integrated supply chain networks achieving global competitiveness the logistics way the kisanbandhu:...
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ay The KisanBandhu:The KisanBandhu:Creating a Globally Competitive Rural Growth EngineCreating a Globally Competitive Rural Growth Engine
N. ViswanadhamExecutive Director,
Global Logistics and Manufacturing StrategiesIndian School of Business
[email protected], 2007
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State of Indian EconomyFood supply Chain in IndiaRural Business Transformation
KisanBandhuRetail supply ChainConclusions
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Sector Contribution to GDP
Work Force Employment
Agriculture 21% 60%
Manufacturing 28% 17%
Service 51% 23%
The Three Sectors of the Economy are
Mutually Dependent
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The Food Supply Chain In IndiaThe Food Supply Chain In India
State of Indian Food SectorState of Indian Food Sector
Consequences1.Surplus food wasted away2.Low incomes to farmers 3.Inefficient supply chain4.Not meeting the changing consumer preferences (processed hygienic food)
Opportunities for 1.Cold chain infrastructure builders 2.Processed food manufacturers3.Food packaging & logistics providers4.Food retailers and exporters 5.IT and data analysts6.Research Institutions
Strengths1.Vast natural resources (cultivable land, water, seasons)2.Established farming system3.Growing economy4.Supporting government policies (FDI, SEZ, subsidies)5. Vital outsourcing hub
Weaknesses 1.Small scale conventional farming 2.Primitive post-harvest methods 3.No channel master & many intermediaries farmers to consumers
4. Hardly any Food processing industry 5. Inadequate Cold chain infrastructure
Potential to become a leading
food supplier for th
e whole
world
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Benchmarking Food ChainBenchmarking Food ChainEconomic Integration
Reso
urces &
Man
age
men
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Product & Value Chain Innovation
Co
nn
ecti
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Tec
hn
olo
gie
s Resources
Resources Management
Supply ChainProduct Offering
Logistics
Economic Policies
Information Technology
Trade Tariffs
FOOD SUPPLY CHAIN
No Cold Chain
No Supply Chain Visibility
Packaging Duties High Protectionist
Too many intermediariesFew Processed Products/Labs
Abundant
Inefficient and Fragmented
Planning
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Background for KisanBandhuBackground for KisanBandhu Existing scenario is supply driven The farmer is unaware of the market, produces something
and sells in a mandi or to an agent and wants to get a fair price & immediate payment.
This must change. Need to create a system, where the farmer is made aware of the market demand and encouraged to produce to the requirements of the buyer
The farmer should get right inputs ,Grow the right grade of produce (most optimal grade), trade it (double auction mechanism), and sell it to get maximum Net income
The idea is to transform the way agriculture works, create a business orientation among the farming community
Thus we propose – “Corporatization of Villages”
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Rural Business TransformationRural Business TransformationKisanBandhuKisanBandhu
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Village as a Business System
Agriculture & Industry
Farm labor
Technology
Logistics
Policies
Processing
Industries
Resource
Managem
ent M
arketing Skills
Value added Products
Non-farm Community
Farm-inputs – Fertilizers, seeds etc.
Financial S
ervices
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Core Business Processes
Villages
Production Procurement Processing
Retailing
Farm-inputs – raw materials
adding value
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Banks
Logistics Provider
ISB-Kisan-BandhuISB-Kisan-Bandhu
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Aggregator model For implementation
Farmers
Aggregator at Village and Higher
Levels
ISB (Knowledge partner)
Forward contract
Input credit
Knowledge
sharing
Regional Call Centres (RCC)
Bank
Fund
transfer
WR
fina
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NBHC
MCX
NSEL
Market players
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Retail Supply ChainRetail Supply Chain
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Retail: The Indian advantage There is a huge opportunity in this space 12 M retail outlets employing 21 M ( 7% of total
work force) people 100% FDI is not allowed for foreign companies. Least saturated of global markets with small
organized retail. The least competitive of all global markets studied
– Lower barriers of entry for big players– Tremendous market size in both Urban, and
Rural areas,– Growth potential of 20-40% as in China
Retail is going turbulent with entry of big players
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Rural Retail Model : Flow Chart
Village Retail Shop
State Distribution Centers
District/Local Distribution Centers(FMCG)/Perishable
RTC/Private Transport
Post Office
Call Center
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Rural Retail Flow ChartRural Retail Flow Chart
The Indian postal service can take advantage of its vast network and logistical capabilities to transform itself into a profitable business and to bring a host of services to rural populations.
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Conclusions
India provides huge opportunities for Food supply chain stakeholders
Retail, Food manufacturing are the Growth areas– Halal hub (Export to South-East Asia, Middle East),
Vegetarian hub (20% of Indian population + overseas), Organic food hub (Europe and USA), Sea food hub
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Cyber-IntermediaryFarmers
3P Grading 3P Warehousing Logistics Service
Banks
Commodity Exchanges
Big RetailersLocal buyers/
Other significant buyers
Buyers
Kisanbandhu Pilot model