A CASE STUDY OF AMUL CO-OPERATIVE IN INDIA IN RELATION TO .
International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013ISSN 2229-55181A CASE STUDY OF AMUL CO-OPERATIVE IN INDIA IN RELATION TO ORGANIZATIONALDESIGN AND OPERATIONAL EFFICIENCYFIRST AUTHORDr. Ruchira PrasadLecturer in ManagementSeth Padam Chand Jain Institute of ManagementAgra University, Khandari, AgraUtter Pradesh, IndiaEmail: ruchi 1508@rediffmail.comSECOND AUTHOURDr. Rupali SatsangiAssistant ProfessorDepartment of EconomicsDEI. Dayalbagh Educational InstituteDayalbagh, Agra-2822005Utter Pradesh, IndiaEmail: rupali22dei@gmail.comIJSER 2013http://www.ijser.org
International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013ISSN 2229-55182A CASE STUDY OF AMUL CO-OPERATIVE IN INDIA IN RELATION TOORGANIZATIONAL DESIGN AND OPERATIONAL EFFICIENCYDr. Ruchira Prasad and Dr. Rupali SatsangiABSTRACTOrganizational Structure can improve the working condition of an organization and a poor structure can ruin all the possibilities of openness,dynamism and decision-making. Organizational effectiveness on the other hand, is the extent to which an organization, given certain resources andmeans, achieves its objectives without placing undue strain on its members. Another important role is played by the technology. More anorganization is able to adapt itself to the changing technology the better will be its efficiencies.In the present research paper a relationship between the designs of an organization with its operational efficiency indicators has been examined inthe context of Amul. The factors were studied in context to a cooperative form of organization and while comparing with the corporate form, it wasfound that the design of the basic structure is somewhat different as it believes in the federal form of structure each unit is independent of eachother. It is a popular belief that co-operatives are a failure, but Amul with Co-operative Structure is a grand success. Amul has an appropriate blendof policy makers, technology and a support system to the milk producers without disturbing their agro-economic system and ploughing back theprofits, by prudent use of men, materials and machines.Keywords: Organizational Structure, dynamism, Organizational effectiveness, operational efficiency, federal, agro-economic system.1.1 INTRODUCTIONAn organization is a social unit or a group of peoplestructured in such a way that they work for achievementof specific goal. Structure can improve the workingcondition of an organization and a poor structure canruin all the possibilities of openness, dynamism anddecision making.Organizational effectiveness is the extent to which anorganization, given certain resources and means, achievesits objectives without placing undue strain on itsmembers. Another important role is played bycommunication among the employees and thetechnology. More an organization is able to adapt itself tothe changing technology the better will be its efficiencies.Amul’s structure was founded on the basis of cooperativesystem.1.2 SIGNIFICANCE OF THE STUDYIn the present research paper a relationship between thedesigns of an organization with its operational efficiencyindicators has been examined. It was found that theseindicators play a very important role in the success of theorganization. The factors were studied in the context to aco-operative form of organization and while comparing itwith the corporate form, it was found that the design ofthe Amul structure is somewhat different as it believes inthe federal form of structure each unit is independent ofeach other.1.3 OBJECTIVE OF THE STUDYTo make study more scientific and systematic theresearcher frame following objectives:1)To study the significance of Amul co-operative inIndia.2) Toidentifytherelationshipbetweenorganizational design and operational efficiencyof Amul co-operative in india.3) To suggest an action plan for smooth functioningof Amul co-operative in India.1.4 RESEARCH METHODOLOGYTo evaluate the success of Organizational Design the twotypes of data sources are considered. Primary Source aswell as Secondary Source. Primary data was collectedthrough a structured closed / open-ended questionnaireand interviews with senior officials of AMUL, itsemployees and customers.Research Design TableGeographical Areaof the researchSample populationAnand in Kaira district of GujratKaira district milk producer’s unionLtdType of SampleConvenient samplingRespondentsEmployees of different hierarchallevel of the AMUL and the producermembers.Size of sample200 (100 farmers and 100 employeesof different hierarchal level of AMUL)Type of researchAnalyticalSecondary data was collected trough internet, newspapers, magazines, journals and annual reports.2.1 ORGANIZATIONAL DESIGNIJSER 2013http://www.ijser.org
