MUMBAI DABBAWALA

SUPPLY CHAIN MANAGEMENT PRACTICES

Presented by:

Dr. Debomalya Ghose,

Asstt. Professor, Department of Business Administration,

Assam University.

1. INTRODUCTION

A dabbawala, also spelled as dabbawalla or dabbawallah,

literally meaning person with a box, is a person in

the Indian city of Mumbai who is employed in a unique

service industry whose primary business is collecting the

freshly cooked food in lunch boxes from the residences of

the office workers (mostly in the suburbs), delivering it to

their respective workplaces and returning back the empty

boxes by using various modes of transport. "Tiffin" is an old-

fashioned English word for a light lunch or afternoon snack,

and sometimes for the box it is carried in. For this reason,

the dabbawalas are sometimes called Tiffin Wallahs.

The concept of the dabbawala originated when India was

under British rule. Many British people who came to

the colony did not like the local food, so a service was set up

to bring lunch to these people in their workplace straight from

their home. Nowadays, although Indian business men are the

main customers for the dabbawalas, increasingly affluent

families employ them instead for lunch delivery to their

school-aged children. Even though the services provided

might include cooking, it primarily consists of only delivery

either home-made or in that latter case, food ordered from a

restaurant.

At 19,373 persons per km², Mumbai is India's most densely

populated city with a huge flow of traffic. Because of this,

lengthy commutes to workplaces are common, with many

workers traveling by train.

Instead of going home for lunch or paying for a meal in

a café, many office workers have a cooked meal sent either

from their home, or sometimes from a caterer who delivers it

to them as well, essentially cooking and delivering the meal in

lunch boxes and then having the lunch boxes collected and re-

sent the next day. This is usually done for a monthly fee. The

meal is cooked in the morning and sent in lunch boxes carried

by dabbawalas, who have a complex association and

hierarchy across the city.

A collecting dabbawala, usually on bicycle, collects Dabbas

from homes or from the Dabba makers. The Dabbas have

some sort of distinguishing mark on them, such as a color or

symbol. The dabbawala then takes them to a designated

sorting place, where he and other collecting dabbawalas sort

(and sometimes bundle) the lunch boxes into groups. The

grouped boxes are put in the coaches of trains, with markings

to identify the destination of the box (usually there is a

designated car for the boxes). The markings include the rail

station to unload the boxes and the building address where the

box has to be delivered.

At each station, boxes are handed over to a local dabbawala,

who delivers them. The empty boxes, after lunch, are again

collected and sent back to the respective houses.

It has been recognized since 2002 to be one of the most

reliable supply chains in the world, after being given a six

sigma rating by Forbes Magazine. This is despite the supply

chain using no computers or modern technology and most of

the delivery staff being illiterate.

A few years ago, US business magazine Forbes gave

Mumbai's dabbawallas a Six Sigma performance rating, or a

99.999999 percentage of correctness.

2. SUPPLY CHAIN MANAGEMENT

2.1 What is supply chain?

A supply chain consists of all parties involved, directly or

indirectly, in fulfilling a customer request. The supply chain

includes not only the manufacturer and suppliers, but also

transporters, warehouses, retailers, and even customers

themselves. Within each organization, such as a manufacturer,

the supply chain includes all functions involved in receiving

and filling a customer request. These functions include, but

are not limited to, new product development, marketing,

operations, distribution, finance, and customer service.

Consider a customer walking into a Wal-Mart store

to purchase detergent. The supply chain begins with the

customer and his or her need for detergent. The next stage of

this supply chain is the Wal-Mart retail store that the customer

visits. Wal-Mart stocks its shelves using inventory that may

have been supplied from a finished-goods warehouse or a

distributor using trucks supplied from a finished-goods

warehouse or a distributor using trucks supplied by a third

party. The distributor in turn is stocked by the manufacturer

(say, Proctor & Gamble [P&G] in this case). The P&G

manufacturing plant receives raw material from a variety of

suppliers, who may themselves have been supplied by lower-

tier suppliers.

This example illustrates that the customer is an integral

part of the supply chain. In fact, the primary purpose of any

supply chain is to satisfy customer needs and, in this process,

generate profit for itself. The term supply chain conjures up

images of product or supply moving from suppliers to

manufacturers to distributors to retailers to customers along a

chain. This is certainly part of the supply chain, but it is also

important to visualize information, funds, and product flows

along both directions of this chain. The term supply chain

may also imply that only one player is involved at each stage.

