Business Strategies for Managing Complex Supply Chains in Large Emerging Economies: The Story of AMUL

Pankaj Chandra Devanath Tirupati Indian Institute of Management Vastrapur, Ahmedabad 380015 India chandra@iimahd.ernet.in devanath@iimahd.ernet.in Revised April 2003

Acknowledgement: We would like to thank BM Vyas, MD, GCMMF, Kailash Vyas, MD, AMUL and many employees of the two organizations for hours of discussion, for making documents on performance and practices available to us for research, and for arranging field visits to various village societies, chilling units, and union plants. We are also grateful to MS Sriram and Partha Mukhopadhyay for their extensive comments on the paper. This project was funded by a grant from Research & Publications, Indian Institute of Management, Ahmedabad, India.

Abstract

In this paper we describe a case study of a dairy cooperative, AMUL, in western India that has developed a successful model for doing business in large emerging economy. It has been primarily responsible, through its innovative practices, for India to become world’s largest producer of milk. This paper draws various lessons from the experiences of AMUL that would be useful to cooperatives globally as well as firms that are interested in doing business in large emerging markets like India and China. Many of these economies have underdeveloped markets and fragmented supply bases. Market failures for many of these small producers are high. On the other hand, the size of both, markets and the suppliers is large. As a result, firms that identify appropriate business strategies that take into account these characteristics are more likely to succeed in these markets. The following are some key message from AMUL’s success: firms in these environments need to simultaneously develop markets and suppliers to synchronize demand and supply planning, develop or