Application of Supply Chain Management through SAP in Agriculture of SAARC Nations

Application of Supply Chain Management through SAP in Agriculture of SAARC Nations

Somnath Chaudhuri (Royal Thimphu College, Bhutan)
DOI: 10.4018/978-1-4666-7470-7.ch023

Abstract

The prime source of income of the different countries in the SAARC region comes from the agricultural sector. Currently, this sector is facing several challenges in this entire region, threatening its growth and sustainability. Hence, if the policymakers need to improve the economic conditions of the nations, then the only way to do that is to improve the agricultural sectors of this region. This can be achieved by successful implementation of Supply Chain Management (SCM). This chapter is concerned with the concept of SCM and how it can play a vital role in developing the agricultural sectors in the SAARC countries. Another aspect of this chapter is concerned with the effectiveness of the application of SCM in agriculture; it can be implemented by using a fully integrated software package like SAP ERP. By the application of this IT software package, SCM can be made more efficient and lead to time and inventory reduction.
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Introduction

The predominant sector of the SAARC countries is agriculture. The prime source of income for the entire region comes basically from agro sector, as majority of the population is from the rural sector and depends upon agriculture for their livelihood. In brief, agriculture in this entire region provides livelihood to 70%-80% of the population, employing about 60%-70% of the work force, and contributing 24%-50% to GDP.

At present, this sector is facing several challenges in the entire region, threatening its sustainability and growth. Various physical as well as economic factors are negatively affecting the agricultural activities. The major challenges for the agriculture in the region are: (a) raising and sustaining agricultural growth; (b) ensuring food and nutritional security; (c) facing impact of climate change; (d) adjusting to changes in energy scenario; (e) maintaining biosafety and bio-security; (f) make sustainable use of natural resources; and (g) protecting biodiversity Chand (2010). Hence, if the policy-makers need to improve the economic conditions of the nations, then the only way to do that is to implement some effective policies to improve the agricultural sectors of this region. One effective and efficient mean by which this can be achieved is the successful implementation of Supply Chain Management.

Objective

The main objective of the paper is related to the concept of Supply Chain Management (SCM), its effective implementation through SAP ERP and how effectively it can play an important role in developing the agricultural sectors in the SAARC countries.

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Agricultural Scenario

The prime occupation for the major section of the population, as discussed previously, is agriculture. Due to increasing growth in population on one hand and a fixed land base on the other, the small farms are becoming smaller. In practical sense, they are too small to be productive and hence unable to support the livelihood for the families sufficiently. Thus, it is unable to compete in the global market FAO (2002) (See Table 1).

Table 1.
Structure of landholdings and status of irrigation in SAARC countries
CountryAverage Landholding Size (ha)Holdings Below 1 ha (%)Irrigated Area: % of Arable Land
Afghanistan---
Bangladesh0.4686.4656.1
Bhutan--31.2
India1.4161.5832.9
Maldives---
Nepal0.7974.1547.0
Pakistan3.0936.0990.6
Sri Lanka0.8371.2338.8

Source: 1. www.adb.org for farm size and holdings

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