In reality, a manufacturer may receive material from several

suppliers and then supply several distributors. Thus, most

supply chains are actually networks. It may be more accurate

to use the term supply network or supply web to describe the

structure of most supply chains.

A typical supply chain may involve a variety of stages. These

supply chain stages include:

• Customers

• Retailers

• Wholesalers/distributors

• Manufacturers

• Component/raw material suppliers

Each stage in a supply chain is connected through the flow of

products, information, and funds. These flows often occur in

both directions and may be managed by one of these stages or

an intermediary. The appropriate design of the supply chain

depends on both the customer’s needs and the roles played by

the stages involved.

The objective of a supply chain

The objective of every supply chain should be to maximize

the overall value generated. The value a supply chain

generates is the difference between what the final product is

worth to the customer and the costs the supply chain incurs in

filling the customer’s request. For most commercial supply

chains, value will be strongly correlated with supply chain

profitability, the difference between the revenue generated

from the customer and the overall cost across the supply

chain.

Having defined the success of a supply chain in terms of

supply chain profitability, the next logical step is to look for

resources and cost. For any supply chain, there is only one

source of revenue: the customer. The customer is the only one

providing positive cash flow for the supply chain. All other

cash flows are simply fund exchanges that occur within the

supply chain, given that different stages have different

owners. All flows of information, product or funds generate

costs within the supply chain. Thus, the appropriate

management of these flows is a key to supply chain success.

Effective supply chain management involves the management

of supply chain assets and product, information, and fund

flows to maximize total supply chain profitability.

2.2 Decision phases in a supply chain

Successful supply chain management requires many decisions

relating to the flow of information, product, and funds. Each

decision should be made to raise the supply chain surplus.

These decisions fall into three categories or phases depending

on the frequency of each decision and the time frame during

which a decision phase has an impact. As a result, each

category of decisions must consider uncertainty over the

decision horizon.

1. SUPPLY CHAIN STRATEGY /DESIGN:

During this phase, given the marketing and pricing plans for a

product, a company decides how to structure the supply chain

over the next several years. It decides what the chain’s

configuration will be, how resources will be allocated, and

what processes each stage will perform. Strategic decisions

made by companies include whether to outsource or perform a

supply chain function in-house, the location and capacities of

production and warehousing facilities, the products to be

manufactured or stored at various locations, and the type of

information system to be utilized. A firm must ensure that the

supply chain configuration supports its strategic objectives

and increases the supply surplus during this phase.

2. SUPPLY CHAIN PLANNING:

For decisions made during this phase, the time frame

considered is a quarter to a year. Therefore, the supply chain’s

configuration determined in the strategic phase is fixed. This

configuration establishes constraints within which planning

must be done. The goal of planning is to maximize the supply

chain surplus that can be generated over the planning horizon

given the constraints established during the strategic or design

phase. Planning includes making decisions regarding which

markets will be supplied from which locations, the

subcontracting of manufacturing, the inventory policies to be

followed, and the timing and size of marketing and price

promotions. In the planning phase, companies must include

uncertainty in demand, exchange rates, and competition over

this time horizon in their decisions. Given a shorter time

frame and better forecasts than the design phase, companies in

the planning phase try to incorporate any flexibility built into

the supply chain in the design phase and exploit it to optimize

performance. As a result of the planning phase, companies

define a set of operating policies that govern short-term

operations.

3. SUPPLY CHAIN OPERATION:

The time horizon here is weekly or daily, and during this

phase companies make decisions regarding individual

customer orders. At the operational level, supply chain

configuration is considered fixed and planning policies are

already defined. The goal of supply chain operations is to

handle incoming customer orders in the best possible manner.

Because operational decisions are being made in the short

term (minutes, hours or days), there is less uncertainty about

demand information. Given the constraints established by the

configuration and planning policies, the goal during the

operation phase is to exploit the reduction of uncertainty and

optimize performance.

2.4 Supply chain performance: achieving strategic fit

Strategic fit means that both the competitive and supply chain

strategies have aligned goals. It refers to consistency between

the customer priorities that the competitive strategy hopes to

satisfy and the supply chain capabilities that the supply chain

strategy aims to build.

There are three basic steps to achieving strategic fit:

1. Understanding the customer and supply chain

uncertainty: First, a company must understand the

customer needs for each targeted segment and the

uncertainty the supply chain faces in satisfying these needs.

These needs help the company identify the extent of the

unpredictability of demand, disruption, and delay that the

supply chain must be prepared for.

2. Understanding the supply chain capabilities: There are

many types of supply chains, each of which is designed to

perform different tasks well. A company must understand

what its supply chain is designed to do well.

