Itc Echoupal Initiative
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The eChoupal has provided the services that increase efficiency of all stakeholders along the value chain. These services have been offered through the website, which encompasses the sense of “community”. The website includes real-time weather information and forecasts; best practices of farming approaches; crop information; market information; panel-like experts on general questions and customized questions; and relevant news. The new services have completely reengineered the old supply chain, leading to significantly reduce inefficiencies that were evidenced in several interfaces along the chain.
ITC has introduced information technology into agricultural business in India. . The eChoupal kiosks have been set up to facilitate a new supply chain. This new technology-integrated supply chain has addressed several difficulties in the past. The following sections will lay out the inefficiencies of the traditional supply chain management; describe the ITC eChoupal Initiative; and analyze how eChoupal enhances the soybean supply chain. The future platform will also be discussed.
Traditional Soybean Procurement
There are several inefficiencies occurred in the traditional supply chain. First, the only means for price discovery is at the mandi. Although farmers might forecast the price from the previous days, they cannot know the real price in advance before they reach the mandi. In this way, they have to incur considerable amount of logistic costs. Without real-time information about price and demand, farmers cannot make effective decision about when/where/how much to sell or produce. Since the selling price is not discovered before reaching the mandi, the farmers earn low profits or are even in deficit, leaving them in the vicious cycle.
When farmers arrive at the mandi, their produce needs to go through the subjective inspection process by CA. Their produce might be determined unqualified even though the produce has a superior quality. Consequently, they may not get compensated as worth as what they are supposed to get. Farmers also have to pay the fee for the CA and some extra fees at the mandi. Even worse, the reimbursement for the farmers is often delayed; they have to make several trips in order to get the full payment.
On the other side of the chain, a buyer like ITC also has to pay commission fees to the CA, who procures the produce. These fees keep the procurement cost of ITC’s soybean high; thus, leading to uncompetitiveness in costs. Therefore, ITC has lower price leverage in market competition. In addition, the quality of the purchased soybean is not guaranteed because of the unscientific inspection procedure of the CA. These problems are the motivation that drives the innovative change of the traditional supply chain.
Reorganized Soybean Supply Chain
The new supply chain is aimed to direct both physical flows and information flows to farmers. The ITC soybean supply chain has been reengineered to deliver the price discovery to the farmers. ITC Web technology, so-called eChoupal, has been introduced in order to act as two-way communication channel with the villages. The eChoupal kiosks have been set up throughout the soybean suppliers’ village. Sanchalak, an influential farmer, is assigned the responsibility to facilitate information provided by the eChoupal. Farmers gather at the Sanchalak to learn about prices and markets of soybean before they make decision on whether or not they will travel to the mandi.
ITC has also built new infrastructures, called ITC hubs, to offer an alternative to the farmer’s sale channels. Some of the ITC CAs are relocated to the new hubs to help support the business activities.
In order to avoid the poor quality assurance at the mandi, the Sanchalak is responsible for inspecting the quality of soybean. He takes the samples from the farmer and uses an ITC machine to report the graded quality of the samples and declare the prospective price. The authorized report will be given to the farmer who decides to sell the produce to the ITC. However, the produce of the authorized farmer needs undergo an inspection again at the ITC hub in order to assure the quality. If the quality is within acceptable variation from the report, the farmer will get the same price as previously quoted. The cash reimbursement is immediately paid to the farmer when the transaction is finalized.
Underlying Principles
The eChoupal depends strongly on trust. It only offers information and acts as a medium for interactions. The decision of farmers is left on their own. They can still sell their produce at the mandi. ITC also created a sense of pride and responsibility for the Sanchalak to ensure