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VIABLE AGRO-INDUSTRYMODELS FOR SMES ANDSUPPLY RELATIONSHIPS IN
THE INDIAN CONTEXT.Presentation by
Amarnath Govindarajan
Sandwalk Consultancy
UEL.
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PROBLEM STATEMENT
Indian agro-industrial SMEs have beenfinding it difficult to source products thatmeet international standards.
Seasonal variations, fluctuating demandissues are not suitably addressed at thesupply side.
Lack of communication channels, informationexchange between stakeholders. One enddoes not know the other!
(Rao, 2007)
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ACTION PLAN
Study prevalent models and identify a modelappropriate for an SME.
Identify factors/components on the supplyside of the model that need to becustomized.
Address academic issues involved withcustomization.
Identify tools and methodologies that can
help the process.
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EXISTING MODELS
Co-operative, government organization,private MNC contracting and VAC models areprevalent.
The co-operative and governmentorganization models are ruled out.
Both are top-heavy, very large scale models.Difficult to emulate at SME level.
(Gandhi, Kumar, & Marsh, 2001)
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THE MNC PARTNERING MODEL
PepsiCo introducedcontract farming inthe Indian state ofPunjab.
Used informalcontracts to buy backproducts fromfarmers.
Company invest inbuilding relationshipswith
suppliers.(producers)
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PEPSICO PARTNERING MODEL
Capable of absorbing losses for three yearsbefore profitable operations. ( Rs.40 millionper year). Mostly uni-product.
Heavy industrial backing, and marketinginfrastructure has been seen as importantfactors that led to success.
Ruled out for SMEs.
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Adapted from (Gandhi, Kumar, & Marsh, 2001)
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VAC MODEL KEY ENABLERS
Implementing agencyaccess to Information-Communicationtechnologies, and
infrastructure set-upat every village level.
Financial viability forlarge scaleprocurement moneysaved on intermediaryexpenses.
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ISSUES IN ADOPTING THE VAC MODELFOR SMES
Problems Costs incurred on setting up ICT infrastructure
is prohibitive at SME levels.
Intensive organizational skills and resourcesneed to be deployed to assure last mileconnectivity and mass-reach out.
Lead-in time before profitable operations isminimum 3 years.
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PROPOSED SOLUTION FORADOPTING THE VAC MODEL FOR SMES
Substitute market intermediaries for ICT. Deploylimited ICT for educating/informing theintermediaries.
The SMEs will begin working within the existingsystem and incrementally improve services.
Resource requirements are much lesser.
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THE CHALLENGE
Getting the intermediaries/suppliers to work oncompany requirements while a ready mademarket is available.
Appropriate Service System Design for suppliers andSupplier Development.
Evolving a framework/model that will assist
substituting mass ICT presence with intermediaries.
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ACADEMIC ISSUES
Adopting a two-level bi-directional supply chain.
Adapted from (Sampson, 2000)
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ACADEMIC ISSUES
Supply Relationships Supply base issues
Supply chainintegration
Partnering andVendor Development
Supply ChainApproach to
Service Design Service blueprinting
(Sampson, 2000)
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PROJECT DELIVERABLES
Overview of present models in Indian agro-industry and positioning VAC model as apt forSMEs with required changes. (750 words)
A brief review of academic issues involved(1500 words)
Methodology & Findings (1250 words) Supply Chain Management Tools
Appropriate Service System Design
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REFERENCES
Gandhi, V., Kumar, G., & Marsh, R. (2001).
Agroindustry for Rural and Small Farmer
Development : Issues and Lessons from india.
International Food and Agribusiness Management
Review , 331-344.
Rao, N. (2007). A framework for implementing
information and communication technologies in
agricultural development in India. TechnologicalForecasting & Social Change , 491-518.
Sampson, S. E. (2000). Customer-Supplier Duality
And bi-directional supply chains in service
organizations. International Journal of Service
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THANK YOUSuggestions/Questions/Comments.