Supply chain reengineering in agri-business: A case study of ITC’s e-Choupal

Abstract

The main premise of the chapter is that emerging economies are characterized by “broken value chains” that attempt to connect the poor, as sellers and buyers, to markets for products and services. Often these value chains do work (as they need to) but with the help of numerous intermediaries who extract disproportionate value leaving the poor with little residual income. The challenge of fixing these value chains is further exacerbated by factors like fragmentation, dispersion, heterogeneity, and weak infrastructure. Nevertheless, the enormity and the complexity of the task at hand imply that reengineering the farm-to-market supply chain offers a tremendous business opportunity. In this chapter we describe a large scale agri-business supply chain reengineering effort, called e-Choupal, being implemented across various commodities by the ITC Group of India. We argue that this large-scale effort enhances shareholder value, alleviates poverty, lays the foundation for global competitiveness of agriculture, and at the same time sows the seeds of social transformation. We illustrate this through a detailed discussion of ITC’s interventions in soybean, wheat, and coffee procurement. Together the three highlight a progression of value provisioning using supply chain reengineering. While the first one focuses on improving the logistics efficiency of a commodity supply chain, the second example illustrates the shift from commodity-based to a variety-based strategy, and finally the third example illustrates the migration from products to services-based strategy in agri-businesses. For each of these cases, we articulate benefits that accrue to the key stakeholders. We close the chapter with a discussion on how ITC’s e-Choupal is an innovative business platform to convert agricultural supply-chains into demand-chains or from ‘selling what is produced’ to ‘help producing what is wanted’.