Introduction

GCMMF came into existence in year 1973 with the advent of the co-operative movement in
the milk sector. It was kicked off and made to reach at the pinnacle by “milkman of India”, Dr.
VERGHESE KURIEN. It has a three tier structure starting from the Village Level Co-operatives
as first, which help in the procurement; the District Level Unions handle transportation and
processing; and the Federation, to market the product. The Federation also handles strategic
planning and investment. Initially, at the time of inception it marketed only dairy products like
liquid milk, butter and Ghee but time to time it updates its products and diversifies in various
other products like jams, etc and also diversifies in other more novel milk products.

Objective
GCMMF has, as its main objective, “carrying out activities for the economic development of
agriculturists by efficiently organizing marketing of milk and dairy produce as produced by
member unions, veterinary medicines, vaccines and other animal health products, agricultural
produce in raw and/or processed form and other allied produce.” This is done through:
• Common branding
• Centralized marketing
• Centralized quality control
• Centralized purchases and
• Efficient pooling of milk

Functioning of GCMMF
In this Corporate Office, GCMMF plans for the products to be sold, quantity of each product
and strategy to sell the same. At present, Amul is the sole brand marketed by GCMMF in Gujarat
as well as nationally. The two areas, which are given special attention are -'customer focus' and
'quality orientation'.

Business Philosophy
• To serve the interests of milk producers
• To provide quality product that offers the best value to consumers for monetary gains
Size and Hierarchy Chart of GCMMF:
Managing Director

CGM

GM

AGM Total Employees => 750 (100%).

Executives => 450 (60%)
Field Sales Representatives => 150 (20%)
Manager Staff => 150 (20%).
EXECUTIVES
(450)
Deputy Manager

Asstt. Manager

Sr. Executive

Executive

Junior Executive

STAFF (150) Field Sales Representative

• Clerks (150)
• Peons

Figure 1: Size and Hierarchy chart

Organizational Structure of GCMMF

MD Selection through
advertisement
 CHAIRPERSON

Board of Directors
(Also includes nominees and invitees)

Zonal Officers
(6)
Delhi, Mumbai, Chennai, Calcutta,
Guwahati and Ahmedabad
De facto members from the
member Unions and the invitees
(e.g. NDDB Chairperson)

Branch Officers
(47)
Figure 2: Organizational chart of GCMMF
To cover the maximum area they
are strategically placed, 2 in all
states and Corporate Office is in
Anand, Gujarat

GCMMF is the marketing agency for AMUL. These two are inter-related but
independent in their functioning. It has about 30 lakh farmer members and 12,640 village co-
operatives. These farmer members choose 17-18 members as management committee in their
village co-operative which further elects District union representatives who have the voting
rights and these representatives then elect the chairmen of each district union who represents
his/her district in the GCMMF . These are 13 in numbers (earlier these were 12 but now
Surender-Nagar district union is also included). These members choose the chairperson. And rest
acts as board of directors. Post of Managing director is filled through advertisement. There are 6
zonal office of the federation- four of it in the metropolitan cities and rest two in Guwahati and
Ahmedabad. And there are 47 branch offices all over India. GCMMF has one overseas office in
Dubai. Corporate office of the federation is in Anand and it has following departments under it.
 Corporate Office GCMMF

Internal Accounts Marketing HR Information Quality

Audit Systems Assurance

Purchase Commercial Product Logistics Commodities Advertising

Function Management

Figure 3: Corporate office departmental structure.

Five lines on which GCMMF concentrates

Marketing being the core activity of the organization is given the due importance

GCMMF

RETAIL LINE NEW LINE FRESH MILK MAIN LINE ICE CREAM

Tapping the
Concentration Introduction of Liquid Milk
Butter, Ghee, potential of
is on selling new products in Market of
Cheese, Indian Ice-
the products the market. AMUL, also the
AMUL cream market.
through E.g. Sugar Free tetra packs of
Shakti etc. 35% share is of
Retailing Chocolates. AMUL Fresh.
AMUL
Figure 4: 5 lines on which GCMMF concentrates

There are five basic lines on which GCMMF works viz. Retailing, New Line, Fresh Milk,
Main Line, and Ice-cream. Through these line processes GCMMF brings about its basic work of
marketing and creating market for the AMUL products.

1. Retail line: through this line GCMMF concentrates on selling out its products through
chain of retailers and also the availability of the products is ensured through the
functioning of this line.
2. New line: this line ensures that the new products are properly introduced and placed in
the market. This way it ensures the proper availability and publicity of the new product.
3. Fresh Milk line: this is the most important product line for GCMMF. It forms the largest
share of the product sold by AMUL.
4. Main line: this line includes the traditional milk products being formed by AMUL like
Ghee, Cheese, Butter etc, which forms an important market for AMUL.
5. Ice-cream: it is the line which has ensured AMUL becoming the market leader of the
Indian Ice-cream industry and enjoys a 35% share of the total market.

Values:
It is said strong values are substitute for formalization in the organizational structure. Its
really true as we found in GCMMF. The organization has a rich history, the great architect
being Dr. Varghese Kurien, the father of white revolution in India. The organization has the
following core values
• Customer Orientation

• Commitment to Producers

• Integrity

• Co-operation

• Excellence
 • Leadership

• Quality

• Innovation

• Growth Orientation-New Products

• Belongingness

• Pride in Organization

• Employee Satisfaction

Strategy
AMUL’s business strategy is driven by following two objectives of
• Long-term, sustainable growth to its member farmers, and
• Value proposition to a large customer base by providing milk and other dairy products at
a low price.