International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013ISSN 2229-5518Organizational design is a formal, guided process forintegrating the people, form of the organization as closelyas possible to the purpose of an organization. It is used tomatch the organization seek to achieve. Through thedesign process, organizations act to improve theprobability that the collective efforts of members will besuccessful. Organizational design involves the creation ofroles, processes and formal reporting relationships in anorganization.2.1.1 THE AMUL MODELAmul has a Co-operative form with a blend ofprofessionalism. In the corporate form of an organizationthe shareholders are non-participative members whereasin this form the members are the participative owners ofthe organization. There are basically three tiers a dairy co-3operative viz., the village society- procurement unit, theunion- which is the processing unit and the federationwhich is the marketing unit all being an institution initself. The institutions at each tier have the bond oforganic and inter-institutional linkages and obligationswhich provide sense of purpose and directions in theiractivities. To manage these units efficiently the leadersfelt a need of the professionals. These professionals havea hierarchy similar to that of the corporate structure withthe managing director as their head. The ManagingDirector of all these units is appointed by the board ofdirectors. The board of directors comprises of the farmersmembers who come from the respective societies. So, ateach level the decision making lies in the hands of theproducers only, which give them a feeling of ownershipto them.2.1.2 COMPARISON OF AMUL MODEL WITH OTHER CO-OPERATIVESIn this study a comparison has also been done on theworking of other states co-operatives with that of theAMUL Model. It was found that the basic Anand Patternis the same everywhere, but the professionalmanagement is different from the AMUL model. In thecase with other dairy cooperatives the managing Directorof the federation which is apex body is an IAS ondeputation. As he is not in one federation permanentlythat does not give him the feeling of ownership which isvery essential for a co-operative to be successful. Since inmost of the co-operatives the government still has share,so various representatives are there in the board ofdirectors and they become the decision makingauthorities. The elections of the village society, union andIJSER 2013http://www.ijser.org
International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013ISSN 2229-55184federation are not politicized at GCMMF, whereas inother states these are influenced by the political parties atthe state. At AMUL the employees are hired by their ownrecruitment pattern by the Human Resource Sectionwhereas st other milk co-operatives there has not beenany recruitment since last many years. The recruitmentsystem is dependent on state government.Cooperatives works for the same purpose i.e. maximisingreturn for milk producers by adding value in differentways in the whole value chain. The organistion design isdone taking into consideration the mission of theorganization. That is why the design is done in such away so that there is maximum participation of itsmembers and the benefits can reach the members in aproper way.Even at the profit-sharing level, the distribution is madein proportion to the volume of business contributed byeach member; therefore, bonuses etc. are determinedfrom the value of the commodity supplied by themembers. This in turn ensures that while the co-operativedoes business, it also makes its members qualityconscious.In Anand Pattern Co-operatives, while the producersthemselves determine the policies, the opportunity isprovided to the professionals to implement the policies aswell as to manage the operations3.1 OPERATIONAL EFFICIENCYAny dairy is able to survive if the amount of milkprocurement increases. For this various aids have beenprovided by the unions to the farmers like cattle feeds,the mineral mixture powder, the veterinary services, forOperational Efficiency of an organization is based uponthe nature of a firm’s operations strategy. This comesfrom the mission of the firm itself and is tied to the notionof achieving competitive advantage through operations.A key subsequent decision is what type of process abusiness needs. Design must follow strategy; so givenpriorities from the strategic plan, a process can bedesigned that will support these priorities. There shouldalways be flexibility in the strategy adopted by tiveness and efficiency because with the help ofstrategies the resource can be put to the best of theirefficiency and maximum contribution to organizationalobjectives. Thus, strategies ensure that resources are putin action in a way in which they are specified. Thestrategies can be implemented only when we have aproper organizational design.3.1.1 DYNAMIC LOGISTICS SYSTEM AT AMULIJSER 2013http://www.ijser.org
