Business Concept to address Efficiency improvement in Agriculture supply chain

management by Private sector

Background

Agriculture food waste is reality that impacts the P&L of all stakeholders in the business. While the

developed economies have been far successful in using technology to improve efficiencies in their

supply chains, developing economies have lagged behind because of institutional and structural

problems.

India is a case in point.

India is the second largest producer of vegetables and fruit, and yet almost 35% of its production is

reported to be lost to waste during its journey from farm to the retailer.

80% of the trade in vegetables in fruit in India, estimated to be worth 20 billion USD per annum is

managed by the private sector, of which 75% (15 Billion USD) is controlled by the unorganized retail and

25% (5 billion USD) by the organized retail chains.

An estimated 45% of the fruit and vegetables managed by the organized retail sector are lost to waste.

This translates to 2.25 Billion USD per annum. (The organized retail business is growing at 20% per

annum, and the wastage is growing in proportion)

Major organized retail chains in India are….and more will follow as the FDI retail policy is in place over

time

Reliance Fresh- RELIANCE INDUSTRIES

BIG BAZAAR- The FUTURE GROUP

MORE- ADITYA BIRLA Group

SPENCERS- RPG Group

FOODWORLD- Dairy Farm International (DFI) group

GREAT VALUE- Bharti WALMART India

METRO CASH and CARRY- Metro India

Top Reasons for wastage

Lack of storage – cold chain storage capacity and scale

Poor logistics management- poor planning, tracking, monitoring and control of logistic assets-

OPPORTUNITY FOR THE CLOUD SERVICE PROVIDER AND INTEGRATOR.

Demand –supply gaps- Poor demand supply management due to poor forecasting/predicting-

OPPORTUNITY FOR THE CLOUD SERVICE PROVIDER AND INTEGRATOR.

Driving efficiencies and profits in the value chain.

The organized, corporate backed, retail chains have established systems that are geared to reduce

efficiencies in existing supply chains and improve value across the farm- fork delivery. However this

system still does not eliminate wastage that remains very high at 25-30%. Main reasons attributed to

this inefficiency are inability to improve the logistics management and improving its integration to the

demand supply model.

Demand supply management is of poor quality because of poor forecasting capabilities of the buyers

and the sales team on the ground, who go by “gut feel” over fact based analysis and conclusion.

ICT enabled solution and predictive data analytics provides a ray of hope to the organized retailer, with a

business opportunity for the solution provider.

The PROPOSED Solution

Predictive CLOUD + Cloud based communication

SUPPLY SIDE

LOGISTICS

DEMAND SIDE

Demand

supply

Predictive

Analytics

Engine

Demand supply

MIS and smart

predictive

forecast

Logistics and

tracking

management

engine

Supply Chain

Manager

Retail outlet

manager

Supply chain

transport

FARMER

BUYER

DATA

REPOSITORY

Field data

Field data

Data mining Data Analytics

engine

MIS report –

SUPPLY SIDE

Retail POS

Retail

outlet order

DATA

REPOSITORY

Field data

Field data

Data mining Data Analytics

engine

MIS report –

DEMAND SIDE

SOME QUICK NUMBERS

The Predictive cloud +CLOUD COMMUNICATION PLATFORM would be offered as a managed service to

the global agro food retail industry.

If we take India as an example, and assume that by developing a better predictive analytics engine in the

platform, and providing seamless communication and tracking capability, we are able to improve the

wastage figures from the 45% to 30%, saving the industry a total of 750 million USD per annum,

VERIZON can deploy a suitable commercial model that can generate between 15-20 million USD per

month. (240 Million- 180 Million USD per annum)

Supply chain inefficiencies lead to considerable losses in any economy where agro food retailing is a

major component of the GDP and this model has traction to be deployed globally, with significant

revenue gains for THE SOLUTION PROVIDER.

PLEASE NOTE- other opportunities on the platform

The predictive analytics engine+ CLOUD communication model has applications in other industry

verticals, where forecasting plays a major role in impacting the P&L. The global Pharma industry is

dependent on their sales reps to forecast the demand for drugs in their respective territories, and at the

same time obliged to take back, unsold and expired drugs that done move off the shelf because the

forecast (prediction) by the sales rep was of questionable quality. The global pharmaceutical market in

2011 was 880 billion USD of which an estimated 2% (18 Billion USD) was returned back due to no

demand and expiry. The US pharma market with a size of 300 Billion USD and an estimated 2% return (6

Billion USD) on account of poor forecasting can be a lucrative market for VERIZON Predictive analytics

engine+ CLOUD computing platform.