Business/Donor partnership, the best formula for empowering the poor – The Agora case study

The Business/Donor partners working on the Agora SME development project.

Agora established in 2001 with an ultimate aspiration to be the Wal-Mart of the East is an expanding chain of retail outlets in Bangladesh, run by Rahimafrooz Superstores Ltd. Agora now operates 11 outlets, a sourcing and processing centre for commodities and a state of the art distribution centre with 680 employees and 320 suppliers. With an aggressive expansion programme in mind Agora recently migrated to an end to end ERP system powered by SAP and WINCOR NIXDORF.

When Agora started its supermarket [providing food, personal care and household needs] business in 2001, the brand was positioned as the best solution for customers for the purchase of fresh produce [fish, meat, vegetables, fruit and dairy] of high quality at the right price as this was the predominant customer need in the absence of an organized modern trade [supermarket] system. This resulted in Agora investing in cold and chill storage, transport and display facilities. The absence of organized fresh produce supply chain resulted in Agora solely developing fresh produce suppliers. This included training perishable traders who operated in the unorganized wet market on proper sorting, grading, storing &transportation of produce and fundamental disciplines of running a business. We also formed partnerships with farmer associations toward this objective.

As Agora expand, the company realized the need to further build the capacity of small and medium fresh produce suppliers and develop robust supply chains and trading relationships. As Agora was looking for solutions for this important need, a meeting between Ms Parveen Huda of BIF [Business Innovation Facility] and Mr Niaz Rahim of Agora led to the signing of an MOU designed to address Agora’s needs while developing their SME suppliers ensuring the ‘inclusive’ aspect.  The project was funded by DFID, BIF and AGORA and the capacity building expertise was received from one of the world’s leading business consultancies Accenture and PUM from Netherlands.

The project vision was to support the growth of Agora and improve Agora’s external social impact. It supports Agora’s profitable growth and brand image, increases revenue & the number of stores and enhances quality & brand image of ‘Agora fresh’. On the ‘inclusive’ side it increases Agora’s external social contribution by commercially benefiting the poor and reducing unhealthy practices in the perishables supply chain.

While the concept of ‘inclusive’ was practiced unconsciously by the Agora team, we did not refer to it as ‘inclusive’ until the birth of this project. The ‘Inclusive’ concept was exciting as it ensured that the project will have a positive impact on the lives of poor people making a livelihood as farmers, fisherman, butchers, collectors, sorters, transporters and processors who are directly and indirectly linked to the Agora fresh produce supply chain.

The work in this project done by a Agora team allocated to this project guided by consultants from Accenture included benchmarking, setting Agora standards, developing an SME supplier assessment tool, assessing the suppliers and developing a consulting and training module that can be used by local resource persons. The technical aspects of this module were developed with the guidance of PUM from Netherlands with inputs from the perishable experts in Agora.

Once the module was developed we selected two local consulting/training companies G-Mark and Matrix and together with the Agora retail school a comprehensive train the trainer process was conducted to prepare them to deliver the consulting and training module to develop the SME suppliers.

At the time of writing this blog the local resource persons from G-Mark, Matrix and Agora Retail School has conducted the assessment of all Agora’s SME suppliers and the reports have been prepared for the guidance in the next stage; the consulting and training process that will take a total of a year. At the end of the year it is expected that there will be significant improvement in all SME suppliers, especially in the areas identified for improvement in line with the improvement targets that have been set by Agora.

The assessment were done with visits to SME supplier premises, inspections, observations and interviews using the assessment tool that has 172 question, under 41 competency areas which belong to 10 capability areas. These 10 capability areas are; Strategic Management Procurement & Supply, Premises, Distribution  & Transportation, Product Quality, Interaction with Customers, Finance, Leadership, Information Technology and Human Resources.

Once the assessments are competed, clusters of 10 to 15 SME suppliers will go through a classroom session that covers 2-3 capability areas where they learn the relevant world-class standards, Agora’s standards [defined to suit local requirements], the gaps between their assessment and Agora’s standards and some practical steps that can be taken to bridge the gap. They leave the classroom with a commitment to make the required improvements. Thereafter the consultants/trainers will visit and communicate with the SME suppliers using various means to guide and support them in executing the commitments. They come back to class after 2-3 months to cover 2-3 more capability areas and the process continues until all 10 capability areas are covered. Another assessment will be done at the end of the process to assess the improvements and agree on next steps.

The process which was co-created by all parties involved is robust as there is vested interest in all parties, especially those on the ground to make it work. Firstly Agora would want it to work as it is important for their expansion plans and they need to be accountable to the shareholders in terms of the money invested in this project. The funding partners would want to ensure that the investment of time, money and energy is of no waste. The SME suppliers know that they need to improve their capacity to be able to take a larger chunk of the growing Agora business and to prevent Agora appointing new suppliers. The local training/consulting partners who had to make an investment to get trained to deliver the course would want to recoup the investment and make it a commercial success.

This project therefore has a very solid business/donor partnership that has many mechanisms built in to ensure success, ensurecontinuity and to multiply the benefits to avoid the pitfalls highlighted in the TedX video of David Damberger titled: What happens when an NGO admits failure. I have written a blog in relation to this eye opener for NGO’s who spends money in providing infrastructure such as tube wells and neglect to invest a fraction of that investment on maintaining such infrastructure by the local beneficiaries with proper support and guidance. Please click on the link below to read this blog post and watch David Dambergers’ video.

While I move back in to full time consultancy after having concluded my 3 years assignment as CEO of Agora, I am certain that the team at Agora led by the Managing Director Niaz Rahim will ensure the continuity of the process, while BIF will take it into other organizations to spread the benefits far and wide.

Please see below the embedded YouTube video of a presentation I made regarding this project at the Bangladesh Agri Business Supply Chain conference in June 2012.

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