Transforming the BoP agenda

It was Franklin D. Roosevelt who referred to “the forgotten man at the bottom of the economic pyramid” in a radio address in 1932, but the late CK Prahlahad who brought it into the business arena with his book the Fortune at the Bottom of the Pyramid. The idea was compelling. The Bottom of the Pyramid, or just BoP; is the largest, but poorest socio-economic group globally, who live on less than $2.50 per day. Prahlahad’s book triggered a huge debate on developing new models of doing business targeting this demographic group – selling low margin products in high volumes to consumers at the bottom of the socio-economic ladder. 

 

MBA students session on Transformational Logistics at AMET University, Chennai, India.

Earlier today, Rob Bell gave a talk on the International Logistics scene to Faculty and MBA students at AMET  University and, moved to a discussion of Transformational Logistics and the Indian logistics and supply chain landscape.

The session opened with a review of the evolution of supply chains from the spice routes to today – via Napoleons military logistics; cowboys losing out to the railroad in the Wild West of 19th century America and on to containerisation revolution of the 1950’s. A key shift has been the integration of markets from globalisation and, the specialisation of the logistics function enabled by technology supporting this “new rocket science”. The segmentation of products (and ways to deliver them to the consumer) into Agile (those with high variability) and Lean (you can have any car as long as its black said Henry Ford) products was covered and the role of logistics as a differentiator was highlighted. As Professor Martin Christopher makes plain: “supply chains compete, not companies.” Logistics is part of any companies competitive edge.

The last mile counts ...

 

Transformational capitalism

He sold fruit on the streets of Sidi Bouzid, Tunisia; operating from a vendors cart on two square yards of public space and had to pay bribes to work undisturbed. That day, 17^th December 2010, there had been an argument and so two police officers confiscated his two crates of pears ($15); a crate of bananas ($9); three crates of apples ($22) and a set of electronic scales ($179, second hand). Given the fact that he had bought his merchandise on credit and he could no longer sell it to pay his creditors back he was bankrupt. One hour after the police had closed down his business, Tarek Mohammed Bouazizi – known locally as Basboosa – set fire to himself yelling “how do you expect me to make a living” and triggered the Arab Spring. According to the Sidi Bouzid’s state office for employment and independent work, no permit is needed to sell from a cart. Unemployment in the area stands at 30 per cent. Within weeks many of the estimated 200 million Arabs who work in the informal markets of the Middle East and North Africa started to mobilise.

How else can I make my living?

 

Traditional supply chains mean business too

Global business is under pressure with sluggish growth or recession in the developed world and huge potential in emerging and developing markets demanding the infrastructure and skills to deliver sustainable growth. There are industries led by MNCs (Multi National Corporations) that straddle frontiers characterised by modern, high tech and consolidated operators and others that remain local, traditional, low tech and fragmented. And yet, there is more to be gained by seeing these extremes as part of a continuum and not as opposing forces to explore mutually beneficial initiatives that can enable us to understand better how supply chains function in all sorts of traditional, modern or hybrid contexts.

This story picks up momentum on a beach in Rushikonda, just 13 kms from Vishakhapatnam on one of the best rated beaches on the south east Indian coast. One morning Rob Bell was walking the beach and, having taken a photo of a fishing boat on its way back to the shore continued the sequence on to the beach; unloading the nets; sorting the species and sizes and then, as the women arrived to trade with agents, an idea took shape …

Off to market

 

Design transforms livelihoods

Last year, Dr Graham Hamilton of Yorks St John University led a team visiting the NAESEY Project in Tamil Nadu – a training initiative for the rural unemployed. This year they repeated the trip which featured a design initiative led by James Fathers – also of York St John. Here are some notes built from discussions with the team leaders and, observations from  Nottingham University student Ben Hagyard, the winner of an Archomai Studentship to Naesey and an excellent exponent of the spirit of enquiry!

Adding value building livelihoods through design

 

Are International retailers running out of road in emerging markets?

Much is made of BIG Retail with more than 80% of the retail market in the US; the UK and most of the EU in the hands of major retailers. Now, in many emerging and developing markets the debate on modern International retailers expanding into emerging markets has polarised debate. Some claim that International Retailers are a vital catalyst to serve the needs of increasingly prosperous consumers; others warn that corporate imperatives are not always compatible with local needs. Whichever side of the argument you are on, both tend to agree that BIG Retail knows how to generate profitable business – or does it?

In recent weeks, stories have started to appear about International retailers reporting profits warnings because of a combination of fragile economic conditions in their domestic markets and, difficult trading conditions in emerging and developing markets. Are these the first signs that the major retailers do not have all the answers? First, the background.

It takes all sorts

 

A Transformational Agenda at GITAM School of International Business

Yesterday, Dr D Subbarao, Governor of the Reserve Bank of India gave a fascinating Lecture on “India and the Global Financial Crisis” to the GITAM School of International Business at Vizag in Andra Pradesh, India. Emphasising the need to diversify the economy he referred to the inclusive agenda and, the opportunity to develop rural markets as part of sustaining economic growth.

