Role of IT in future restructured FCI
While the IT initiative implemented so far has contributed immensely to improve efficiency in the operations of FCI, there is a lot more that use of IT can do in future improving the efficiencies of the organization.
The operations of FCI are primarily a supply chain mechanism wherein foodgrains are procured from farmers at MSP from various mandis and then they are moved to various FCI depots through road or rail and finally distributed to State Agencies for TPDS and OWS as per the allocations made. Such an operation requires adoption of a Warehouse Management System which would help improve the supply chain management by controlling the movement and storage of foodgrains from and within various depots and automate the various processes involved in procurement, storage and movement. The present IT applications are implemented as stand-alone solutions and have not been integrated as an end-to-end solution which would have helped to ensure optimization and reduce costs. The various modules that can be part of the IT back bone for the organization will address the key challenges at various stages of FCI operations and help bring in efficiency. Some of the initiatives that can be part of the modules are the following:-
2.1 Procurement – Presently the bulk of the procurement happens at the mandis where farmers bring in foodgrains which are taken over by Arhtiyas who act as a go-between the farmers and FCI. The arhtiyas plays a critical role in the supply chain by ensuring that foodgrains that are procured by FCI conform to the quality specifications and he receives the payments from FCI which he further passes on to the farmers after deducting the charges and whatever advances he might have given to the farmers as a loan. Thus, the role of Arhtiya that appears to be necessary in the supply chain but it does add to the inefficiency of the system as there is a cost associated to it.
The use of IT can eliminate or reduce the role of Arhtiya in the procurement process. With the increasing use of IT in various spheres of the Government today, we have a scenario where the land records are computerized, most farmers have Aadhar numbers and they also have bank accounts and mobile phones. Through IT initiative if we are able to link the Aadhar number of the farmers with the land records data and also add the bank account numbers and mobile numbers of farmers then we could possibly assess the actual likely arrival of foodgrains at mandis in advance.
Through a specially designed mobile application, farmers could register on FCI's procurement portal and choose dates and mandis on which they would be bringing the foodgrains to the mandis. Based on this each farmer can get an appointment on a scheduled day and time for bringing his foodgrains to the mandis. There can be a window of say two days for each farmer which would allow for delays or other unforeseen circumstances. This would ensure that the arrival in the mandi is regulated and farmers do not incur additional costs due to delay in getting their foodgrains accepted at the mandis. Mandi operations will also become efficient as the mandi officials will know how many farmers are coming on a given date. This will help plan their bagging, storage and movement operations so that we don't have a situation where large amount of procured foodgrains are left at mandis waiting for them to be moved.
Once the foodgrains brought by the farmers who are identified with their Aadhar numbers is accepted by FCI, an automatic payment system will help electronically credit the fund to the bank accounts of the farmers. This would eliminate the need of issuing any cheques and would also eliminate harassment of farmers in getting their dues. Thus, use of IT in procurement operations will reduce the costs for both the farmers and FCI and will help in efficient and optimum utilization of the transportation and storage facilities of FCI. This is likely to result in almost 15 to 20% of savings in procurement costs of FCI which would translate to almost 10 to 15,000 crores annually.
2.2 Movement: Use of IT can help optimize the logistics for movement of foodgrains from the procuring areas to the consuming areas. The foodgrain production in the country is such that only Punjab, Haryana and Madhya Pradesh have surplus wheat which can be moved to other States of the country. Similarly, for rice only Punjab, Haryana, Chattisgarh, Andhra Pradesh and Odisha have surplus rice that can be moved to other States. The movement of these foodgrains is also dependent on the storage facilities that are available in respective States as also the requirement under TPDS/OWS/NFSA. Further, movement is a combination of rail network, road network and even riverine movement. Given this complexity, the efficient transportation plan which optimizes costs of movement as also optimum utilization of the storage facilities requires an efficient IT based system that could provide the most efficient model of transportation. This would also allow real time monitoring of movement of stocks which would also help in reducing transit losses as also demurrage costs. With the modernization of storage capacity and bulk movement of foodgrains through specialized wagons use of IT can help bringing in efficiency by optimum utilization of the specialized wagons as also in monitoring of the entire movement plan. Such an IT based system in movement is likely to reduce costs substantially.
