By
A.Arputha Selvaraj APMP IIM CALCUTTA
Company Logo
ITC e-Choupal : An Introduction,
Stake holder Analysis
1
Comparison of status of Supply Chain
before and afte...
ITC e-Choupal : An Introduction
Company Logo
 Incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company
 Company rechristened 'ITC Limited„ in 1974...
 Farm linkages in 14 states covering Soya, Wheat, Marine
products, Coffee etc. Focus on value added agri
commodities
 Un...
Low Risk Appetite
Weak Market
Orientation
Low InvestmentLow Margins
Low ProductivityLow Value Addition
Caught in a vicious...
 Started in the year 2000
 Target Area so far 38,000 villages, 6500 kiosks, 9
states
 Wholly owned by ITC
Why it become...
ITC’s Supply chain of Soya bean before e-Choupal
Initiative
Company Logo
Company Logo
Farmer
Agri-Input
Companies
Dealer/
Stockiest
Retailer
Agril University,
Met Dept,
Insurance Co.
VLW (of Dept...
Company Logo
The Tactical
Imperative
Capture of Intra-
day Price shifts
Seasonal price
Inflation
Daily price
inflation
ITC...
ITC’s Supply chain of Soya bean after e-Choupal
Initiative
 Pricing
 Previous day‟s closing price used as benchmark price for
next day
 Mandi prices communicated to sanchalak thr...
 Inbound Logistics
 Farmer proceeds to the nearest ITC procurement hub with the
note
 Some procurement hubs are ITC fac...
 Inspection and Grading
 At the ITC procurement hub, laboratory tests are conducted
on a sample of farmer‟s produce
 To...
 Inspection and Grading
 At the ITC procurement hub, laboratory tests are conducted
on a sample of farmer‟s produce
 To...
 Weighing and Payment
 Farmer‟s produce is weighed on electronic weighbridge
 He is then given full cash payment
 Frei...
 Hub Logistics
 Farmer transports his produce to the nearest processing
centre or storage hub
 ITC incurs the transport...
 Technological support
 Nodal platform catering to commodity blending, agricultural
trading, e-choupal &rural distributi...
Company Logo
Farmers gain
• Better information
Content
• Better info timing
• Less transportation
Cost
• Transaction
durat...
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
Synergies for ITC
Company Logo
 Generation of Goodwill & positive public opinion
 Better supply chain for ITC‟s Food & Agri Businesses
 Costs, Quality...
Company Logo
F
A
R
M
E
R
S
M
A
R
K
E
T
S
Cigarette Trade Marketing capability
Branded
Foods
Expanded FMCG distribution cap...
Company Logo
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
Critical Analysis of ITC’s Supply Chain
Company Logo
Primary
Stakeholders
Interest
Farmer Community
Access to information
– Empowered decisions
– Improved agriculture
Economic...
 Last mile low cost solution
 Full Service approach
 Demand aggregation
 Third party seller
 Extensive use of technol...
Company Logo
Drivers of
Supply Chain
Information
Logistics at hub
Transportation
Storage facilities at
hub
Who are in
prob...
Comparison with Haryali Kisan Bazar
Company Logo
Hariyali
kisaan
bazaar
Farmers
DSCL
ICICI Bank
Other companies
Loan for pass
through to farmers
Repayment of loan
with int...
E-chaupal Haryali Kisaan Bazaar
Main
objective
Procurement Rural Retail
Benefit to the
farmers
computer application to pro...
Future of e-Choupal
Company Logo
Cmpany Logo
Parameters Version 1.0( the start) Version 2.0( the scale-up)
Idea The concept gave a power of scale to
the small farmers ...
The Deepening
 NEW BUSINESSES:
1) Rural jobs and employability
2) Personalised agri services.
 MORE INTERACTION: Through...
