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ITC e-Choupal : An Introduction, Stake holder Analysis Supply Chain of ITC e-Choupal Critical Analysis, and Comparison with HKB Future Scope

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ITC e-Choupal : An Introduction Company Logo .

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. (@ April 09)  No. 1 in FMCG Sector (IMRB-  Rated as one of India’s Most Respected Companies Businessworld Survey 2006)  Diversified conglomerate with interests ranging from Tobacco to Hospitality . 4 among Indian listed Private Sector Companies by market cap.ITC :AN OVERVIEW  Incorporated on August 24.

Wheat. Coffee etc.ITC’S AGRI COMMODITY DIVISON  Farm linkages in 14 states covering Soya. Focus on value added agri-commodities.  Unique CRM program 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 . Marine products.

The predicament of Indian Farmers Low Risk Appetite Caught in a vicious Low Investment cycle of underdevelopment Low Value Addition Low Productivity Weak Market Orientation Low Margins .

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.Involvement of intermediaries 4.Weak institutions 3.ITC E-CHOUPAL • Started in the year 2000 • Target Area so far 38.Fragmented farms 2. 6500 kiosks.Information Asymmetry . 9 states • Wholly owned by ITC.000 villages.

Analysis of Supply chain of e-Choupal Initiative Company Logo .

A ri -In u g pt C m a ie o pn s D a r/ e le S c ie t to k s Company Logo .


ITC’s Supply chain of Soya bean after e-Choupal Initiative .

quantity/conditional price). if farmer decides to sell to ITC Company Logo . assesses quality and gives farmer a conditional quote and a note (name/village/quality tests/approx.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.

others are purely warehouse operations • ITC’s aim is to have a processing centre within 30-40 km radius of its farmers Company Logo .• Inbound Logistics • Farmer proceeds to the nearest ITC procurement hub with the note • Some procurement hubs are ITC factories.

ITC is developing lab tests to reward farmers with reward points for better quality supply Company Logo .• 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.

laboratory tests are conducted on a sample of farmer’s produce • To change farmer’s attitude and appreciating produce quality.• Inspection and Grading • At the ITC procurement hub. ITC is developing lab tests to reward farmers with reward points for better quality supply Company Logo .

• 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 .

• 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 .

e-choupal &rural distribution • 24. Insurance.• Technological support • Nodal platform catering to commodity blending. Exports. Rural Distribution.000+ pre-built business function points • Integrated Business Systems for Direct Agriculture Procurement.000 personalized business function points • 110. Aqua Processing & Commodity blending • Support for 8 local languages Company Logo . e-Choupal Management. agricultural trading.

A WIN-WIN DEAL Company Logo .

2008 . 24. IIM-K.TRANSACTION COST IN MANDI CHAIN (BEFORE ECHOUPAL) Source: Seminar on Bottom of the Pyramid and CSR. Sept.

2008 . 24. Sept. IIM-K.TRANSACTION COST IN MANDI CHAIN (AFTER ECHOUPAL) Source: Seminar on Bottom of the Pyramid and CSR.

Synergies for ITC Company Logo .

Entertainment. e-Governance Company Logo . Quality. and founded on “Trust” that is built  New ITES Business Opportunities • Health. Generation of Goodwill & positive public opinion  Better supply chain for ITC’s Food & Agri-Businesses • Costs. Education. Traceability  Access to the Underserved Rural Markets • Through a Virtuous Cycle created by “Larger Incomes”.

ERP & CRM capability F e-choupal rural two-way fulfillment A capability R M Cigarette Trade Marketing capability E R Expanded FMCG distribution capability S Brande d Foods Lifestyl e retailin g Educatio n Stationer y Matches & Agarbat tis M A R K E T S A basis for strategic partnerships with other FMCG brand Company Logo owners .SYNERGY REDEFINED :THE FUTURE VPN providing SCM.


IIM-K. 2008 . Sept.COMPANIES USING E-CHOUPAL NETWORK Source: Seminar on Bottom of the Pyramid and CSR. 24.

Critical Analysis of ITC’s Supply Chain Company Logo .

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 Interest • • Commission Agents • (Kachha & Pakka .STAKE HOLDER ANALYSIS Primary Stakeholders Farmer Community • • • • • • ITC • • 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 .

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 .

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Comparison with Haryali Kisan Bazar Company Logo .

E-chaupal Main objective Procurement Haryali Kisaan Bazaar Rural Retail Benefit to thecomputer application to provide provide better method of cultivation by farmers Synergies market information Synergies with products which ITC is manufacturing trained agronomist Synergies with what DSCL is selling(inputs to agriculture plus other services Economies scale of25-30 km area coverage 20-25 km area coverage Strategically placed near petrol pump mainly Procurement near small town centre .

Future of e-Choupal Company Logo .

E-CHOUPAL 2.0 Cmpany Logo .

Farmer’s gain The farmers get bargaining power and a opportunity of have choice Information on weather. soil testing etc Purchase of seed.VERSION 1.0( the scale-up) By 2006.0 V/S VERSION 2. water harvesting ITC’s gain Access to inputs for its agri business. price etc Knowledge on farming methods. 40. offer the use of network to other companies ITC was able to procure fresh commodities with reasonable prices from the farmers .0( the start) The concept gave a power of scale to the small farmers by aggregating them as sellers ( of produce) and as buyers (of farm inputs) Version 2.000 villages covering 4 million people. fertiliser to insurance Farmers sell crops to the ITC centres cattle care.0 Parameters Idea Version 1.

themegallery. analytics.0. new partner www.E-CHOUPAL 3. The Deepening NEW BUSINESSES: 1) Rural jobs and employability 2) Personalised agri Company Logo . MORE INTERACTION: Through Choupal Saagars and Haats and via mobile phones NEW TECHNOLOGY: Use of especially enabled mobile phones.

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