Business Case Study | Amul’s Strategy during the COVID Pandemic | Dr. R.S Sodhi | Brain Behind Success

How Amul beat its competition & made Rs.39,200 CR during the 2020 pandemic

COVID Spread in Entire world & March 24th,2020 India’s Honorable Prime Minister Shri Narendra Modi announced Janta Lockdown. It was a hard to digest for People but more for Labors. Lockdown affected to not only people but economy as well. India faced a loss of about 10 Lakh Crore. Many Industries came into dilemma. But from all of 2–3 Industries affected the Most which is Food(Wholesale & Retail), Hotel & Travel & Education.

As per government guidelines, People should avoid outdoor food and that’s something which affected to AMUL. Many Companies tried there best to tackle this like Zomato introduced MaxSafety+, etc.

But The impact was so heavy that it costed the milk producers of India more than 112.3 crores of rupees every day. But one legendary company, which every Indian child knows was so strategically able to navigate the situation. They did not only minimize their losses but they even increased their revenue by almost 700 crores. the brand we are talking about here is none other than Anand Milk Union Limited, which we also know as AMUL.

source — The Economic Times

As we all know that Amul is in the Market from a so long time and have made it’s Unique Position by Introducing more that 25 Products during COVID and due to his Unique Marketing Strategies, While many other companies were fighting with COVID.

Amul observed that people are at home and doing nothing and just watching Television because Indian government started again old but people favorite Ramayana & Mahabharat Serial & IPL. So Amul launched and invested heavily in Marketing. Amul showed old ads during serial break, so that people will feel Nostalgic. The Amul ads were so popular that they crossed all the barricades of TRP.

Now Question is -

How did Amul able to hold such a large milk Quantity and how did he work on supply Management chain and achieved such a great height?

So, when the lockdown was announced, the dairy industry was allowed to operate with certain restrictions because milk is also an essential food. But as soon as the lockdown was declared, several businesses either cut down or shut their businesses. This resulted in the loss of demand in the dairy industry. Industry saw 20% drop in revenue and 12% drop in business. All companies quickly pulled down production , decreased their logistics. As an outcome of this, many farmers were left in a helpless state. Many workers such as truck drivers and factory workers lost their daily bread because less milk meant less operation of factories which means less transportation of milk. But when most of the dairy industry was preparing for a loss in demand, AMUL on the contrary prepared for a surge in demand.

Change in Consumer Behavior

Why was AMUL preparing for a surge in demand, isn’t it like taking a risk of 1000 of crores?

Now Amul observed that Industry demand for milk has decrease but the consumption of milk products in house has massive shoot up because due to COVID. People wanted to be a Fit to fight with Disease & People started to stay at home due to Work from Home culture. People chosen Pack Products over other loose Products. While other companies misjudged consumer demand and started decreasing their supplies, Mr. R. S. Sodhi, Managing Director of AMUL insisted that they should keep the supply chain running at full capacity.

Despite the closures of restaurants, as of May 2020, during the peak of lockdown times, the demand for milk-based products took a massive shoot up. Milk products like cheese increased by almost 80%, demand for cottage cheese increased by 40%, and demand for condensed milk almost doubled. Despite running at its full capacity of 115%, the demands were so massive that they had to hire other plants from other companies that were lying vacant. Except for ice creams, all their plants were running at full capacity throughout the lockdown. They also realized that moving of trucks through the country would be very difficult because of the shortage of labor and the lockdown restrictions. They started using railways for the transportation of products quickly throughout the country.

Strategic Partnerships

Now, considering the vast supply chain of AMUL, i.e., 18,700 societies, 5000 milk tankers which go up to 200 chilling stations, 10,000 distributors, 1 million retailers, and most importantly more than 3.6 million farmers. The question arises that how did they manage to coordinate with their huge supply chain and manage their resources properly?

Well, the answer lies in a strategic partnership that was established between AMUL and IBM in 2009 wherein AMUL invested a hefty amount of 80 crores transforming the information technology landscape of the company. Now what they meant is that IBM would develop a full-fledged digital system and it would track every small detail of operation that is being carried out in the supply chain of AMUL. And just like Amazon, IBM could tell you how many plants are working at full capacity, how many trucks are engaged, and in which areas. Most importantly, it also tells you when and how many trucks or plants are at idle capacity so that they can divert the workload to them to make optimum utilization of every element of the supply chain.

This system turned out to be a game-changer for AMUL during the lockdown. Because of this AMUL Could able to improve Supply chain Management. He started to pay for an extra work of about Rs.100 -125. And for the workers, food and stay arrangement were made, so that they don’t get sick and affected by COVID. When they realized that the cattle feed was not sufficient to meet the needs. AMUL even made extra arrangements for cattle feeds for farmers. All of this made the supply chain so effective that, while the rest of the dairy industry was completely shut down, AMUL procured 3.5 million liters of milk every day and even paid 800 crores of rupees extra to rural milk producers of India. AMUL even used third part e-commerce sites like Flipkart, Big Basket, Dunzo and even started prompting deals with Swiggy and Zomato to sell butter, milkshake, and paneer. According to Mr. R. S. Sodhi, managing director of AMUL, they got more than 60,000 orders through Zomato and they sold AMUL products of almost 3 crores in more than 200 cities.

Important Business Lessons

1. Good Leaders are ready to face risk while Great Leaders embrace with open arms.
2. Strategic Investment will always help you. In this case 80 CR IBM strategic Investment helped AMUL to handle Supply Chain Management.
3. Always See Such storm as a Golden Opportunity not as a obstacle.

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