3. Depot Operations: Depots are the critical points in the entire supply chain mechanism of FCI as all key operations of the organization are centered around depots. A depot online system is essentially a warehouse management system which would automate all processes and operations at the depot level including receipt of foodgrains, storage and maintenance activities, issue of foodgrains as also the quality control operations. The depot online system can have inbuilt modules for inventory management, quality control, weighbridge integration, storage and transit losses management and management of gunny inventories. This system would improve the functional efficiency of FCI at the depot level.
4. Storage: Use of IT can greatly enhance the optimization of storage capacity that FCI has. Presently, FCI and State Agencies have a total storage capacity of 76 million MTs spread across the country. However, the actual distribution of storage capacity district-wise is not uniform and there are certain districts which have surplus storage capacity and certain districts have deficit storage capacity. As per the storage norms each district should ideally have a storage capacity as per the buffer norms. In the absence of a proper plan for storage very often recourse is taken to hiring capacity from private operators and the overall inefficient mechanism results in high storage costs. In order to optimally utilize the storage facilities in the country, IT can be used to map all storage facilities on a GIS map and similarly the requirements of PDS and OWS can be mapped district-wise and linked to the depots already mapped on the GIS platform. Using this GIS model optimum utilization of storage capacity can be ensured and hiring of godowns can be resorted to only as per the actual need. Capacities not needed can be de-hired. This will help in substantial cost savings. With the plan for upgrading of existing storage capacities to modern silos for bulk storage IT can play a critical role in managing the operations of silos as also allied operations relating to quality control and bagging. Thus, IT can greatly help in reducing the storage costs.
5. Financial Accounting Package: FCI has already implemented financial accounting package which has automated and integrated the finance, treasury, inventories, purchasing and pay roll functions across all office of FCI including Headquarters, 5 Zonal Offices, 24 Regional Offices and 163 District Offices. Under this system more than 5 lakh vouchers are processed every month. However, the present FAP system is not integrated with the procurement and stock management system. Use of IT has the potential of integrating the finance and accounting functions with key operations of FCI that include procurement, storage and movement which would be part of an end to end IT based logistics management solution. This would help identify cost inefficiencies in FCI operations and would help FCI to address issues that can greatly make FCI operations more efficient and cost effective.
6. Project Management: One key aspect of FCI operations is engineering operations under which FCI undertakes construction of new depots, railway sidings and also office buildings. Similarly, the annual repair and maintenance work of FCI are carried out across all depots on a regular basis. Use of IT for Project Management of these civil works can help reduce delays by utilizing standard solutions like PERT. Similarly, use of IT can help standardize design and project plans as also costs of similar projects. IT can greatly help in supervision and monitoring of engineering works which will help in bringing in accountability and transparency. This would result in cost savings.
7. Sales: One of the key operations of FCI is management of sale of foodgrains to State Governments under various schemes as per allocations made. FCI also undertakes open market sale of foodgrains from time to time. An integrated IT based solution can help manage the sales operations of FCI and ensure that FCI realizes the dues in time. This would make the sales operations more efficient and cost effective.
8.Personnel Management: In the last several years, FCI has cut down its manpower size from almost 60,000 to 22,000 now. Still it is one of the largest organizations in the country and in order to improve personnel management, IT can help in implementing the Human Resources Management System which would ensure that all HR related functionalities are handled efficiently by an IT based solution. Such a system can also integrate labour management. This would help in optimal deployment of resources across the country and will be linked to the actual operations and functional requirements. Such a system would also help in resolving employee grievances and will boost the morale of the employees, motivate them and help increase productivity of the organization.