How Amul beat its competition & made 39,200 Cr during Lockdown? : Business case study - YouTube

<b>On 24th of March 2020, our Prime Minister announced a nationwide lockdown because of the pandemic</b>

<b>and what followed next was a nightmare that our nation was not prepared for.</b>

<b>Millions of people, especially the labourers lost their jobs</b>

<b>several billion dollar industries came to a standstill and it costed the Indian economy more than 10 lakh crores.</b>

<b>One such industry that was heavily impacted due to the pandemic was the dairy industry</b>

<b>and it costed the milk producers of India more than 112.3 crores every single day.</b>

<b>But you know what guys?</b>

<b>There was one legendary company that was so strategically able to navigate through this situation</b>

<b>that they did not juts minimise their losses</b>

<b>but even went one step further to increase their revenue by 698 crores.</b>

<b>This brand that I'm talking about is none other than</b>

<b>Anand Milk Union Limited which we all so dearly know as Amul.</b>

<b>Now, everybody knows the story and history of Amul and how it has been there for decades.</b>

<b>But very few people know how incredible this company's business strategies are.</b>

<b>And one such mind blowing example of the same is how Amul reacted to COVID-19. </b>

<b>People, you know what? Amul has done such an extraordinary job during the COVID times</b>

<b>that in 2020 itself while rest of the companies were struggling to even keep their supply chain going</b>

<b>Amul went on to produce 33 new products in the market</b>

<b>procured an additional 35 lakh litres of milk every single day</b>

<b>and even paid 800 crores extra to the rural milk producers of India.</b>

<b>The question is-</b>

<b>How did Amul manage to achieve such an incredible feat and most importantly</b>

<b>what are the business strategy lessons that you and I need to learn</b>

<b>from this case study in order to become extraordinary business leaders.</b>

<b>The answer to this question lies in the extraordinary supply chain management of Amul.</b>

<b>When the lockdown was announced in the month of March</b>

<b>the dairy industry was allowed to operate with certain restrictions because</b>

<b>milk came under the essential goods category.</b>

<b>But as soon as the announcement of lockdown was done</b>

<b>several businesses either cut down or closed their businesses</b>

<b>and this resulted into the loss in demand for the dairy industry</b>

<b>because these industries also included the restaurants, the catering and the hotel businesses. </b>

<b>And these businesses accounted for 20% of the revenue for the organised dairy sector.</b>

<b>As a result Amul's sales also saw a decline of 10-12%.</b>

<b>And when the dairy companies saw this massive fall in demand</b>

<b>they quickly cut down the milk procurement</b>

<b>decreased their logistics and decreased their production by a large extent.</b>

<b>This left many farmers in a helpless state because</b>

<b>milk procurement was very less</b>

<b>many labourers such as truck drivers and factory workers lost their livelihood because</b>

<b>less milk meant less trucks and less operation of factories.</b>

<b>But you know what guys?</b>

<b>While the entire dairy industry was preparing for a loss in demand</b>

<b>Amul did the complete opposite and started preparing for a surge in demand.</b>

<b>Now the question is</b>

<b>when it's clearly being seen that there is a major decline in demand from the restaurants and the hotels</b>

<b>that account for 20% of the revenue.</b>

<b>Why would anyone prepare for a surge in demand.</b>

<b>Isn't that like a 1000 crore gamble.</b>

<b>Well, guess what?</b>

<b>There was one very important variable that very few people took into consideration</b>

<b>and that was the change in consumer behaviour.</b>

<b>Now, if you remember from what we've learnt from the Airbnb case study</b>

<b>every time there is a crisis of any kind, there is a </b>

<b>paradigm shift in consumer behaviour.</b>

<b>In this case</b>

<b>Although there was no demand from the restaurants</b>

<b>the household consumption of milk products skyrocketed</b>

<b>as more and more people began to stay at home.</b>

<b>And this, in turn, gave rise to the homemade food trend</b>

<b>because of which</b>

<b>the demand for both, groceries and milk products skyrocketed.</b>

<b>And secondly, because of the pandemic</b>

<b>people became extremely health conscious</b>

<b>millions of people shifted from buying loose milk to buying packaged milk.</b>

<b>And while other brands underestimated this consumer demand and started decreasing their supplies</b>

