The Amul Success Factor

   

Amul operates on a three-tier mechanism. The first tier is the cooperative society in the village, with milk producers as voluntary members at the base. They are responsible for managing the co-operative through a democratically elected 9-member managing committee. The business is conducted by purchasing milk from members and selling it to the district-level cooperative. There are around 11,000 co-operatives or more in the small villages of Gujarat

The second tier has the district co-operatives responsible for transforming milk into milk products, which are then marketed locally and the surplus is then sold to the state co-operative for national and international marketing purposes.

The third and final tier is the state-level cooperative also known as the Gujarat Cooperative Milk Marketing Federation (GCMMF) which holds the responsibility of marketing the products both nationally and worldwide.

This structure is a unique institution as it includes the entire network from production and procurement of raw materials to marketing and distribution channels and their management. Each of these steps has an estimated 23.60 lakh primary milk producers; 35,000 rural workmen in more than 11,400 village societies; 12,000 workers in 15 dairy plants; 750 marketing professionals; 10,500 salesmen in the distribution network and 600,000 salesmen in the retail network.

A co-operative of this level is not only bound to succeed but also sets an example of proper structure and management for others to follow. This structure has allowed Amul to create the most efficient supply chain thus leading the industry while simultaneously reaching its customer community in time, across the country, and abroad.

Amul’s efficient supply chain using its three-tier framework has increased the efficiency and speed of operations to such a level that it has helped set a precedent for other companies to follow. Amul adopted this model way back in the 1970s as part of the flood operation that led to the White Revolution. This model not only helped the farmer community get a fair price for their product but also helped India become the largest milk producer in the world.