Tuesday, December 16, 2008

Rural and Urban Multinational Linkage

When we talk about rural markets we tend to see it as something which is too far and disconnected from our normal day-to-day activities, but as consumers of many products and services the linkage with rural is much closer than we realise. 

When we buy agricultural commodities like wheat and rice some of us might think about its rural linkage , but for retailers the procurement network in rural becomes  very critical if they have to ensure consistent quality at reasonable prices.

But what I am trying to say is that the linkage is much closer. A good example of this is the french fries that you eat in any of the 132 Mc Donald's restaurants across the country. Most of us would agree to the fact they tend to be much crispier than whatever we eat in some other restaurant  or prepared at home. And world wide it is a proposition to which they stick to . This is ensured through an efficient supply network in place of right kind of potatoes. For which they have to get these specific varieties of potatoes grown(usually exclusively from Mc Donald's) and then transported through a cold chain. The same applies to other ingredients which go into making a burger. 

But this in turn has also restricted the speed at which they been able to expand their operations in India, as they have to have the cold chain and procurement network in place before they start their restaurants.

Many more instances of how a efficient back end rural linkage is essential to ensure a consistent offering for the urban consumer. Be it how Pepsi went in for contract farming in Punjab for tomato's and potatoes or the echoupal model providing the linkage to the foods division of ITC.



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