In recent times, the agri-retail supply chain has witnessed a dramatic transformation. It grew from being a short cycle to a complex and intricate global chain. As enticing as this growth seems, it also led to the rise of several challenges that created gaps in these supply chains, rendering them ineffective. The industry faced losses, and the troubles of smaller farmers continued to follow an upward trajectory. A report published by the Organization for Economic Co-operation and Development states that among agricultural products, the highest post-harvest losses in India are in fruits and vegetables — ranging from 4 to 16% of the total output produced.
Retailers, too, bore the brunt of multiple issues, including exhausting procurement processes, poor quality management, and hygiene, assortment, pricing, as well as a lack of customer understanding. However, agri-tech startups have changed the whole scenario and have started working relentlessly towards bridging these gaps, while making the agri-retail supply chain systems increasingly efficient and streamlined.
Application of innovation and technology
Several technological interventions have induced a transition in the supply chain segment. Moreover, with the help of drones, IoT devices, machine learning, and artificial intelligence, agritech firms are now helping to grow the country’s agricultural economy.
The introduction of Radio Frequency Identification (RFID), which is a communication system between an RFID scanner and tag, has worked wonders. Under this method, it becomes very convenient to access essential data such as order ID number, product bin location, order status, serial numbers for individual product components, and location logs. This information is used to track the movement of goods, right from the time it leaves the farmland to when it reaches retail stores.
Fair prices for farmers
After undertaking a detailed study of the market and issues faced by the sector, the agri-tech start-ups identified farmers as the key element of all the operations. Therefore, they work in close proximity with producers and simultaneously ensure that farmers receive a fair price for their output. Traditional middlemen routes have been eliminated to protect improved income realization. Direct liaison between the suppliers and the retailers has been established. An upswing in prices has led to the eradication of vicious debt cycles for farmers. In many villages, these endeavors have helped increase farmland income by 20%.
The ingenious startups have established a consistent consumer base, consequently assisting farmers with the presence of a stable market for their produce. This consistency in consumption helps them in planning their harvest in a more structured manner. In a large number of cases, it protects them from risks of price volatility as the consumers lift offerings in vast quantities. Additionally, since the collection happens directly from the farmland, it aids farmers by saving them the time they would have spent on traveling to markets or Mandis to sell their crops.
Usage of reverse logistics
An integral part of such operating systems involves the inclusion of reverse logistics, wherein after the completion of deliveries, vehicles are allowed to rest and proceed. The delivery agents then plan the return and recovery channels, deemed as the most critical aspects of any supply chain. Under the return facet, they run a quality inspection of the remaining items. In addition, they retrieve crates delivered in the morning along with those remaining from the previous night.
Activation of high-speed active supply chain
Agricultural products are perishable, which makes the transportation and distribution of these goods, a very time-sensitive task. Several technological advancements are employed to ensure that the products reach stores in less than 12 hours from the time of harvest. To make this happen, the new agri-tech entrepreneurs are setting up robust infrastructure facilities. Collection centers in villages to collect the produce from farmers, fulfillment centers on the outskirts of the cities to consolidate produce from multiple collection centers, and distribution centers within cities to take the produce to retailers at a faster rate, are being built. The new active supply chain promises speed at a reasonable cost.
Author – Thirukumaran Nagarajan is the chief executive officer and co-founder of Ninjacart, India’s largest fresh produce supply chain company.