SUPPLY CHAIN MANAGEMENT: DABBAWALLAHS OF MUMBAI

SUBMITTED BY:SHREYA MUKHERJEE(6) GUNJAN KUMARI(22) MFM BATCH 2010-12

In today's world, competing is taking on new dimensions. A global re-segmentation of markets is imposing stiff foreign and domestic competition on worldwide economies. The ability to compete is being determined by the degree of responsiveness to customers and key markets: how fast you deliver, how good the quality is, what the price is, and what value the customer perceives he is getting. Markets are demanding quick customizing of products. Over the next ten years, worldwide manufacturers will be faced with stiffer competition in most markets. Clearly the pressure is on to be the best, nothing less. They must concentrate on satisfying the demands of the market: designing and building the best quality product in the shortest time possible.

There are four major decision areas in supply chain management: 1) location, 2) production, 3) inventory, and 4) transportation (distribution), and there are both strategic and operational elements in each of these decision areas. Find newer ways of designing supply chain delivery networks by incorporating principles of modularization, flexibility, postponement and thereby improve value propositions. Develop speedier, more responsive business processes in the supply chain, to reduce costs, cycle times and improve response and flexibility. Exploit the power of IT/CT/Complex modeling software to explore more cost effective options in arriving at strategic and operational decisions such as transportation mode choices, vehicle routing, shipment sizes, warehouse sizes and locations, inventory stocking patterns and service levels, optimal supply chain, network design, etc.

The dominant improvement methods in use today are Lean Manufacturing Six Sigma and The SCOR (Supply Chain Operations Reference) model.

SUPPLY CHAIN OF DABBAWALLAHS OF MUMBAI: The members of the supply chain are identified as primary and secondary members. Primary members include the business units which actually perform operations and/or managerial activities in the business activities in the business process designed to produce a specific output for a particular customer or market. Supporting members are business units which simply provide resources, knowledge, utilities or assets for the primary members of the supply chain.

Primary Members
The analysis of the Supply Chain of dabbawalas entirely focuses on the network flow of dabbas - the lunch boxes from the households to the respective destinations. The primary members of the distribution supply chain are identified as follows Collection of the dabbas Sorting done by the dabbawalas Transportation using the various modes of transport like train, bicycles and pull carts Delivery to the respective destinations of the lunch boxes i.e., offices or schools The meals are picked up from respective homes in suburbs around central Mumbai long after the office goers or the students have left. The collection time depends on the distance between the source and destination. Since a dabbawala is not going to pick up SUPPLY CHAIN METRICS more than 10-20 dabbas the chance of error is very less and they can easily recognize the dabbas at the respective station and deliver it to the owner. Each dabba has, painted on its top, a number of symbols which identify where the carrier was picked up, the originating and destination stations and the address to which it is to be delivered. The dabbas carry only A symbol (not name) of the originating station A symbol for the destination station A symbol for the building where the addressee is. Each dabba has the mark of a circle or a flower of a specific color and a digital identity number. Take this Tiffin Mark for example-K-BO-10-19/A/15. K is the identity letter of the dibbawala. BO means Borivali i.e. the area from where the tiffin is to be collected, The figure of 10 refers to Nariman point area. 19/A/15 refers to the 19th Building and the 15th floor in Nariman point area where the tiffin is to be delivered. After the dabbas are picked up, they are taken to the nearest railway station, where they are sorted according to the destination sector. Between 10:15 a.m. and 10:45 a.m. they are loaded in crates onto the baggage cars of trains. At the railway station in destination sector they are unloaded by other dabbawalas and re-sorted based on the destined sites. At the site they again sort it according to street address and floor. The dabbas are carried in 100-kilogram crates and are carried on dabbawalas' heads, hand-wagons and cycles and delivered by the dabbawalas to the respective destinations at around 12:30 p.m. They are picked up at around 2:30 p.m., and are returned to the households from where they came from. The network design of the distribution system is given in the

figure 3a and 3b. Channel/Network design gives the forward distribution network from source to destination, while the Reverse Channel/Network gives the backward distribution network from the destination to source. SUPPLY CHAIN METRICS

A total of 200000 dabbas are transported on a day from the households to the respective destinations and back to the households. The charge for this service is just 150 rupees ($3.33) per month. The dabbawalas have to pay Rs.60 per crate and Rs.120 per man per month to the Railways of Mumbai for transportation. An average dabbawala gets about Rs.3250. Of that sum, Rs.10 goes to their Association. After minimal expenses, a rest of the Rs.50000 a month, the Association of Dabbawalas collects to a charitable trust that feeds the poor. SUPPLY CHAIN METRICS

