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Adani and Reliance – Ant and the Grasshopper story! September 6, 2009

Posted by Ramnath Rangaswamy in Emerging Markets, India, Indian Economy, Logistics, Railways, Supply Chain.
2 comments

Adani Grain wagon1In the week of India’s independence day there was a lot of news about agricultural supply-chains in India. The fare was mixed- some good some bad!

The bad news first; there was the news of Reliance abandoning it’s project of setting up agricultural rural mandis in Punjab.
The good news was that
Adani had set up a complete end-to-end agricultural supply chain
and LN Jain Group planned to setup an agricultural supply-chain.

Good news – Adani Agri Logistics
The Adani end-to end supply-chain is a wow as far as supply-chains go! It is as close to an ideal supply-chain as is practically possible. Adani has taken care of the complete supply-chain from grain storage to transportation to the last mile connectivity.

Adani has built grain silos where grains will be stored depending on the grade. Here different grades of grains can be stored. It reduces loss due to rodents and insects. The silos have rapid loading facilities to load wagons rapidly.
Adani got custom made wagons, BCBFG, to carry grains. These wagons are like covered BOBRN wagons. They are covered on top and they have bottom opening doors for rapid discharge into a hopper.

They have built smaller silos in the cities where the grain has to be distributed. These are akin to depots or RDCs.

Bad news – Reliance Retail
Reliance announced with a lot of fanfare and bluster on how they will setup mandis across the country and change the face of rural India. The called it the farm to fork project.

But they did not think about how they will store the foodstuff, how they will efficiently transport it and how they will distribute it. In short Reliance did not invest anything in setting up the supply-chain and logistics.

The difference
Adani did exactly what Reliance never did. Adani understood the importance of the supply-chain and ensured it built the supply-chain backbone. Reliance ignored the supply-chain and the results are there for all to see.

Most industries and companies in India ignore the logistics and supply-chain element while setting up factories. Plants are setup without any planning on how raw material will come in, how finished goods will be taken out.

Innovations in supply-chain (like the Adani example) are very few and far between.

The best thing is that Adani just reapplied ideas from other supply-chains. Coal is loaded by rapid loading systems into specialized wagons (BOBRN), transported by rail and unloaded into specialized hoppers that take the coal by conveyor belts to the power plant. Petroleum products already follow this model.

Adani’s model can be replicated for other products. Other liquids, like acids, edible oils can use this model. Tanks could be setup in Ports, specialized railway wagons can transport the material from source to destination i.e port to plant or customer. Similar supply-chains can be setup for other raw material in liquid or powdered form – silo storage, specialized railway wagons and distribution systems.

So this was a repeat of the classic ant and the grasshopper story.

May we see more innovations in India’s supply-chain, like Adani Agri’s!

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