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Phase: Ideas Missions: Connection to Markets

Efficient Supply Chain Through Brand Loyalty and Accurate Market information to Consumers and Farmers

We connect shops and collectors via VPN and interactive voice response to consolidate, transport and supply products under single brand.

Photo of Fikrie Sintayehu Sinku
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EXPLAIN YOUR IDEA

We start with connecting urban retailers with rural sourcing agents who do sorting, grading, aggregation, transportation on behalf of retailers. We have so far agreed with 150 existing retail shops in urban areas and refubrish them into Walmart like chain. This is an important milestone. The next step is to identify arround 85 farmer traders who provide agency services to sort, grade and aggregate the product going door to door or simply after farmers deliver products to them. We are now in the third and final step which is to put in place virtual private network to connect rural collection shops and urban retail partners thus information, orders and payment flows from retail to collectors and vice versa. The information is also available to consumers and farmers on SMS and interactive voice responses thus both could have perfect market information about products they buy and sell using mobile phones. Farmers could subscribe to SMS price updates or simply dial Voice Response Gateway before they supply the product to the nearest agent at correct market prices. The agent updates product availability to all subscribed retailers at once. When order is made, the collector checks if it meets the standards retailers in the chain require i.e. improving nutrition through brand compliance. Then products are packaged and transported quickly and conviniently. Find some information on our website: http://www.azmeramarket.com Or twitter: @azmeramarket E-mail: azmeramarket@gmail.com

WHO BENEFITS?

Currently, we seek financing to deploy market autmation tools with capacity to source products from 400,000 small farmers with 120 retails consumers so around a million consumer receive healthy and fair trade certified products. Farmers' current profit margin on similar unit of product will grow by staggering 75%, reduces post-harvest loss vegetables and fruits from what is 35% to less than 10%. We so far received research leave from university and seed grant from Tony Elumelu Foundation

WHERE WILL YOUR IDEA BE IMPLEMENTED?

implemented in Ethiopia. Vegetables and fruits from Ethiopia are exported to Djibouti and Somaliland. Thus, we could source products from small farmers in Ethiopia on behalf of buyers there so that farmers could access regional markets directly.

ARE YOU IMPLEMENTING IN AN ELIGIBLE COUNTRY?

  • Yes

EXPERTISE IN SECTOR

  • I’ve worked in a sector related to my idea for over a year

EXPERIENCE IN IMPLEMENTATION COUNTRY(IES)

  • Yes, for more than one year.

TELL US MORE ABOUT YOU!

I am an organization registered under Ethiopian law. A first stage seed capital, mentorship and training support of 5000 USD was provided after winning a Pan-African entrepreneurship competition. I am currently looking for collaborators for market entry, implementation and expansion stages.

IS THIS IDEA NEW FOR YOU OR YOUR ORGANIZATION?

I have worked as university Lecturer for over five years in Ethiopia. Due to my research activities, I was in contact with dozens of farmer cooperative leaders, wholesale and input supply companies in the agriculture sector. I came to understand that providing market access to small scale farming is much more complex activity involving much more than providing information on market prices. The most significant challenge for small farmers to access better markets is rather issues related to product variety, small size nature of goods available for market and literacy of the population. If we are about to increase small farmers access to markets and fair prices, we have to provide a full-fledged supply chain through which farmers could secure product flow in addiction to information. That is why mobile phones had limited impact on small farmers in relation to large commercial farmers. Sound Market access, in addition to reducing postharvest loss, could increase production capacities and have hunger free nation.

HOW IS YOUR IDEA UNIQUE?

We combine accurate market information with agency services on the ground to assist small farmers not only make sound market decisions but also enable products flow conveniently and efficiently. call-centre facility that connects a chain of suppliers, transporters and retailers. The SMS gateway and call-centre facility is equipped with OZEKI SMS gateway system with a capacity to send 500 SMS/second to subscribed customer about current market prices and product availability. Subscribed Azmera agents on the ground use our market information to consolidate, transport and supply products to consumers at national, regional and international markets. Thus, there is speedy product flow in addition to the information flow. Why to Use Azmera?  increase consumer choice  ensure stability in supply  allow one-stop shopping and  deliver products at cheaper prices

WHO WILL IMPLEMENT THIS IDEA?

Currently implementing the idea are the following persons. Kevin Wilkins, an international agricultural consultant based in Washington DC with over 12 years of experience, pro bono advisor, Mengistu Gebeyaw* is an Industrial automation Engineer

HOW HAS YOUR IDEA CHANGED BECAUSE OF BENEFICIARY FEEDBACK?

