The existing supply chain of AMUL

The distribution network Amul products are available in over 500,000 retail outlets across India through its network of 3,500 distributors. There are 47 depots with dry and cold warehouses to buffer inventory of the entire range of products. 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 GCMMFs 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 dealers ROI. All the branches of GCMMF are engaged in route scheduling and have dedicated vehicle operations. Largest Cold Chain: AMUL has the largest cold chain network in India (18000 refrigerators) as compared to any other company. The chemical components of milk are water, SNF and solids. It is a perishable product so it has to be consumed within 24 hours. In order to avoid wastage AMUL converts the milk into SNF (Solids not fats) and milk solids by evaporating the water, which comprises of 60-70% of the milk contents. Customers: India is still in the evolutionary stage with tremendous potential for high value products such as variants of milk. The distribution network is quite reasonable with access to metros as well as rural areas. Suppliers: A majority of suppliers are small or marginal farmers who are illiterate, poor and with liquidity problems. Third party logistics service: There are ample deficiencies in the current infrastructure and the outbound logistics is taken care by GCMMF coordinating with distributors. It also connects with unions for product mix, product allocations and in developing production plans. The key lies in matching supply and demand as the demand outstrips supply by a big margin. Interlocking control: The objective of interlocking mechanism is to ensure that the interest of the farmer is always kept at the top of the agenda through representatives who constitute the Boards of different entities that compromise the supply chain. Professional managers and farmers work together as a team to strengthen the cooperative. Coordination agency: Objective of such an agency is to ensure the milk produced by the farmer is sold in the market either as milk or as value added product.

SCM AND MARKET LOGISTICS

The network Milk is procured from the villages and collected at Village Cooperative Societies (VCS); from there the milk is taken to manufacturing units where the milk is processed into various products. The products are then transporters to the company Depots located in various parts of the country. The products are then sent to Wholesale Distributors (WD) and from there to the retailers. The fact sheet

payment is made under twelve hours of procurement

re approximately 4,50,000 retailers spread all over India

te has been 6 million liters per day

SCM and Market Logistics Enterprise resource planning: the company at has implemented an ERP program as low as Rs. 3 corers in collaboration with TCS ltd. The company uses it; the data right from the procurement from the farmers till the delivery of goods to the retailers is fed into the system. The software enabling the channel members to use for the synchronized working and best possible utilization of the available resources maintains details regarding the inventory management. Market logistics deals with the implementation of the SCM of the company. Upstream Channel in which milk is procured from the farmers to the manufacturing units. 1. In the first step, the milk is taken to the VCS by the farmers on foot or bicycles in small quantities 2. The second step involves the transportation of milk from the co-operatives to the manufacturing units this is done in special trucks which are equipped with tankers to carry milk.

concept of logistics in agriculture and food supply chains Logistics services in developed countries The role of production and supply chain management is increasing worldwide due to the growing consumer concerns over food safety and quality together with retailer demands for large volumes of consistent and reliable product. In developed countries, product losses (post harvest losses) are generally small during processing, storage and handling because of the efficiency of the equipment, better storage facilities, and control of critical variables by a

skilled and trained staff. Recently, the concept of Agricultural and Food Logistics has been under development as more effective and efficient management system is required for the food production planning, physical collection of primary produce from fields and homesteads, processing and storage at various levels, handling, packaging, and distribution www.intechopen.com128 Pathways to Supply Chain Excellence of final product. In the food supply chain many stakeholders such as farmers, vendors/agents, wholesalers, rural retailers and suppliers and transporters are involved. At all levels, information flow and management of produce is essential to maintain the food quality throughout the chain (see Figure 1). The flow of input resources from farms to consumers needs to be described in detail and the constraints in each sub-process needs to be identified to develop appropriate solutions for logistics related problems. Material, capital and information flow between producers (farmers) and consumers It is important to note that lack of packaging facilities may be one of the constraints in the logistics system of small-scale farmers during the transition from subsistence to commercial farming. Significant post-harvest losses occur when especially vulnerable crops and fruits are subjected to mechanical damage (Ferris et al, 1993). Therefore management of packaging should be taken into consideration in the development of agricultural logistic systems.

