DISTRIBUTION CHANNEL OF SUDHA DAIRY

6/12/2016

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Shubham Kumar Singh - 33

Praveen Kumar Singh - 34

Rohit Banerjea - 38

Subrata Kumar Dey - 45

Anubhav Prateek - 48

Shashi Bhushan Prasad - 58

TEAM MEMBERS

MARKETING -1

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CERTIFICATE

This is to certify that the project entitled “Distribution Channel of

Sudha Dairy” submitted by Rohit Banerjea, Shashi Bhushan

Prasad, Subrata Kumar dey, Shubham Kumar Singh, Praveen

Kumar Singh & Anubhav Prateek of Marketing – 1, XISS is a

record of bonafide project work carried out by them under my

guidance and direction.

Prof A. R. Bodra

(Head of Dept. Marketing)

XISS, Ranchi

Date: 06th

December, 2016

Place: XISS, Ranchi

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ABSTRACT

This report describes the distribution network and supply chain management

used in Sudha Dairy, Ranchi. A distribution channel is a chain of businesses or

intermediaries through which a good or service passes until it reaches the end

consumer. It can include wholesalers, retailers, distributors and even the internet

itself. There are three main types of channels, all of which include a combination

of a producer, wholesaler, retailer and to the end customers. Each intermediary

receives the item at one pricing point and movies it to the next higher pricing

point until it reaches the final consumer.

Sudha is having across 1400 retailers and 27 distributors who are being

registered from Sudha to distribute Sudha milk products and its items to the

customers. The distributors collect the orders individually from each retailer on

daily basis and take the order payment and submit it to Sudha’s bank A/c just a

day before the delivery. After receiving the order payment the supply of milk

products is done through van directly from Sudha Dairy.

Keywords: - Distribution network, Supply chain management, Chain of

businesses, producer, wholesaler, retailer, end customers.

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ACKNOWLEDGEMENT

We are extremely grateful to Mr. Anmol Roshan Bodra, Head of the

Department of Marketing (XISS) for giving me the consent to carry out the

project.

We would also like to thank to Md. Majiduddin, Chief Executive of Sudha

Dairy Ranchi for his guidance and permission to complete this project

successfully.

Finally, we would like to thank our entire team & friends for their support &

love that kept us going during hard times.

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CONTENTS

Index Page No.

TEAM MEMBERS………………………………….................................. 1

CERTIFICATE…………………………………………………………… 2

ABSTRACT……………………………………………………………….. 3

ACKNOWLEDGEMENT………………………………………………... 4

CONTENTS……………………………………………………………….. 5

CHAPTER – 1

ORGANIZATION- A PROFILE………………………………………... 7

1.1 History…………………………………………………………….. 7

1.2 Background……………………………………………………….. 8

CHAPTER – 2

OPERATIONS…………………………………………………………... 10

2.1 Area of Operations………………………………………………... 10

2.2 Products of Sudha Dairy………………………………………….. 11

CHAPTER – 3

DISTRIBUTION CHANNEL…………………………………………… 12

3.1 Supply Chain Management………………………………………... 12

3.2 Role of Channel Intermediaries…………………………………… 13

3.3 Line Diagram of System of Distribution…………………………... 14

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Index Page No.

CHAPTER - 4

CHANNEL SELECTION……………………………………………….. 15

4.1 Channel Selection in Sudha……………………………………….. 15

4.2 Selection of Distribution Channel by Sudha……………………… 15

4.3 Conflict Solving Strategy in Distribution Channel…………........... 16

4.4 Distributors in Ranchi………………………………………........... 16

CHAPTER – 5

PRODUCT MANAGEMENT…………………………………………... 17

5.1 Product Management by Sudha Dairy…………………………….. 17

5.2 Compensation and Benefits……………………………………….. 17

CHAPTER - 6

Physical Distribution……………………………………………………. 18

6.1 Physical Distribution Channels…………………………………… 18

6.2 Distribution System of Sudha Dairy………………………………. 18

6.3 Sudha Supply Chain……………………………………………….. 19

CHAPTER - 7

OBSERVATION………………………………………………………... 21

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CHAPTER - 1

ORGANIZATION - A PROFILE

1.1 History

The mighty Ganges at its origin is but a tiny stream in the Gadgetry ranges of the

Himalayas. Similar is the story of Sudha which inspired 'Operation Flood' and

heralded the 'White Revolution' in India. Father of white revolution is Dr.