<b>The managing director of Amul, Mr. Rupinder Singh Sodhi, insisted</b>

<b>that they keep the supply chain functioning at full capacity.</b>

<b>And guess what?</b>

<b>Despite the closure of the restaurants</b>

<b>as of May 2020, during the peak of the lockdown times</b>

<b>the demand for milk based products skyrocketed.</b>

<b>The demand for cheese increased by 80%</b>

<b>demand for cottage cheese increased by 40%</b>

<b>and the demand for condensed milk increased by 100%</b>

<b>And the result?</b>

<b>Well, Amul plans for operating at 115% capacity.</b>

<b>In fact, the demand for Amul products was so high</b>

<b>that they had to hire other plants from other companies that were lying vacant</b>

<b>and except for ice creams all their plants were operating at full capacity throughout the lockdown.</b>

<b>And on top of that</b>

<b>they also realised that moving trucks through the country</b>

<b>will be very difficult because of shortage of labour and the lockdown restrictions.</b>

<b>So, they started using the railways to transport products quickly throughout the countries.</b>

<b>Now this begs the question, considering the vast supply chain of Amul</b>

<b>I mean, we are talking about 18,700 societies</b>

<b>5000 milk tankers going to 200 chilling stations,</b>

<b>10,000 distributors, 1 million retailers and most importantly</b>

<b>more than 3.6 million farmers.</b>

<b>The question is</b>

<b>how did they manage to coordinate such a huge supply chain</b>

<b>and manage their resources properly?</b>

<b>The answer to this question lies in a strategic partnership</b>

<b>that was established between Amul and IBM in 2009</b>

<b>wherein Amul invested a hefty 80 crores</b>

<b>into transforming the information technology landscape of the company.</b>

<b>Now, what this meant is that</b>

<b>IBM would develop a full-fledged digital system</b>

<b>to track every small detail of operation that is being carried out in the supply chain of Amul.</b>

<b>And just like we get an update about our Amazon order</b>

<b>through IBM's system, the management team of Amul could exactly tell you</b>

<b>how many plants were working at full capacity</b>

<b>how many trucks are engaged and in which areas and most importantly</b>

<b>it could also tell you when and how many trucks or plants</b>

<b>are at idle capacity so that</b>

<b>you can direct the workload to them</b>

<b>to make optimum utilisation of every element of the supply chain.</b>

<b>And this system</b>

<b>turned out to be a game changer for Amul during the lockdown</b>

<b>because while on onse side the supply chain of milk was overloaded</b>

<b>the ice-cream and frozen foods vertical of the business was almost shut down.</b>

<b>Therefore, the labours, storage, and trucks were lying at idle capacity</b>

<b>from the end of ice-cream and frozen foods.</b>

<b>But thanks to IBM's system,</b>

<b> Sodhi Sir and team were able to accurately oversee the entire operation of the supply chain.</b>

<b>And they very conveniently diverted all the idle resources</b>

<b>from the ice-cream and frozen foods vertical to the milk supply chain.</b>

<b>And all of this process is said to have happened overnight.</b>

<b>And this end to end digitalisation made the process so efficient </b>

<b>and gave them so much clarity about their operations</b>

<b>that Amul was even able to provide incentives or the ground staff.</b>

<b>The casual workers were given 100-125 rupees cash incentives</b>

<b>and for the workers, even food and stay arrangements were made so that</b>

<b>they don't get sick and they don't get affected by COVID.</b>

<b>And when they realised that the cattle feed was not sufficient</b>

<b>Amul even made extra arrangements for cattle feed for farmers.</b>

<b>And all of this made the supply chain of Amul so efficient and effective</b>

<b>that while the rest of the dairy industry was completely shut down</b>

<b>Amul tapped onto their market share</b>

<b>and procured 3.5 million litres of extra milk every single day</b>

<b>and paid 800 crores extra to the rural milk producers of India.</b>

<b>A fun fact over here is that</b>

<b>Amul even used 3rd party e-commerce sites like Bigbasket, Dunzo, Flipkart</b>

<b>and even landed exclusive deals with Swiggy and Zomato</b>

<b>to sell butter, milkshake and paneer.</b>

<b>And according to Sodhi Sir</b>

<b>in the month of May itself they got more than 60,000 delivery orders through Zomato</b>

