gopaljee : transforming traditional supply chains

Presentation on Supply Chain Management

GOPALJEE : TRANSFORMING TRADITIONAL SUPPLY CHAINS

Presented by:SARIN RAJUCET,TRIVANDRUM

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PRESENCE OF GOPALJEE IN INDUSTRY

PRODUCTS

• Bread Spreads

• Milk Drinks

• Powder Milk

• Fresh Milk

• Cheese

• For Cooking

• Chocolate

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Automatic milk collection unit system

Distribution Process

Company Wholesaler Dealer Franchisee

Retailer

Consumers5

THE CHANNEL NETWORK

• Procurement channel- upstream flow

• Distribution channel- downstream flow

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Procurement

• Activities at the village level comprised developing and servicing the VCSs.

• Increasing milk collection, procuring milk, and transporting it to the chilling and processing units twice a day.

• The VCSs provided the farmers with good quality animal feed, fodder, and other services like veterinary first aid. 7

PROCUREMENT CHANNEL(UPSTREAM)

• On an average around thousand farmers come to sell milk at their local co-operative milk collection center.

• Each farmer has been given a plastic card for identification.

• At the milk collection counter, the farmer drops the card into a box and the identification number is transmitted to a personal computer attached to the machine.

• The milk is then weighed and the fat content of the milk is measured by an electronic fat testing machine.

Cont…

• Both these details are recorded in the PC. The computer then calculates the amount due to farmer on the basis of the fat content.

• The value of the milk is then printed out on a slip and handed over to farmer who collects the payment at adjacent window.

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Cold Storage Network

• Chillers in proximity of villages

• Prompt transport to district facilities for further dispatch to consumers/ processing units.

• Chilled trucks to transport processed products

• Delivery to local chillers by insulated rail tankers and chilled trucks.

• Refrigerators and freezers with retailers and departmental stores to retain freshness.

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Distribution

• GCMMF coordinated with various unions to get a regular supply of milk and dairy products.

• The processed milk and dairy products were procured from district dairy unions and distributed through third party distributors.

• To ensure quality and timely deliveries, GCMMF and the district unions had several mechanisms in place.

• The unions monitored the supplies of milk and the distribution of finished products.

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DOWNSTREAM FLOW• First leg

• Manufacturing units to company depots using 9 and 18 MT trucks

• Frozen food below -18°C• Dairy wet 0-4°C

• Second leg• Depots to WDs• Transport through insulated 3 and 5 MT TATA

407’s

• Third leg• WDs to retailers• Transport through rickshaws 13

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Reverse logistics

MILK CHURN from dairy to VCS

BOTTLEfrom retailer to dairy

DAMAGED PRODUCTS from customer to retailer then to dairy

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POUCH MILK TRAYfrom retailer to dairy

Direct retailing

• Amul has recently entered into direct retailing through "Amul Utterly Delicious" parlors created in major cities.

• Amul has plans to create a large chain of

such outlets to be managed by franchisees throughout the country.

• More than 2000 parlor with a turnover of

Rs. 200 crores.16

Supply Chain Drivers• Inventory: Low Inventory

(direct procurement from the diary farm)• Facilities: high facilities

( it handles a total of a million litres of milk per day with almost 125,000 farmers supplying their produce through 4,500 village level societies)

• Information: High • Sourcing: Direct procurement from the milk producers --- no

intermediaries• Pricing: Comparatively high• Transportation: Established own fleet of transport-- Transportation to

the plant – from the plant– finished products to the wholesalers by using own fleet of transport.

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Logistics Process

I. Logistics in collection –

– 6 million liters of milk per day– From about 10,600 separate village cooperative societies.– Approximately 2.8 million milk producing member.

II. Logistics in coordination of –

– Storing the milk.– Processing the milk.– Distributing the milk.

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Cont…

III. Supplier logistics –

–Weighing the milk.– Determining of fat content.– Calculation of the purchase price.