Poors Supply Chain: Indian Public Distribution System Revisited

1. Introduction In India a public distribution system (PDS) and its improved version targeted public distribution system (TPDS) was carved out as a novel system of safety net operations for the distribution of scheduled commodities to the citizens especially the below poverty line (BPL), above poverty line (APL) and those coming under Antyodaya Anna Yojana (AAY) through a network of institutions comprising Food Corporation of India (FCI) warehouses and fair price shops (FPS). Poverty line is multidimensional in nature. At one level it represents deprivation from physical needs such as food, clothing, and shelter. At other level it represents deprivation from education, health, lack of voice and information. Therefore, poverty alleviation involves providing basic food and other essential commodities at subsidized rates, providing relevant information and developing human capabilities so that they can acquire, assimilate and make decisions. For a developing county like India which is positioning itself as a pragmatic and progressive State, it is an opportune moment to serve its underprivileged citizens by crafting its TPDS supply chain through ICT based interventions. Hence forth the term PDS is used to mean TPDS. PDS provides rationed amount of basic food items such as rice, wheat, sugar, and non food items such as kerosene at below market prices to specified group of citizens. The issues dealing with PDS comes under concurrent list of the constitution of India. Therefore, central as well as states governments are responsible for planning and running the PDS supply chain. The central ministry of civil supplies lays down policy to cover what commodities are sold in different areas, their prices, legislation, coordinating the work of several agencies and monitoring the performance. Central government agencies are responsible for procuring the goods, storing them, and transporting them to convenient locations in the states. The FCI handles grains. Within each state, the state ministry of civil supplies administers the PDS. The supply chain of PDS involves various actors such as producers, warehouse, FPS and end customers. Figure 1 depicts the PDS supply chain. However, this system is fraught with many difficulties such as inefficiency, deterioration of food grains, unsatisfactory quality of commodities, malpractices in weights and measures, mismatch of demand and supply, long waiting times, exorbitant corruption, rude behaviour of shopkeepers 3

and poor service delivery. The PDS had been criticized for its urban biased (Dev and Suryanarayana, 1991) and for its failure to serve effectively the poorer sections of the population. Preliminary assessment of PDS reveals that PDS suffers from heavy losses of food grains, mismanagement of inventory, high carrying cost, lack of accountability and poor quality of service. The underlying reasons include lack of visibility of flow of food grains and embedded information. Information needed for planning and control of PDS fails to deliver desired results. Information and communication technology (ICT) enabled interventions in the PDS are very weak. Flow of Food Grains in PDS Supply Chain Streamlining of PDS processes will result in increased operational efficiency, thereby reducing transit losses and pilferages. This can be achieved by real time flow of information across all the stages of PDS. This visibility will ensure availability of correct quantities of scheduled commodities to fair price shop owners and the end customers thus, improving the service delivery. Improvement in service delivery will also improve quality of service across various stages of the PDS. To meet the expectations of policy makers and demands of the citizens, the PDS should be agile enough to identify the needs of the targeted citizen groups and adapt and align itself with dynamic market conditions and policy frameworks.

Introduction The agriculture sector in India accounts for about 25 percent of gross domestic product(GDP) and employs close to 70 percent of the countrys work force. However, it is plagued by multitude of problems which hinder its efficient operation. India has seenrapid developments in several areas, most notably in manufacturing industry and the service sector (e.g. information technology). But, in the agriculture sector, the grain supply chain has remain unchanged: over 90 percent of food is sold in unorganised markets, with organised business accounting for just 2 percent of the market (Economic Times Intelligence Group, 2003). According to the Indian Ministry of Trade and Industry, approximately 20 percent of food produced in India is wasted (see www. etfoodprocessing.com). Various research studies by the Economic Times Intelligence Group (ETIG) and the Investment Information and Credit Rating Agency (ICRA) have detailed the weaknesses and problems present in the Indian grain chain (Investment Information and Credit Rating Agency, 2001). First, tonnes of grain are wasted due to improper handling and storage, pest infestation, poor logistics, inadequate storage and transportation infrastructure. Second, intermediaries take large portions of the earnings which should go to farmers. Third, post-harvest losses are about 25-30 percent in India. Even marginal reductions in these losses are bound to bring great relief on the food security front as well as improve the income level of the farmers. Fourth, Indian consumers pay three to four times the farm gate price, as compared to developed countries where the consumer pays one and a half to two times the farm gate price. Also, 60-80 percent of the price that consumers pay goes to traders, commission agents, traders, wholesalers and retailers (Economic Times Intelligence Group, 2003). These intermediaries (also called commission agents) lead to poor coordination and collaboration in the supply chain, which in turn leads to inefficient information flow. Seeing the inefficiencies in the Indian grain chain and the opportunity of making good profits, some private and public sector companies entered into this organised food business. These companies were based on three types of model: (1) the cooperative supply chain model; (2) the collaborative supply chain model; and (3) contract farming.

Indian grain supply chain A supply chain has been described as a system whose constituent parts include material suppliers, production facilities, distribution services and customers linked together via the feed-forward flow of materials and the feedback flow of information (Stevens, 1989). Recently there has been a shift of focus in supply chain management towards a more integrated approach (Towill, 1996). Integrated supply chain management is a process-oriented, integrated approach to procuring, producing, and delivering products and services to customers. Integrated supply chain management covers the management of materials, information, and fund flows (Metz, 1998). In India wholesalers buy grain from the Agriculture Produce Marketing Committee (APMC), which is established in every state or in every major producing region by the Government. The APMC is meant to consolidate buyers and sellers in a central place to reduce time, effort and cost. In the APMC there are traders who are surrounded by commission agents on all sides. These commission agents deal with farmers and wholesalers on behalf of traders. These commission agents deal with consolidators (who represent the small farmer) on the farmers side and wholesalers on the retailers side (Table I). These consolidators and commission agents charge their fees as a percentage of the transaction. This number of people varies across the markets, and their percentages also vary. In this study we have considered five major players in the Indian grain chain:

(1) farmers; (2) traders; (3) commission agents; (4) wholesalers; and (5) retailers (also considered in the ICRA report).