Designing Procurement System for Giri Tea Factory

A case study on the procurement problems and possible

solutions

• Alok Kumar-u309005
• Indu Mahapatra-u309021
• Priyadarshini –u309037
• Sonal Agrawal-u309054
Background of the case:

• Giri Cooperative is a newly acquired

tea factory of GETC in Nilgiris

• Initially GETC was procuring

processed tea from Nilgiris.

• GETC entered into marketing of

pocketed tea. Acquisition of GIRI
cooperative was seen as a profitable
move.

• Market prices are at all time low

because of external factors

• Processing facilities in Nilgiris is more

than adequate

• Different companies in Nilgiris have

different procurement strategies
Procurement Problem

• There are supply constraints

for Giri Cooperative

• Procurement problem in
quantity, quality, time,
price, transportation

• Competition from other

players
Probable Solutions

• Regularize supply base

quantity and quality

– Increase area of
production by increasing
the size of the land
holdings

– Increase the number of

members of the
cooperative
Probable Solutions

Quality concerns:

• Ceiling on the minimum

quantity to be procured
by the farmers

• Setting the basic

standard for
procurement of quality
products

• Regular supply on time

Probable Solutions

Monitoring :
• Members who do not
supply the minimum
required amount on time
should be penalized.

• The members who supply

raw materials (tea) on
time and of high quality
should be incentivized.
Probable Solutions

Diversification and New

markets:

• Since Giri Cooperative

has a processing plant it
can diversify into
producing tea dust

• Looking for new markets

for tea dust in Kerala

• Looking for new markets

for GTL abroad
Probable Solutions

Transportation Issue:

• Both Cooperative and the

farmers should bear the cost
of transportation in a
proportion decided by both
parties

Procurement Issues:

• Cooperative will procure all

the produce from the farmers.

Pricing Issues:

• Pricing to be based on quality

of tea
– GTL (Rs 6/kg)
– Tea dust(Rs 4/kg)