iConcept Software services

Yes, the title is a mouthful, and I have many things to unpack. Please settle down for a long, and hopefully insightful read with a cup of green tea. I owe many thanks to veteran agribusiness leaders Jagadeesh Sunkad and Anand Gudihal for many insightful conversations over the past few weeks which led to the birth of this article.

What is a Dharmasankata?

The idea of “Dharmasankata” – a decision-making double-bind – is central to Indian thought. If you’ve read Bhagavad Gita, a 700-verse Hindu scripture in Sanskrit that is part of the Hindu epic Mahabharata, you would know that it starts with Arjuna, one of the key protagonist of the Mahabharata, stating his double-bind upfront, as he is about to go into the battle against his own kin.

This was Arjuna’s double-bind:

I am damned if I go ahead and fight this battle against those who raised me as a child.

I am damned, if I withdraw from the battle, as that would mean I go against the grain of my identity as a warrior and I would be ashamed forever.

(You must read Mahabharata, if you have the penchant to read grand epic tales like Lord of the Rings. With more than one hundred thousand sanskrit stanzas in verse, eight times longer than The Iliad and The Odyssey put together, it is the longest composition of the world, narrating the greatest story ever told. Try Kamala Subramaniam’s English Prose Translation of the Original. It is the best one in English. Period.)

Hamlet’s painful anguish, “To be, or not to be” stems from the same double-bind. Why go that far ? Every painful decision-making situation faced by a competent leader, where two or more equally valid options (with equally positive or negative consequences) exist, whether in business or in our personal lives, involves acknowledging the inherent double-bind in choice-making.

Closer home, agribusiness leaders in agri-input firms, whether they realize or not, are sitting on a dharma-sankata, whenever they invest in product traceability systems to get line of sight into channel distribution across two-tier channel distribution networks.

What is this dharma-sankata and what is the way out to resolve this dharma sankata?

Few weeks back, when I wrote, “The Politics of Channel Management”, I wrote,

Channel, at the end of the day, is about stakeholders vying to control the distribution. The fundamental reason why you should study the channel and its structures of distribution (Tier-1, Tier-2) deeply is not to simply get “organized” or “efficient” upto the last mile for its own sake, but to gain political control over the channel. Otherwise, you risk someone else taking control.

Allow me to spell the obvious truth.

There is no such thing as a “disorganized” channel. Every state of “organization” of channel is a means of control for somebody. And If you don’t know who that is, it probably isn’t you.

Although many Agribusiness Leaders resonated deeply with what I wrote, in retrospect, I realized that I was describing only part of the picture called Channel Management. I mean, how can you talk of “Channel Management”, describing the yin forces of “Control” without even mentioning its mutually opposing yang forces of “Visibility” through Traceability systems?

You see, “Control” and “Visibility” are yin-yang forces because, let’s face it, agribusiness leaders investing in traceability systems have to navigate the double-bind of “Channel Management”, balancing the pulls of Control with the pushes of Visibility.

Let me give you a concrete example.

What are the common symptoms which prompt Agribusiness Leaders to invest in Traceability systems in context with two-tier channel distribution?

1) SKU rationalisation right from the moment when goods leave the Factory premises

2) Which product packs are finding greater traction in sales in kharif season in a particular territory?

3) When product packs are being bought by farmers?

4) How to manage receivables and forecast receivables planning at distributor and retailer level?

Now, for the sake of illustrating this dharma-sankata, let us deep-dive into the fourth one: Receivables Management.

Here is a typical scenario in the market.

The Sales Agent/Field-Agent of the agri-input firm visits the Distributor to do his stock count, take orders and recommend new products. He visits the distributor godown and what he sees is something like this.

By the way, that’s my colleague and friend Pradeep smiling towards the camera, when I had shot a picture of a premium distributor godown during my field visit. Imagine the plight of an agro-chemical sales agent who has to wade through this dimly lit room to do his stock count, take orders and recommend new products.

Now, in such a scenario, the agrochemical sales agent will have to trust the word of the Distributor, when it comes to doing stock take of unsold goods in the godown. Although it is likely that the distributor might have already sold the goods, the distributor will most likely share an appropriate number that will buy him more time to pay back the bills to the agrochemical sales agent.

Now, considering this, an agribusiness leader takes a call to invest in traceability systems which can track up-stream processes viz.,a) primary sales from depot to distributors. b) stock transfer from one depot to the other. In this particular case, the traceability system would track, along with the up-stream processes, the down-stream processes of liquidation as well. (I have explained the complete workflow with a diagram in this article here, incase you are interested)

(Note: For the sake of this discussion, I have identified distributor and retailer as two different entities, although in many scenarios, this distinction become nebulous)

If you try and map this scenario over the “Control” and “Visibility” axes, this dharmasankata becomes more clear.

Even though Traceability systems provide visibility, a good agribusiness leader will know the art of balancing the pulls of “Control” of Dealer/Distributor, based on the credit-terms offered to build relationship and maximize product visibility, with the pushes of “Visibility“, to manage account receivables for working capital requirements.

Note that in the diagram above, “Distributor” is placed in the High-Control-Low-Visibility quadrant, and “Retailer” and “Farmer” are placed in the “Low-Control-Low-Visibility” quadrant.

If you are able to connect the dots, and see the bigger picture, the dharmasankata an Agribusiness Leader investing on “Traceability systems” faces is this:

“I am damned if I incorporate the data from Traceability systems in my business processes with the sole aim of protecting the Channel partner’s best interests”

“I am damned if I incorporate the data from Traceability systems in my business processes with the sole aim of protecting the farmer’s best interests”

A good agribusiness leader becomes great when he is able to navigate through this dharmasankata and balance both the interests.

Leave a Reply

Your email address will not be published. Required fields are marked *