Company Logo
ITC in Rural India
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ITC in Rural India

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ITC in Rural India

  1. 1. By A.Arputha Selvaraj APMP IIM CALCUTTA
  2. 2. Company Logo ITC e-Choupal : An Introduction, Stake holder Analysis 1 Comparison of status of Supply Chain before and after ITC e-Choupal 2 Critical Analysis, and Comparison with HKB 3 Future Scope4
  3. 3. ITC e-Choupal : An Introduction Company Logo
  4. 4.  Incorporated on August 24, 1910 under the name of 'Imperial Tobacco Company  Company rechristened 'ITC Limited„ in 1974  One of the 8 Indian Companies to feature in „Forbes A-list‟ for 2004  Only Indian FMCG Company to feature in Forbes 2000 List  Among top in :  Sustained value creation (BT-Stern Stewart survey)  Operating profits  Cash Profits  Ranks No. 4 among Indian listed Private Sector Companies by market cap. (@ April 09)  No. 1 in FMCG Sector  Rated as one of India‟s Most Respected Companies (IMRB-Businessworld Survey 2006)  Diversified conglomerate with interests ranging from Tobacco to Hospitality Company Logo
  5. 5.  Farm linkages in 14 states covering Soya, Wheat, Marine products, Coffee etc. Focus on value added agri commodities  Unique CRM programme in commodity exports  Leveraging IT for the transformational „e-Choupal‟ initiative Rural India‟s largest Internet-based intervention Over 40,000 villages linked through 6500 e-Choupals servicing over 4 million farmers  Distinctive sourcing capability for ITC‟s Foods business
  6. 6. Low Risk Appetite Weak Market Orientation Low InvestmentLow Margins Low ProductivityLow Value Addition Caught in a vicious cycle of underdevelopment The predicament of Indian Farmers
  7. 7.  Started in the year 2000  Target Area so far 38,000 villages, 6500 kiosks, 9 states  Wholly owned by ITC Why it become a success ?  Only initiative to attempt to combine Services and an Effective Business Model successfully Designed to address the issues such as: 1. Fragmented farms 2. Weak institutions 3. Involvement of intermediaries 4. Information Asymmetry
  8. 8. ITC’s Supply chain of Soya bean before e-Choupal Initiative Company Logo
  9. 9. Company Logo Farmer Agri-Input Companies Dealer/ Stockiest Retailer Agril University, Met Dept, Insurance Co. VLW (of Dept of Agriculture) Money Lender Pakka Adtiya (Registered Dealer) Kaccha Adtiya (Un-Registered Dealer) Trader Broker Processor ITC-IBD
  10. 10. Company Logo The Tactical Imperative Capture of Intra- day Price shifts Seasonal price Inflation Daily price inflation ITC’s distance from Farmer The Strategic Imperative Horizontal spread Vertical presence Risk management The Social Imperative
  11. 11. ITC’s Supply chain of Soya bean after e-Choupal Initiative
  12. 12.  Pricing  Previous day‟s closing price used as benchmark price for next day  Mandi prices communicated to sanchalak through e-Choupal portal  Sanchalak inspects the sample, assesses quality and gives farmer a conditional quote and a note (name/village/quality tests/approx. quantity/conditional price), if farmer decides to sell to ITC Company Logo Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technologi cal support
  13. 13.  Inbound Logistics  Farmer proceeds to the nearest ITC procurement hub with the note  Some procurement hubs are ITC factories, others are purely warehouse operations  ITC‟s aim is to have a processing centre within 30-40 km radius of its farmers Company Logo Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technologi cal support
  14. 14.  Inspection and Grading  At the ITC procurement hub, laboratory tests are conducted on a sample of farmer‟s produce  To change farmer‟s attitude and appreciating produce quality, ITC is developing lab tests to reward farmers with reward points for better quality supply Company Logo Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technolog ical support
  15. 15.  Inspection and Grading  At the ITC procurement hub, laboratory tests are conducted on a sample of farmer‟s produce  To change farmer‟s attitude and appreciating produce quality, ITC is developing lab tests to reward farmers with reward points for better quality supply Company Logo Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technolog ical support
  16. 16.  Weighing and Payment  Farmer‟s produce is weighed on electronic weighbridge  He is then given full cash payment  Freight expenses are reimbursed  Appropriate documentation at each stage and farmer is given a copy of that  Samyojaks handle cash operations Company Logo Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technolog ical support
  17. 17.  Hub Logistics  Farmer transports his produce to the nearest processing centre or storage hub  ITC incurs the transportation cost  The farmer bears the risk of transportation until produce is delivered and the sale is completed Company Logo Pricing Inbound Logistics Inspection Grading Weighing and Payment Hub Logistics Technolog ical support
