E Farm Tnau Scm Conference Technologyin Agri Scm

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eFarm : A Farmer To Consumer Agri Supply Chain Network Venkata Subramanian Founder/ Managing Director , eFarm M.S (Comp. Science) , SUNY Albany, Newyork (2003) B.Arch , IIT Kharagpur (1995) ICT tools to empower the Agri supply chain eFarm an Introduction Vegetable and Fruit Supply Chain in India Current Issues and Status Supply Chain Management What is it ? Why is it important ? Technology in SCM : Key segments Data collection / communication Voice and Mobile Customer Relationship Management tools Order Management Supplier Relationship Management tools Resource Planning Demand forecasting & aggregation Pricing analysis using indg/tnau data Data analysis / MIS Logistics Management tools Supply chain management & simulation Social networking tools - Forums, Blogs (text / video) Data exchange : XML

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Transcript of E Farm Tnau Scm Conference Technologyin Agri Scm

Page 1: E Farm Tnau Scm Conference Technologyin Agri Scm

eFarm : A Farmer To Consumer Agri Supply Chain Network

Venkata SubramanianFounder/ Managing Director , eFarm

M.S (Comp. Science) , SUNY Albany, Newyork (2003)

B.Arch , IIT Kharagpur (1995)

ICT tools to empower the Agri supply chain

eFarm – an Introduction

Vegetable and Fruit Supply Chain in India – Current Issues and Status

Supply Chain Management – What is it ? Why is it important ?

Technology in SCM : Key segments

•Data collection / communication – Voice and Mobile

•Customer Relationship Management tools – Order Management

•Supplier Relationship Management tools – Resource Planning

•Demand forecasting & aggregation

•Pricing analysis using indg/tnau data

•Data analysis / MIS

•Logistics Management tools – Supply chain management &

simulation

•Social networking tools - Forums, Blogs (text / video)

•Data exchange : XML

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• Venkata Subramanian

• Founder & Managing Director: ([email protected] )

MS (Computer Science), University at Albany, NY , B.Arch , IIT

Kharagpur (1995) , India

12 years of experience in IT industry in leading Global Software

development and consulting firms

Very strong expertise in analysis & design of complex systems ,

portal development , back office operations in BFSI segment

Responsible for overall strategy , technology and public

relations

Combination of different background ,skills and experience to provide creative perspectives to solving key

problems in the supply chain area

Our Vision •Bring people together through creative use of technology platforms ('connecting the dots' ) to form socio-economic-webs•Create successful entrepreneurial, social enterprises which are profitable and sustainable•Make corporate social responsibility our core business model and differentiator •Measure success not just in financial growth , but also in the social growth in the areas we serve

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HiTech

Sabjeewallah

;-)

IT enabled

Annachee !!!

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Wholesalers to Retailers

Terminal markets to neighborhood wholesalers

Regional mandi to Terminal markets near

large cities

Harvesting of Vegetables

A local mandi auctioning

Local to Regional mandis for Auction

• Unorganized, unregulated, unprofessional &

unprofitable - A Middlemen’ dominated market

• Lack of demand/supply data

• No reliable sales, distribution, marketing

channels

• Poor logistics and storage management

• No IT/ERP usage – decisions are adhoc and

arbitrary

1

2

3

4

5

6

Retailers to Dining Table

7

Loss in transit 40%

Price hike

End to end

> 400%

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Eg: Ooty Carrots (As of 29th

June 2009)

5/kg

20/kg

28/kg32/kg

Farmer’s

market

(In Ooty/

Kothagiri)

Metro Terminal

Market

(Chennai)

Kirana

stores,

Push

carts

Branded

Retailers

500 % Price hike

Over 500% Price hike on average to customer , but no value addition

Changes hands several times: 40-50% is wasted – which adds to the costs

Prices set at each intermediate point arbitrarily by brokers/agents without

any planned demand/supply data

Farmer typically operates at 25% loss , End retailer less than 5% net margin

Regional

mandi

(Mettupala

yam)

12/kg

Neighbourhood

market

(Thiruvanmiyur

Chennai)

24/kg22/kg

End customer

price

Premium

Grade

(Export)

42/kg

Source : Ooty market traders, Chennai traders, indg.in

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Description Cumulative Wastage

Potato 24%

Cauliflower 24%

Banana 30%

Cabbage 36%

Tomato 40%

High cumulative wastages across the supply chain varied from 24% (for potato) to 40% (for tomato)

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Market Scenario

Data Value Notes

Fruits & Vegetables (Total market) 668800 Cr Organised + Unorganised

Organised segment 8216 Cr < 1.2% of total market

Total Volume of fruits & vegetables produced

100 Million Tonnes

Amount processed 1% World avg ~ 40%

Amount exported 1% Not in top 25 in world exporters

Wastage in transit & handling 40% ~ Rs 40000 Crores lost revenue

Average per person monthly expenditure in F&V (Urban)

68 Rs 11% of monthly expenses on food

Avg. per person monthly consumption of F&V

8 kgs

ITC, Nilgiris, Reliance, More, Big bazaar etc all put together !!!