Vargiskurian (1973) it began with two village co-operatives and 250 litres of

milk per day, nothing but a trickle compared to the flood it has become today.

Today Sudha collects processes and distributes over a million litres of milk and

milk products per day, during the peak, on behalf of more than a thousand

village co-operatives owned by half a million farmer members. Further, as

Ganga-ma carries the aspirations of generations for Moksha, Sudha became the

symbol of the aspirations of millions of farmers. Creating a pattern of liberation

and self-reliance for every farmer to follow.

The start of a revolution:-

The revolution started as awareness among the farmers that grew and matured

into a protest movement and the determination to liberate themselves. Over four

decades ago, the life of a farmer in Kaira District was very much like that of his

counterpart anywhere else in India. Its income was derived almost entirely from

seasonal crops. The income from milk buffaloes was undependable. The

marketing and distribution system for the milk was controlled by private traders

and middlemen. As milk is perishable, farmers were compelled to sell it for

whatever they were offered. Often, they had to sell cream and ghee at

throwaway prices. In this situation, the one who gained was the private trader.

Gradually, the realization dawned on the farmers that the exploitation by the

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trader could be checked only if marketed their milk themselves. In order to do

that they needed to form some sort of an organization. This realization is what

led to the establishment of the Bihar state Cooperative Milk Producers'

federation Limited (popularly known as Sudha) which was formally registered

on December 14, 1946.

The Kaira Union began pasteurizing milk for the Bombay Milk Scheme in June

1948. An assured market proved a great incentive to the milk producers of the

district. By the end of 1948, more than 400 farmers joined in more village

societies, and the quantity of milk handled by one Union increased from 250 to

5,000 litres a day.

1.2 Background

“Patna dairy project” was started at 1st October, 1981 through the National

Dairy Development Board (NDDB).NDDB handed over the arrangements of

Patna Dairy Project (PDP) to Vaishal Patliputra Dugdh Utpadak Sahkari

Sangh Ltd. (VPDUSS) with effect from 1st July, 1988. The Company is ISO-

9001:2000 and HACCP (IS-15000) certified by Bureau of Indian Standards in

March, 2002.

A Corporation know as Bihar State Dairy Corporation was formed in the year

1972 for speedy and effective implementation of the Operation Flood program in

the state. The Dairy Corporation was to develop the Dairy Cooperatives both at

the village level and milk shed level cooperative would take over the entire

infrastructure created in due course.

The Corporation positioned a multi-disciplinary Procurement & Inputs wing in

1975 after their recruitment and training. A Spread Head Team (SHT) was

deputed from National Dairy Development Board (NDDB) from the same year

for helping the Corporation in organizing and developing the Cooperatives.

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Though the progress in the initial years was encouraging, the programme, for

obvious reasons could not achieve the goals for which it was established.

Subsequently, the State Government felt it worthwhile to request the DAIRY

BOARD (NDDB) for taking over the infrastructure created on management

basis. The National Dairy Development Board (NDDB) took over the

management of the infrastructure with effect from 1st October, 1981 under the

banner of Patna Dairy Project (PDP).

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CHAPTER – 2

Operations

2.1 Area of Operation

There are six district level Milk Producer’s Cooperative Unions affiliated to the

Milk Federation. These milk unions are covering twenty-six districts and in

addition five districts are being covered by the Federation.

