STUDY OF PRODUCTION AND OPERATION MANAGEMENT

AMUL - The Taste of India

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 STUDY OF PRODUCTION AND OPERATION MANAGEMENT

A PROJECT REPORT
ON

AMUL DAIRY AND PROJECT WORK

ENTITLED AS

PRODUCTION AND OPERATION MANAGEMENT OF ANAND

MILK UNION LIMITED (AMUL)

PROJECT TEAM MEMBERS

# Ajay Singh

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PREFACE

The MBA programme is well structured and integrated course of business

studies. The main objective of practical training at MBA level is to develop
skill in student by supplement to the theoretical study of business
management in general. Industrial training helps to gain real life knowledge
about the industrial environment and business practices. The MBA
programme provides student with a fundamental knowledge of business and
organizational functions and activities, as well as an exposure to strategic
thinking of management.

In every professional course, training is an important factor. Professors give

us theoretical knowledge of various subjects in the college but we are
practically exposed of such subjects when we get the training in the
organization. It is only the training through which I come to know that what
an industry is and how it works. I can learn about various departmental
operations being performed in the industry, which would, in return, help me
in the future when I will enter the practical field.

Training is an integral part of MBA and each and every student has to
undergo the training for Several months in a company and then prepare a
project report on the same after the completion of training.

During this whole training I got a lot of experience and came to know
about the management practices in real that how it differs from those of
theoretical knowledge and the practically in the real life.

In todays globalize world, where cutthroat competition is prevailing in the

market, theoretical knowledge is not sufficient. Beside this one need to have
practical knowledge, which would help an individual in his/her carrier
activities and it is true that Experience is best teacher.

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ACKNOWLEDGEMENT

It has been an enriching experience for me to undergo my summer training

at AMUL, which would not have possible without the goodwill and support of
the people around. As a student of SRM UNIVERSITY I would like to
express my sincere thanks too all those who helped me during my practical
training programme.

Words are insufficient to express my gratitude toward Prof. Dr. Sharat

sharma, the Senior faculty of SRM. I would like to give my heartily thanks
to Mr. J. K. Joshi, Manager of Administration, who permitted me to get
training at AMUL. I am very thankful to all, who helped me at every step
whenever needed and arranged all possible visits for me at AMUL.

As we know research work needs hard work, keen insight and long patience
with scholarly vision based on content operation hence it becomes a humble
duty to express my sincere gratitude to Mr. Dalveer Singh, Production
incharge.

However, I accept the sole responsibility for any possible error of omission
and would be extremely grateful to the readers of this project report if they
bring such mistakes to my notice.

Date : 14TH march, 2009

Place : Modinagar (UP)
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CONTENTS

Sr. No.

Executive summary

1.

Introduction to dairy industry

2.

Introduction to AMUL

3.

Introduction to operation management

4.

Production systems

5.

Processes

6.

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Material requirement planning
Dispatching
Packaging
Plant layout
7. Plant location
Raw material required

SWOT analysis of Amul

8.
Conclusion

9.

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ANAND MILK UNION LIMITED

THE KAIRA DISTRICT CO-OPERATIVE MILK

PRODUCERS UNION LIMITED
ANAND

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EXECUTIVE SUMMARY

Name of the company: AMUL India Ltd.

Title of the project: Production and operation management
in amul (anand milk union limited).
Type of project: Research based pom project.

Number of team members: 5

Area under research: WT-5 (West Delhi)

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Analysis of Milk Industry

Traditionally, in India dairying has been a rural cottage industry.
Semi-commercial dairying started with the establishment
of military dairy farms and co-operative milk unions
throughout the country towards the end of the nineteenth
century.
In earlier years, many households owned their own family cow or secured
milk from a neighbour who had one. With the increase in urban population
fewer households could afford to keep a cow for private use & moreover
there were other problems also like the high cost of milk production,
problems of sanitation etc. restricted the practice; and gradually the family
cow in the city was eliminated and city cattle were all sent back to the rural
areas.

Gradually farmers living near the cities took advantage of their proximity to
the cities & began supplying milk to the urban population; this gave rise to
the fluid milk-sheds we see today in every city of our country.

