ITC-eChoupal

By Group 9:Pradeep Fernandes

Shreya ShettyJenniefer Dias

Muneet NarangNavyesh Kambli P

Contents: Choupal: Tradition About ITC Traditional supply chain Problems faced by traditional supply chain Problems faced by traditional practices: Discuss the business benefits of echoupal Initiative Discuss the success factors for the ITC Initiative “E-choupal” What are the changes bought in the supply chain through e-

choupal? Role of samyojak What is the role of technology in their supply chain? Identify Key strategic intentions of the initiative

Choupal: Tradition

A village of Dahod, Bhopal in India’s central state of Madhya Pradesh was dominated by soybean workers.

Followed traditional way of harvesting crops and selling in the local market.

The word choupal is a Hindi word which constituted an informal assembly or a meeting place where knowledge could be shared and

captured.

About ITC: It is a large agricultural export business unit which comprised of

various commodities. Two-third of its business consisted of soybean and its derivatives.

MP was said to be the “soyabowl” where farmers contributed 4 million of India’s 5 million tons of soybean crop.

80% - soymeal ( high protein extract for poultry) 20% - edible oil (domestic purpose)

Current value chain ITC was lagging behind compared to other commodities.

Y.C Deveshwar – ITC chairman

S.Shivakumar the Chief Executive pondered the choupal concept.

Traditional supply chain:

I) After harvest, farmers hauled their loads to closest mandi which was around 30 to 50kms.

II) Price discovery mechanism through auctioning.

Auction process: Government appointed bidder sets the initial bid

Then govt licensed bidders i.e commission agents (CA) bid upwards until the crop was sold.

After auction, transaction was between

farmersCommission agents

(CA)

transaction

Transaction between CA and ITC

Commission agents(CA)

ITCCrops sold

Payment received

Problems faced by traditional supply chain:

Distance to each mandi was 30-50kms. Adulteration by CA’s. After the auction, the weight of the crop was manipulated by

inaccurate scales by CA’s. Farmers had to wait 2-3 days in the crowded market place. Sometimes payment was not immediate. No storage facility for the crops and hence had to be sold because

of it was perishable.

Problems faced by traditional practices:

Some of the factors are Lack of sophisticated inputs Overdependence on monsoon Farming practices

1.What are the changes bought in the supply chain through e-choupal?

sanchalak ITC processing facility

farmer1

farmer3

farmer4

farmer5

Internet

farmer2

ITC hubs

These are nothing but the processing units where farmer could bring soybeans and have direct transaction with ITC.

i) computerized weighbridgeii) immediate paymentiii) reimbursement of transportation costiv) soil testing lab

Role of Samyojak The commission agents (CA) are entitled with the

new name as ‘‘samyojak’’.

They comprised major responsibilities likei) Setting up the echoupals.ii) Facilitating ITC’s purchasing transactionsiii) Helping with ITC’s selling transaction.

Role of Samyojak contd..i) Setting up the echoupals:

-Assisting in the selection of sanchalak

ii) Facilitating ITC’s purchasing transactions -provide warehouse to store the soybeans -assist in cash disbursements. -provide transportation facility

iii) Helping with ITC’s selling transaction. Involved “one-stop-shop strategy”

Here sanchalak took the responsibility of picking up and

Samyojak took the responsibility of delivery Three systems was enabled for this:i) Sanchalak placed the orders based on aggregated

demand i.e at village level.ii) Based on the estimated demand and stocking them at

home.

“one-stop-shop strategy” contd.. iii) selling the goods at ITC processing facility.

3) Identify the key components of itc e-chopal implementation that lead to success?

Use of digital technology ( retain many aspects of existing production system)

customer designed supply chain “one-stop-shop” feature. User friendly website. Advanced transportation facility Significance of sanchalak and samyojak.

Question 2 contd..

“ideal price” for the crops produced Insurance facility Credit facility Superior product Relationship benefits. Transparency Warehouse facility.

3.What is the role of technology in their supply chain?

ITC supplied a computer kit to each village with following components A PC with windows/Intel platform, multimedia kit and

connectivity interface Connection i.e either telephone lines or VSAT A power supply consisting of UPS and solar powered

battery backup. A dot matrix printer

• Farmers were insisted in accessing World Wide Web

Role of technology contd.. Provided certain key information areas like - Weather page:

It provides localized forecasts about the weather to the farmer.

- Best practices page: Will get to know about different practices followed by other

farmers. Comparisons between “ideal” practices and “actual”

practices are also described. Webpage is in Hindi vernacular.

- Crop Information page: Information about the requirement of soil testing. Also the required action that has to be taken after testing.

Role of technology contd.. Market Information:

Four links: Exploring world demand World production Mandi trading volume Mandi pricing lists

Q+A forums:-Here farmers would clarify certain queries.-All the queries are stored in a central database so that it can

be useful for farmers present in some other location.

News Page:- Relevant news on some external factors like government

decision on subsidies, innovations in other countries etc.

Contd..

Role of Sanchalak: Log in feature Moisture meters Control samples for quality comparison.“Best material price” for “best quality beans”

4)Discuss the business benefits of echoupal Initiative Growth in customer network i.e

In mid-2003, e-Choupal services reached more than 1 million farmers in nearly 11,000 villages, and the system is expanding rapidly.

Direct contact with farmers enabled knowledge sharing. Increase in profits Expansion into other potential markets. Higher quality led to more competitive pricing in

International market. Disintermediation (no middleman)

5) Identify Key strategic intentions of the initiative

To increase the profit. Better design of supply chain. To understand farmers requirements or needs. No access to quality input. To avoid unfair trade practices (middleman) Lack of farmers taking experimental risks. Presence of warehouse facility. Lack of telecommunication.

By group 9