<b>and they sold 3 crores worth of Amul products</b>

<b>in more than 200 cities.</b>

<b>This was the second pillar of their historic success, that is</b>

<b>the end to end digitalisation of the entire supply chain</b>

<b>and the incentivising of the labour forces.</b>

<b>With that we move onto the last part which is something that you all must have already observed and that is</b>

<b>the humungous investment of Amul into marketing.</b>

<b>Now, people, during the months of COVID when other brands were cutting down on their advertisement</b>

<b>Amul increased its ad volumes by 316% compared to 2019.</b>

<b>And they were so aggressive with their campaign</b>

<b>that the Amul Kool ad was viewed 10 times more than the Indian Premiere League (IPL) itself.</b>

<b>And when Doordarshan started re-broadcasting the epic shows like Ramayan and Mahabharat during lockdown</b>

<b>Amul started running their old ads</b>

<b>to resonate with the nostalgic mood of the audience, creating even better impact.</b>

<b>Now, the highlight over here is that</b>

<b>although Amul was very keeen on tapping onto the marketing opportunities</b>

<b>and even made immunity boosting products</b>

<b>they never went overboard with any kind of ridiculous COVID claims</b>

<b>unlike some other brands in our country.</b>

<b>This is how using an extraordinary foresight of consumer behaviour</b>

<b>through agile supply chain management system.</b>

<b>using digital transformation, third party collaboration, incentivising of labour </b>

<b>and through strategic marketing initiatives</b>

<b>Anand Milk Union Limited established a benchmark for crisis management</b>

<b>for dairy companies from all across the world to follow.</b>

<b>And this brings me to the most important part of the video and that is</b>

<b>what are the lessons that we need to learn in order to become extraordinary business leaders</b>

<b>Lesson number one,</b>

<b>while good leaders prepare to face risk</b>

<b>great leaders prepare to embrace risk with open arms.</b>

<b>In this case</b>

<b>while most companies prepared to prevent their losses</b>

<b>Sodhi Sir prepared Amul to operate at full capacity even during the pandemic</b>

<b>And one of the reasons was such a bold decision was the fact that</b>

<b>he had already seen how his senior leaders kept the company going</b>

<b>inspite of the floods, inspite of the curfew and even during war situation.</b>

<b>Lesson number two, no matter how big your organsation is</b>

<b>resourcefulness is one attribute that will always save you during crisis.</b>

<b>The only question is</b>

<b>how are you going to build such an agile system.</b>

<b>In this case, it was Amul's futuristic investment of 80 crores into IBM's systems</b>

<b>that helped them operate such a huge supply chain in such an optimised manner.</b>

<b>And last and most importantly,</b>

<b>every time there is a crisis of any kind, it could be a pandemic</b>

<b>it could be a crisis specific to your industry</b>

<b>always remember during such a time</b>

<b>that you can either choose to see it as an obstacle or</b>

<b>you can choose to see it as a golden opportunity to get ahead of your competitors.</b>

<b>In this case, Sodhi Sir was so sharp that he realised</b>

<b>that COVID-19 was the perfect opportunity for him to capitalise on the market in every single front.</b>

<b>So, firstly</b>

<b>he increased his market share and got the customers who were transitioning from loose milk to packaged milk.</b>

<b>Secondly, all the farmers who were denied procurement from restaurants and other companies</b>

<b>they rushed to Amul, giving Amul 3.5 million litres of extra milk every single day.</b>

<b>Hence, Amul was able to establish itself as a saviour for farmers.</b>

<b>And most importantly</b>

<b>while the industry was ruthless in cutting down its frontline workers</b>

<b>Amul provided the same workers with added incentives, therefore,</b>

<b>building a very strong relationship with its frontline workers.</b>

<b>This is how</b>

<b>Amul became an opportunist during the times of crisis and established a benchmark for brands</b>

<b>all across the world to learn from.</b>

<b>And I couldn't be more grateful to have the privilege to present this case study to you.</b>

<b>That's all from my side for today guys. If you learnt something valuable</b>

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<b>Thank you so much for watching. I'll see you in the next one.</b>

<b>Bye-Bye.</b>