Digital Platform for Offering Public Distribution System Services through General Trade Outlets and Direct-to-Home delivery in India
Introduction
In our first post we, AsterQuanta [AQ], introduced the public distribution system [PDS] in India and how we obtained permissions from the government for enabling proxy distribution of ration services.
In the previous post we presented a survey that captures the time, effort and cost aspects from a beneficiary perspective and insights from the pre-deployment solution development for proxy distribution of rations.
In this post we describe the distribution models, operational stack and processes, findings and key learnings from testing the distribution models in the field while delivering the technology & design for enabling proxy distribution.
Decentralization of Public Distribution System [PDS]
The PDS is a decentralized way of distributing food items to the beneficiaries. Decentralization starts from the center to the states, to the Districts, Taluks, and Gram Panchayats where rations are distributed to the beneficiaries. However, Fair Price Shops [FPSs] are sparsely located where some of the beneficiaries have to walk even more than 5 kilometers to collect rations from the FPS. In our pilot, we are looking at how we can reduce inconveniences such as walking to a FPS, waiting in line for rations, the loss of wages to avail the rations (opportunity cost), the conveyance cost, the visibility into every transaction for transparency and accountability, and occasional technical issues such as failure to recognize the fingerprint of beneficiaries. The availability of rations at retail stores which will be located somewhere between 300–500 meters from the beneficiary’s residence will make the entire process so much easier.
Our Proposal
⮚ FPSs are not conveniently located. However, in the villages, there are retail shops which we can use as FPS nodes or e-FPS outlets to supply ration items to the beneficiaries. This way, our citizens do not have to walk long distances and stand in line to get ration from the designated FPSs.
⮚ The “ATM Model” makes it easier for the beneficiaries to procure rations. A citizen can withdraw directly from the Bank or the ATM. Likewise, the FPS is like the bank, and the ration shops are like the ATM where our citizens can conveniently collect ration close to their homes.
⮚ The items from the FPS will be available at the registered retail shops from which beneficiaries in the area can come and collect their ration.
⮚ Our solution includes a mobile application which will automate all the steps involved in acquiring rations. Once a citizen logs in to the app, he/she can place the order for the items which will be made available at the nearest registered retail shop.
⮚ The proposed systems promote a more equitable, inclusive, and secure PDS for our citizens.
Proxy Distribution Models
In our pilot, we have tested two approaches
⮚ VLE-FPS-Beneficiary (Direct-to-Home delivery): In this mode of delivery, a Village Level Entrepreneur (VLE) picks up the beneficiaries’ items from the FPS outlets, packs them into neatly marked kits and directly delivers these kits to the beneficiary at his/her home. Our hypothesis is that this version of the system will greatly decrease the opportunity costs incurred by beneficiaries.
⮚ VLE-FPS-Retailer-Beneficiary (via Retail Store): In this mode of distribution, VLE picks up the beneficiaries items from the FPS outlets, packs them into neatly marked kits and delivers these kits to the designated retail outlets. Beneficiaries pick up these kits from these retail outlets. Our hypothesis is that this version of the system will not only decrease opportunity costs, but also minimize operational costs by reducing delivery expenses. Also, we hypothesize that there will be direct (financial) and indirect (commercial, e.g. increased footfall) incentives for the retailers for this service.
For both the models described above, the hypothesis is that the FPS outlet associates would be able to manage and execute the deliveries by themselves once they become familiar with the system. Removing the need and therefore the cost of VLEs.
Figure-1 captures the current and proposed process of food grains distribution. In the current system, food grains are sourced from Food Corporation of India (FCI) warehouses by the FPSs’ to be distributed to the beneficiaries. This is shown in the upper part of the picture. Multiple FPS outlets are directly stocked with food grains by FCI. Subsequently beneficiaries access these food grains from any of these FPS outlets. In our proposed pilot, the VLE’s will be sourcing food grains from these FPS outlets and directly delivering to the beneficiaries or through the retail outlets. For our pilot, studies and experiments, we have designed an operations stack with a virtual FPS engine that can sub-source from the FPSs’ (accessed by the VLEs’) and then distribute it to retail outlets for further decentralization or disburse directly to the beneficiaries enabling Direct-to-Home delivery. The neighborhood retail outlets also work as intermediate distribution nodes for the beneficiaries simplifying the access to the rations.
