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By

Priyankka Chaurasia
IT, UIT-RGPV

Agenda
1

ITC e-Choupal : An Introduction,


Stake holder Analysis

Comparison of status of Supply Chain


before and after ITC e-Choupal

Critical Analysis, and Comparison


with HKB

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Future Scope

ITC e-Choupal : An Introduction

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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 Indias Most Respected Companies (IMRB-Businessworld Survey

2006)
Diversified conglomerate with interests ranging from Tobacco to Hospitality
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ITCs 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 Indias largest Internet-based intervention

Over 40,000 villages linked through 6500 e-Choupals


servicing over 4 million farmers

Distinctive sourcing capability for ITCs Foods business

The predicament of Indian Farmers


Low Risk Appetite

Low Margins

Caught in a vicious
cycle of
underdevelopment

Low Value Addition

Low Investment

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.
2.
3.
4.

Fragmented farms
Weak institutions
Involvement of intermediaries
Information Asymmetry

ITCs Supply chain of Soya bean before e-Choupal


Initiative

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Pakka Adtiya
(Registered Dealer)
Agri-Input
Companies

Dealer/
Stockiest

Retailer

Money
Lender

Farmer

Broker

Processor

Trader

ITC-IBD
Agril University,
Met Dept,
Insurance Co.

VLW (of Dept of


Agriculture)

Kaccha Adtiya
(Un-Registered Dealer)
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Why ITC thought of e-Choupal

The Tactical
Imperative
ITCs distance
from Farmer

The Strategic
Imperative

The Social
Imperative

Horizontal
spread

Daily price
inflation
Vertical presence
Capture of Intraday Price shifts
Seasonal price
Inflation

Risk
management

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ITCs Supply chain of Soya bean after e-Choupal


Initiative

Supply chain post re-engineering

Pricing

Inbound
Logistics

Inspection
Grading

Weighing
and
Payment

Hub
Logistics

Technolog
ical
support

Pricing
Previous days 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
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Pricing

Inbound
Logistics

Inspection
Grading

Weighing
and
Payment

Hub
Logistics

Technolog
ical
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
ITCs aim is to have a processing centre within 30-40 km
radius of its farmers
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Pricing

Inbound
Logistics

Inspectio
n Grading

Weighing
and
Payment

Hub
Logistics

Technolo
gical
support

Inspection and Grading


At the ITC procurement hub, laboratory tests are conducted
on a sample of farmers produce
To change farmers attitude and appreciating produce
quality, ITC is developing lab tests to reward farmers with
reward points for better quality supply

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Pricing

Inbound
Logistics

Inspectio
n Grading

Weighing
and
Payment

Hub
Logistics

Technolo
gical
support

Inspection and Grading


At the ITC procurement hub, laboratory tests are conducted
on a sample of farmers produce
To change farmers attitude and appreciating produce
quality, ITC is developing lab tests to reward farmers with
reward points for better quality supply

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Pricing

Inbound
Logistics

Inspectio
n Grading

Weighing
and
Payment

Hub
Logistics

Technolo
gical
support

Weighing and Payment


Farmers 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
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Pricing

Inbound
Logistics

Inspectio
n Grading

Weighing
and
Payment

Hub
Logistics

Technolo
gical
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

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Pricing

Inbound
Logistics

Inspectio
n
Grading

Weighing
and
Payment

Hub
Logistics

Technological
support

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
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A win-win Deal
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

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Other e-Choupal Initiative

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Companies using e-Choupal


network

Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008

Critical Analysis of ITCs Supply Chain

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Stake holder Analysis


Primary

Interest

Stakeholders

Farmer Community

ITC

Commission Agents
(Kachha

Adatiyas)

&

Pakka

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
Lower procurement costs
Direct interaction with farmers - Control on quality &
supply security
Low cost distribution channel
Access to market intelligence
Gain access to global markets through ITC and commission
to compensate some of the loss revenue

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
Supply Chain

Who are in
problems

Risk associated
with e-Choupal

Information

Local Mandi

Eroded dominance of
Commission agent

Logistics at hub

Mandi laborers
Authenticity of
information

Transportation

Storage facilities at
hub

Market near Mandi


Small processors

Problem of Power
and internet
connectivity

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Future of e-Choupal

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e-Choupal 2.0

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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

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ITC e-Choupal Footprint

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