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Co-operative Dairy System

Presentation Overview
Overview of the Business Purpose of the Business Production Department Marketing Department Finance Department Purchase And Stores Quality Control Department Dispatch And Logistics Business Workers Business Actors

Overview of the business

Traditionally Dairy was a subsidiary occupation of the farmer. However, the contribution of the farmers income was not prominent as it was from farming. But this attachment to dairy was kept as a tradition handed down from one generation to the next. India has the largest population of cattle in the world with approximately 140 million cows and 130 million buffaloes. Presently there are around 82,000 village dairy co-operatives across the country. The co-operative societies are federated into 198 district milk producers unions.

Vision and Mission

A Co-operative dairy is a Co-operative society and is not just a profit motive unit, but to serve the society. The main mission of a Co-operative dairy is to assure and safe guard the interest of both, nominal consumer of milk, in city area and supplier of rural areas. And for this it deals accordingly to provide the best quality products at a reasonable price to their customer.

Quality Policy
Firmly believes to provide Milk and Milk products of good quality. Implements Quality and Food safety Management Systems. The implemented systems emphasize on ensuring and maintaining quality and Food safety at all stage of procurement, Production, Packaging, Storage and Distribution of Milk and Milk Products. To conserve natural resources and energy. Control plant operations to prevent pollution. Comply with applicable environmental legislation and regulations. The product quality and safety is ensured at every stage.

Purpose of the Business

Satisfy the demand of milk and milk products Providing source of income to the people involved Inviting social and economic change of the farmers Providing benefits to the farmers Ensuring best quality products


Functional Departments
Production Department Marketing Department Finance Department Purchase and Stores Quality Assurance Dispatch and Logistics

Production Department
Converts raw material into finished goods by processing them and creating utility out of them. Interrelated with the Personnel, Finance, Marketing Departments. Portion of the milk is used for milk packing, while other is used for milk products.

Milk is major raw material. Milk is received at the receiving dock in two shifts (Morning and Evening). It is segregated on the basis of cow and buffalo milk. Cow and buffalo milk cans are kept on different moving belts during which the workers check whether the milk is of good quality or fair quality. Separated on the basis of good quality and fair quality.

Sample testing
Weighing of milk Good quality milk- satisfy the demand of milk and to produce products such as butter, ghee, cream, cheese, ice-cream, sweets Fair quality milk - produce curd, butter milk, paneer, shreekhand MilkoScan measures Fat, SNF, protein, lactose contained in the milk sample Source of sample not know to lab workers Milk-societies also perform sample testing

Record maintenance Records contain Fat and SNF percentage in the milk given by a particular milksociety Payment after a predetermined interval usually 10-15 days according to records

Storage and Processing

Cooling down the milk up to 4c after receiving to stop pathogen multiplication Pasteurization
84c for 18 seconds and 4c for 2.5 minutes

Extract or add fat according to the parameters

Testing in lab for approval Clarifying

Removes dirt and dust particles

Fat globules are broken into tiny particles

Storage in tanks of capacity around 15000 liters

Low temperature

Thereafter different process are carried out to obtain various products such as butter, ghee, butter-milk, curd, etc.

The products obtained after processing are then brought into the packaging department. Automated machines with high efficiency are used for the packing of different products.

After packing is done, these products are supplied to different distributors of that particular dairy. The distributors are supposed to order the amount of the products in advance. On receiving, distributers have to pay the bill of the purchase. The distributers then sell these products to the customers.

Wastage Management
The fat which cannot be used for consumption is considered as waste and non-edible. Non-edible fat contains casein which is useful in the manufacture of medicines. So, the dairy dries up the non-edible fat which is nothing but raw casein. Medicine manufacturing companies buy raw casein converts it into useable casein to manufacture capsules. Soap manufacturing companies buy non-edible fat in the manufacture of soap. Water wasted along with the fat cannot be disposed directly into the environment. So, treatment plants are used to purify the water which is then re-used if possible or disposed.

Marketing Department
Marketing occupies an important position in the organization of a business unit. Consists of those efforts which affect transfer of ownership of goods and care for physical distribution. Products are made available to the ultimate consumer. It consists of all those activities which are meant to ensure the flow of goods and services right from the production or the manufacture to the consumers.

Product Planning
Each product level must develop a marketing plan for achieving its goal. Utmost important for success of the marketing process. Done by the marketing department according to the feedback received from the market. Steps:
-Market research and survey -Product analysis -Costs -Decisions

Market Planning
Market planning focuses on consumers having different needs, geographical locations, buying attitudes and buying practices. Any of these conditions can be used to segment a market. Out of all the above factors for milk distribution, income is considered most important. High earning group of people buy wholesome milk, while among middle class and the lower income class people toned milk is more in demand.

Price - most deciding factor for the success of any product. Different Co-operative dairies handle pricing in a variety of phases. In small dairies prices are often set by top management rather than by marketing sales people. In large dairies pricing is handled by division and product line managers. Even top management sets the general pricing objectives and approves the prices proposed by lower level of management. Competitive pricing Co-operative dairy always has to keep both the interest of the farmers as well as consumers while deciding the price policy. The average price of milk all over India is fixed by NDDB(National Dairy Development Board).

Pricing Policy

Discount is yet another option to increase the sale of the product if the sales go down. Seasonal changes may trigger discounts on products. For instance during summer people tend to buy cold products such as ice-cream, butter-milk, etc. So, offering discounts on such products during summer would result in huge selling of the products.

Sales Promotion
Sales promotion consists of varied collection of incentive tools mostly short term, designed to stimulate greater purchase of particular product or services by consumer. The report growth the sales promotion media has created is similar to advertising culture.

