Reimagining historic linkages
Supply chains, whether we like it or not, unlike content cannot be digitally replicated in totality. Food grains are a physical consumption commodity and hence any pandemic will have an adverse impact on the same whether it is on productivity, transportation, storage, etc.
The idea as a condition of “lockdown” as most of the countries are now facing is that the physical supply chain should be augmented with digital gateways for transparent and efficient information flow. To elaborate, the first and foremost mission should be the availability of information as to how much stock of essential commodities are available at which site. Post that the consumption centers should be mapped to these sites and then using forecasting tools efficient supply chain management systems to be developed.
Even in today’s lockdown, essentials services like warehousing, transportation are allowed. If the network of warehouses along with their stocks are available in a central information repository then the planning of lockdown can be more accurate while adhering to the principle of maintaining “social distancing”, which is the need of the hour.
Similarly, if the warehousing service provider has mapped its resources, which is typically the warehouse manager to an electronic network, then the identification of such a resource can be shared electronically on a non-contactless basis to the administrative authorities. This can then seamlessly provide them permissions to man the supply chain origination point without any delay or hindrance.
Even in the period of the lockdown, the information of crop quality and quantity stored at any location becomes even more critical from the perspective of monitoring crop health without deputing extra resources on a Real-Time basis. This can become a pivotal point in saving precious cargo that can go towards feeding the population.
Hence, we believe that currently available technology can and has become an indispensable tool in managing of supply chain. Moreover, its application along with the relevant crop knowledge can do wonders in mitigating supply chain fragility in times of stress.
Creating win-win scenarios
Farmers are already doing their bit for the nation, and I believe it is time that stakeholders like NBFC’s, Aggregators, Warehouse Service Providers have to step up their act and try to provide a seamlessly integrated platform to ensure that the precious crop sown and harvested by the farmer reaches the consumption point.
Please envisage a scenario that a farmer has cut his crop and somehow he has arranged to transport the same, but now the mandis are shut. He is at one end distressed due to the fact that crop has been harvested, but is not able to get proceeds from the same. These proceeds were to be used by him for multiple issues like repayment of a loan that he may have taken from his community, for purchasing essentials for the survival of his family, etc.
Now in this scenario, if his harvested crop is brought to a warehouse that is electronically connected as illustrated above then the crop availability information becomes nationally available. This allows him to connect with buyers. At the same time banks, NBFCs can come forward to grant him liquidity based on the crop as collateral. Doesn’t this become a win-win scenario for all? Not only does the farmer not have to commit to a distress sale, but the business of financial institutions are also augmented, the information of availability dispels the fear of any shortage, thereby smoothening the supply chain. Buyers are able to plan their inventories too.
The bright point in the above is that this revolution has already begun. There are certain agri service providers that have not only connected the dots, but also shown that such a model can not only exist but also scale.
[box type=”shadow” align=”” class=”” width=””]Disclaimer: The views expressed are those of Mr. Sandeep Sabharwal, Group CEO, Sohan Lal Commodity Management Pvt Ltd (SLCM). They do not purport to reflect the opinions or views of Sohan Lal Commodity Management Pvt Ltd (SLCM) [/box]