Report: Supply Chain of ITC

Name:Gunjan Mishra
Roll No:36

Introduction:
ITC Limited or ITC is an Indian conglomerate. Its diversified business includes
five segments: Fast Moving Consumer Goods (FMCG), Hotels, Paperboards &
Packaging, Agri Business & Information Technology. Established in 1910 as the
Imperial Tobacco Company of India Limited, the company was renamed as the
Indian Tobacco Company Limited in 1970 and further to I.T.C. The company
completed 100 years in 2010. It employs over 25,000 people.

In 1975, the company acquired a hotel named the 'ITC-Welcomgroup

Hotel Chola'
In 2000, ITC launched the Expressions range of greeting cards, Wills Sport
range of casual wear, wholly owned information technology subsidiary, ITC
Infotech India Limited.
ITC diversified into body care products in 2005
The company began online sales in 2014
ITC is today the only company in world to be carbon positive, water
positive, and solid waste recycling positive. Almost 40% of the energy
consumed in the ITC is from renewable sources.

ITC has diversified its business in:

FMCG
Lifestyle Apparel
Personal care products
Safety Matches and Agarbattis
Agri Products
Hotels
Packaging and Printing
Information Technology

Source: http://cmuscm.blogspot.in/2013/02/itc-revolutionized-its-supplychain.html

ITC Supply Chain:

ITCs supply chain comprises a large number of small-scale partners. Many of
them operate under limiting circumstances in terms of their ability to invest in

efficient technologies and their necessity to rely on labour intensive practices. It

will be important to integrate the Triple Bottom Line approach amongst the
supply chain for long-term competitiveness by adopting a balanced approach
towards creation of livelihoods and economic viability of the small scale units.

ITCs Initiatives:

The Companys engagement with the supply chain is being extended in a

structured and phased manner.

ITC encourages its supply chain to comply with certifications, such as ISO
9001, ISO 14001 and OHSAS 18001, to strengthen their quality,
environmental and occupational health & safety systems.

ITC is developing its approach to address these aspects and we intend to

cover our entire value chain with our sustainability initiatives in the next
few years.

ITC Current situation: Misalignment between business and

technology affecting the supply
chain and distribution network.
IMPACT
Issues with balancing fill rates and
working capital to manage inventory
build-up across the supply network.
RESOLUTION
Built-in standardized supply chain
process models and practices that
account for dynamic market and
industry challenges.
ITCs Challenge:

Existing supply chain models challenged by the dynamic nature of the

business environment

Supply chain practices and process not flexible enough different

scenarios

Lack of alignment between business and technology creating supply

chain

complexity

Need to increase sales and customer satisfaction by enhancing supply

chain reliability.

Lack of defined standard processes and inventory optimization

E- Choupal:
eChopal initiative was taken by ITC, a corporate giant in India to empower the
farmers back in 1998-99. Company is a very big consumer of raw soybean and
produce soybean products that are sold in domestic and international markets.
Back in those days company was facing the challenge of soybean raw materials
ineffective supply chain. There were many problems such as lack of fine inputs,
farming practices, inconsistent availability and fragmented farms that are
dependent on mansoon rains. The main challenge before ITC management was
to find ways to secure the competitiveness of the entire value chain so their
business achieves full potential within limited budget.
In the decades old traditional system, farmers used to bring their grown product
to an agricultural marketplace where potential buyers i.e. middleman rate their
product. These middlemen used unscientific and sometimes outright unfair
means to judge the quality of the product to set the price. [2] The middleman
intentions were to make most of the profit as illiterate farmers had no idea about
the worth of their commodity. After putting so much time and effort in growing
and transporting the commodity to market, farmers had no choice but to sell
even on loss.
In villages, farmers after a long day of work gather in evening at a common place
to chitchat about the daily affairs of business and life. ITC took advantage of the
cultural norms of the rural people. ITC introduced eChopal system in which they
setup a kiosk in villages. In every kiosk a computer with internet connection and

a printer was setup. ITC linked the domestic prices of soybean to the
international market and this information was made available on these
computers. They carefully selected capable, trustworthy and influential people
from each village and offer them commission based incentive to operate these
kiosks.
Previously ITC was buying the soybean mostly from middlemen as farmers could
not afford to bring their crop directly to ITC. Now ITC established the collection
centers at carefully selected locations to purchase the soybean directly from the
farmers. They even reimbursed the transportation costs to farmers. In
marketplace, farmers were losing 5% of their crop in weighting errors but ITC
make sure the farmer get the fair value for the actual weight of the crop. Dealing
with middleman, farmers might have to wait for days, even weeks to get their
money but ITC make sure that farmers are paid immediately. It was very
important for the farmers business that is generally low on cash and where
delays in any activity may adversely affect the crop production.
The setup of eChopal facilitated the new kind of supply chain network in which
the technology was at the curx. Farmers now have the direct access to
international market trends. In addition they had access to weather forecasts,
best practices, crop information and FAQs. They now have the opportunity to
learn from each other as well as from ITC professionals. Collection at hubs
minimized the influence of middleman. Hubs also served the additive purpose of
selling seed, fertilizers and equipment. Soil-testing in labs at these hubs and free
advice from researchers helped the farmers to get better yields. By selling back
the finished products of ITC at low prices, they established the sense of
belonging and care among farmers.
The features such as knowledge, real-time access, transparency and above all
trust made this ITC supply chain network a success.