3. Achieving strategic fit: If a mismatch exists between what

the supply chain does particularly well and the desired

customer needs, the company will either need to restructure

the supply chain to support the competitive strategy or alter

its competitive strategy.

A supply chain can be classified into two categories:

1. Responsive supply chain.

2. Efficient supply chain.

RESPONSIVE SUPPLY CHAIN:

Supply chain responsiveness includes a supply chain’s

ability to do the following:

1. Respond to wide ranges of quantities demanded

2. Meet short lead times

3. Handle a large variety of products

4. Build highly innovative products

5. Meet a high service level

6. Handle supply uncertainty

These abilities are similar to many of the characteristics of

demand and supply that led to high implied uncertainty. The

more of these abilities a supply chain has, the more responsive

it is.

Responsiveness however comes at a cost. For instance, to

respond to a wider range of quantities demanded, capacity

must be increased, which increases costs. This increase in cost

leads to the second category of supply chain.

EFFICIENT SUPPLY CHAIN:

It is the inverse of the cost of making and delivering a

product to the customer. Increase in cost lower efficiency.

For every strategic choice to increase responsiveness, there

are additional costs that lower efficiency.

COST-RESPONSIVENESS EFFICIENT FRONTIER

FINDING THE ZONE OF STRATEGIC FIT

3. THE MUMBAI DABBAWALLA

A dabbawala (one who carries the box), sometimes spelled

dabbawalla, tiffinwalla, tiffinwalla or dabbawallah, is a person

in the Indian city of Mumbai whose job is to carry and deliver

freshly made food from home in lunch boxes to office

workers. Tiffin is an old-fashioned English word for a light

lunch, and sometimes for the box it is carried in. Dabbawalas

are sometimes called tiffin-wallas.

Though the work sounds simple, it is actually a highly

specialized trade that is over a century old and which has

become integral to Mumbai's culture.

The dabbawala originated when a person named Mahadeo

Havaji Bachche started the lunch delivery service with about

100 men. Nowadays, Indian businessmen are the main

customers for the dabbawalas.

Who are they?

They are successor of the great worriers “Mawle”, who were

associated with the Nobel king Chhatrapati Shivaji Maharaj, the

founder of Maratha Empire. They starved to protect people from

brutality of the rulers. They are starving to feed our people on time.

They carry tiffin (Lunch box) from the home of customer and carry

it to their work place of work.

• Started in 1890

• Charitable trust: Registered in 1956

• Avg. Literacy Rate: 8th Grade Schooling

• Total area coverage: 60 Kms to 70 Kms

• Employee Strength: 5000

• Number of Tiffin's: 2, 00,000 Tiffin Boxes i.e. 4, 00,000

transactions every day.

• Time taken: 3 hrs.

How do they work?

• They work as work is worship. Their motto is 100% customer satisfaction with no error. Their logistics and supply chain system is among the top in the world with SIX SIGMA rating. They work on central, western and harbour railway lines. They care for the health of their customers by providing home cooked food.

• Error Rate: 1 in 16 million transactions

• Six Sigma performance (99.999999)

• Technological Backup: Nil.

• Cost of service - Rs. 300/month ($ 6.00/month)

• Standard price for all (Weight, Distance, Space)

• Rs. 36 Cr. Turnover approx. [6000*12*5000=360000000

i.e. Rs. 36 crores p.a.]

• “No strike” record as each one a share holder

• Earnings -5000 to 6000 p.m.

• Diwali bonus: one month's from customers• 0 % fuel

• 0 % modern

technology

• 99.9999%

performance

• 0 % investment

• 100 % Customer

Satisfaction

• 0 % Disputes

• No Alcohol Drinking during business hours• Wearing White Cap during business hours• Carrying Identity Cards

The Mumbai Dabbawalas were honoured by Prince Charles

on the 4th of November, 2003. He took keen interest in their way of

functioning, expressed surprise at their efficiency and was struck

with awe when he was told that they didn’t employ any

technology. The prince was presented a small memento,

accompanied with a garland, a Gandhi topi and a trophy by the

dabbawalas.

AWARDS

• Shri.Varkari Prabhodhan Mahasamati Dindi Palkhi Sohala –

4th March – 2001.

• Documentaries made by BBC, UTV, MTV, ZEE TV, AAJ

TAK, TV TODAY, SAHARA SAMAY, STAR TV, CNBC

TV 18, CNN, SONY TV, TV TOKYO, NDTV, Channel 7,

DD Metro, Doordarshan.

