Professional Documents
Culture Documents
4 Future Scope
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ITC e-Choupal : An Introduction
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ITC :AN OVERVIEW
Incorporated on August 24, 1910 under the name of 'Imperial Tobacco
Company
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
ITC’S AGRI COMMODITY DIVISON
Weak Market
Orientation
ITC E-CHOUPAL
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Agri -Input Dealer/
Companies Stockiest
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WHY ITC THOUGHT OF E-CHOUPAL
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ITC’s Supply chain of Soya bean after e-Choupal
Initiative
SUPPLY CHAIN POST RE-ENGINEERING
• 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
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• 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
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• 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
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• 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
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• 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
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• 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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• 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
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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
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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, e-Governance
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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
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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 ITC’s Supply Chain
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STAKE HOLDER ANALYSIS
Primary Interest
Stakeholders
Farmer Community • 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
ITC • Lower procurement costs
• Direct interaction with farmers - Control on quality
& 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
EFFICIENCIES IN E-CHOUPAL NETWORK
Demand aggregation
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E-chaupal Haryali Kisaan Bazaar
Synergies Synergies with products which Synergies with what DSCL is selling(inputs
ITC is manufacturing to agriculture plus other services
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E-CHOUPAL 2.0
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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.