Inter-departmental challenges and proposed solutions

Assignment Taken

Identify & Resolve all business-related issues according to your department. (Leader with Help of all Departments)

Case Understanding

The case revolves around the business of 'Fresh Growers', a company that was established with a vision to offer fresh and unadulterated farm produce to the Indian population. The company carries out the business of procurement and delivery of fresh farm produces. Currently, it faces a lot of issues across multiple departments, namely Finance, IT and Business Analysis, HR, and Marketing. The most prominent challenges that the business faces include a falling number of subscriptions, stiff competition from local players, marketing challenges, achieving TAT targets, quality and cost considerations, and the incongruence between the goals of farmers and the company. However, the company aims to surpass all these challenges and expand its business operations to at least 3 metro cities, in the next 2 Years. Post the lockdown, the company witnesses a fall in the number of its subscribers adding to its troubles. So, the major challenge in front of the company is to increase sales, align all departmental goals with company goals, and arrange finance for its expansion strategies.

BCS Solution Summary

The solution highlights the problems faced by each department of the company and the probable solutions to these problems from the perspective of the business leader. There are many marketing-specific challenges that involve huge finances and the role of IT to address them. Similarly, there are a lot of logistics issues that can be addressed by IT integration and HR Strategic intervention. Hence, it is concluded that these challenges and their probable solutions cut across multiple departments. Once these solutions are implemented and problems are solved, the company will see growth in its sales, the actualization of its USP, and a roadmap of its 2-year expansion strategy.

Solution

Marketing (Principles: Customer-Centricity, Sustainability Solutions, Affordable Offerings, and Superior Customer Experience)

1. Fostering Idea of Sustainability-based Consumption: Eating Freshly Grown foods has high benefits to our bodies

As people in India are still not inclined towards healthy eating habits, it is an issue before the marketing department to create awareness and build health-consciousness amongst the target audience. Running targeted online and offline campaigns focused on creating awareness about the benefits of consuming fresh produce can immensely help in fostering this idea

2. Threat from local vendors  and app-based services offering fresh farm produce

Stiff competition from local vendors and digital app-based delivery service providers is a threat for the business. Providing similar customization and pricing options like those offered by the competitors while constantly improving the quality standards is the key to win over the competition. Further, collaborations can also help to kill the competition and grow in the marketplace

3. The falling number of subscriptions

Introducing a reward-point system and loyalty programs is the solution in this case. Make the customers feel appreciated with the complementary offerings and other sales promotion offers

4. The focus of Omni-Channel Marketing Activities (Offline + Online)

A judicious blend of online and offline channels to promote the product can help consumers get a superior customer experience. Moreover, the use of targeted sensitizing ads rather than direct promotions is the key. Arrangement of exhibitions and sample offerings can also create a strong demand for the products

 

IT and Business Analysis (Reduced TAT, Superior Quality, Internal Efficiency, and Cost Minimisation)

1. The problem of 6 hours of Turnaround Time (TAT)

Manual labor for harvesting, packing, and sorting takes another 2 hours, which can be minimized using automated machines for accelerated sorting and packing. Companies such as Fresh Plaza, Unisorting, and Unitec provide semi-automatic and fully-automatic machines to conduct the sorting and packing of items in a much reduced time and can pack 1000 pouches per hour. Moreover, tractors and mechanized harvesters can help in the quick harvesting of crops from the farmland, instead of spending an hour there.

 

2. Quality Considerations

Fresh Grower needs to invest in setting up small refrigeration units wherever it intends to operate. It can store a specific amount of farm produce according to what the Machine Learning models recommend. The freshness of the vegetables and fruits will have to be ensured and therefore, the refrigeration units must be equipped with IoT sensors to track the ambient temperature, relative humidity, and the pressure inside the refrigeration units. The sensors will transmit important real-time data to a backend database over a 4G network once every hour. The backend system will keep a track of the environment parameters and will alert whenever the parameters have an anomaly.

3. Inventory Management and Cost Considerations

Based on historical order data, the ML models will recommend how much farm produce must be harvested the next day and how much should be stored as a buffer stock. This will ensure that Fresh Growers store only a minimal amount of farm produce in the refrigerators for those orders that arrive at odd times during the day. The entire data on environment parameters, available inventory, and payments will be stored in the database and will be made available in the MIS Reporting Tool.