• CASE STUDY –

Richard Ivey School of Business – Ontario

IFIM Business School Bangalore

IIM Ahmedabad

ICFAI Press Hyderabad

Agrawal Institute of Management, Mumbai

• Invitation from CII for conference held in Bangalore, IIML,

IIMA, CII Cochin, CII Delhi, Dr. Reddy’s Lab Foundation

Hyderabad, SCMHRD Pune, Suryadatta Pune, SCMHRD

Nasik, MIT Pune, MET Mumbai, IIT & IIM, Harvard U.S.A.,

Cambridge Oxford .

Included in a subject in University of California, Berkeley.

Radio –

German Radio Network ,Radio Mirchi

Radio Mid-day FM – Gold

BBC Radio

Letter from "PRINCE CHARLES"

CERTIFICATE OF REGISTRATION

4. SUPPLY CHAIN PRACTICES: MUMBAI DABBAWALA

Let us take an insight of the supply chain in case of the

Mumbai Dabbawalas. Mumbai dabbawalas actually act as an

intermediary to serve the customer by delivering lunches to

them which has been prepared at the houses of the respective

customers.

Product: Home cooked food.

Manufacturer: Housewives.

Supplier: The food prepared at home is supplied to the

dabbawalas to be dispatched on time to the office going

people and also school going children.

Means of transport: Bicycles, Carts, Railway (Mumbai

Local).

Customers: Office going people and also school children

in Mumbai.

The supply chain flow diagram explaining the entire supply

chain in the case of the working of the Mumbai Dabbawala.

The Mumbai Dabbawallas in their endeavour uses the

cheapest means of transportations. Their prime objective is to

deliver the tiffin boxes collected from houses to their

respective destinations strictly on time. Being recognised as

one of the most efficient and promising supply chain network

in the world, the dabbawalas ensure an efficiency of

99.9999%, thus satisfying the needs of their customers, which

is the primary objective of any supply chain.

At 19,373 persons per km², Mumbai is India's most densely

populated city with a huge flow of traffic. Because of this,

lengthy commutes to workplaces are common, with many

workers traveling by train.

Instead of going home for lunch or paying for a meal in

a café, many office workers have a cooked meal sent either

from their home, or sometimes from a caterer who delivers it

to them as well, essentially cooking and delivering the meal in

lunch boxes and then having the lunch boxes collected and re-

sent the next day. This is usually done for a monthly fee. The

meal is cooked in the morning and sent in lunch boxes carried

by dabbawalas, who have a complex association and

hierarchy across the city.

A collecting dabbawala, usually on bicycle, collects Dabbas

from homes or from the dabba makers. The dabbas have some

sort of distinguishing mark on them, such as a color or

symbol. The dabbawala then takes them to a designated

sorting place, where he and other collecting dabbawalas sort

(and sometimes bundle) the lunch boxes into groups. The

grouped boxes are put in the coaches of trains, with markings

to identify the destination of the box (usually there is a

designated car for the boxes). The markings include the rail

station to unload the boxes and the building address where the

box has to be delivered.

At each station, boxes are handed over to a local dabbawala,

who delivers them. The empty boxes, after lunch, are again

collected and sent back to the respective houses.

The service is almost always uninterrupted, even on the days

of severe weather such as monsoons. The local dabbawalas

and population know each other well and often form bonds of

trust. Dabbawalas are generally well accustomed to the local

areas they cater to, and use shortcuts and other low profile

routes to deliver their goods on time. Occasionally, people

communicate between home and work by putting messages

inside the boxes; however, with the rise of instant

communication such as SMS and instant messaging, this trend

is vanishing.

4. SUPPLY CHAIN SUCCESS: MUMBAI DABBAWALAThe success of the Mumbai Dabbawalas has been

recognised worldwide. The success can be attributed to the

well-disciplined organizational structure and a well-planned operational process. Their strategy can be summarized as follows:

1. Distributed the entire city into several areas or zones.2. Assigned one Dabbawala for a specific area consisting of

about 30 houses.3. Different set of dabbawalas to perform specific task to that

set.4. Used cycle, push carts and the train “Mumbai local” as

their means of transport.

THE ORGANIZATIONAL STRUCTURE OF THE MUMBAI DABBAWALA

As discussed earlier, strategic fit can be achieved if the following three steps are taken care of:

1. UNDERSTANDING THE CUSTOMER AND SUPPLY CHAIN UNCERTAINTY:

Quantity of product needed in each lot: 1 Dabba per customer.

Response time: 12:30 pm i.e. lunch time in office.