Prior to the 1850s most milk was necessarily produced within a short
distance of the place of consumption because of lack of suitable means of
transportation and refrigeration.
The Indian Dairy Industry has made rapid progress since Independence. A
large number of modern milk plants and product factories have since been
established. These organized dairies have been successfully engaged in the
routine commercial production of pasteurized bottled milk and various
Western and Indian dairy products. With modern knowledge of the
protection of milk during transportation, it became possible to locate dairies
where land was less expensive and crops could be grown more
economically.

In India, the market milk technology may be considered to have

commenced in 1950, with the functioning of the Central Dairy of Aarey Milk
Colony, and milk product technology in 1956 with the establishment of
AMUL Dairy, Anand.

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Indian dairy sector is still mainly an unorganised sector as barely
10% of our total milk production undergoes organised
handling

INTRODUCTION AND HISTORY

In the year 1946 the first milk union was established. This union was
started with 250 liters of milk per day. In the year 1955 AMUL was
established. In the year 1946 the union was known as KAIRA DISTRICT
CO-OPERATIVE MILK PRODUCERS UNION. This union selected the
brand name AMUL in 1955.

The brand name Amul means AMULYA. This word derived form
the Sanskrit word AMULYA which means PRICELESS. A quality
control expert in Anand had suggested the brand name AMUL. Amul
products have been in use in millions of homes since 1946. Amul Butter,
Amul Milk Powder, Amul Ghee, Amulspray, Amul Cheese, Amul Chocolates,
Amul Shrikhand, Amul Ice cream, Nutramul, Amul Milk and Amulya have
made Amul a leading food brand in India. (The total sale is Rs. 6 billion in
2005). Today Amul is a symbol of many things like of the high-quality
products sold at reasonable prices, of the genesis of a vast co-operative
network, of the triumph of indigenous technology, of the marketing savvy of
a farmers' organization. And have a proven model for dairy development
(Generally known as ANAND PATTERN).

In the early 40s, the main sources of earning for the farmers of Kaira
district were farming and selling of milk. That time there was high demand
for milk in Bombay. The main supplier of the milk was Polson dairy
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limited, which was a privately owned company and held monopoly over the
supply of milk at Bombay from the Kaira district. This system leads to
exploitation of poor and illiterates farmers by the private traders. The traders
used to beside

the prices of milk and the farmers were forced to accept it without
uttering a single word.
However, when the exploitation became intolerable, the farmers were
frustrated. They collectively appealed to Sardar Vallabhbhai Patel, who
was a leading activist in the freedom movement. Sardar Patel advised the
farmers to sell the milk on their own by establishing a co-operative union,
Instead of supplying milk to private traders. Sardar Patel sent the farmers to
Shri Morarji Desai in order to gain his co-operation and help. Shri Desai
held a meeting at Samarkha village near Anand, on 4th January 1946. He
advised the farmers to form a society for collection of the milk.

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These village societies would collect the milk themselves and would
decide the prices at which they can sell the milk. The district union was also

form to collect the milk from such village co-operative societies and to
sell them. It was also resolved that the Government should be asked to buy
milk from the union.
However, the govt. did not seem to help farmers by any means. It gave the
negative response by turning down the demand for the milk. To respond to
this action of govt., the farmers of Kaira district went on a milk strike. For
15 whole days not a single drop of milk was sold to the traders. As a result
the Bombay milk scheme was severely affected. The milk commissioner of
Bombay then visited Anand to assess the situation. Having seemed the
condition, he decided to fulfill the farmers demand.
Thus their cooperative unions were forced at the village and district level to
collect and sell milk on a cooperative basis, without the intervention of
Government. Mr. Verghese Kurien showed main interest in establishing
union who was supported by Shri Tribhuvandas Patel who lead the
farmers in forming the Co-operative unions at the village level. The Kaira
district milk producers union was thus established in ANAND and was
registered formally on 14th December 1946. Since farmers sold all the milk
in

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Anand through a co-operative union, it was commonly resolved to sell the
milk under the brand name AMUL.

At the initial stage only 250 liters of milk was collected everyday. But
with the growing awareness of the benefits of the cooperativeness, the
collection of milk increased. Today Amul collect 11 lakhs liters of milk
everyday. Since milk was a perishable commodity it becomes difficult to
preserve milk flora longer period. Besides when the milk was to be collected
from the far places, there was a fear of spoiling of milk. To overcome this
problem the union thought out to develop the chilling unit at various
junctions, which would collect the milk and could chill it, so as to preserve it
for a longer period. Thus, today Amul has more than 150 chilling centers
in various villages. Milk is collected from almost 1073 societies.