Advertisement plays a vital role in the publicity of a product. Mostly all products need publicity. Due to advertisement, the product gets known among the consumers, consequently the sales of the Product increases. Various kinds of media may be implemented for the enhancement of the sales. Advertisements can be given on radio, TV, newspapers, banners and hoardings, etc.

Finance Department
Financial management is concerned with managerial decision making. Every activity concerned with the dairy is primary concern of the financial management. Financial management has to go into details of every business activity concerned with purchase, production, marketing, personnel, administration, etc. The task of financial manager is not limited to acquisition of funds to satisfy business requirements, but even beyond that.

Goals And Scope

The functions of a co-operative dairy are animal health care, milk production quality, co-operative development, customer satisfaction, etc. A co-operative dairy doesnt have a goal of profit maximization.

Financial Planning
The major decision pertaining to financial planning such as long term requirement of capital expenditure, permanent and short term needs, etc. are taken by top level. Factors affecting financial planning are: Nature of Business Degree of Risk Attitude of Management Government policies

Working Capital Management

Working capital management is concerned with the problem to manage the current assets and current liabilities and the inter-relationship that exists between them. It is necessary because if the firm is not able to maintain this level it is likely to become insolvent and may even be forced into bank. The working capital manager is thus concerned with maintaining a tradeoff between profitability and risk associated with firms level of current assets and liabilities.

Inventory Management
Inventory constitutes the most important part of current assets of a company. Any Firm neglecting the management of inventory will be in long run non-profitable and may collapse ultimately. It is possible to manage inventory to a considerable degree without any adverse effects on production and sales, by using simple inventory planning and control techniques.

Receivable Management
When goods are sold on credit, the prices of goods become receivable. This is known as trade debtors or receivables. According to receivables, assets are accounts representing the amount owned to a firm as a result of sales of goods or services in the course of business. Objectives of maintaining receivables To achieve growth in Sales To increase profits To meet competition

Cash Management
A firm should have sufficient cash neither more nor less. If the firm holds surplus cash, this excessive cash remains idle and simply increases the cost without contributing anything towards the profitability of the firm. On the other hand if the organization is always running with shortage of cash in trading, then manufacturing will disport and ultimately profitability also. Cash Management involves following four factors: Ascertaining of the minimum cash balance and controlling the level of cash Controlling cash inflow Controlling cash outflow Optimum involvement of surplus cash

Purchase and Stores

A Co-operative Dairys main raw material is milk. The purchase department has to pick up just 10% of other raw material.

Purchase Procedure
Respective department heads find out their need and get it approved by the managing director. They contact the stores department. Send an indent to the purchase department. The purchase department asks for quotation from the suppliers. After the quotations are received supplier will be selected. The least cost giving supplier will be selected. Further the finance department will make the payment to the supplier after the delivery of goods.

Cold Stores The cold stores are used for storing milk, butter milk, flavored milk, curd, etc. and many other products. General Store 1 In this general store, the veterinary products, medicines, transportation instruments, buckets, flavors for milk and shrikhand are stored. General Store 2 Here plastic of milk bags is stored, tins of ghee, milk powder, fodder for cattles, etc. are stored. Non Moving Item Stores Here plastic of milk bags, which are outdated, expired chemicals and other products or items, which are of no use or which are not reusable are stored here.

Types of Stores

Material Handling
There are two types of method for material handling in the store department: Technical method The technical method consists chain hoist, chain trolley, etc. Manual method The manual method consists of truck, trolley and three wheel trolleys.

Receipt Procedure
Requirement from the concerned department. Indent raising Inquiry by purchase department Comparative statement and approval Purchase order Material Supplied Invoice in stores Material Inspection Goods receipt Inspection report Copy sent to purchase department for rejection or acceptation.

Issue Procedure
Stock requisition note from the concerned department Signed by the officer of stores Issue of the material to the concerned department

Quality Control Department

Deals with the maintenance of quality of the products, based on the quality standards defined in the quality policy. Products can be sold only if they are approved by the Quality Control Department. The workers include Quality control manager, Senior officer, Junior officer, Chemist and sampler.

Dispatch and Logistics

As per all information given by General Manager of Marketing Department and Assistant Manger of dispatch department, all activities are carried out under their supervision i.e. order of milk and milk products are dispatched as per the order of customers and retailer and all records of dispatch are kept in dispatch register and computer.

Modes of Dispatch and Logistics

In dispatch department the work is divided in 3 shifts: 1. Morning 2. Afternoon 3. Evening Sources of Mode of Transportation Trucks, tempos, insulated vans, three wheeler tempos are used to deliver milk and milk products.

Business Workers
Superintendent Senior Officer Junior Officer Chemist Sampler Engineer Doctor Supervisor Cleaning Staff

Business Actors
Milk-Society Distributors Transporter


Soap Manufacturer

Medicine Manufacturer

Advertisement Media


Pollution Control Board

Use Cases

Actor: Milk Society

Supply Milk

Use Case: Supply Milk

Storage and Processing

Sample Testing



Provide Transportation service

Order and Billing

We visited Baroda Dairy for collection of information as an when required. The Departments we decided to focus on were visited first. Specific date and time was decided prior to the visit by consulting the concerned authorities. To reach there we used public transportation vehicles such as Bus, Rickshaw and as an alternative used our own vehicles. For numeric data and pictorial data we consumed Internet as a resource. We consulted Dr. S. N. Joshi Former Gen. Manager of Panchmahal Dairy Producers Union and also Mr. Shridhar Patel marketing Manager of Amul Dairy . There were times when our visit was not successful , as in the goal for the visit was not achieved. We also thank Dr V. A. Kalamkar for making us eligible for imparting knowledge and successful completion of the project.

Project Members
Shivam S. Barve Kruti J. Malaviya Bhramar S. Bhatnagar Ekta V. Issrani

Thank Yu