Fortunately, I was doing a beneficiary feedback already. We discussed all issues in detail with wholesalers and small farmers and finally signed preliminary agreement with 120 wholesalers in Addis Ababa who had a capacity to absorb a total of over 40 tonnes of vegetables, fruits and grains per day. In this equation, it could benefit over 40,000 small farmers to whom we are going to assign and train collection agents at five major rural districts in the country. From this, their income is expected to increase by over 75% from current prices. In five years, our plan is to subscribe major exporters, agro-industries and retailers so that we could reach over 5 million farmers through 300 agents. We also plan to connect all of the through VPN so that everything is automatically measured, standardized and transported efficiently and conveniently.

WHAT ARE SOME OF YOUR UNANSWERED QUESTIONS ABOUT THIS IDEA?

How to find impact investors interested in the idea? Does the organization have to follow a non-profit or social impact sustainable structure?

WHY DO YOU THINK THE PROBLEM YOUR IDEA SOLVES FOR HASN'T BEEN SOLVED YET?

First, Ethiopia don't allow foreign direct investment in wholesale/retail sector. Thus, this sector is not open to advanced retail chains which have technical advantage over domestic investors. Second, the food sector in Ethiopia is populated by small farmers who produce very little and commecial agriculture is at its lowest level. Thus, attention is provided to cash crop producers which produce for export. This sector is relatively organized while food producers for domestic market are ignored.

WHAT WOULD YOU ULTIMATELY LIKE TO ACHIEVE WITH THIS IDEA? WHAT IS YOUR NEXT STEP TO GET THERE?

establish strong supply chain and competitive market for Ethiopia's small holder farmers and contineously eliminate postharvest loss by more than half . It increases farmer's income and reduce malnutrition.

MEMBERS OF MY TEAM HAVE BEEN WORKING TOGETHER FOR:

  • More than a year

MY INTENDED BENEFICIARIES ARE:

  • Within 50 km of where our team does most of its work

MY ORGANIZATION'S OPERATING BUDGET FOR 2015 WAS:

  • We didn't have an operating budget

Vegetables and fruits reach consumers after passing through distributors, transporters and collectors. Urban shops are not recognizable to consumers and rural collectors are not to farmers. It is fragmented, long and disorganized. I am working to change that. Azmera is creating brand loyalty on the side of buyers and farmers by organizing all retailers and collectors into SINGLE BRAND shops. Retailers and collectors are equipped with communication technologies; and are connected to our central database so they view and compare product prices, quality and standards across the supply chain. Transactions are secured quickly and product flow throughout the chain and reach markets faster, cheaper and healthy. Farmers in addition to wider markets, gain additional benefits such as market information services, trading history, fair-scaling and prompt payment from our certified rural sourcing agents. Trading history is like credit worthiness.  

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Farmers will save agriculture if they survive
Farmers will save agriculture if they survive

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Photo of Fikrie Sintayehu Sinku
Team

Dear Chioma, Thank you and I feel it is important to explain this question further. 
Our supply chain is available as a Software simulation with clear parameters for all individual components and predefined but flexible business process. It is better to consider Azmera project as a simulation of a whole system than a prototype of a single product.
The following points illustrate the objective, competitive strategy and important yardsticks of our supply chain.

With an objective to become a reliable, low-cost retailer for a wide variety of food goods in Ethiopia,
Our competitive strategy is by attaining supply chain performance. Because, supply chain performance accounts to over 60% of financial well-being of both farmers and consumers.
What our completive strategy dictates? Our supply chain emphasizes achieving highest responsiveness to buyers and sellers at a cost as minimum as possible. In doing so, we consider the following six drivers to achieve the right balance between supply and demand.

