Notes on Amul's Strategic Response to COVID-19

Overview

• Date of Nationwide Lockdown: March 24, 2020
• Impact: Millions lost jobs, major industries halted; Indian economy lost over 10 lakh crores.
• Dairy Industry Losses: Milk producers suffered a loss of more than 112.3 crores per day.
• Key Player Mentioned: Anand Milk Union Limited (Amul)
  • Surprisingly increased revenue by 698 crores despite the pandemic.

Amul's Strategy During COVID-19

• Proactive Measures: Instead of minimizing losses, Amul prepared for increased demand.
• New Products: Launched 33 new products in a year.
• Milk Procurement: Increased procurement by 35 lakh litres/day and paid farmers an extra 800 crores.

Shift in Consumer Behavior

• Increased Home Consumption:
  • Decline in restaurant demand, but increase in household milk product consumption.
  • Trends: Homemade food boom and rise of packaged milk.

Managing Supply Chain

• Operational Status: Dairy industry operating under restrictions; Amul, however, maintained full operations.
• Sales Decline: Affected by hospitality sector closures: 10-12% decrease in sales initially.
• Amul's Prediction: Anticipated a surge in demand for dairy products despite general industry decline.

Key Factors in Amul's Success

1. Supply Chain Management

• Strategic Partnership with IBM (2009):
  • Invested 80 crores for IT transformation, enabling real-time tracking of operations and optimizing supply chain efficiency.
• Labor Management:
  • Utilized idle labor and resources from ice-cream production to enhance milk production.
  • Provided financial incentives to frontline workers and made housing arrangements during COVID-19.

2. Marketing Strategies

• Increased Advertisement Efforts:
  • Advertising volume rose by 316% compared to 2019.
  • Effective campaigns leveraging nostalgia resonated strongly with the public.
  • Did not resort to false COVID-related claims unlike competitors.

Lessons for Business Leaders

1. Embrace Risk:

• Good vs Great Leaders: Great leaders prepare to embrace risks; Amul aimed for full capacity during downturns.

2. Build Agile Systems:

• Resourcefulness: Emphasize the importance of effective resource management during crises.

3. Opportunism During Crises:

• Seeing crises as opportunities rather than obstacles can lead to leveraging market changes.
• Amul positioned itself to capture market share effectively and support farmers in need.

Conclusion

• Amul established a benchmark for crisis management in the dairy industry globally, demonstrating resilience and innovation.

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