Concor to buy 12,000 tonnes of apples for retail supply August 7, 2007Posted by Ramnath Rangaswamy in Business, Indian Economy, Logistics, suppply chain.
CONCOR’s initiative via it’s subsidiary, Fresh and Healthy Enterprise Ltd., to provide an end to end supply chain solution for apples is a very good initiative.CONCOR plans to buy, warehouse, transport and distribute apples grown in north India to retailers across India. This supply chain solution, if designed and implemented well, will reduce the cost of apples and would be a win-win for both, the apple’s seller and the apple’s buyer.The components of supply chain costs that need to be lowered are;
Transportation Costs: The cost would be lower because CONCOR would have a better bargaining power with the truck operators, than the apple growers. The better bargaining power comes from;
- the large number of trucks that CONCOR would be contracting for transporting the apples
- because CONCOR uses a large number of trucks in it’s core work of transporting ISO containers
CONCOR will use multi-modal transportation- rail and road- it’s core skill and forte, to transport the apples across long distances throughout India.
Warehousing Costs:CONCOR would manage it’s own cold storages. This would give it a cost advantage versus other players who would hire cold storages.
Damages: By using cold storages, reefer trucks and reefer containers spoilage would be minimal. To further reduce damage, packaging woiuld have to be improved.
The cold chain [ farm-gate to retailer supply chain supply] space will get competitive. For CONCOR to remain the competitive, it will have to provide excellent service to the seller and buyer. The excellent service coupled with best prices [ driven by low supply chain costs as discussed above] could become an entry barrier for future competitors.
For the buyer, good service would include;
- minimum waiting time in queues
- prompt payment
- fair and transparent grading system for the produce
- good price
For the seller good quality would include;
- quick service,
- year long availability,
- consistent quality
- good price
As a next step, after learning from the apples, CONCOR could apply this model to exports of fruits and vegetables from India.
For once you can compare apples and oranges!!
The link to the story is;
CONCOR to buy 12000 tonnes of apples