With the financial help from UNICEF, assistance from the govt. of New
Zealand under the Colombo plan, of Rs. 50 millions for factory to
manufacture milk powder and butter was planned. Dr.Rajendra Prasad,
the president of India laid the foundation on November 15, 1954. Shri

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Pandit Jawaharlal Nehru, the prime minister of India declared it open at
Amul dairy on November 20, 1955.

PEOPLE POWER: AMUL'S SECRET OF SUCCESS

The system succeeded mainly because it provides an assured market at

remunerative prices for producers' milk besides acting as a channel to market
the production enhancement package. What's more, it does not disturb the
agro-system of the farmers. It also enables the consumer an access to high
quality milk and milk products. Contrary to the traditional system, when the
profit of the business was cornered by the middlemen, the system ensured

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that the profit goes to the participants for their socio-economic upliftment
and common good.

Looking back on the path traversed by Amul, the following features make it a
pattern and model for emulation elsewhere.

Amul has been able to:

Produce an appropriate blend of the policy makers farmers board of

management and the professionals: each group appreciating its rotes
and limitations,

Bring at the command of the rural milk producers the best of the
technology and harness its fruit for betterment.
Provide a support system to the milk producers without disturbing their
agro-economic systems,
Plough back the profits, by prudent use of men, material and machines,
in the rural sector for the common good and betterment of the member
producers and

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Even though, growing with time and on scale, it has remained with the
smallest producer members. In that sense. Amul is an example par
excellence, of an intervention for rural change.

The Union looks after policy formulation, processing and marketing of milk,
provision of technical inputs to enhance milk yield of animals, the artificial
insemination service, veterinary care, better feeds and the like - all through
the village societies. Basically the union and cooperation of people brought
Amul into fame i.e. AMUL (ANAND MILK UNION LIMITED), a name
which suggest THE TASTE OF INDIA.

Introduction to Operation
Management
Operations management is an area of business that is concerned with the
production of good quality goods and services, and involves the responsibility
of ensuring that business operations are efficient and effective. It is the

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management of resources, the distribution of goods and services to
customers.

APICS The Association for Operations Management also defines operations

management as "the field of study that focuses on the effectively planning,
scheduling, use, and control of a manufacturing or service organization
through the study of concepts from design engineering, industrial
engineering, management information systems, quality
management, production management, inventory management, accounting,
and other functions as they affect the organization".

Additionally, The Operations Management Body of Knowledge (OMBOK)

Framework defines the scope of operations management and the activities
and techniques that are a part of the operations management profession.

Operations also refer to the production of goods and services, the set of
value-added activities that transform inputs into many
outputs. Fundamentally, these value-adding creative activities should be
aligned with market opportunity for optimal enterprise performance.

Operations as a Transformation Process

Inputs Transformation Output

Operations management is about the way organizations produce goods and

services. Everything you wear, eat, sit on, use, read or knock about on the
sports field comes to you courtesy of the operations managers who organized
its production. Every book you borrow from the library, every treatment you

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receive at the hospital, every service you expect in the shops and every
lecture you attend at university all have been produced.

This definition reflects the essential nature of Operations Management; it is a

central activity in organizing things. Another way of looking at an operation is
to consider it as a transformation process.

Operations Management is all about providing customers with

products and services.

You survive by giving customers with what they want

Every Product or Service is really a bundle of different attributes.

Product, place, price, performance, quality, timing, service, etc.

Customers are looking for a bundle of characteristics

Total bundle provides the level of value customers deem appropriate

Buying products with the attributes they want at the lowest price
possible

Attributes

Price

Quality

Image

Performance

Safety
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Place distribution

Time delivery, availability

How do you decide which product to produce?

How do you find out what attributes your product should have?

How do you get those attributes into your product?

What process?

What resources do you need?

Where do you get those resources?