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STRATEGIC FIT

• Simultaneous development of supplier and customer• Cost leadership• Focus on core activities• Managing third party service providers• Financial strategy

Business strategies are driven by twin objectives:• Long term sustainable growth of member farmers• Value proposition to a large customer base by

providing milk products at low cost

PROCESS VIEW

• CYCLIC VIEW

• PULL VIEW– Anticipating customer demand– Collection of milk—purifying– storage– conversion

to different milk products

INDIAN SUPPLY CHAIN SYSTEM—A GLOBAL APPROACH

-Op Maestros

SOLOTAXONOMY APPROACH

PRIMARY LEVEL

INDIAN BUSINESS ARE HIGHLY FRAGMENTED.

UNISTRUCTURAL LEVEL

• ABSENCE OF INDUSTRY ROLE MODELS AND BENCH MARKS MADE INDIAN BUSINESS HIGHLY FRAMENTED IN WHICH THE SMALL AND MICROSCALE OPERATIONS PREDOMINATE

MULTI-STRUCTURAL LEVEL

• PAST ,INDIAN BUSINESS WAS HIGHLY FRAGMENTED IN WHICH SMALLAND MICROSCALE OPERATIONS PREDOMINATE.

• RISE OF GCMMF AND THEIR BRAND AMUL RESTRUCTURED THIS CONCEPT.

RELATIONAL LEVEL

• PAST,INDIAN BUSINESS WAS HIGHLY FRAGMENTED .

• RISE OF GCMMF AND THEIR BRAND AMUL RESTRUCTURED THIS CONCEPT.

• MANY COMPANIES LIKE GOPALJEE GROUP OF COMPANIES USE THE SAME ROADS TO ACHIEVE PEAKS.

OUT OF BOX

• ELIMINATION OF INTERMEDIARIES BETWEEN THE MANUFACTURERS AND CUSTOMERS –REDUCTION IN INVENTORY COST—HANDLING COST– TRANSPORTATION COST

How can Gopaljee supply and distribution model be extended to other business lines in the Indian

and South Asian context?• Indian subcontinent countries had highly

fragmented structure in which small and micro scale operations predominate ,if not control the entire sectors.

• The main reason behind this is the absence of proper bench mark and role models.

a) Practice in Agriculture Indian subcontinent have mainly Agrarian

countries. The supply Chain system can be usedd by these companies too, where retail agriculture products are selling.

They can remove the middle men,by directly collecting vegetables and fruits from farmers

The role of Intermediary in Indian Agriculture is very high .

They can also arrange classes for meeting International standards(ie bio fertilizers,Bio pesticides)

These companies can bench mark from national and international experts in these area like RELIANCE FRESH.

• Practice in Fisheries.Indian Subcontinent is blessed with Fisheries due to the

presence of Indian Ocean-Arabian Sea—Bay of Bengal .Fishing Exporting and Processing companies can also

follow this system of supply chain.They can reduce the intermediaries who act as a link

between fisherman and companies, there by reducing the cost

Training Classes and Bench Marking is also possible in this area.

What socio economic features of South Asian societies can be identified as the foundations for

building Sustainable Supply Chains• Family BondageMost of the companies in Indian Subcontinent

are run by a particular family rather than by Debt-Equity share holders. Typical examples includes Traditional TATA, Ambani group.They follow a systematic supply chain linking their family chain

• Caste System

South East Asia will be the only Geographical area,where a certain group is allowed to do only a specific set of Job.

This create a large supply chain. Both the Public as well as Private Sector Companies are forced to maintain a sustainable supply chain

• Emotional BondageSouth Asian countries gave predominant

consideration for emotions rather than Marketing and Expanding Strategies.

This act as a foundation for building sustainable supply chain

• Economic Factors

a)Subsistence Theory

Once a company follows a particular supply chain,it become difficult to remove the chain, as it affects the subsistence of that firm.

• B) Strategic Alliance

Strategic alliance between different companies forced them to maintain a sustainable supply chain.

How can these existing distribution channels in South Asian regions be transformed to maximize

the value delivered to the customer?a. Setup an international Bench Markb. Follow International Standardsc. Use best in Market Channeld. Reduce the Intermediariese. Training Classes for every elements in

distribution channel

How can such indigenously developed SCM modes integrate with and expand into

Global Supply Chain• 3R system• Reduce number of Intermediaries• Setting up of International Bench Mark• Giving Environment Considerations• Sustainable Development Concept

Thank you…

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