Different milk unions, which are organising the DCS network in these districts,

are as follows:

Vaishal Patliputra Milk Union, Patna covering Patna, Vaishali, Nalanda,

Saran and Sheikhpura districts.

DR Milk Union, , Barauni covering Begusarai, Khagaria, Lakhisarai and

part of Patna Districts.

Tirhut Milk Union, Muzaffarpur covering Muzaffarpur, Sitamarhi,

Sheohar, East Champaran, West Champaran, Siwan & Gopalganj.

Mithila Milk Union, Samastipur covering Samastipur, Darbhanga &

Madhubani, Basopatti district.

Shahabad Milk Union, Area covering Bhojpur, Buxar, Kaimur & Rohtas

districts.

Vikramshila Milk Union, Bhagalpur, Munger, Banka and Jamui Districts.

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The Milk Federation has already taken up organisation of Dairy Co-operative

Societies (DCS) in the districts of Gaya, Jehanabad, Arwal and Nawada under

Magadh Dairy Project and work has been initiated by Kosi Dairy Project in

Saharsa, Supaul and Madhepura, Katihar, Purnia, Araria and Kishanganj

districts.

The districts of Ranchi, East and West Singhbhum, Bokaro and Dhanbad now in

Jharkhand are being covered by the dairies directly under the control of Milk

Federation for the supply of milk and milk products to the urban consumers in

these cities. Procurement of milk has been taken up in Ranchi districts only.

2.2 Products of Sudha Dairy

Products manufactured and sold by Sudha dairy are categorized into three parts:-

Milk

Milk Products

Ice Creams

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Raw Material Procurement

Chilling Unit/ Processing Plant

Distribution

Zone 1

Route 2 Route 1

Zone 2

Route 2 Route 1

Zone 3

Route 2 Route 1

Retailer

Customer

CHAPTER – 3

Distribution Channel

3.1 Supply Chain Management

Here Distribution directly controls retailers.

There is no direct sales forces that are controlling retailers. If is a sole a

responsibility of a distributors to control retailers.

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3.2 Role of Channel Intermediaries

Distribution of Milk and Milk Products takes place by means of channels, and

the intermediaries are the independent groups that make the product available for

consumption.

The entire distribution is based on the customer demand. The customer demand

flows through some important intermediaries such as retailer, distributors, whole

seller etc. according to customer demand the retailer and distributor prepare the

list of liquid milk consumption of one day.

The computer department of PDP collects the demand from the distributors of

different zones / pay in slip/ Bank guarantee cheque.

Distribution usually takes order from the retailers and then transfers the

order to Sudha Dairy.

Distributors submit the money of orders into the Bank account of Sudha

Dairy.

Orders are usually paced before the day of delivering.

Then Sudha deliver their products to their respective distributors.

And then it goes from distributors to the retailers.

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3.3 Line Diagram of System of Distribution

CUSTOMER DEMAND

LIQUID MILK

RETAILER RETAILER

MILK BY VAN DETAILS OF

DEMAND

SUDHA DAIRY DISTRIBUTOR

DEMAND SHEET DEMAND & MONEY

COMPUTER DIVISON OF

PDP

It’s a cycle process and also day to day affairs of PDP, which starts with

consumer demand of milk and ends over consumption of milk by the consumer.

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CHAPTER – 4

CHANNEL SELECTION

4.1 Channel Selection of Sudha

They usually have a direct contact with distributors where they supply

their products and then it goes to retailer and finally it reaches to the

customer.

Sometimes they also have a direct contact with the retailers like

“Reliance Fresh” where they directly supply their products.

These are all perishable product so here products are distributed fastly

before getting expired.

4.2 Selection of Distribution Channel by Sudha

Sudha usually published tender for distributors and they select those

distributors who offer at a very low and reasonable cost.

They select those distributors who are already in a business of dairy

products and experience.

They select these distributors who have TIN Number and PAN No.

Those have their own transportation and must have a enough space to

stock their products.

