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By
Priyankka Chaurasia
       IT, UIT-RGPV
Agenda
                  ITC e-Choupal : An Introduction,
         1             Stake holder Analysis

              Comparison of status of Supply Chain
         2       before and after ITC e-Choupal

                 Critical Analysis, and Comparison
         3                    with HKB


         4               Future Scope




         Company Logo
ITC e-Choupal : An Introduction




      Company Logo
ITC :An Overview
 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
ITC’s Agri Commodity Divison
   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
The predicament of Indian Farmers

                      Low Risk Appetite


   Low Margins                              Low Investment
                      Caught in a vicious
                           cycle of
                      underdevelopment
 Low Value Addition                         Low Productivity

                        Weak Market
                         Orientation
ITC e-Choupal
 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
ITC’s Supply chain of Soya bean before e-Choupal
                     Initiative




                                Company Logo
Pakka Adtiya
                                                           (Registered Dealer)
Agri-Input         Dealer/
                                    Retailer
Companies         Stockiest




                                                                         Trader


     Money
                                               Farmer




                                                                                       Processor
     Lender                                                              Broker




                                                                                    ITC-IBD

   Agril University,
                             VLW (of Dept of
      Met Dept,
                              Agriculture)
    Insurance Co.
                                                            Kaccha Adtiya
                                                        (Un-Registered Dealer)

                                                                     Company Logo
Why ITC thought of e-Choupal



    The Tactical         The Strategic            The Social
    Imperative            Imperative              Imperative
      ITC’s distance         Horizontal
       from Farmer            spread
        Daily price
         inflation
                          Vertical presence
     Capture of Intra-
      day Price shifts
                              Risk
      Seasonal price
                           management
        Inflation




                                              Company Logo
ITC’s Supply chain of Soya bean after e-Choupal
                    Initiative
Supply chain post re-engineering


                                       Weighing                     Technolog
              Inbound     Inspection                      Hub
   Pricing                               and                           ical
              Logistics    Grading                      Logistics
                                       Payment                       support



 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
Weighing                    Technolog
             Inbound     Inspection                     Hub
   Pricing                              and                          ical
             Logistics    Grading                     Logistics
                                      Payment                      support




 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
Weighing                     Technolo
               Inbound     Inspectio                      Hub
     Pricing                             and                          gical
               Logistics   n Grading                    Logistics
                                       Payment                       support




 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
Weighing                     Technolo
               Inbound     Inspectio                      Hub
     Pricing                             and                          gical
               Logistics   n Grading                    Logistics
                                       Payment                       support




 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
Weighing                     Technolo
               Inbound     Inspectio                      Hub
     Pricing                             and                          gical
               Logistics   n Grading                    Logistics
                                       Payment                       support




 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
Weighing                     Technolo
               Inbound     Inspectio                      Hub
     Pricing                             and                          gical
               Logistics   n Grading                    Logistics
                                       Payment                       support




 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
Inspectio   Weighing                  Technological
             Inbound                              Hub
   Pricing                   n         and
             Logistics                          Logistics        support
                          Grading    Payment



 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
A win-win Deal
       Farmers gain              ITC gains

  • Better information     • Disintermediation
    Content                  savings
  • Better info timing     • Freight costs
  • Less transportation    • Quality control
    Cost                   • Risk management
  • Transaction duration
  • Weighing accuracy
  • Professionalism




                                 Company Logo
Transaction cost in Mandi Chain (before e-Choupal)




Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
Transaction cost in Mandi Chain (after e-Choupal)




  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, 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
Synergy Redefined :The Future
             VPN providing SCM, ERP & CRM capability


  F                                                               M
  A     e-choupal rural two-way fulfillment                       A
  R     capability                                                R
  M Cigarette Trade Marketing capability                          K
  E                                                               E
  R Expanded FMCG distribution capability                         T
  S                                                               S

        Branded    Lifestyle       Education    Matches &
        Foods      retailing       Stationery   Agarbattis



A basis for strategic partnerships with other FMCG brand owners
                    Company Logo
Other e-Choupal Initiative




         Company Logo
Companies using e-Choupal
network




Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
Critical Analysis of ITC’s Supply Chain




