23421898 itc e choupal ppt final
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ByVignesh k.
MBA
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
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
Low Risk Appetite
Weak Market Orientation
Low InvestmentLow Margins
Low ProductivityLow Value Addition
Caught in a vicious cycle of
underdevelopment
The predicament of Indian Farmers
ITC e-ChoupalStarted in the year 2000Target Area so far 38,000 villages, 6500 kiosks, 9
statesWholly owned by ITCWhy 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 farms2.Weak institutions3.Involvement of intermediaries4.Information Asymmetry
Company Logo
Farmer
Agri-Input Companies
Dealer/
StockiestRetailer
Agril University, Met Dept,
Insurance Co.
VLW (of Dept of Agriculture)
Money Lender
Pakka Adtiya(Registered Dealer)
Kaccha Adtiya(Un-Registered Dealer)
Trader
Broker
Pro
cess
or
ITC-IBD
Why ITC thought of e-Choupal
Supply chain post re-engineering
PricingPrevious day’s closing price used as benchmark
price for next dayMandi prices communicated to sanchalak through e-
Choupal portalSanchalak 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
Inbound LogisticsFarmer proceeds to the nearest ITC procurement
hub with the noteSome procurement hubs are ITC factories, others
are purely warehouse operationsITC’s aim is to have a processing centre within 30-
40 km radius of its farmersInspection 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
Weighing and PaymentFarmer’s produce is weighed on electronic weighbridgeHe is then given full cash paymentFreight expenses are reimbursedAppropriate documentation at each stage and farmer is given a copy of thatSamyojaks handle cash operations
Hub LogisticsFarmer transports his produce to the nearest processing centre or storage hubITC incurs the transportation costThe farmer bears the risk of transportation until produce is delivered and the sale is
completed
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Technological supportNodal platform catering to commodity blending,
agricultural trading, e-choupal &rural distribution24,000 personalized business function points110,000+ pre-built business function pointsIntegrated Business Systems for Direct Agriculture
Procurement, Rural Distribution, e-Choupal Management, Exports, Insurance, Aqua Processing & Commodity blending
Support for 8 local languages
A win-win Deal
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Transaction cost in Mandi Chain (after e-Choupal)
Source: Seminar on Bottom of the Pyramid and CSR, IIM-K, Sept. 24, 2008
Generation of Goodwill & positive public opinion
Better supply chain for ITC’s Food & Agri BusinessesCosts, Quality, Traceability
Access to the Underserved Rural MarketsThrough a Virtuous Cycle created by “Larger
Incomes”, and founded on “Trust” that is builtNew ITES Business Opportunities
Health, Education, Entertainment, eGovernance
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Synergy Redefined :The FutureFARMERS
MARKETS
Cigarette Trade Marketing capability
BrandedFoods
Expanded FMCG distribution capability
e-choupal rural two-way fulfillment capability
VPN providing SCM, ERP & CRM capability
Lifestyle retailing
Education Stationery
Matches & Agarbattis
A basis for strategic partnerships with other FMCG brand owners
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