They do not randomly select the distributors in their distribution channel.

On their basis of population of that particular location and the demand of

customers they decide how many distributors are required in their

distribution channel.

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They have supervisors who do the proper survey of every location on the

basis of their survey; Sudha selects how many distributors they require.

4.3 Conflict Solving Strategy in Distribution Channel

Sudha has a very organized system of doing business with their

distributors and retailers.

Sudha takes order from distributor after the deposition of money into the

bank account of Sudha Dairy.

Then only they supply the products to distributors.

Something they do with the big retailers like Reliance Fresh, they have a

bank agreement with them. When Reliance Fresh places their orders they

also need to pay of orders to Sudha Dairy.

4.4 Distributors in Ranchi

The total no. of distributors are:

Ranchi - 6

Hazaribagh - 3

Bokaro - 4

Gumla - 1

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CHAPTER – 5

PRODUCT MANAGEMENT

5.1 Product Management by Sudha Dairy

Sudha is very much cautious that they have enough stock to avoid the

problem of stock out.

They usually produce pasteurized milk which can stock for 3 days.

So in these ways they stock their products through this process they can

also meet the urgent orders of consumers during festive seasons.

They usually have a stock of 1lakh liters to 1.20 lakh liters of milk in their

plant. Which is sufficient to fulfill the demand of consumers and they can

maximum store it for 3 days due to pasteurization.

5.2 Compensation and Benefits

Incentive scheme: Suppose distributor or retailers have a target to sell

1000 liters of milk. If they sell more than 1000 liters then Sudha pays

extra to distributors or retailers as a incentives.

They also provide fridge to retailers so that they could stock their

products.

Rewarding and Awarding: Sudha gives praise and certificates to retailers

or distributors for their best performance.

They usually perform all these activities within 2 or 3 month.

They are rigid with their compensation structure if any new channel

members are added into their distribution channel system.

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CHAPTER – 6

PHYSICAL DITRIBUTION

6.1 Physical Distribution Channels

Physical distribution is the group of activities associated with the supply of

finished product from the production line to the consumers. The physical

distribution considers many sales distribution channels, such as wholesale and

retail, and includes critical decision areas like customer service, inventory,

materials, packaging, order processing, and transportation and logistics. You

often will hear these processes be referred to as distribution, which is used to

describe the marketing and movement of products.

6.2 Distribution System of Sudha Dairy

The structure of distribution channel describes the arrangement and linkage of its

member. This are-

Direct distribution system

Indirect distribution System

Double distribution system

We have found that Sudha uses double distribution system because they follow

both direct and indirect system. Under direct distribution they have their own

retail outlets in these areas-

Kokar

Kanke Road

Ratu Road

Harmu & etc..

Under Indirect system they distribute its product to grosery shops.

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6.3 Sudha Supply Chain

Village

Cooperative

societies

Company

owned units

Other

Villagers

Other Local

Bodies

Unions Chilling

Plants

Milk

Processing

Warehouses

Distributers

Consumer

Retail

Outlet

Farmers

Groceries

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Consumer

Despatching

Cold storage at 5°C

Packaging

Pasteruzation of Milk

Storage Milk

Chilled at 4°C to 5°C

Dumb Tank

RMRD

Societies

Let’s see a process how milk reaches to the final consumer-

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CHAPTER – 7

OBSERVATION

It has been observed that distributors are the 1st partner of Sudha Dairy

who gives the order to the company.

They have an organized system in doing business with their distributors &

retailers, so there is no chance of conflicts.

They also have a direct relationship with big retailers like Reliance Fresh

where they directly deliver their products.

Roots supervisors usually do the survey of location on the basis of their

survey. Sudha selects the distributors on the basis of their survey.

They have incentive system and award for the distributors and retailers

who gives the best performance.

Sudha does not have their own transport, distributor or retailers need to

have their own transportation for the distribution and supply of products.