4. Elimination of Redundancies and Inefficiencies

MIS Reporting Tools will help to visualize which processes are taking unnecessary long times and how lead times can be reduced. This will help eliminate the wastage of inventory, overproduction, and defects. Moreover, the Finance team will be able to see how cash outflows and inflows look like. The Marketing team will be able to visualize which channels have contributed to the new and repeat orders, and which platform they are arriving from. The Urchin Tracing Module (UTM) in the URLs used to place the orders will help in tracking marketing campaigns. Therefore, the marketing team will be able to bring efficiencies to its marketing campaigns and portfolio of channels to drive omnichannel strategy.

 

Finance (Enhanced Profitability, Controlled Risk, Better Returns, and Revenue Producing Accelerated Offerings)

1. Less Profit Margins

As per the information supplied in the case study, the company is generating on an average 30 INR as its profit margins per household order (INR 200 - INR 170), which seems to be too less. The company must try to reduce the dependency on farmers and must try to figure out ways to integrate backward in the supply chain in order to control and reduce the cost.

2. High Risk of the Owner

As it’s a self-financed organization (the owner has invested Rs.10 Lakh from his savings as initial capital), there is a chance of huge business losses to be borne by the owner as he is bearing all the risk. There should be a judicious mix of debt and equity into the company to diversify the capital structure and minimize the risk for the owner of the business. This would be even more helpful in case of the expansion of the business.

3. Expansion of Subscription-based delivery to subscription-based order

In order to increase the business sales revenue, the company must expand the scope of its subscription-based delivery to subscription-based order selection. This will help consumers to not only get additional services but also place regular customized orders through apps with a click of a mouse.

 

HR (Motivation, Training, Development of Workforce, Stakeholder Management, and Employer Branding)

1. The motivation of Field Workforce:

There are a lot of field workers involved in the procurement and delivery of fresh produce. The efficiency of such workers plays a very important role in ensuring the least turnaround time (TAT) in fulfilling the orders. Relevant motivational techniques, majorly monetary incentives, need to be leveraged in keeping the workforce interested in their respective jobs. Giving them timely performance-based incentives and providing them with the necessary capabilities play a pivotal role in achieving the relevant targets.

2. Training and Development of Field Workers

Providing the field workers with the required training and development from time-to-time will help them in their career progression. A detailed plan of training and development activities needs to be chalked out and implemented to yield higher productivity and lower TAT.

3. Changes in Selection Plan

HR should focus on hiring contract laborers/casual workers/temporary staff and must frame their compensation strictly based on performance. This will not only help in higher performance levels but will also help in cost savings for the company as a whole.

4. Stakeholder Management

Another major concern for the HR department is stakeholder management, which includes relationships with suppliers and distributors of the company. As a Business Partner, the company must bring in incentive plans for farmers, for carrying out demand-based harvesting, so that their interests get aligned with that of the company and it becomes a ‘Win-Win’ strategy for both parties. Not only this, the HR must think to create new job positions on the field that can ensure direct supervision over all the agricultural activities. This will bring in quality control of the product and will help the organization to achieve its USP on a sustained basis.

5. Employer Branding:  

Last but not the least, the HR department must strictly focus on establishing the brand equity of the company as an employer to retain the workforce and build its goodwill in the market. This will not only help in the reputation management of the company but will also help to withstand stiff competition from local suppliers and app-service providers. This can be done through social media marketing, offline channels, testimonials, web presence highlighting the sustainability goals of the company.

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Expansion Strategy 

The expansion strategy takes into consideration all the cost heads mentioned in the Business Case Scenario, along with additional costs of hiring engineers, setting up cold storage, and implementation of IoT infrastructure. 

Appropriate and conservative CAGR has been assumed for subscribers' base, the salary of personnel, and other cost heads over each quarter, wherever applicable. 

The 2-year breakeven strategy shows that breakeven will happen in July-Sep '22 quarter and thereafter, net income will increase gradually for Fresh Grower.

Conclusion

Hence, it can be concluded that all the department goals need to be re-aligned and re-assessed to address multiple issues confronting the organization. Once these issues are addressed, there will be room for the growth and expansion of the business, better targeting of its customers, realistically visible USP, resolution of the tiff between farmers and the company, better internal efficiency, better quality control, increase in sales revenue, and better stakeholder management in general.

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