Variety of products needed: Homemade food specific to each customer.

Service level required: On time delivery of correct Dabbas.

Price of the product: Price paid for transportation from source to destination, which is the cheapest as they only pay for using the railway (Mumbai local).

Desired rate of innovation: Not much innovation required as such.

2. UNDERSTANDING THE SUPPLY CHAIN CAPABILITIES:

The Mumbai dabbawalas deal with only homemade cooked food which they require to supply to their customers based at different locations in the city of Mumbai. So it is clear that they do not cater to variety of services. As a result, their supply chain can be thought of an efficient supply chain, where cost incurred to cater the service is very less considering the fact that receive a huge turnover annually.

3. ACHIEVING STRATEGIC FIT:

The first step in achieving strategic fit is to assign roles to different stages of the supply chain that ensure the appropriate level of responsiveness. It is important to understand that the desired level of responsiveness required across the supply chain may be attained by assigning different levels of responsiveness and efficiency to each stage of the supply chain. The Mumbai dabbawalas have a very well organized as well as disciplined and simple organizational structure, where each member knows his assigned role. The organization is headed

by an executive committee, which looks after the entire business. The executive committee is subordinated by the Mukaddam (supervisors). Several dabbawalas work under one Mukaddam. Everyone who works within this system is treated as an equal. Regardless of a dabbawala's function, everyone gets paid about two to four thousand rupees per month (around 25-50 British pounds or 40-80 US dollars). More than 175,000 or 200,000 lunches get moved every day by an estimated 4,500 to 5,000 dabbawalas, all with an extremely small nominal fee and with utmost punctuality. According to a recent survey, there is only one mistake in every 6,000,000 deliveries.The Mumbai dabbawalas run a very successful business since its inception about a century ago. Their supply chain has achieved success as they could properly follow the three necessary steps that guarantee success.

6.CONCLUSION:Although the service remains essentially low-tech, with the barefoot delivery men as the prime movers, the dabbawalas have started to embrace modern information technology, and now allow booking for delivery through SMS. A web site, mydabbawala.com, has also been added to allow for on-line booking, in order to keep up with the times. An on-line poll on the web site ensures that customer feedback is given pride of place. The success of the system depends on teamwork and time management that would be the envy of a modern

manager. Such is the dedication and commitment of the barely literate and barefoot delivery men (there are only a few delivery women) who form links in the extensive delivery chain, that there is no system of documentation at all.

A simple colour coding system doubles as an ID system for the destination and recipient. There are no multiple elaborate layers of management either — just three layers. Each dabbawala is also required to contribute a minimum capital in kind, in the shape of two bicycles, a wooden crate for the tiffins, white cotton kurta-pyjamas, and the white trademark Gandhi topi (cap). The return on capital is ensured by monthly division of the earnings of each unit.

The service is uninterrupted even on the days of extreme weather, such as Mumbai's characteristic monsoons. The local dabbawalas at the receiving and the sending ends are known to the customers personally, so that there is no question of lack of trust. Also, they are well accustomed to the local areas they cater to, which allows them to access any destination with ease. Occasionally, people communicate between home and work by putting messages inside the boxes. However, this was usually before the accessibility of instant telecommunications. The BBC has produced a documentary on dabbawalas, and Prince Charles, during his visit to India, visited them (he had to fit in with their schedule, since their timing was too precise to permit any flexibility). Owing to the tremendous publicity, some of the dabbawalas were invited to give guest lectures in top business schools of India, which is very unusual. Most remarkably in the eyes of many

Westerners, the success of the dabbawala trade has involved no Western modern high technology. The main reason for their popularity could be the Indian people's aversion to Western style fast food outlets and their love of home-made food.

The Mumbai dabbawala can now be thought of as a landmark of efficiency, success and discipline. Generating employment to an estimated 5000 Mumbaikars, the Mumbai dabbawala is also a house of employment. The success story of the Mumbai dabbawalas is sung worldwide, they have become a symbol, an identity of India at the very first glance. The semiliterate dabbawalas have shown us an exemplary example of how efficient a supply chain can be.

7. REFERENCE: 1. Supply chain management – Sunil Chopra, Peter Meindl and

D.V. Kalra.

2. www.mydabbawala.com – official website of the Mumbai dabbawalas.

3. www.wikipedia.org

4. Hart, Jeremy (2006-03-19). "The Mumbai working lunch". The Independent Online (The Independent group, London).

5. Harding, Luke (2002-06-24). "A Bombay lunchbox". The Guardian.