ITC’s eChoupal initiative deployed technologies to re-engineer the process of procurement of soya and other crops in rural India.
Instead of the conventional view of re-constructing the failures of the current system, ITC took a different approach by looking at the successes of the current system and identifying what they could build on. Besides retaining the efficient supply chain providers within the mandi system, ITC also created new roles for some of the inefficient providers to improve the supply chain.This benefited ITC as it engaged members of the existing supply chain to make their expertise available to ITC while preventing it from being shared with ITC’s competitors. Information technology was recognized as a fundamental solution to optimize effectiveness, scalability, and cost to the traditional choupals, thus it became 20% of the efforts of ITC’s eChoupal business model and it was the most crucial element of the business model.Information technology was used to visualize 2 important goals of the eChoupal. The first goal is the delivery of real-time information independent of the transactions to empower farmers where and when to sell their crops.
The second goal is the facilitation of collaboration between many different parties involved to fulfil the spectrum of farmer needs through an effective communication mechanism deployed by the eChoupal system.For example, internet technology plays a crucial role in the new eChoupal system in bringing price discovery to the village level which changed the way of doing business for the farmers. Through the prior knowledge of pricing that a farmer could get at an ITC hub, he could compare the prices and revenues, inclusive of transportation, and made informed decision of where to sell his crops eventually. It cost ITC Rs.
170,000 (US$3,762) to set up each choupal while another Rs. 00,000 ($2,213) was spent on people, travel, communication, software and training. Even though such high costs were incurred, these costs were justified with the effective use of the eChoupal by more farmers and information previously inaccessible by farmers were made available through ITC’s knowledge dissemination to gain the trust of the farmers.
ITC thus provided an alternative means to farmers who could sell their soybean produce to ITC instead of selling them at traditional mandis, which generated higher revenues for ITC.