Model Processes
Figure-2 captures the operations, order and delivery process for the Direct-to-Home delivery model. Essentially there are three stages i.e. Order creation (initiated by the beneficiary and captured by the village level entrepreneur -VLE), Order Collection (executed by the VLE at the FPS outlet) and Order Delivery (managed by the VLE and acknowledged by the beneficiary)
Figure-3 captures the operations, order and disbursal process for the Retailer delivery model. Essentially there are four stages i.e. Order creation (initiated by the beneficiary and captured by the village level entrepreneur -VLE), Order Collection (executed by the VLE at the FPS outlet) and Order Delivery (managed by the VLE and acknowledged by the retailer) and Order Disbursal (managed by the retailer and acknowledged by the beneficiary)
Execution
The procurement of rations is now on a digital platform for the beneficiary. The importance and utility of this system is in enhancing the efficiency in delivering rations to the beneficiary, about reducing the opportunity cost to the beneficiary, and also to address more social problems such as inclusivity, equitable sharing of resources.
Throughout the sprint, our team of VLEs interviewed beneficiaries to gain more knowledge of end user needs, and to validate end user reception of the new system.
Following pictures capture the entire flow of our field operations.
Beneficiaries’ Quotes
“ The nearest FPS from where I live is 4 kilometers away. And since I cannot afford a scooter, I walk to the FPS when I hear about the availability. The biggest challenge is walking back all the way with 30–35 kilograms of ration. But with this initiative, I can either get ration directly to my home or buy it from my neighborhood kirana store.”
“ Once the pandemic started, it was very difficult to get ration mainly because the demand was more and we had to wait in line . The fear of contracting the virus was another huge problem until this pilot was introduced. I registered for the pilot the moment I learnt about it. We should really think about implementing this everywhere.”
The VLEs’ explained the rationale of both the retailer and direct-to-home models, by highlighting the cost differences and the scalability challenges between the models. The beneficiaries preferred the direct-to-home delivery as it was more convenient for them.
Experiments Data
264 deliveries were executed delivering over 10,000 kilograms of grains to 365 people in 100 families.
The unit cost of delivering 1 kilogram of grains varied between 0.80 INR to 1.24 INR for the two different models during our deliveries.
We captured the opportunity costs, cost and time benefits for all the stake holders during the course of the pilot. The details and findings are explained in the next section
Learnings, Results & Key Takeaways:
Through our deliveries, based on our survey data that was sampled and revalidated during our deliveries, we captured the following summary of insights –
⮚ Nearly INR 4360 was saved for the 100 beneficiaries over 3 months of deliveries
⮚ Approximately 21030 minutes (350+ hrs.) was saved for the 100 beneficiaries over 3 months of deliveries
⮚ Approximately INR 100 was saved from wage loss per beneficiary every month
⮚ Retailers were able to on an average X-sell INR 250 in 1–2 days to the beneficiaries
⮚ FPS outlets were able to save around 60 hours on the 265 deliveries over 3 months.
Opportunity Cost Savings for Beneficiaries
During regular pickups, beneficiaries spend up to INR 50 on every pickup of the ration, with INR 20–30 being an average. This was captured during our survey and revalidated during our pilot deliveries. With the current pilot, the cost of pick up and conveyance was zero for the beneficiaries in the direct-to-home model and around INR 10 in the retailer model (ration had to be carried from the retail outlet to the home by the beneficiary).
For the 265 transactions, our analysis showed nearly INR 4360 was saved, in the form of conveyance costs, for the 100 beneficiaries over 3 months of deliveries.
During our survey we were able to capture data regarding the time spent by beneficiaries for procuring ration. A bare minimum of 60 to 90 minutes was spent by the beneficiaries to procure ration. This time typically runs into 2–3 hours in many cases. The time spent was in travelling, standing in the line and carrying back the ration. Because of this , beneficiaries had to forgo half-a-day’s wage to procure the ration. The minimum daily wage is typically INR 350. With these numbers captured and sample revalidation during the survey, our analysis shows that beneficiaries’ could save typically around INR 100 and up to INR 200 during the pilot period.
Connectivity Issues
Out of the 265 deliveries in 5 Gram Panchayats, through 8 FPS outlets, VLEs’ ran into connectivity issues in 20 deliveries due to poor cellular network coverage. Pictures of the ID cards, beneficiary facial and gesture pictures could not be uploaded through the application due to lack of connectivity. As a work around, the VLEs’ were made to capture all the pictures in an offline mode which were uploaded later into the backend database. We intend to implement this feature in our next version of the application i.e. the mobile application would be able to capture the pictures in an offline mode and upload them automatically when the phone detects proper network connectivity.
