUREMENT CHANNEL

* Milk is taken to VCS by farmers by bicycles. * Transportation of milk from the co-operatives to the manufacturing units through trucks equipped with tankers equipped to carry milk.
2.5 ROLE OF INFORMATION TECHNOLOGY
“Without IT, one cannot work in rural areas considering the numbers involved. We collect milk from 3.5 million farmers twice a day, that’s more than six million transactions a day scattered over 16,000 village societies. We’ve been able to achieve such geographical dispersion and diversity only because of IT. Sitting here, I know in which village which farmer has given me how much milk. Product integration with IT also helps me predict demand and adjust my produce to meet that demand. IT is a strategic differentiator. It has helped us cut costs and improve customer service. This has helped Amul turn complex, duplicate, fragmented and error-prone systems into simplified, standardized, and customer-enabled systems”, says R.S Sodhi, MD, Amul. * Automatic Milk Collection System Units (AMCUS). * CEO of Amul Mr. B.M. Vyas said, “Amul is not a food company ,It is an IT company in the food business.” * Initially AMCUS was installed free of cost to convince farmers. * Enterprise-wide integrated application system (EIAS). * Covers market planning, advertising and promotion, distribution network planning, stock control, sales and accounting, budgetary control, quality control management and co-operative service management. * Connected its zonal offices, regional offices and members dairies through VSATs. * Each Amul office was connected by e-mail and all send a daily report on sales & inventory to main system. * Geographic Information System (GIS). * Helps in getting zone wise data used for sales and distribution planning. * Includes farmer-member census and animal census data. * Helps in monitoring veterinary health.

AMUL’S IT ROADMAP * Uses AMCUS for milk collection. * Implemented a customized ERP system which is used in conjunction with GIS * Uses data analysis software for forecasting milk production and increasing productivity. * Has connected all zonal, regional and member dairies through VSAT. * One of the first five organizations to have web presence. * Has made IT education compulsory for all its employees. * Milk collection information from 10,000 villages is collected. * Dairies can make faster decisions in terms of production and distribution planning. * Disease control in 6700000 animals.

3. CONCLUSION

Everyday 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.
In the wake of increasingly complicated supply chains, distribution network design plays a key role in controlling the cost of doing business. And in a world of shrinking margins, controlling the cost of doing business can be the factor that puts one ahead of the competitors.
Amul no doubt is the overall market leader in respect of the white industry. But it was not able to cater to smaller towns as the distributors were located only in the major towns of the country. So they introduced the concept of the super distributor. They identified 200 districts and added a super distributor to each of the districts. This super distributor would then cover 15-20 small towns. Last year, it added 3,000 more towns and cities to the distribution network. Today, all its products reach the whole length and breadth of the country. It has a strong procurement channel and transport channel.

4. BIBLIOGRAPHY

1. http://en.wikipedia.org/wiki/Amul 2. http://www.amul.com/ 3. http://www.amul.com/m/about-us 4. http://en.wikipedia.org/wiki/Distribution_%28business%29 5. http://www.slideshare.net/nikunj1986/distribution-network-of-amul-2463949?from_search=36 6. http://www.slideshare.net/omkarnd86/amul-15137249 7. http://www.slideshare.net/BabasabPatil/a-project-report-on-distribution-channel-and-demand-of-amul-beverages-in-hubli?from_search=56 8. http://www.digitalimpulse.in/insights/amul-the-taste-of-india/#.UiiJilPzunA 9. http://www.slideshare.net/deepshataneja/amul?from_search=1 10. http://www.slideshare.net/AmitAgarwal33/distribution-system-9033693?from_search=49 11. http://www.businessdictionary.com/definition/distribution-channel.html 12. http://www.investopedia.com/terms/d/distribution-channel.asp 13. http://searchitchannel.techtarget.com/definition/channel-strategy

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