International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013ISSN 2229-5518better breeding ofthe cattle they have artificialinsemination. It has been found that all these inputshaeve helped in the production of milk. The procurementat Amul has increased from 41.42 lakh kg to 64.38 lakh kgresulting a growth of 55.42% in last 10yrs . In Gujrat, thevillage societies have got so much profit that they have afund from which they are able to contribute some moneyfor the upliftment of their village like opening a school,building a hospital etc. This gives a good impact on thevillagers and encourages them to become a part of the cooperative. These village societies are a link between themembers and the union. The co-operative helps thefarmers to get remunerative price as well as continuousmarket for the milk. In addition to the price of the milkthey also get a bonus at the end of the year from the profitof the organization. The professionals utilize it bydiversifying the products and finding suitable market. Tofurther improve the efficiency of the procurement theorganization has used the technology for this. Everysociety has its own computerized system where thetesting of milk is done and payment is made according tothe quantity and quality. Milk being a perishablecommodity it is necessary to preserve it properly. Tomaintain its quality the society maintains a Bulk MilkCooling system which preserves the milk below 40oC.This also reduces the expenses of the transportation as thesociety which has this unit the van goes only once a dayto collect the milk. Further to prevent the sourage of themilk the union has its own chilling centers which help inpreserving the milk procured from the far off societies3.1.2 QUALITY MANAGEMENTQuality is very important for any food industry. Qualityimplies maintenance of functional values of the productas well as improving the style of management by keepingcustomer in focus. The milk producers of the memberunions have a commitment to achieve quality in basicallysix priority areas – Cleanliness of the dairy cooperativesocieties, Planning and Budgeting of the Dairy Society,Artificial Insemination Service, Quality Testing and Milkmeasurement at Dairy co-operative Societies andManagement Practices and Self-leadership Development.This TQM movement has also been extended to thewholesale dealers by organizing workshops for them.Quality circles that work in tandem with the sales force .This movement also involves the process of policydeployment known as Hoshin Kangri. This involvesstrategy formulation and implementation, involvingevery member of the value chain.53.1.3 E-REVOLUTIONAMUL is the first company in the co-operative form ion-Entertainment age, the barriers betweenthe business organization and consumers, betweenmanufacturers and end-users are all breaking down. Thisis what was started fifty years back by AMUL byeliminating the ‘middlemen’ and bringing the ‘producers’closer to the ‘consumers’. The organization believes ininnovations in product as well as process. For rapidcommunication access to Veterinary Health Assistancethey have introduced the GIS facility. The adoption of theelectronic milk testers to ensure efficient testing andmeasurement of milk constituents is a step in thisdirection. This is first organization to have its ownwebsite – www.amul.com They have nationwidecyberstores, functioning in some 120 cities, and an AMULcyber stores gifting service capable of serving consumersin more than 220 cities, on special occasions. This hasbeen possible by creating an IT network, which links theproduction, centres with sales offices and dealers byVSAT and e-mail connectivity.3.1.4 BRAND –A POWERBrand is the power of any organization. This can bedeveloped only with the marketing skills and by givingthe customers value for money. This was done with theformation of GCMMF in 1974. It became the marketingunit of the organization helping in the centralization ofthe marketing of all p0roducs except liquid milk whichthe unions had to do on its own. AMUL has a strongsupport of the rural Managers for IRMA. This institutionalso forms an integral part of the AMUL model. Thisinstitute has helped sufficiently in building these traits atthe federation and conducting Management developmentprogramme. The distribution channel is well equippedwith 48 depots situated in five zones.IJSER 2013http://www.ijser.org
International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013ISSN 2229-5518Exports: AMUL has the export of products also. Theorganization is getting the APEDA award for excellencein exports of dairy products.Growth Dynamics : According to the study conducted itwas found that the revenue has increased from Rs.2218.52to Rs.8005.36. The exports have also gone up by 50% andthe foreign exchange earnings have crossed a mark of Rs.100 crores.Amul is the no.1 most popular brand in thecountry and in this process the organizational design hasbeen instrumental. As the survey indicates approximately80% of the employees report that the operationalefficiency is the outcome of the dynamic organizationalstructure of Amul.Table 1.1 Showing the growth dimensions of AMULYearSalesMilkProduction(inProcurement of Milk(inbillions) (in million 797.749.4511280.059.2811052.557.371084.1 AN ACTION PLAN TO STRENGHEN THERELATIONSHIP BETWEEN ORGANIZATIONALDESIGN AND OPERATIONAL EFFICIENCYLike any other organization Amul too has its ownstrength and some grey areas. The strength of Amul liesin the dedication of its producer members, thetechnology, the supply chain management, the values,the HR initiatives taken by the organization, theirvisionary leadership.And the grey areas include certain structural as well asoperational bottlenecks which need to be tackled byAmul for smooth & steady