Transcript Agenda - Rural Finance

The Logistics Way
INTEGRATED SUPPLY CHAIN NETWORKS
Achieving Global Competitiveness
The KisanBandhu:
Creating a Globally Competitive Rural Growth Engine
N. Viswanadham
Executive Director,
Global Logistics and Manufacturing Strategies
Indian School of Business
[email protected]
Feb20, 2007
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The Logistics Way
Achieving Global Competitiveness
Contents
State of Indian Economy
 Food supply Chain in India
 Rural Business Transformation
KisanBandhu
 Retail supply Chain
 Conclusions
N.Viswanadham
The Logistics Way
Achieving Global Competitiveness
The Three Sectors of the Economy are
Mutually Dependent
Sector
Contribution to
GDP
Agriculture
21%
60%
Manufacturing
28%
17%
Service
51%
23%
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Work Force
Employment
The Logistics Way
Achieving Global Competitiveness
The Food Supply Chain In India
N.Viswanadham
State of Indian Food Sector
Strengths
1.Vast natural resources (cultivable
land, water, seasons)
2.Established farming system
3.Growing economy
4.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
Consequences
1.Surplus food wasted away
2.Low incomes to farmers
3.Inefficient supply chain
4.Not meeting the changing
consumer preferences (processed
hygienic food)
Opportunities for
1.Cold chain infrastructure builders
2.Processed food manufacturers
3.Food packaging & logistics providers
4.Food retailers and exporters
5.IT and data analysts
6.Research Institutions
Economic Integration
Packaging Duties High
Connecting Technologies
The Logistics Way
Trade Tariffs
Protectionist
Economic Policies
Logistics
Resources
No Cold Chain
Abundant
FOOD
SUPPLY
CHAIN
Information
Technology
Resources
Management
Inefficient and
Fragmented
Planning
No Supply
Chain
Visibility
Product Offering
Few Processed Products/Labs
Supply Chain
Too many intermediaries
Product & Value
Chain Innovation
N.Viswanadham
Resources & Management
Achieving Global Competitiveness
Benchmarking Food Chain
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The Logistics Way
Achieving Global Competitiveness
Background 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”
N.Viswanadham
The Logistics Way
Achieving Global Competitiveness
Rural Business Transformation
KisanBandhu
N.Viswanadham
Agriculture & Industry
Non-farm Community
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Processing
Industries
The Logistics Way
Village as a Business System
Technology
Achieving Global Competitiveness
Resource
Management
Marketing Skills
Policies
Farm-inputs –
Fertilizers, seeds etc.
Logistics
Financial Services
Farm labor
Value added Products
adding value
The Logistics Way
Achieving Global Competitiveness
Core Business Processes
Production
Procurement
Processing
Farm-inputs –
raw materials
Retailing
Villages
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Banks
The Logistics Way
Achieving Global Competitiveness
ISB-Kisan-Bandhu
Logistics Provider
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ISB (Knowledge partner)
Regional Call Centres (RCC)
The Logistics Way
Achieving Global Competitiveness
Aggregator model For implementation
Farmers
Forward contract
Input credit
Aggregator at
Village and Higher
Levels
MCX
NSEL
Market
players
Bank
NBHC
N.Viswanadham
The Logistics Way
INTEGRATED SUPPLY CHAIN NETWORKS
Achieving Global Competitiveness
Retail Supply Chain
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The Logistics Way
Achieving Global Competitiveness
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
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Retail is going turbulent with entry of big
players
N.Viswanadham
4
RTC/Private Transport
5
Post Office
5,6
The Logistics Way
Achieving Global Competitiveness
Rural Retail Flow Chart
District/Local
Distribution Centers
(FMCG)/Perishable
Village Retail Shop
1
Call Center
3
2
State Distribution Centers
Rural Retail Model : 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.
N.Viswanadham
The Logistics Way
Achieving Global Competitiveness
Conclusions
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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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3P Grading
The Logistics Way
Achieving Global Competitiveness
Kisanbandhu Pilot model
3P Warehousing
Logistics Service
Commodity Exchanges
Farmers
Cyber-Intermediary
Buyers
Big Retailers
Local buyers/
Other significant buyers
Banks
N.Viswanadham