Mar 2009
Complex India calls for customised services
01 March 2009 12:25
John Hey
On a recent visit to India, I was struck by an innovative cold chain solution for fresh produce retailing. It consists of a refrigerated push-cart for the street vendors that dominate fruit and vegetable sales in the country. Based on a thermal management system using passive cooling, these modernised trolleys are fitted with battery-charged refrigerated plates designed to help the street vendor deliver the best produce to the consumer, often to their doorsteps.
Here was a cost-effective cold chain service tailored to Indian conditions, something that has eluded the big corporates at the other end of the retail scale who, until lately, had been throwing up supermarkets at a dizzying rate across the country. When these players burst onto the scene two years ago, they were going to become the panacea for the problems that plague India’s fruit and vegetable sector. With their grand plans to develop supply chains, they would forge a direct “farm-to-fork” model that would slash huge wastage levels, raise farmer incomes and close the “service” gap for the Indian consumer. Pundits confidently predicted that India’s “unorganised” retail market was about to be transformed by the “modern trade”.
After all the hype and the hoopla, the dream seems to have turned sour, with many big players in retreat. Managing fresh produce supply chains has proven to be a lot more tricky than they bargained for. With India’s fragmented production base, buying direct from the farmer is fraught with difficulty, forcing retailers to rely on the intermediaries they sought to remove. The realisation has dawned that these middlemen often add value, not cost, and can perform tasks far more nimbly and cheaply than they can. The so-called organised retail sector is now in disarray, and must go back to the drawing board to find a cost-efficient sourcing model tailored to India’s complex conditions. For instance, the cost of eliminating wastage through forging an integrated cold chain, as many players set out to do, outstrips that of alleviating wastage levels through just-in-time supply chain management – surely a more realistic model for retailers.
In failing to master the supply chain, organised retail has failed to win over Indian consumers, who continue to cross the road to buy their fresh fruit and vegetables from the street vendor. Indeed, rather than India’s retail sector learning lessons from Western-style supermarkets, it appears that India has a lesson for the rest of the world – one that is particularly pertinent to produce – about the role the little man can play along the supply chain, not least in servicing the consumer.
On a recent visit to India, I was struck by an innovative cold chain solution for fresh produce retailing. It consists of a refrigerated push-cart for the street vendors that dominate fruit and vegetable sales in the country. Based on a thermal management system using passive cooling, these modernised trolleys are fitted with battery-charged refrigerated plates designed to help the street vendor deliver the best produce to the consumer, often to their doorsteps.
Here was a cost-effective cold chain service tailored to Indian conditions, something that has eluded the big corporates at the other end of the retail scale who, until lately, had been throwing up supermarkets at a dizzying rate across the country. When these players burst onto the scene two years ago, they were going to become the panacea for the problems that plague India’s fruit and vegetable sector. With their grand plans to develop supply chains, they would forge a direct “farm-to-fork” model that would slash huge wastage levels, raise farmer incomes and close the “service” gap for the Indian consumer. Pundits confidently predicted that India’s “unorganised” retail market was about to be transformed by the “modern trade”.
After all the hype and the hoopla, the dream seems to have turned sour, with many big players in retreat. Managing fresh produce supply chains has proven to be a lot more tricky than they bargained for. With India’s fragmented production base, buying direct from the farmer is fraught with difficulty, forcing retailers to rely on the intermediaries they sought to remove. The realisation has dawned that these middlemen often add value, not cost, and can perform tasks far more nimbly and cheaply than they can. The so-called organised retail sector is now in disarray, and must go back to the drawing board to find a cost-efficient sourcing model tailored to India’s complex conditions. For instance, the cost of eliminating wastage through forging an integrated cold chain, as many players set out to do, outstrips that of alleviating wastage levels through just-in-time supply chain management – surely a more realistic model for retailers.
In failing to master the supply chain, organised retail has failed to win over Indian consumers, who continue to cross the road to buy their fresh fruit and vegetables from the street vendor. Indeed, rather than India’s retail sector learning lessons from Western-style supermarkets, it appears that India has a lesson for the rest of the world – one that is particularly pertinent to produce – about the role the little man can play along the supply chain, not least in servicing the consumer.
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