Khadi Case Study

Topics: Value added, Marketing, Supply chain management Pages: 6 (1872 words) Published: August 10, 2010
Khadi is a cloth woven using hand-operated loom with hand-spun yarn. The three varieties of Khadi are cotton, silk and wool. In 1925, Mahatma Gandhi established the first association of Khadi producers. In post independent India, the government of India at the federal level, and the provincial governments at the State level, set up promotional government bodies under the banner of Khadi & Village Industries Commission and Khadi & Village Industries Board respectively. One major concern of developing countries was, and still is, the generation of adequate employment opportunities and utilization of physical and human resource to the maximum advantage, particularly in rural areas where the majority of the population lives. This concern of India was reflected in the symbol of “charkha”, the spinning wheel which, next to agriculture is the most important source of income in rural India. Under the patronage of the Commission and Board, Khadi, this was hitherto a household, disorganized activity, and gradually evolved into a vibrant sector. While wooden single spindle wheel gradually developed into fabricated metal-based multi spindle “Charkha”, employment opportunity increased in manifolds, production multiplied, marketing outlets established, and consumer interest grew. From a household activity, Khadi developed into an expanding industry that could compete with products of the big industries in its own right. Khadi established itself as a marketable product. Over the years, Khadi grew substantially in value but not in net production terms. This obviously raises the question of quality value versus quantity value of the produce. End users are prepared to pay the price, if the supply of the product is at the right time, of proper quality and as per need. The growth of Khadi as discussed below specifically focuses on the issue of how the product has gained acceptance in the market, grown over the years, but is now faltering trying to keep pace with the tremendously fast changing needs of the market. SCM thus assumes high significance for the entire sector. ANALYSIS OF GROWTH

The growth of Khadi in last five decades, since organized production and marketing started is indicated in Table 1 below. Table 1 shows that though the turnover value production shows sustained growth, employment opportunity is not sustained as is evident from the production figures. Growth in the 6th Plan period onwards could not be sustained as can be seen in the 9th Plan. Even with the high consumer discount during the Golden Jubilee year of Independence, the 9th Plan period could not sustain the growth experienced over the past few years. The fast changing consumer tastes, the opening up of the electronic media to the rural areas, the accelerated development of telecommunication facilities and greater integration with global markets seemed to have adversely affected the steady growth of Khadi. Policy makers had to address the problem. Various expert groups under the chairmanship of the Prime Minister of India as well as Deputy Chairman of the Planning Commission have analyzed the sectoral disadvantages and recommendations have been made to bring forth the reform to put it back on track. Some of the most common ailments identified are:- • Lack of information about the needs of consensus

• Lack of ability to produce goods to achieve common satisfaction as per changing needs
• Lack of strategic alliances between various producing institutions to build a sustained supply chain
• Inadequate inventory management
• Restrictive laws & regulations
• Lack of product upgrading and product diversification
• Lack of technology upgrading
The supply management of the Khadi institutions started with the procurement of different varieties of raw materials. Each institution has developed a time-tested system to forecast the requirements of raw materials. Projections are made based on the assessment of the national level apex body known as Khadi &...
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