Even a 1% reduction in wastage will generate additional 5 crores in profit to farmers !!!

Typical scenario for a metro city in India with 5 Million population :Daily demand : 1250 tonnesDaily sales : Rs 1.2 Crores

India is a World leader in PRODUCTION but still IMPORTING our food to meet local demand

Over 60% involved in agriculture & related activities, but contributes less than 20% to GDP. Growth rate Y-O-Y is just 2% owing to lack of professional management & focus

Source : IMAGES F&R Research Study , Govt of India , Dept. of Agriculture

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The Farmer : Mandi system does not offer stable , sustainable price realization Organised retailers don’t pick lower grades , have long credit periods

The Lorry drivers : Lorry booking agents/brokers take 40% of cut. Fluctuating rates and

high stress work The Sellers : Organized retail : High investment , Poor supply chain, Low volumes Unorganised retailers : Sabjeewallah/push cart vendors :

▪ Missing link and unsung heroes of the supply chain. (Over 90% of volume retailed here)

▪ No proper benefits / finance / support The Buyers : Housewife : Fluctuating costs, Poor quality Hotels / Food processors : High costs, Unreliable suppliers Exporters : Poor standards / quality , High logistics cost

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Supply Chain ManagementWhat is it ? Why is it important ?

Farmers

Cooperatives

Collection centers

Village ICT kiosks

Phone booths

Mobile operators

Storage

Warehouses

Value added resellers

Sorting , Grading , Processing, Packing

Small Independent transporters

Intra-city small tempos

Kiranas

Self Help

Groups

Hawkers

eFarm

Bulk buyers

Exporters

Logistics Fleet

operators

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•IT Systems usage : NIL•Management team : Illiterate and average age of 55•Age of company : Over 150 years•Customer Segment : From slumdwellers to crorepathis•Operational efficiency : Six sigma !!!

The Mumbai Dubbawallahs !!!

•Key success factors :

•Highly decentralized operations – agile, flexible , scalable •Use of low cost transport medium – trains•Use of human power for last mile delivery – No Fuel related hikes•Strong customer relationship – personal , localised•Simple coding, routing, labelling system – operates even without electricity !•Delivery excellance – fixed time , professionalism

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Fix the process first

And THENImplement technology

Otherwise will be

a failure …..

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Farmers

Rural Produce

Collection Centres

Quality

Inspection/ Grading

Cleaning / Packing

Routing

Long haul

Transportation

Urban area

Distribution centre

Small retailersLocal vendors

Food Processing

units

Exports

Bulk buyers

(Hotels / Caterers /

Retailers)

Compost/Manure

from waste

eFarm Common Services

Planning &

CoordinationResearch

Call centre /

CommunicationTechnology

Training &

Support

Local

Distribution

Financial Success

An untapped , niche market with very few organized, entities

Revenue generation through better optimization, value addition across the chain

Reduced wastage in transit = more revenue

Has potential to jumpstart other agri-dependent ventures

A professional ly managed supply chain is vital for tapping international markets

Potential to scale across India as core problem is wide spread

‘Pull factor’ from rural India for other services and products

Social Progress

Organizing the large unorganized agri sector of India – bottom of pyramid

More income to farmers , truck operators and small vendors owing to profit sharing across the network

Support to traditional , eco friendly farm practices , organic farming through better marketing

Convert waste to compost , providing low cost manure back to farmers.

Revival of agriculture dependent livelihoods , empowering villagers

Under privileged/Disabled and urban poor get employment opportunities

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Open source

Tools &

technologies

AgriXML

As a dataXchange

format

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Collaboration and B2B trading

platform

•Content : Daily pricelists,

Schedules, Trends , Buyers

guides

•Order management

•Search / Track items

•Delivery tracking

•Agri specific social networking

Backoffice Systems

•Customer relationship

management

•Supply chain management

•Mobile/SMS gateway interface

•Voice based interface

•MIS & Data mart

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-

-

eFarm Registers the farmers,

transporters and other intermediaries

with basic details such as produce

type, volume, expected price range

etc.,

1

eFarm Retail co-coordinators (ie.,NGO

/small retailers) consolidate the Orders

from buyers received through phone,

email and walk-in to make one

consolidated demand list

2

eFarm sourcing managers track prices

across different areas and feed in the

data. The central order matching

system determines best source,

location and logistics channel for

fulfillment.

3

Advance amounts are collected from buyers

.Payments are made to farmers and

intermediaries upon delivery.

4

The vegetables are sorted and graded at the

eFarm Distribution centers across the city by

members of women’s self help groups of the

area..

The orders are delivered immediately through

delivery vans,push carts etc to end

customers

5

6

7Lessons learnt, feed back and data analysis conducted on the order received is shared with

the members in the chain. This helps to optimize the operation continuously and increase the

value creation across the chain.

