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Simplifying the Grocery Supply Chain

The COVID-19 crisis has exposed the fragility of supply chains and their operations. It also has uncovered opportunities for improvement. There are many lessons that could be learnt by these harsh experiences that we have paid a price for. Here are some thoughts on possible restructuring of the grocery supply chains in urban areas which have been severely impacted during the lockdown.

What are some of the observations of the pandemic and subsequent lockdown? 

  • Reduction in environmental pollution
  • Less traffic, noise or need to travel, except for emergencies
  • We are able to survive with less, especially if basic necessities of food supply and shelter are taken care of
  • Reliability of the local providers (milkman, newspaper vendor, smaller grocery shops, vegetable vendors)

The grocery supply chain consists of two portions – the upstream supply chain of agriculture and food processing and the downstream supply chain of distributors, traders, wholesalers, retail supermarkets/smaller grocery shops reaching the end-consumer (you and I). The upstream supply chain has been the subject of many discussions and has some peculiar India-specific issues that are not just related to supply chain network design, but also subsidies, livelihood, policy and regulatory issues. So, let us leave that for a separate discussion and focus on the downstream issues.

Groceries are treated as essential supplies and are required for every household. Some of us buy them on-line (e.g. from BigBasket), some of us buy from supermarkets and many of us buy them from local grocery stores. The demand for groceries, from a consumer perspective is fairly well known and reasonably stable. We buy them at regular intervals, typically on a monthly basis. How could we simplify this supply chain? How do we ensure that it performs well during a crisis? There are going to be regular quarantines and hot spots going forward as well. How do we manage these things on a routine basis?

Here are some thoughts

  • Cities are already divided into constituencies and wards for the purpose of civic administrations; the local officials, as well as the legislators usually know their localities very well; Aadhar cards, census and voting information is available as well; most households will also have a mobile phone, many will have smart phones; we also have newspaper vendors and milk-men who know the roads, lanes and colonies intimately
  • Design a distribution network using the grocery stores as nodal points; they already have the supply relationships to get goods; customers may order from among a set of grocery stores which are near (they have their freedom of choice, but incentivize them to order from stores which are close by); each store may support the needs of say 100 houses
  •  Households can choose a delivery plan – monthly or weekly; use the milk-vendors (or some similar agencies) to plan for delivery; for the 100 houses in the locality, if we are planning monthly deliveries, we will deliver to 4 of them every day; if there are weekly plans, there will be more frequent deliveries, but less volume to be sent every day
  • We could also incorporate a reverse supply chain for the packaging material and containers which today clog up our waste disposal; on the return route after delivery, these could be picked up and the households get some discount in return

How will this system help?

  • It will lead to predictable demand aggregation at the ward level and help the suppliers plan better
  • It will cut inventory levels across the supply chain – the grocery stores need not carry more than one weeks supply of goods, leading to higher profitability
  • A detailed study is required, but judging by the automotive industry lean manufacturing experiences, this could significantly reduce cost, improve efficiencies and reduce wastage
  • The supply chain is more reliable, responsive and sustainable
  • Once it works, we could extend it to vegetables and fruits as well

The biggest benefit of this simplification will be to build a community workforce – and bring more entities (the stores, the individuals who work in the store, the delivery persons) into a social organization that is reliable, resilient and sustainable. 

20 comments

  1. Godand Rad

    Good common sense solutions that can be very effective during this pandemic; and also help the small businesses, grocery stores continue to thrive in these difficult times. Would require community support and implementation, locally. Best wishes 👍

  2. Sanjeev Appicharla

    The model articulated here in the blog article is an idea worth implementing. Local community owned supply chains will bring relief to the distribution of the food items. Contrary to the popular perception that we do a good job in supply chain management by funding big outfits, the article calls on us to rethink ideas.

  3. Cherian thomas

    A self sustaining model that can be scaled . Also factors in the collection of recyclables. A good social enterprise project for communities to integrate into their existing network .

  4. Sanjeev Appicharla

    The blog article contains ideas that are worth implementing. Contrary to popular perception, the article calls upon us to re-think our conventional ideas in the supply chain management sector. Local community owned distribution chains is a good idea.

  5. Ramesh Venkat

    Hi Mr Venkat. Well scripted. This space needs to be defragmented for vendors & online or both. Intermediaries need to be co-created and need to sustainable co-exist as well. Can be a last mile delivery operator. Capabilities with maturity needs to be modeled. With guest-workers at home states, this can be spun into a great in-scale workable “Entrepreneurship” model on a PPP mode at taluk or pin-code levels. A. It can supplement incomes for the needy B. Serves to connect people with needs C. Importantly, reduces crime.

  6. Manu Konchady

    During the pandemic, the supply of “essential” goods took on more importance than under ordinary circumstances. Efficient grocery supply chains are definitely needed for the smooth, uninterrupted, and well organized distribution of “essential” goods, which hopefully will increase the income of the farmers.

    1. Ranjini Jois

      Yes, while the issues regarding farmers have been rightfully getting prominence, the unorganized distribution network is often ignored. The article suggests how they could be an integral part of the community and be recognized for it.

  7. Nanditha Rao

    Good and simple blog – I liked it. It’s interesting to see how the theory expounded here can be actually translated into practical implementation – which is when the community would benefit.

    One small feedback – the author would do well to do a grammar check, as the blog moves between the first person and third person at times, and uses the past modals interchangeably in the same paragraph

    1. Ranjini Jois

      Yes indeed ! We would welcome and support anyone who would consider taking the ideas forward. Thanks for your constructive feedback on the grammar as well.

  8. A K Panicker

    Well , this model is already working in the Public Distribution System at least in Kerala . Every family has a ration card, whether they avail of the rations or not – depending on their financial status the cards are given high priority and low priority categorization. With the local ration shop as the nodal agency the govt distributed the groceries to all the citizens during the lockdown period when most other outlets were closed.

    Once the lockdown has been eased we are back to the local supermarkets. They create databases of their regular customers and offer home delivery. Nowadays collection of personal data by private entities is a sensitive issue that may impact in implementation of this model by private enterprises on a larger scale

    The article is well appreciated as a commendable exercise in applying management principles to offer solutions to everyday problems of the common man.

    1. Ranjini Jois

      Great to note the workings of the PDS in Kerala and its effectiveness during the lockdown period. There is much for us to learn from that. In a small way it reinforces the idea that this type of solution is implementable. Local community involvement and de-centralisation rather than large private enterprise could reduce the need for maintaining invasive databases.

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