These two priorities, inclusivity and rural markets, were covered in a ground breaking series of lectures given at GITAM over the past two weeks on Transformational Logistics; an umbrella term for logistics and supply chain thinking in emerging, developing and devastated markets. This course explored these markets not as “an act of charity”, not as an “act of corporate social responsibility” but as a viable option to build sustainable, inclusive and innovative growth beyond the mature – but largely stagnant – developed world. This is not about sharing best practice from those “that know” but building fresh practice from markets that have an acute survival instinct and an ability to adapt that can be an inspiration elsewhere. All businesses can benefit from these markets beyond the mainstream in many ways.

At the invitation of the Director of GSIB, Professor V.K. Kumar Rob Bell led the sessions with Dr P.R.S. Sarma and Assistant Professor Ram Bhagavatula.  This is a detailed overview of the Course. These are the core units.

1.      Mainstream Logistics. Drawing from the work of Martin Christopher (2011), John Gattorna (2006) and, a sample of key Papers from the Logistics and Supply Chain discipline the sessions started with an overview of mainstream logistics highlighting all sorts of examples from lean to agile supply chains and, logistics and supply chains as a source of competitive advantage. This revision session linked to GITAM’s established Logistics Course.

2.      Checking our assumptions. The three F’s crisis (Food; Fuel and Finance) has accelerated a number of trends (the pace of the BRICs; G7 to G20) and, questioned a number of fundamentalisms – not least, as George Soros coined the term – market fundamentalism.

The Group explored ideas on Globalisation; Growth and free markets in this fresh context and, explored the impact such global shifts have on logistics and supply chains in all industries.

3. The Brands New World.With Global population rising from 6 to 9 billion by 2050 As Dr Subbarao had said in his talk earlier today, there is a need for greater inclusivity and, exciting potential to develop rather than ignore rural markets. Equally, there is a role for traditional industries in the business mix.

The Rushikonda fishing community

 

Transformational Retail

In an exclusive interview with the London Times (17 June 2011), Kishore Biyani, the founder of the Future Group (India’s largest retailer with more than 1,000 stores in 83 Indian cities), highlighted the problems facing International Retailers such as Tesco entering the Indian market: “They won’t be able to find spaces and they will find it tough to make their out-of-town outlets work in India. The roads are not good enough.”

The prize for International Retailers is clear: a slice of an estimated $350 billion retail market. However, market access is not easy. Land in the big Metros is at a premium – Future Groups cost of occupancy is 6 per cent versus 2.5 per cent in developed world markets – leaving tier 2 and 3 cities and towns as the only realistic target for foreign traders. This is where the well honed supply chain models of the top five global retailers will come unstuck. Indian infrastructure is notoriously weak and, with severe traffic congestion in urban areas so severe it is no shock that an estimated 40 per cent of fruit and vegetable harvests rot on the way to market. Tough territory for the ECR (Efficient Consumer Response) to build ever better, cheaper and faster supply chains.

In several conversations with Anshuman Singh of the Future Group’s Supply Chain Solutions business over the past year or so, we have discussed this theme in more detail. With over thirty distinct supply chains from Household to White Goods; Fresh Food and Vegetables to Fashion, the Future Group has to make unique Indian conditions work for them. Bullock carts and handcarts are as much a part of this picture as a sophisticated truck and, the stores themselves have more in common with the chaos found in traditional bazaars than in the manicured isles of developed world retailers.

It takes all sorts

 

Transforming the logistics and supply chain agenda

On February 18^th 2011, Belgium – not used to being world champions at much – took the title from the Iraqis to break the modern world record for the longest period without a government; 220 days after last years June election. It is a sobering thought that, as the regimes of North Africa have their 1848, falling like dominos, and western media opines about the voice of the people and the triumph of democracy that the developed world would be best advised to pause for thought.

Looking for the X factor

 

Transforming the eco-system of logistics

Ever since 2006 on India’s National Day, the 26^th January, the Future Group’s Big Bazaar superstores hold the Big Sale – Sabe Saste Din – and thousands of items are priced, in the words of one advert, as “cashews for peanuts”. This year the sale lasts for a few days but the first year saw crowds that were unprecedented and stores in Kolkata were closed by mid-day because of fears for public safety. Big Bazaar were prepared for this – having studied crowd control at religious festivals. However, not all religious festivals run smoothly.

Sabarimla is located in a remote area of Kerala, India, and characterised by dense forest and difficult terrain infested with wild animals. Sabarimla is home to the deity Kantamala Jyoti, “the sacred light of the magnetic hills”. Back in the 1950’s a trickle of pilgrims would make the treacherous 65 kms trek barefoot over seven seven steep hills to witness the shrine; “thorns and sharp stones are like pads on our feet”. This year, millions made the journey and 102 pilgrims were crushed to death as the hopelessly inadequate infrastructure collapsed.

From a queue to a swarm to ...