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

Summary

The video script narrates how Anand Milk Union Limited (Amul), a leading dairy company in India, successfully navigated the COVID-19 crisis. Despite nationwide lockdowns and industry-wide challenges, Amul increased revenue by 698 crores, launched 33 new products, and procured an additional 35 lakh litres of milk daily. The company's strategic supply chain management, digital transformation with IBM, and aggressive marketing during the pandemic are highlighted as key factors in its extraordinary business performance and resilience.

Takeaways

• 🔒 The Indian nationwide lockdown in response to the COVID-19 pandemic had a devastating impact on the economy and industries, with the dairy industry losing over 112.3 crores daily.
• 🚀 Amul, the Anand Milk Union Limited, not only survived but thrived during the crisis, increasing its revenue by 698 crores through strategic business maneuvers.
• 🆕 Amul launched 33 new products in 2020, increased milk procurement, and paid an additional 800 crores to rural milk producers, showcasing resilience and innovation.
• 🛒 Consumer behavior shifted dramatically during the pandemic, with a surge in household consumption and a preference for packaged milk over loose milk, which Amul capitalized on.
• 📈 Despite a 10-12% drop in sales, Amul anticipated and prepared for a surge in demand, defying industry trends of cutting down operations.
• 💡 Amul's foresight was rooted in recognizing the change in consumer behavior towards health consciousness and the rise of homemade food trends.
• 🔄 The company's supply chain management was pivotal, utilizing IBM's technology to track operations and optimize resource allocation during the crisis.
• 🚂 Amul adapted its logistics by using railways for product transportation when labor shortages and lockdown restrictions hindered road transport.
• 💰 The company's strategic partnership with IBM since 2009 and investment in digital systems allowed for efficient supply chain management and quick response to changing demands.
• 📢 Amul increased its marketing efforts during the pandemic, with a 316% increase in ad volumes, and cleverly used nostalgia during the re-broadcast of epic shows on Doordarshan.
• 🛍️ Amul leveraged third-party e-commerce platforms and exclusive deals with food delivery services to expand its market reach and sales channels.

Q & A

What was the main reason for the nationwide lockdown announced by India's Prime Minister on 24th March 2020?

The main reason for the nationwide lockdown was the COVID-19 pandemic, which necessitated strict measures to curb the spread of the virus.

How did the lockdown impact the Indian economy and the dairy industry specifically?

The lockdown had a severe impact on the Indian economy, costing it more than 10 lakh crores. The dairy industry was particularly hard hit, with milk producers in India losing more than 112.3 crores daily.

What was the strategy of Anand Milk Union Limited (Amul) during the COVID-19 crisis that allowed them to increase their revenue?

Amul managed to increase their revenue by launching 33 new products, procuring an additional 35 lakh litres of milk daily, and paying 800 crores extra to rural milk producers. Their strategy involved anticipating a surge in demand due to changes in consumer behavior and maintaining full capacity in their supply chain.

How did Amul's sales initially react to the lockdown?

Amul's sales initially saw a decline of 10-12% due to the closure of restaurants, catering, and hotel businesses, which accounted for 20% of the revenue for the organized dairy sector.

What was the key variable that Amul considered while other companies were cutting down on milk procurement?

Amul considered the change in consumer behavior during the pandemic. They anticipated an increase in household consumption of milk products as people stayed at home and became more health conscious, shifting from buying loose milk to packaged milk.

How did Amul manage to increase their production capacity and meet the surge in demand during the lockdown?

Amul operated at 115% capacity and hired other plants that were lying vacant. They also used the railways to transport products quickly throughout the country due to labor shortages and lockdown restrictions.

What strategic partnership did Amul establish to transform its information technology landscape?

Amul established a strategic partnership with IBM in 2009, investing 80 crores to develop a full-fledged digital system to track every detail of their supply chain operations.

How did the digital system developed by IBM help Amul during the lockdown?

The digital system allowed Amul's management team to oversee the entire operation of the supply chain, enabling them to divert idle resources from the ice-cream and frozen foods vertical to the milk supply chain and optimize the utilization of every element of the supply chain.

What measures did Amul take to support its labor force and farmers during the crisis?

Amul provided cash incentives to casual workers, arranged food and stay for workers to prevent them from getting sick, and made extra arrangements for cattle feed for farmers.

How did Amul's marketing strategy differ from other brands during the COVID-19 pandemic?

While other brands cut down on advertisement, Amul increased its ad volumes by 316% compared to 2019. They ran aggressive campaigns and old ads during re-broadcasted epic shows to resonate with the audience's nostalgic mood, without making any exaggerated COVID claims.

What are the key lessons for business leaders from Amul's crisis management during the pandemic?

The key lessons are to embrace risk, be resourceful by building agile systems, and view crises as opportunities to get ahead of competitors. Amul's foresight, digital transformation, third-party collaboration, labor incentivizing, and strategic marketing initiatives set a benchmark for crisis management.