A Business Standard Publication

indianVOLUME 54 ISSUE 5MAY 2015 `60

The Journal of

ALL INDIA MANAGEMENT ASSOCIATION

management

HARNESSING MOBILEFOR CUSTOMERCENTRICITY 63

CAN MAKE ININDIA REVIVEMANUFACTURING? 20

HOW CAN A STRONGSUPPLY CHAINCONTAIN AGRI LOSSES 50

Waiting forthe roarWaiting forthe roarWill Make in India help revive growth?

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BUILDING A STRONG

SUPPLY CHAIN

BUILDING A STRONG

SUPPLY CHAINIf scientific processes are deployed to manage storage and agri logistics in existingstructures, storage losses can be reduced from 10 per cent to a mere 0.5 per centBY SANDEEP SABHARWAL

L O G I S T I C S

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TO SUBSCRIBE TO INDIAN MANAGEMENT-SMS ‘IMM’ TO 57007

L O G I S T I C S

India's agriculture sector has made rapid stridesin the last few decades as introduction of newfarming methods and technologies has enabledfarmers and allied sectors to increase yield per

hectare and produce bountiful food grains in-cluding rice, wheat, pulses, and coarse cereals. In-dia's geographical diversity and varying soil coveralso allows for production of various types of agri-cultural products. For 2014-15 crop year that runsfrom July to June,India is expected to produce 261

million tonne food grain and to meet domestic de-mand. Further,going by current output trends,foodgrain output is projected to reach 290 million tonneby 2020 and 345 million tonne by 2030.

While self sufficiency in food grain output islaudable, it is equally distressing to note that everyyear,an enormous amount of food stock gets wasteddue to archaic procurement, storage and ware-housing methods. Typical storage losses for agriproducts in India account for approximately 10 percent of the entire goods.This results in huge bur-den on the economy because it leads to inflationas additional supplies could have helped cool downprices and two, this production can go a long wayin providing food to millions of poor people in In-dia at highly subsidised rates. According to a FicciStudy conducted on SLCM's systems and processes"Agri Reach" (patent pending), using scientificprocesses for managing storage and agri logisticsin existing structures can reduce storage lossesfrom 10 per cent to a mere 0.5 per cent which trans-lates into a saving of $13 billion or roughly `80,000crore every year in India. This has been clearlydemonstrated by SLCM Group & validated by thedetailed study of Ficci- Partnership to Scale NewHeights: India-US Collaboration in Agriculture.

Given the demand for food grain, it will onlyincrease in the coming years due to an increase inpopulation, rising income levels and changing di-etary preferences, India can ill-afford such colos-sal wastage of agriculture produce. The pressurewill only increase as available farm land will go

I N D I A N M A N A G E M E N T -- M AY 2 0 1 5 51

ABOUT THE AUTHOR

Sandeep Sabharwal is CEO,Sohan Lal CommodityManagement

While self sufficiency infood grain output islaudable, it is equallydistressing to note thatevery year, an enormousamount of food stock getswasted due to archaicprocurement, storage andwarehousing methods

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down due to rapid urbanisation and the need tobuild associated infrastructure. A combination ofthese factors is bound to push up prices.

It is imperative that apart from raising agri-cultural productivity, improvement in manage-ment of supply chain would be critical for main-

taining overall economic growth and prevent anysharp escalation in prices. India must start todemonstrate and adopt best warehousing prac-tices/ processes for a robust supply chain man-agement for agriculture as well as farm products.Some players in the industry have shown their

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52 I N D I A N M A N A G E M E N T — M AY 2 0 1 5

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competence in the area and some need to innovate.For instance, India is the world's largest pro-

ducer of fruit and vegetables but it has been esti-mated that inadequate post-harvest storage andtransportation cause losses of around 30-40 percent,whileonly7percentvalueadditiontakesplace,

and only about 2 per cent of production is processedcommercially. India's current cold storage capac-ity is barely sufficient for 10 per cent of fruit andvegetables produced in the country.

Improper warehousing practices results in sea-sonal fluctuations in product prices.According toNiti Ayog (formerly known as Planning Commis-sion), the estimated gap between agri-warehous-ing supply and demand is at 35 million tonne.Heretoo,there is a substantial inter-regional imbalanceas northern pat of the country has access to 60 percent of the total storage.Existing marketing chan-nels are dominated by multiple intermediaries,thereby adding to the woes of the producers ofperishable agri goods.

With simply adopting best practices by the keyplayers in the market; the availability of food grainswould be 9.5 per cent more which is equivalent toalmost `76,000 crore.Also, there is an urgent needto spruce up both road and rail connectivity.Thiswill ensure that farm produce can be transportedacross the length and breadth of the country in amore secure environment and in quick time,therebyensuring minimal impact on the quality of the pro-duce.

Technology can be a key enabler and gamechanger in establishing efficient and transparentprocesses in the supply chain system and facili-tate sharp reduction in post harvest losses.The ef-

L O G I S T I C S

53I N D I A N M A N A G E M E N T -- M AY 2 0 1 5TO SUBSCRIBE TO INDIAN MANAGEMENT-SMS ‘IMM’ TO 57007

The pressure willincrease as availablefarm land will reducebecause of urbanisationand the need tobuild associatedinfrastructure

54 I N D I A N M A N A G E M E N T — M AY 2 0 1 5

ficient value chains will not onlycut down wastage but also bringdown the yawning gap betweenfarmgatepricesandretailprices.Forexample,introductionofGPSenabled handheld devices willensure real time reporting onthe status of the goods stored,enable digital signature, cutdown turnaround time, andtransmit data on key parame-ters to one central location whileGPS tracking will ensure warehouse manager'savailability.The real time data can also be sharedwith the clients so that they can immediately pointout in case of any anomalies.

Similarly, warehouses can be sealed with hy-brid seals having unique numbers and the break-

ing and fixing of seals can beboth monitored on daily basis.This also enables monitoringof timely opening and closureof warehouse, facilitates regu-lar monitoring of the storedcommodity and allows imme-diate action in case of any fi-delity or theft.

India's farm output is pre-cious and the efforts should beaimed at ensuring that not even

a morsel is wasted.There is a need for a sustainedcampaign to improve exiting storage spaces andintroduce technology to make the entire supplychain smooth, transparent and mobile to ensurequality, timely delivery, right price and minimallosses. IM

India needs to adoptbest warehousingpractices/processesfor a robust supplychain management inagriculture as well asfarm products

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