Sumamry of Itc E-Choupal Essay
The case is about a technology based transition of soybean supply chain from traditional flow to a more efficient method.
Case first talks about the traditional way of soybean supply chain. In the traditional method, farmers are taking their product to local markets called “mandi”. They had difficulties in taking their product to far market places, and there they do not know the expected price of their product. So middlemen can play with the price in the local market and they can take advantage of the situation. Then they sell the product to ITC at a higher price.
Moreover, in this supply chain ITC has no control over the quality of the product which results in huge cost for ITC. As a result ITC decides to take action against this situation. The solution that ITC came up with is to create a way to directly stay in contact with farmers. In order for that purpose, ITC looks back to the old tradition of Choupal in villages. Choupals are places where farmers meet, exchange information and goods. So in each soybean producing region they set up a computer, printer and internet connection at Choupals. They let the farmers to access the www. oyachoupal.
com website. In this website, farmers can learn about weather, best practices for soybean production, market information, and crop information in the region, news, frequently asked questions, company information and a feedback area. In each Choupal, they assign a Sanchalak who is responsible for helping farmer accessing the information. They also help farmers in selling their produce to ITC through which they earn commission. Farmers like this new supply chain, because they were informed about the price of their products in real time.ITC set up quite a lot of warehouses and hubs throughout the region so it was comfortable for farmers to take their soybeans. They got rid of the difficulties in local Mandi.
ITC was benefiting from this approach because they were buying for a better price directly from farmers than the middlemen. Moreover, ITC gained control over the quality of the produced soybeans. In this new supply chain, middlemen who are called CA’s (Commission agents) became Samyojaks who were responsible for the transportation of farmers produce to ITC.
This transition was a real success for ITC and they turned their attention to applying this model to other agricultural products such as coffee and wheat. Additionally, ITC tried to start business through this network of Choupals and Sanchalak, on various areas such as fertilizers, agrichemicals, seeds, insurance and credit. ITC Chairman Deveshwar summarized the success of this new supply chain in the following words: “The pioneering eChoupal business model contributes to creating the market through improved farm incomes, whilst placing ITC in a unique position to reap benefits through its closeness to the potential consumer”.