Supporting Members
The supporting member in this supply chain is identified as the Mumbai Metro Railway System. It has three lanes, which include the central, western, and the harbor lanes. The train timings and the associated constraints play an important role in the reliability of supply chain of the dabbawalas. Refer figure 4. The entire transportation of the dabbas is primarily done by the Mumbai Metro Railway system. The precise timing and the frequency of the system aid the dabbawalas to be exact in maintaining the schedule. The railway transportation system of the Mumbai Metro Railway is identified and the entire system is classified into 6 major sectors. Each sector is further divided into 56 minor sectors for the advantage of distribution. The dabbas are sorted in the places where the different systems meet. The major sorting centres of the dabbawalas are shown in the figure 4. The sorting centers are marked in circles. SUPPLY CHAIN METRICS

The Structural Dimension

There are three structural dimensions for describing, analyzing and managing the supply chain: 1) horizontal structure, 2) vertical structure and 3) horizontal position. The vertical structure indicates the number of suppliers within each tier and the horizontal structure indicates the number of suppliers across the supply chain. The horizontal positioning describes the location and the relation between the point-of-origin and the end user. SUPPLY CHAIN METRICS

The Horizontal Structure

The service rendered by the dabbawalas has two tiers of suppliers and single tier of customers. This is identified by treating the product flow in the supply chain. Here the dabba is treated as a product for consideration. (refer Figure 5) The tier 1 suppliers include the households that supply the dabbas. The dabbas are collected by the dabbwalas and the focal organization of the supply chain includes the sorting and transportation. The distribution part is the first tier of consumers followed by the end consumers.

The Vertical Structure:

The vertical structure of the dabbas is the wide clientele of their service. There are about 200000 dabbas transported by them in a day. There may be an addition or deduction of 3 to 4 dabbas in each minor sector. This accumulates to a change of around thousand dabbas a day. In Mumbai metro region the dabbas are collected at 6 major sectors. Under each sector there are around 56 minor sectors. The tier 1 consumers of the dabbas include the dabbawalas who deliver the dabbas to the respective places. Their plan of action is to identify the region to which the dabba belong to and to keep track of the people and their destined address to which each dabba is assigned. This is attained by their superb cognitive memory structure. Refer figure 6. SUPPLY CHAIN METRICS Types Of Business Process Links In this supply chain concept of dabbawalas the level of integration is situational and varies from process to process. Since there is no written agenda behind the boundaries of action of a dabbawala the process and its constraints cant be strictly demarcated. But the business process links are well managed, even if there are some discrepancies, which cant be avoided as mostly illiterates run this system. The focus is to identify the number of process links, which are to be managed effectively. The character of these links and the contextual setting affect the amount and the type of the relationships optimal for a focal organization. The emphasis is given for the closer relationships and partnerships that are implemented with key suppliers or customers in the case of large corporations. As companies focus on fewer suppliers, the vertical structure becomes narrower as in the case of dabbawalas. Managing all the relationships as partnerships would be time consuming for the organization. Supply Chain with many tier 1 customers or suppliers require much of the companys resources and the limit the number of process links that can be integrated and closely managed. Different types of business process links can be identified: 1) managed process links, 2) monitored process links, 3) not managed process links and 4) non-member process links. Managed Process Links The process integration with the focal organization and the suppliers are decided by the managed process links. The Mumbai Metro Railway service forms the managed process link of the dabba distribution system. The bottleneck constraints for this process link are 1) Weather, 2) Delay of train, 3) Strike in city and 4) Traffic problems. Here the system of dabbawalas can be compared with service to order and just in time philosophy. The logistics service is rendered for the customers as and when required. The addition of a client is an ordered addition of the requirement. As and when the client enrolls for his dabba, the address and the time for the dispatch is ready with them. They decide the pick up and delivery time at the convenience of the client. The carrier, the route and the train by which it has to move, all are extensively planned by them. The address of the new customer to whom the dabba has to be delivered is written on it for a few days to ensure the point of delivery.