Examples of Operations Decisions

Operations managers must make decisions on three levels

Strategic

Tactical

Operating

STRATEGIC DECISIONS:

Longer term decisions

Usually made at the senior management level

Product and service strategy

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Competitive priorities

Positioning strategy

Location, capacity

Long term partnerships

Quality system and overall approach to quality

TACTICAL DECISIONS

Medium term decisions

Tactical in nature

Made by middle and senior managers

Process design

Technology management

Job design and workforce management

Capacity management

Facility location

Facility-layout

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OPERATING DECISIONS

Shorter term decisions

Made at middle and lower management levels

Forecasting

Materials management

Inventory management

Aggregate planning

Master production scheduling

Production control

Scheduling

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PASTEURISED MILK PRODUCTION

SYSTEM
Product/process description

Liquid milk has a high demand because of its nutritional

value and pleasant flavour. Milk from

cows has a creamy white appearance, but from goats and

other animals has a yellower colour

and a higher viscosity. Milk is sold universally for domestic

consumption, for use with other

products (eg. tea, porridge) and for use by other processors

(eg. butter, cheese, yoghurt). For

small-scale processors this is a relatively difficult product to

produce as the process requires

careful control over hygiene, a relatively high capital

expenditure and short distribution channels

to good markets as the shelf life (at 3-5 days) is shorter

than most products.

Principles of preservation and methods of processing

The principle of preservation is the destruction of

pathogenic and most spoilage bacteria and

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inactivation of most enzymes by heat during pasteurization
at 63C for 30 minutes. This time

and temperature combination is described by regulations in

some countries and should be

Carefully adhered to.

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Process flow

Notes
Milk is immediately filtered, by use of filtering pads, soon

after milking.

A surface cooler is used to cool the milk to stop

further multiplication of micro-organisms in milk.

Use batch pasteurizer. Control of temperature and time is

very

important for correct pasteurization to give expected shelf

life.

The vessel to be used should be fabricated from stainless

steel

or aluminium or bought locally from hardware shops. Milk

should

be heated with constant stirring to prevent the product

overheating/burning at the bottom.

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Cool quickly to temperature below 10oC. Cooling is done by

placing the pan containing the hot product into another

vessel

which contains cold water. The product is stirred

continuously

until the temperature drops.

Pack into sterilized bottles and seal with sterile lids using

a small filling and capping machine.

Storage should be in either a cooler or a refrigerator at

below 10C. The milk should not be exposed to sunlight as

this will heat it, promote rancidity of milk fat and destroy

the vitamin riboflavin.

The transportation of milk from the storage room to the

market should be in a refrigerated vehicle if the distance to

be covered is long. But for a short distance which takes less

than an hours drive, refrigeration is not necessarY

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Plants Location and Layout

First plant is at ANAND, which engaged in the manufacturing of milk,

butter, ghee, milk powder, flavored milk and buttermilk.

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Second plant is at MOGAR, which engaged in manufacturing chocolate,
nutramul, Amul Ganthia and Amul lite.

Third plant is at Kanjari, which produces cattelfeed.

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Fourth plant is at Khatraj, which engaged in producing cheese.

Today, twelve dairies are producing different products under the brand
name Amul. Today Amul dairy is no. 1 dairy in Asia and no. 2 in the world,
which is matter of proud for Gujarat and whole India.

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Share of Agriculture and Livestock Sector in GDP

(At current prices in Rs. Billion)

Year GDP GDP (Agriculture) GDP (Livestock

(Total) Sector)

Rs. % Share Rs. % Share

1980-81 1,224 425 34.72 59 4.82

1985-86 2,338 700 29.94 139 5.95
1986-87 2,600 744 28.62 156 6.00
1987-88 2,949 835 28.31 183 6.21
1988-89 3,527 1,041 29.52 217 6.15
1989-90 4,087 1,154 28.24 275 6.73
1990-91 4,778 1,352 28.30 308 6.45
1991-92 5,528 1,593 28.82 375 6.78

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1992-93 6,307 1,779 28.21 432 6.85
1993-94 7,813 2,218 28.39 507 6.49
1994-95 9,170 2,552 27.83 577 6.29
1995-96 10,733 2,778 25.88 650 6.06
1996-97 12,435 3,340 26.86 747 6.01
1997-98 13,901 3,535 25.43 819 5.89
1998-99 15,981 4,064 25.43 911 5.70
1999-00 17,618 4,224 23.98 992 5.63
2000-01 19,030 4,235 22.25 1093 5.74
2001-02 20,910 4,730 22.62 1187 5.68
2002-03 22,495 4,560 20.27 1209 5.37

