Why e-logistics matters in agri-biz

With the rapid globalisation of trade since 1990s, the Indian agri-business industry has evolved itself. It has also been exposed to competition from within as well as outside the country. This has resulted in changed understanding, implementation and practices through adoption of technologies related to logistics followed in developed countries. In agriculture, logistics plays central role in profitability of a company as procurement has to be done from several small pockets and again final distribution goes to households spread over a vast geographical area.

Though development of logistics in the country has been given emphasis over the last few decades, it has to be better customised to ultimately benefit all the partners in agri supply chain, especially the farming community.

Logistics is often misunderstood as transport and storage functions alone.

In fact, there is wide range of activities in logistics that include rendering of services, flow of information, addition of value to products, marketing, order processing, aggregation of stock and many more in an integrated way, ultimately resulting in competitive advantage to a firm.

The increasing importance of logistics in agriculture can be attributed mainly to the fact that every new generation of consumers demands regular supply of perishable products with conditions such as right kind of product, at right place at right quality and quantity at the least possible cost.

Elogistics, when defined simply, can be understood as the process of automating/ bringing on electronic platform of logistics processes, aiming at enabling the participants in the supply chain to manage their resources in an efficient way.

Most businesses, however, seem to take a rather limited view of elogistics, which in their context has come to stand for IT-enabled transportation and distribution services with certain warehousing functions as a part of supply chain management.

Essentially, internet mediated operating systems that provide certain value addition to the basic function of end to end movement of goods seem to be the function that elogistics has come to embrace in the business world. Collaborative Freight Management Systems, Cargo Transportation Matching Systems, Freight Exchanges, Vehicle Tracking and Location Data Capture, on board computers and all such applications increase visibility and permit integration of process across the supply chain through the use of IT.

These fall within the purview of elogistics. However, in agribusiness, the concept of elogistics has to relate more with information flow among producers, intermediaries, firms, consumers and other players.

In order to sustain profits in agribusiness, it is imperative to make best possible use of elogistics not only to procure the most suitable produce in a cost effective way but also to operate at with possible inventory without fearing loss of business.

Especially in the Indian context where small farm holders spread over a vast geography, the process of elogistics should include connectivity (for information flow) and clustering. Connectivity in supply chain through elogistics approach will result in better decision making as one will have better information about availability of produce at different places and wider choices as well. Similarly, clustering will result into minimising the movement of vehicle while moving into field for procurement.

Though both elogistics and ICT in agriculture emphasise the flow of information among various players, elogistics is business centric and aims at supporting business houses in operating in an efficient manner, while ICT in agriculture is more of farm focussed and emphasises the flow of information to farmers for a better decision making.

Except a few companies, not many have come forward to improve the situation at the farm level by empowering farming community with ICT enabled tools. The most famous and popular initiative of ITC i.e. e-choupal is the best example of how elogistics and ICT tools can be integrated for farmers.

Though simple replication of e-choupal model may not always yield a good result, it is required to understand how well one can develop such tools in a more customised way which can ultimately help farmers and firms.

Thus the convergence of ICT & elogistics has a great scope for application in agriculture supply chain where it has to be effectively linked to a highly dispersed populace, to provide greater benefits to farmers and higher value to the consumers.

DV Karla, PVSM, AVSM is former Director-General of Ordnance Services, Indian Army. Enamul Haque and Anu Peter are associated with NIAM, Jaipur. Views are personal.