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Small & mid sized farmers

Rural

Collection

Centres

Urban

Distribution

Centers

Retailers /

Mom & Pop stores

Bulk buyers

Exporters

Hub and Spoke Model For

Scalability and Organic Growth

… organic growth and

expansion

Cooperatives

Forward Logistics ( Fresh Produce)

Food Processors

Catering/Hotels

SHGs

Producer

Corporations

Reverse Logistics ( Manure , Farmer supplies)

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ICT Technology and the BOP segment : Challenges

• High illiteracy

• Even amongst educated – Mostly local language skills only

• Low computer skills , Low internet penetration Technology Adoption amongst BOP segment

• Highest and fastest penetration : The mobile phone

• Self taught the phone interfaces , usage

• Pay full price for new models , talk timeeFarm Interface points

• Voice call centres / BPOs (local language )

• Natural language IVRS ( 2 way –automated messages)

• SMS

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Production data

• Produce name, variety

• Grade

• Typical yield at harvest

• Harvest cycles

• Cost price at farm gate

Farmer information

• Name

• Address

• Contact number

• Preferred mode of payment

• Bank / Post office details

• Photo

• Attestation

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Click to open ->

Tools and calculators

to assist farmers in

determining their

Sale price

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Koyambedu

nadu tomato (data courtesy : TNAU-INDG market

information portal)

Ottanchatram

nadu tomato

Where to sell ?

At what price ?

Head to head comparisons

across

Markets

Insight - Support level prices and

inflection points

High / Low variations

Identifying ‘hoarding’ and

‘cartelisation’

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(data courtesy : TNAU-INDG market

information portal)

What is the demand for a

particular product variety in

specific market?

What variety to produce ?

When to harvest ? How much

?

Example using onion in Koyambedu

Koyambedu : Sambar onion

Koyambedu : Nagar Onion

Koyambedu : Tamilnadu Onion

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0102030405060

NENDRUM IN COIMBATORE MARKET

0102030405060

26

/06

/2…

27/0

6/2

28

/06

/2…

29

/06

/2…

30/0

6/2

01/

07/

2…

02/0

7/2…

03/0

7/2…

NENDRUM IN CHENNAI MARKET

0102030405060

Nendram in Bangalore market

Customer : A major chips manufacturer In

chennai

Problem : Nendran variety availability &

quality was poor and price was very high

Identified alternate markets for viable bulk

sourcing from alternate markets

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Stocking Plan

Purchase Orders

Sales & marketing

Sourcing

manager

Farmer

Purchase Order Confirmations

Strategic Forecast

Demand / Supply Forecasting and aggregation

COLLABORATION

FOR PLANNING

COLLABORATION

FOR OPERATIONS

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Tier 3 : End customer drop locations

Tier 2 : Distribution centresCollection and

Tier 1 Suppliers

Farmer / Supplier

Retail outlets

Retail outlets

Distribution

Center (DC)

Distribution

Center (DC)

Collection

centre/

Rural hub

Retailer regional HQ –

supply chain functions

across stores are

managed here

: material flows: information flows

End customer

locations

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Drill down to details

Dashboard summaryFor senior management

Highlight potential problems and issues for immediate action

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Agri India – LinkedIn Group ( > Link )

•Operational since Jan 2009

•connecting farmers, buyers , social agencies, agri professionals

, academicians , press reporters & students

•Leads on key demands , info about agri expos/conferences , trade

news , job announcements , new ideas , discussions …

•Articles on key topics :

•Agri business & entrepreneurship

•Organic farming

•Video clippings on key technologies & processes

•Buyer’s guide to various fresh produce (for e.g. detecting carbide

mangoes, health benefits of keerai , selecting brinjal without

insects etc)

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June 07 – May 08 : Information gathering , discussions, solution proposals to focus groups May’08- Jun’08 : Website launched, Initial prototype system

development

Aug’08- Oct’08 : Concept pitching to pilot customer base/SHGs. Pilot launched with weekly deliveries. Different retailing options such as push carts, stores, mobile trucks

tried out. User feedback has been positive from all strata. Avg. weekly delivery = 2 tonnes

Oct’08 – till date : Distribution centre and retail outlets. established . Daily operations launched to cater to wider customer base . Promotional events, publicity drive. Core

Concept and processes constantly being upgraded and evolved based on trial run results.

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•TATA NEN Hottest startup 2009

nominee

•IIM Kozhikode Whiteknight 2009

Business Plan contest winner

•IIM Ahmedabad Leverage 2009

Showcase shortlisted startup

•In the press •The Hindu magazine’s Ergo tabloid

(Mar 2009)

•Times of India , May 2009

•NDTV News , June 2009

•Featured in leading e-zines –

yourstory.in, startups.in

•Featured in Tamil press- Kumudham

, Dinakaran

•Outlook Money , June 2009

•JADE , June 2009

•Academic•Faculty for Food SCM course, MOP

Vaishnava college

•Key note speaker – TNAU conferences

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Venkata Subramanian , MD eFarm Ph : 044-43577236 M : 98847 61354Email : [email protected] : www.efarm.in11 Loganathan colony , Mylapore, Chennai PIN 600004