* Provisional; ** Quick Estimate; Source : Central Statistical Organization,

Dept. of Statistics, GOI
Dairy Cooperatives- Progress on Key Parameters during 2003-04 *
States/UT DCS # Farmer Women Procurement Marketing
(Nos) Members Members (TKGPD) $ (TLPD) $
('000) ('000)
Andhra Pradesh 5072 756 143 950 898
Assam 65 3 0 4 8
Bihar 4657 240 36 396 288
Chhattisgarh 424 19 4 18 28
DELHI 1937
Goa 169 19 3 43 89
Gujarat 11400 2360 540 5102 2101
Haryana 4219 230 30 331 153

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Himachal Pradesh 283 21 6 25 15
Jammu & Kashmir ** ** ** **
Jharkhand 80 2 0 6 163
Karnataka 9293 1737 444 2243 1518
Kerala 3208 706 125 614 738
Madhya Pradesh 4699 231 33 294 296
Maharashtra 18349 1582 366 2680 2629
Nagaland 76 3 0 2 4
Orissa 1654 122 54 127 132
Pondicherry 96 32 14 54 53
Punjab 6892 402 42 745 496
Rajasthan 9643 534 111 1036 855
Sikkim 189 7 0 9 7
Tamil Nadu 7631 1988 717 1664 1206
Tripura 84 4 1 2 9
Uttar Pradesh 18104 824 237 814 436

West Bengal 2287 172 59 324 816

All - India Total 108574 11994 2963 17483 14875

@ Organized ( cumulative )
*Provisional, includes conventional societies and Taluka unions formed earlier
** Not reported
Chhattisgarh & Jharkhand reported separately from 2003-04

Main Raw materials:

1. Acid
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2. Raw milk
3. Salt
4. Sugar

Process of Procurement & Distribution of

Milk:

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Farmers and the Milk Co-operative Society

The Operation Flood programme helps both farmers as well as the city
consumers. The programme ensures that the farmers get a fair price
for their cow & buffalo milk and the consumers get best quality milk at
reasonable prices.

In order to maintain freshness, this milk is chilled and then

transported to Mother Diary in insulated milk tankers by road and by
rail.

Checking the quality of milk

At the Dairy stringent hygienic standards are maintained. The milk in

the tankers is first checked for quality and freshness and then
unloaded into huge insulated stainless steel storage tanks. These
tanks have a capacity of 1 lakh liters each. The presence of
adulterants (impurities) like urea, neutralizers, preservatives and
germs like bacteria are checked. All these tests ensure that only good
quality milk is accepted. Once empty, the tankers are thoroughly
cleaned and sanitized using acid and alkali. The tankers are then
finally rinsed with water.

Processing of milk

unprocessed milk may contain small dirt particles invisible to the

naked eye. In order to remove these particles the milk has to be
processed.

To process milk at Mother Dairy, the milk is first clarified. This is done
in a clarifier which spins the milk at a very high speed, as a result of
which the dirt particles are thrown out and drained.
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The milk is then pasteurized to make it safe for human consumption.

This process destroys any disease causing bacteria and also increases
the shelf life of the milk. During pasteurization the milk is heated to
72 degree Celsius for 15 seconds and then rapidly cooled down to 7
degree Celsius. This process, unlike boiling, does not affect the
nutritional value of the milk. Pasteurized milk is safe to drink without
boiling as long as it is kept cool at all times.

Fortification with Vitamin A

Toned milk during processing is fortified with Vitamin A. The

deficiency of Vitamin A can lead to night blindness and skin horning.

Homogenization

At Mother Dairy the milk is also homogenized. This ensures that the
customers get uniform amount of cream in their milk.

In this process the milk is pumped at a very high pressure turning the
cream into tiny droplets thus distributing the fat throughout the milk.
These droplets do not float to the surface to form a creamy layer.
That is why no creamy layer appears when Mother Dairy milk is boiled
at home.

Mother Dairy shops sell homogenized toned milk which contains

minimum 3% fat even though you cannot notice it.

Dispatching of milk
After processing, the milk is chilled and stored in silos and further
chilled to about 2 C. by the glycol chilling system, and then
dispatched to the Milk Shops in insulated road milk tankers. Prior to
the milk being dispatched in tankers, it is tested for quality to make
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sure that it meets the quality standards. When the tanker arrives at
the shop the milk is transferred into a large refrigerated tank.