New opportunities for Retailers
Our initial hypothesis was that retailers tend to benefit directly and indirectly when there are disbursals done through their outlets.
We surveyed the 10 retailers who participated in the disbursal through the retailer model. Their expectation was a compensation of INR 0.5 per unit kilogram of grains that gets distributed from their outlet. This is towards storage, handling and service costs. This compensation does not cover transportation costs of the grains from the FPS outlet to the retail outlet. Overall, through the retailer model the unit cost of one kilogram of grain disbursal was coming to INR 1.17.
Extra sales resulting from the beneficiary footfall in the retail outlet to pick up their grains is defined as X-selling (cross-selling) . We recorded 30 events of X-selling (extra sales) out of 94 beneficiary walk-ins for ration pick -ups. On an average each sale resulted in an additional INR 40 of revenue for the retailer.
Enhanced Efficiency though Pre-Packing
We ran into an unexpected process of pre-packing while designing the solution. This one step can result in tremendous savings in time and costs to the beneficiaries while creating efficiencies opening up new revenue channels for the FPS outlet owners.
Just by Pre-Packing of the grains into kits by the FPS outlets at the outlets, and creating a slot system for pickup, waiting lines can reduce to 5 minutes, from up to 60+ minutes i.e. 10 x efficient
For individual order fulfillment the following is generally the process followed
Beneficiary Presents Ration Card- Data Entry through Laptop by the FPS associate — Fingerprint Authentication of the Beneficiary — Item weighing by the FPS associate — Item Packing by the Beneficiary]
This process typically takes 8–12 minute for order fulfillment. Through our models which entailed bulk order fulfillment, it took an average of 6 minutes per order .
We propose that FPS owners can offer a pre packing service of the rations to the beneficiaries, which will help both the beneficiaries and FPS owners in terms of time and revenue respectively.
Nearly all of the beneficiaries were able to experience savings in their opportunity costs and/or time. Some beneficiary families live near the FPS outlets, it is not a big challenge for them to pick up their benefits. Some beneficiaries did not have constraints on time to pick up rations, though they had to travel. Therefore, expecting to benefit a majority (60%+) people would be more rational at scale.
We would like to highlight the point that the VLEs’ that were hired for the pilot were paid by us directly. We have not considered their salaries and costs towards the unit level costs. At scale, our assumption is that the existing personnel working in the FPS outlets can be trained and utilized for deploying the explored models and proposals.
The packing costs are one time fixed costs and have cost us less than INR 50 for family. We believe that these can be borne by the beneficiaries. These assumptions will be validated during the course of the next sprint.
In this sprint, we were able to work closely with multiple stakeholders like government officials, FPS outlet owners, retailers and beneficiaries to get the whole operations stack up and running.
Based on government official inputs, the FPS acknowledgement feature was incorporated into the mobile application to enable more foolproof delivery.
Summary of Findings, Learnings and Insights
⮚ A minimum viable frontier technology platform for ordering and tracking government services — i.e. place an order, get an order ID and track status was developed and deployed.
⮚ More than 10,000 kilograms of grains was delivered and disbursed through this platform in a decentralized manner — resulting in a substantially lower cost of availing ration for the beneficiary.
⮚ Avenues identified for Job creation through FPS outlets, who can potentially work as packing and delivery agents.
⮚ Just by Pre-Packing by the FPS outlets at the outlets, and creating a slot system for pickup, waiting lines can reduce to 5 minutes , from up to 60+minutes i.e. 10X efficient
⮚ The cost of delivery in the current experiment is 1.25 INR per kilo (without VLE costs considered). We predict that it can come down to < 1INR per kilo if the FPS outlets were to adopt a direct-to-home or direct-to-retail outlet delivery.
Next Steps:
Our focus is now on scaling up the operations and running the same in a more streamlined fashion across the district in various gram panchayats while delivering a more government integratable technology for enabling proxy distribution. We are seeking necessary permissions and the required ground support for scaling the operations.
We will be collecting data, checking and validating if the total cost of delivery, including personnel and labor costs can be around 0.75 INR per kilo, if the FPS were to adopt a Direct-to-home or Direct-to-retail outlet delivery.