1. Inventory driver: we keep low levels of inventory by using cross-docking: for larger supplying farmers products are directly shipped to Azmera retail shops in cities. For smaller supplies, products are transferred from inbound trucks from farmers to outbound trucks to the retail store from the farm with a brief stop at our rural collection agents. This significantly lowers inventory costs at final prices down by 5%. Importantly, it reduces postharvest loss contributing to a minimum of 20% food surplus.
2. Transportation driver: we subscribe transporters with promise to permanent work. Transporters negotiate for a decreased price and encourage them to bring safe vehicles, providing quality transportation service responsive to consumer demands. Our supply chain lowers transportation costs by at least 10% and improves food safety and freight convenience.
3. Distribution Driver: Food shops currently available in Addis Ababa sell everything from tomato to perfume in one place. Our distributors will instead be a network of retailers (currently agreed with 120) that are centrally located and demand is sufficient to run specialty food products distribution center. This increases efficiency because of specialization.
4. Information technology driver: we invests heavily on it because it is a key driver to improve responsiveness allowing us to feed demand information across the supply chain to farmers to produce only what is being demanded. i.e. demand and finance flows from Azmera retailers to Azmera collectors and from collectors to transporters while products vice-versa.
5. Sourcing driver: we identify efficient sources for each product we sell. We feed these farmers large orders, allowing them to be efficient by exploiting economies of scale.
6. Pricing driver: due to increases in the supply chain performance, we have product surplus. Thus, our retailers could price products low. Thus, customer demand stays steady and does not fluctuate with price variations. The entire supply chain then focuses on meeting this demand in an efficient manner.

To add more points: 
Thinking about ICT on agriculture, we have been previously working on ecommerce, mobile app and other applications. It was in fact easier for us and seem easy to use and convenient to deploy.

We later found out that mere applications and their impact on agricultural markets and specifically small farmers is limited unless the whole market framework is in place. The reason is what is failing for African small farmers is still a full-fledged MARKET, MARKET again MARKET, not a technical product or knowledge. And, market is a system to be made from many components. This requires something more than manufacturing a fancy product or programming an amazing software.

It is from this point of view, we start thinking about using ICT to revolutionize the whole system than changing individual components. After all, despite centuries of growth and modernity, no matter how convenient the likes of Amazon seem to be, most of the world’s sellers and consumers still prefer to buy at brick and mortar stores that are reliable, convenient and less costly. Thus, it is better to modernize existing structures than trying to bring things wholly new and change our habits overnight.

That is why I prefer to study state of the art supply chain structures of the world’s retail and manufacturing giants from fashion to electronics such as Toyota, Wal-Mart and Apple. The second step was to test existing supply chain frameworks on farmers using software simulation, each of them with different level of supply chain performance, responsiveness, efficiency.

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Photo of Fikrie Sintayehu Sinku
Team

[continued]

We finally come up with a supply chain framework suitable and optimal to farmers and supply chain actors alike. I was still aware the one that are true on theory and mathematical precision should fit to the reality to have chances of success. Thus, determining the one that had the best chance of implementation has not been an easy task. We made observations into century-old market practices among Ethiopia’s small farmers, a country still synonymous with hunger and poverty.

We separately tested every component of our system on the ground using questionnaires and interviews with cooperative leaders, distributors. The response was astounding and here I stand proudly looking for like-minded persons. 

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Photo of Chioma Ume
Team

Hi Fikrie, 

Below are some feedback from our experts and Amplify team. Looking forward to your responses!

This presents a bold way of implementing an existing model. It will be good to know the target location for the implementation of this idea, who the competitors are if there are any and how they are doing in business. We would like to know what percentage of the beneficiaries own devices for accessing the information provided and how the farmers are going to be mobilized for participation in the intervention.

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Photo of Fikrie Sintayehu Sinku
Team

Dear Chioma,
Thank you and here is the answer to the Expert comments:
The target is urban market, Addis Ababa, Ethiopia. Suppliers are small farmers in six major food producing rural districts that had an estimated population of 6.5 million.  Current competitors in the market are a number of unregistered informal brokers that do sourcing to brick and mortar strores located in Addis Ababa. The farmers will be mobilized through independent youth entrepreneurs that we are going to train and assign for each locality. We also use farmer cooperatives and their leaders to mobilize farmers into our supply chain. We promise better market information, convinient sales, dependable payments as an incentive for subscription.
 

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Photo of Chioma Ume
Team

Hi Fikrie,

Thanks so much for the response. I have an additional question - has your team created a prototype of this idea yet?

Thanks!

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Photo of OpenIDEO
Team

Hi Fikrie, interesting post! Any chance you could find an image to go along with it? Images help grab attention and tell a story with higher impact. You should be able to use the Edit Contribution button on the top of your post and follow the instructions to add images from there. Looking forward to seeing more of your inspiring insights on OpenIDEO.

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Photo of Fikrie Sintayehu Sinku
Team

Thank you OpenIdeo community. I was trying to use the picture particularly designed for it, the symbol I plan to display in hundreds partner shops and trucks in five years. I would use another picture explains business process and others. Great to see you featured my conyribution. 

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Photo of OpenIDEO
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Congrats on this being today's Featured Contribution!

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