Coordination in the rural procurement supply chain: An examination of mechanisms, structures and costs

Vijay Dakshinamoorthy, McGill University
Michael D. Gordon, Stephen M. Ross School of Business, University of Michigan


The base of the pyramid (BOP) is characterized by severe resource constraints, yet organizational processes in this context are highly coordination-intensive. One such coordination-intensive process is the rural procurement supply chain. In this paper, we examine coordination problems and mechanisms in rural procurement supply chains. While much case study evidence of successful operations of the rural supply chains have been cited in the literature, not much effort has been devoted to analyzing coordination problems at the BOP. For instance, what is the optimal set of coordination mechanisms for managing dependencies in the rural procurement supply chain? To answer this question and to find solutions to such coordination problems, we analyzed a large set of rural procurement BOP cases. From this analysis we identified common coordination problems in agricultural supply chains. We then identified a set of coordination mechanisms that have been used for managing these dependencies. Using coordination costs as the evaluation criterion for comparing mechanisms, we formulate the problem of minimizing coordination costs for optimal coordination structure with optimal number of kiosks and warehouses. Our findings provide initial insight into effective coordination mechanisms in the rural supply chain.