                           Company Logo
Stake holder Analysis
  Primary                Interest
  Stakeholders
                         Access to information
                          – Empowered decisions
                          – Improved agriculture
                         Economic benefits through lower transaction costs and
Farmer Community         process efficiencies
                         Served with dignity
                         Knowledge bundled sale of goods and services
                         Co-opted in product design
                         Hope for a brighter future
                         Lower procurement costs
                         Direct interaction with farmers - Control on quality &
ITC                      supply security
                         Low cost distribution channel
                         Access to market intelligence
Commission Agents        Gain access to global markets through ITC and commission
                         to compensate some of the loss revenue
(Kachha     &    Pakka
Adatiyas)
Efficiencies in e-Choupal network
 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
Drivers of              Who are in             Risk associated
Supply Chain             problems               with e-Choupal
    Information            Local Mandi            Eroded dominance of
                                                   Commission agent

  Logistics at hub        Mandi laborers
                                                      Authenticity of
                                                       information
   Transportation        Market near Mandi
                                                    Problem of Power
 Storage facilities at                                 and internet
                          Small processors
        hub                                            connectivity




                                             Company Logo
Comparison with Haryali Kisan Bazar




                        Company Logo
Hariyali Kisaan Bazaar
                             Hariyali        Other companies
                             kisaan
      Loan for pass          bazaar
      through to farmers
                                              Extension service




                ICICI Bank              Farmers


  Repayment of loan
  with interest
                                         Produce procurement
                              DSCL
E-chaupal            Haryali Kisaan Bazaar

Main              Procurement                    Rural Retail
objective
Benefit to the computer application to provide   provide better method of cultivation by
farmers        market information                trained agronomist


Synergies      Synergies with products which     Synergies with what DSCL is
               ITC is manufacturing              selling(inputs to agriculture plus other
                                                 services
Economies of 25-30 km area coverage              20-25 km area coverage
scale
Procurement    near small town                   Strategically placed near petrol pump
centre                                           mainly
Future of e-Choupal




                  Company Logo
e-Choupal 2.0




        Cmpany Logo
Version 1.0 v/s Version 2.0
Parameters                 Version 1.0( the start)                  Version 2.0( the scale-up)

Idea            The concept gave a power of scale to      By 2006, 40,000 villages covering 4 million
                the small farmers by aggregating them as people.
                sellers ( of produce) and as buyers
                (of farm inputs)


Farmer’s gain   The farmers get bargaining power and a Information on weather, price etc
                opportunity of have choice                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;   ITC was able to procure
                offer the use of network to               fresh commodities with
                other companies                           reasonable prices from the farmers
e-Choupal 3.0.
 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.com   Company Logo
ITC e-Choupal Footprint