Its strategy, which evolved over time, comprises of elements described below.
1. Equal concern for both Suppliers and Customers: From the very early stages
of the formation of AMUL, the cooperative realized that sustained growth for the long-term was
highly dependent on matching supply and demand. This was even more important in this case as
it was dealing in highly perishable commodity market. Further, given the primitive state of the
market and the suppliers of milk, their development in a synchronous manner was critical for the
continued growth of the industry. The organization also recognized that in view of the poor
infrastructure in India, such development could not be left to market forces and proactive
interventions were required. Accordingly, AMUL and GCMMF adopted a number of strategies
to assure such growth. For example, at the time AMUL was formed, the vast majority of
consumers had limited purchasing power and was value conscious with very low levels of
consumption of milk and other dairy products. Thus, AMUL adopted a low price strategy to
make their products affordable and guarantee value to the consumer. The success of this strategy
is well recognized and remains the main policy of AMUL's strategy even today. The choice of
product mix and the sequence in which AMUL introduced its products is consistent with this
philosophy. Beginning with liquid milk, the product mix has been enhanced slowly by
progressive addition of higher value products while maintaining desired growth in existing
products. Even today, while competing in the market for high value dairy products, GCMMF
ensures that adequate supplies of low value products are maintained.
On the supply side, as mentioned earlier, the member-suppliers were typically small and
marginal- farmers had severe liquidity problems. Most of them were illiterate and had no prior
training in dairy farming. AMUL and other cooperative Unions adopted following strategies to
develop the supply of milk and assure steady growth like:
• For the short term, the procurement prices were set so as to provide fair and
reasonable return.
• Aware of the liquidity problems, cash payments for milk supply was made with
minimum of delay.
For the long-term, the Unions followed a multi-pronged strategy of education and support. For
example, only part of the surplus generated by the Unions is paid to the members in the form of
dividends. A substantial part of this surplus is used for activities that promote growth of milk
supply and improve yields. These include provision of veterinary services, support for cold
storage facilities at the village societies etc. In parallel, the Unions have put in place a number of
initiatives to help educate the members.
To summarize, the dual strategy of simultaneous development of the market and member
farmers has resulted in parallel growth of demand and supply at a steady pace and in turn assured
the growth of the industry over an extended period of time.

2. Cost Leadership: AMUL’s objective of providing a value proposition to a large

customer base led naturally to a choice of cost leadership position. Given the low purchasing
power of the Indian consumer and the marginal spending power, the only viable option for
AMUL was to price its products as low as possible. This in turn led to a focus on costs and had
significant implications for managing its operations and supply chain practices.
3. Emphasis on Core Activities: In view of its small beginnings and limited
resources, it became clear fairly early that AMUL would not be in a position to be an
integrated player from milk production to delivery to the consumer. Accordingly, it has chosen
a strategy to focus on core dairy activities and rely on third parties for other complementary
needs. This philosophy is reflected in almost all phases of AMUL network spanning R&D,
production, collection, processing, marketing, distribution, retailing etc. For example, AMUL
focused on processing of liquid milk and conversion to variety of dairy products and associated
research and development. On the other hand, logistics of milk collection and distribution of
products to customers was managed through third parties. However, it played a proactive role
in making support services available to its members wherever it found that markets for such
services were not developed. For example, in the initial stages, its small and marginal member
farmers did not have access to finance, veterinary service, knowledge of basic animal
husbandry etc. Thus to assure continued growth in milk production and supply, AMUL
actively sought and worked with partners to provide these required services. In cases where
such partnerships could not be established, AMUL developed the necessary capabilities and
provided the services.
4. Managing Third Party Service Providers: Well before the ideas of core
competence and the role of third parties in managing the supply chain were recognized and
became fashionable, these concepts were practiced by GCMMF and AMUL. From the
beginning, it has recognized that the core activity for the Unions is in processing of milk and
production of dairy products. Accordingly, the Unions focus on these activities and related
technology development. Marketing efforts (including brand development) are assumed by
GCMMF. All other activities have been entrusted to third party service providers. These
include logistics of milk collection, distribution of dairy products, sale of products through
dealers and retail stores, some veterinary services etc. It is worth noting that a number of these
third parties are not in the organized sector, and many are not professionally managed. Hence,
while third parties perform the activities, the Unions and GCMMF have developed a number of
mechanisms to retain control and assure quality and timely deliveries. This is particularly
critical for a perishable product such as liquid milk.
5. Financial Strategy: AMUL’s finance strategy is driven primarily by its desire to
be self-reliant and thus depend on internally generated resources for funding its growth and
development. This choice was motivated by the relatively underdeveloped financial markets
with limited access to funds, and the reluctance to depend on Government support and thus be
obliged to cede control to bureaucracy. AMUL’s financial strategy may thus be characterized
by two elements:
 Retention of surplus to fund growth and development, and
 Limited/ no credit, i.e., all transactions is essentially cash only. For
example, payment for milk procured by village societies is in cash and
within 12 hours of procurement. Similarly, no dispatches of finished
products are made without advance payment from distributors etc. This is
particularly important, given the limited liquidity position of
farmer/suppliers and the absence of banking facilities in rural India. This
strategy strongly helped AMUL implement its own vision of growth and
development. It is important to mention that many of the above
approaches are at variance with industry practices of both domestic and
MNC competitors of AMUL.