operations and for taking theorganization to new heights. On the basis of in-depthanalysis of operations and based on the feedbackcollected from the farmers, vendors, employees andofficers at Amul. The following actions were suggestedfor improving the efficiency.4.1.1Mission Statement6As viewed by the employees mission plays a veryimportant role in effective working of the organization.Amul has recently started making members andemployees aware of the mission statement of theorganization, but at certain levels people are not awareabout it. Amul should try to disseminate its missionstatement to member & employee so that they cancontribute their best for attainment of mission &objectives of Amul.4.1.2 Enlargement of MembershipThe number of producer members at Amul has beenincreasing but on having a closer look we can find thepercent growth has been decreasing. This might block thefuture growth of the organization. They can conductcultural shows showing the developmental aspects ofcooperatives. They can organize free cattle care camps forthem which may motivate the villagers to becomemembers.4.1.3 Participative ManagementAlthough the structure of GCMMF demands participativemanagement and it has been, of course trying toimplement it. On the one hand, participativemanagement involve much time impost yet there theyneed a clearly defined the areas where participationmanagement can be implemented. On all critical areasaffecting participative decision making whereas routinedecisions can be taken by the managers in the spot.4.1.4 Changes in Cooperative LawThe cooperative act had been framed some eighty yearsback by the colonial government. It was under thepressure of these farmers the English government had toform a cooperative. The Englishman did not have faith inthe Indians, so they included in the cooperative act thatthe registrar of the cooperatives would be a member ofthe board. In independent India, we must understand therole of cooperatives in rural development. The realdevelopment can take place when we depoliticize thecooperative act.4.1.5 Avoiding Delay in Decision MakingDecision making plays a very important role in thegrowth of the organization. Right decision at right time isvery important. Generally delayed decisions spoil theurgency and significance of the methods in question.GCMMF is advised to spot the decisions where fromdecision making is much warranted. Only with firmIJSER 2013http://www.ijser.org
International Journal of Scientific & Engineering Research Volume 4, Issue 1, January-2013ISSN 2229-5518decision making Amul can stay much ahead of itscompetitors.4.1.6 Availability of the ProductsAmul has been trying to make the products available toits customers easily. In this context they have openedAmul Parlours so that its products are available to itscustomers under one roof. From the survey it has beendeducted that although Amul is doing all such efforts butstill the availability has increased in western parts ofIndia and in Metros but still rest of India these parlourshave a problem of Non-availability due to which they arenot able to meet the consumers demand. Amul mustincrease its milk production base and processing capacityso that they are able to meet the growing needs.4.1.7 Awareness in Unexplored AreasAlthough Amul has been doing lot of projects for theawareness of the people in regards to cattle care andbetter breeding facilities. But unfortunately theseprograms have been concentrated in those areas whichhave higher literacy rate. The remote areas which are thepotential zone for milk production must be taken up byAmul. Extensive programs should be done to attract thefarmers to become members of the society. Somedemonstrations or some experience of the producers likethem should be taken there to share their experience. Thisway they can be convinced easily1.4.8 Coping with the CompetitionThe largest share of Amul’s turnover comes from FreshMilk and then from butter, one of the earliest product. IfAmul has to increase its turnover, it has to concentrate onincreasing its fresh milk sale which will be done only ifthe procurement of the milk increases.1.4.9 Product DevelopmentAltho
In this study a comparison has also been done on the working of other states co-operatives with that of the AMUL Model. It was found that the basic Anand Pattern is the same everywhere, but the professional management is different from the AMUL model. In the case with other dairy cooperatives the managing Director
13 Bibliography 46 5. Executive Summary AMUL is a co-operative sector. It is the institution of the farmers, for the farmers and from the farmers. The AMUL gives pleasure to the farmer to charge the own price, which was not possible in
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3 Contents List of acronyms 4 Executive Summary 6 1 Introduction 16 2 Methodology 18 3 Case Studies 25 Case Study A 26 Case Study B 32 Case Study C 39 Case Study D 47 Case Study E 53 Case Study F 59 Case Study G 66 Case Study H 73 4 Findings 81 Appendix A - Literature findings 101 Appendix B - CBA framework 127 Appendix C - Stakeholder interview questionnaire 133
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