Making the milk available

The control room is very vital to the efficient distribution of milk to the
900 shops across the city. It organizes the tanker routes and its staff
is responsible for ensuring that shops do not run out of milk. Each
milk tanker is fitted with a wireless set. As soon as the in charge at
the control room learns that a particular shop is running out of milk,
he contacts the tanker nearest to the shop on the wireless which then
delivers the extra milk to it.

Quality control all the way

A final quality check of the mill is also made at the shop itself. This
ensures that milk reaching the customers is of same quality as
dispatched from the Dairy.

Consumer Information

To raise the consumers awareness regarding Adulteration of milk,

Mother Dairy has thrown open its testing facilities. In its laboratories
consumers can see for themselves how impurities and adulterants are
easily detected. Mother Dairy also has two "mobile labs" that can test
milk in the residential colonies. All this is part of a commitment to
provide the consumers with the purest milk nature has to offer.

Keeping milk cool

Amul takes care to keep milk cool at every stage-it is chilled before
transporting in insulated tankers, it is stored in insulated silos and
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kept in refrigerated tanks at the shops.

Keeping milk cool slows down the rate at which bacteria multiply. This
also increases its shelf life.

Caring for the environment

Solar Panels: In an effort to conserve fuel, Mother Dairy utilizes the

abundant solar energy to preheat the water going into the boilers.
This also minimizes the pollution caused by burning of fuels like coal,
oil etc.

Effluent treatment plant:

The water used for cleaning equipment and tankers is treated at the
effluent treatment plant in the Dairy before being discharged into the
sewege system.

Comparative study of milk players

MILK Mother Amul Delhi Milk Gopaljee Paras
BRANDS Dairy Scheme
Full 19 19 19 19 19
Cream
Toned 15 15 15 15 15

Double 13 NA NA NA NA
Toned
Standard 17 NA NA NA NA

Skimmed 11 NA NA NA NA

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SWOT Analysis of AMUL

STRENGTHS WEAKNESS
The major strength of the Scarce Amul Outlets.
Amul is the different variety Less Margin given to the
of Milks and a recognized Outlet owners to match the
BRAND name. existing competitors.
The increasing demand for
these products presents a
great opportunity for the
AMul to increase and scale
up the production.

OPPORTUNITIES THREATS
There is a scope of business Increasing competition from
as there is a demand for the other brands.
dairy products. Strong supply chain
Amul should open more management by the
outlets to get the maximum competitors.
advantage of the demand. Strong marketing strategy
Need to put more stress in by competitors by offering
the face-to-face direct the discount coupons to
marketing to reach to the consumers and providing
customers. healthy commissions to the
The increasing demand for retailers.
these products presents a
great opportunity for the
AMUL to increase and scale
up the production.

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CONCLUSION

As we know that Amul is very big

organization and market leader in dairy products. It
has maximum market share in Milk, Butter and
Cheese, which are its main/core products. As we
know Amul is a co-operative organisaion but
chocolate industry is a profitable industry we cant
ignore it. With the help of research, company can find
out its week points in chocolate product and can
increase its market share through rectify mistakes.
People have believed in Amuls product and they
will accept its chocolates also if effective actions were
taken.

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BIBLIOGRAPHY

1. www.amul.com

2. www.amuldairy.com

3. www.google.com

4. www.marketresearch.com

5. www.dairy.com

6. Research Methodology. ( Harper W.Boyd, C. R. Kothari )

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SRM INSTITUTE OF MANAGEMENT

AND TECHNOLGY

PROJECT SYNOPSIS

PROJECT TITLE

PRODUCTION AND OPERATION ACTIVITIES ON

AMUL The Taste of India

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 STUDY OF PRODUCTION AND OPERATION MANAGEMENT

GROUP MEMBER AMAN KUMAR (5084009)

AJAY SINGH (35084006)
AKANSHA GEORGE (35084007)
ALOK SINGH (35084008)
AMBRISH TIWARI (35084010)

PROJECT CO-ORDINATOR

Prof. Dr. SHARAT SHARMA

SRM-IMT

COMPANY NAME AMUL, Anand, India

INDUSTRY DAIRY

FOUNDED 1946

TYPE CO-OPERATIVE

Website www.amul.com

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