        Company Logo
Itc e - choupal-ppt-final

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Itc e - choupal-ppt-final

  • 1. By Priyankka Chaurasia IT, UIT-RGPV
  • 2. Agenda ITC e-Choupal : An Introduction, 1 Stake holder Analysis Comparison of status of Supply Chain 2 before and after ITC e-Choupal Critical Analysis, and Comparison 3 with HKB 4 Future Scope Company Logo
  • 3. ITC e-Choupal : An Introduction Company Logo
  • 4. ITC :An Overview  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. ITC’s Agri Commodity Divison  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. The predicament of Indian Farmers Low Risk Appetite Low Margins Low Investment Caught in a vicious cycle of underdevelopment Low Value Addition Low Productivity Weak Market Orientation
  • 7. ITC e-Choupal  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. ITC’s Supply chain of Soya bean before e-Choupal Initiative Company Logo
  • 9. Pakka Adtiya (Registered Dealer) Agri-Input Dealer/ Retailer Companies Stockiest Trader Money Farmer Processor Lender Broker ITC-IBD Agril University, VLW (of Dept of Met Dept, Agriculture) Insurance Co. Kaccha Adtiya (Un-Registered Dealer) Company Logo
  • 10. Why ITC thought of e-Choupal The Tactical The Strategic The Social Imperative Imperative Imperative ITC’s distance Horizontal from Farmer spread Daily price inflation Vertical presence Capture of Intra- day Price shifts Risk Seasonal price management Inflation Company Logo
  • 11. ITC’s Supply chain of Soya bean after e-Choupal Initiative
  • 12. Supply chain post re-engineering Weighing Technolog Inbound Inspection Hub Pricing and ical Logistics Grading Logistics Payment support  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
  • 13. Weighing Technolog Inbound Inspection Hub Pricing and ical Logistics Grading Logistics Payment support  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
  • 14. Weighing Technolo Inbound Inspectio Hub Pricing and gical Logistics n Grading Logistics Payment support  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
  • 15. Weighing Technolo Inbound Inspectio Hub Pricing and gical Logistics n Grading Logistics Payment support  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
  • 16. Weighing Technolo Inbound Inspectio Hub Pricing and gical Logistics n Grading Logistics Payment support  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
  • 17. Weighing Technolo Inbound Inspectio Hub Pricing and gical Logistics n Grading Logistics Payment support  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
  • 18. Inspectio Weighing Technological Inbound Hub Pricing n and Logistics Logistics support Grading Payment  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
  • 19. A win-win Deal Farmers gain ITC gains • Better information • Disintermediation Content savings • Better info timing • Freight costs • Less transportation • Quality control Cost • Risk management • Transaction duration • Weighing accuracy • Professionalism Company Logo
  • 20. Transaction cost in Mandi Chain (before e-Choupal) Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
  • 21. Transaction cost in Mandi Chain (after e-Choupal) Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
  • 22. Synergies for ITC Company Logo
  • 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. Synergy Redefined :The Future VPN providing SCM, ERP & CRM capability F M A e-choupal rural two-way fulfillment A R capability R M Cigarette Trade Marketing capability K E E R Expanded FMCG distribution capability T S S Branded Lifestyle Education Matches & Foods retailing Stationery Agarbattis A basis for strategic partnerships with other FMCG brand owners Company Logo
  • 26. Companies using e-Choupal network Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
  • 27. Critical Analysis of ITC’s Supply Chain Company Logo
  • 28. Stake holder Analysis Primary Interest Stakeholders Access to information – Empowered decisions – Improved agriculture Economic benefits through lower transaction costs and Farmer Community process efficiencies Served with dignity Knowledge bundled sale of goods and services Co-opted in product design Hope for a brighter future Lower procurement costs Direct interaction with farmers - Control on quality & ITC supply security Low cost distribution channel Access to market intelligence Commission Agents Gain access to global markets through ITC and commission to compensate some of the loss revenue (Kachha & Pakka Adatiyas)
  • 29. Efficiencies in e-Choupal network  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. Drivers of Who are in Risk associated Supply Chain problems with e-Choupal Information Local Mandi Eroded dominance of Commission agent Logistics at hub Mandi laborers Authenticity of information Transportation Market near Mandi Problem of Power Storage facilities at and internet Small processors hub connectivity Company Logo
  • 31. Comparison with Haryali Kisan Bazar Company Logo
  • 32. Hariyali Kisaan Bazaar Hariyali Other companies kisaan Loan for pass bazaar through to farmers Extension service ICICI Bank Farmers Repayment of loan with interest Produce procurement DSCL
  • 33. E-chaupal Haryali Kisaan Bazaar Main Procurement Rural Retail objective Benefit to the computer application to provide provide better method of cultivation by farmers market information trained agronomist Synergies Synergies with products which Synergies with what DSCL is ITC is manufacturing selling(inputs to agriculture plus other services Economies of 25-30 km area coverage 20-25 km area coverage scale Procurement near small town Strategically placed near petrol pump centre mainly
  • 34. Future of e-Choupal Company Logo
  • 35. e-Choupal 2.0 Cmpany Logo
  • 36. Version 1.0 v/s Version 2.0 Parameters Version 1.0( the start) Version 2.0( the scale-up) Idea The concept gave a power of scale to By 2006, 40,000 villages covering 4 million the small farmers by aggregating them as people. sellers ( of produce) and as buyers (of farm inputs) Farmer’s gain The farmers get bargaining power and a Information on weather, price etc opportunity of have choice 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; ITC was able to procure offer the use of network to fresh commodities with other companies reasonable prices from the farmers
  • 37. e-Choupal 3.0. 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.com Company Logo
  • 38. ITC e-Choupal Footprint Company Logo