  18. 18.  Technological support  Nodal platform catering to commodity blending, agricultural trading, e-choupal &rural distribution  24,000 personalized business function points  110,000+ pre-built business function points  Integrated Business Systems for Direct Agriculture Procurement, Rural Distribution, e-Choupal Management, Exports, Insurance, Aqua Processing & Commodity blending  Support for 8 local languages Company Logo Pricing Inbound Logistics Inspectio n Grading Weighing and Payment Hub Logistics Technological support
  19. 19. Company Logo Farmers gain • Better information Content • Better info timing • Less transportation Cost • Transaction duration • Weighing accuracy • Professionalism ITC gains • Disintermediation savings • Freight costs • Quality control • Risk management
  20. 20. Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
  21. 21. Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
  22. 22. Synergies for ITC Company Logo
  23. 23.  Generation of Goodwill & positive public opinion  Better supply chain for ITC‟s Food & Agri Businesses  Costs, Quality, Traceability  Access to the Underserved Rural Markets  Through a Virtuous Cycle created by “Larger Incomes”, and founded on “Trust” that is built  New ITES Business Opportunities  Health, Education, Entertainment, eGovernance Company Logo
  24. 24. Company Logo F A R M E R S M A R K E T S Cigarette Trade Marketing capability Branded Foods Expanded FMCG distribution capability e-choupal rural two-way fulfillment capability VPN providing SCM, ERP & CRM capability Lifestyle retailing Education Stationery Matches & Agarbattis A basis for strategic partnerships with other FMCG brand owners
  25. 25. Company Logo
  26. 26. Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
  27. 27. Critical Analysis of ITC’s Supply Chain Company Logo
  28. 28. Primary Stakeholders Interest Farmer Community Access to information – Empowered decisions – Improved agriculture Economic benefits through lower transaction costs and process efficiencies Served with dignity Knowledge bundled sale of goods and services Co-opted in product design Hope for a brighter future ITC Lower procurement costs Direct interaction with farmers - Control on quality & supply security Low cost distribution channel Access to market intelligence Commission Agents (Kachha & Pakka Adatiyas) Gain access to global markets through ITC and commission to compensate some of the loss revenue
  29. 29.  Last mile low cost solution  Full Service approach  Demand aggregation  Third party seller  Extensive use of technology  Access to information about customers  Pull based strategy
  30. 30. Company Logo Drivers of Supply Chain Information Logistics at hub Transportation Storage facilities at hub Who are in problems Local Mandi Mandi laborers Market near Mandi Small processors Risk associated with e-Choupal Eroded dominance of Commission agent Authenticity of information Problem of Power and internet connectivity
  31. 31. Comparison with Haryali Kisan Bazar Company Logo
  32. 32. Hariyali kisaan bazaar Farmers DSCL ICICI Bank Other companies Loan for pass through to farmers Repayment of loan with interest Produce procurement Extension service
  33. 33. E-chaupal Haryali Kisaan Bazaar Main objective Procurement Rural Retail Benefit to the farmers computer application to provide market information provide better method of cultivation by trained agronomist Synergies Synergies with products which ITC is manufacturing Synergies with what DSCL is selling(inputs to agriculture plus other services Economies of scale 25-30 km area coverage 20-25 km area coverage Procurement centre near small town Strategically placed near petrol pump mainly
  34. 34. Future of e-Choupal Company Logo
  35. 35. Cmpany Logo
  36. 36. Parameters Version 1.0( the start) Version 2.0( the scale-up) Idea The concept gave a power of scale to the small farmers by aggregating them as sellers ( of produce) and as buyers (of farm inputs) By 2006, 40,000 villages covering 4 million people. Farmer’s gain The farmers get bargaining power and a opportunity of have choice Information on weather, price etc Knowledge on farming methods, soil testing etc Purchase of seed, fertiliser to insurance Farmers sell crops to the ITC centres cattle care, water harvesting ITC’s gain Access to inputs for its agri business; offer the use of network to other companies ITC was able to procure fresh commodities with reasonable prices from the farmers
  37. 37. The Deepening  NEW BUSINESSES: 1) Rural jobs and employability 2) Personalised agri services.  MORE INTERACTION: Through Choupal Saagars and Haats and via mobile phones  NEW TECHNOLOGY: Use of especially enabled mobile phones, analytics, new partner www.themegallery.comCompany Logo
  38. 38. Company Logo

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