They dont plan for the extra addition of the dabba, beforehand. There is an approximate variation of around 1000 dabbas every day. The space allocation for its carriage is not pre-planned as the exact variation is not known for them. The just in time philosophy reduces the unnecessary burden of the large carriers and reduces wastage of space. Monitored Process Links Monitored process links are not as critical as the managed process links. Here they include 1) Material Handling Considerations, 2) Packaging and 3) Flexibility. Though these factors dont contribute directly for the process, they have a significant role in this system. The dabba is handled under the consideration that small impact wont create significant damage for the carried food. There is a secondary packaging provided for each of the dabbas. It acts as a buffer for mishandlings. Just in case one dabbawala misses the destined train, the sorting is delayed on the other end. There is a buffer provided for this type of activities. SUPPLY CHAIN METRICS Not Managed Process Links These are the process links which are not in direct relation with the distribution of dabbas. They include the primary packaging of the dabbas from the households. It also includes the collection activity by the end customer who takes the dabba from the floor of the office building in which it is left by the dabbawalas. These activities are not in the direct control of the dabbawalas and hence are non member process links. Still the quality and the customer satisfaction of the distribution service of the dabbawalas are affected by these secondary links. Non Member Process Links They are defined as the competitors for the existing system of distribution. Since the distribution network and the service of the dabbawalas dont have any competitors the non member process links is irrelevant at this context. Chain of Business Processes Identification and the management of the constituent processes are the prerequisites for the successful SCM. When we emphasis on the constituent processes we have to define the same. They are defined as the activities designed for action with a focus on the endcustomers and on the dynamic management of product flows, information flows, cash flows, and the flow of knowledge or ideas. Considering the supply chain management we have eight key inter-firm processes: customer relationship management; customer service management; demand management; order fulfillment; procurement; product development and commercialization; and returns. Customer relationship management It identifies key customer target markets and develops and implements programs with key customers. Key customer target markets for the dabbawalas are the end users of the cycle. They include the office goers who get the dabbas from their homes. The time of delivery of the dabbas is around 1p.m. to 1.30 p.m. to the end customers. They should get their lunch around that time and its expected that they have the lunch break of one hour and dabbas can be collected back at around 2.30 p.m. The service levels for this level is maintained constant even if there are minor changes in service levels for the level 1 customers as they can adjust accordingly and serve the end customers. SUPPLY CHAIN METRICS

Customer Service Management Customer Service Management provides the single source of customer information, real time information system with current order, production and distribution information. In the case of dabbawalas this information is real time. They plan for their day-to-day collection on the basis of the information they already have. Though in each sector there is a chance of minor variation of 2 to 3 dabbas, their system can accommodate that change in the transported volume . Demand Management Demand management balance customer requirements with supply capabilities. Though the distribution system of the dabbawalas is capable of handling the slight variation of the demand, always there are precautions for the additional supply. They arrange for more number of dabbawalas for the handling of such situations from the nearer zones of action. The seasonal variation in the quantity of food carried is also accommodated by the size of the containers. Order Fulfillment The first priority of any service is to provide timely and accurate delivery with a high degree of order fulfillment. For the end customers the order fulfillment is 100%. Around 5000 dabbawalas deliver 200,000 lunches everyday and take the empty dabba back. They make one mistake in 2 months. This means there is one error on every 16 million transactions. This is thus a six sigma performance the quality assurance for the percentage of correctness of 99.999999. Manufacturing Flow Management It includes the customer-based service with flexible distribution systems, also in this case with the right flexibility of the timings. In case of the dabbawalas this issue arises when a client temporarily shift the premises of the collection and delivery. They collect the details of the change in advance and respond for the change as and when needed. Procurement Procurement focuses on the management of the relationship with the suppliers. Here the dabbas are procured from the tier 1 suppliers that are the households. The supplier relationships are maintained by the setting up of the collector base near the supplier. SUPPLY CHAIN METRICS Here each dabbawala is entitled to collect around 20 to 30 dabbas. He takes care of the procurement issues. The pick and pack concept of is used where the secondary packing of the dabba is done by the dabbawalas. The details the customer is identified by the coding system on the dabba. Product Development And Commercialization Since the dabbawalas dont focus on the product development it doesnt need any significant mention here. Some of the advertisement companies use the lids of dabbas

for small levels of promotion. This could fetch some additional income apart from their charges.

Returns The cheaper and the effective distribution attract a lot of customers from the urban areas in Mumbai for the distribution of their lunch. Exact timing and the quality of service rendered by them have contributed for the success of this distribution system. Benchmarking Dabbawalas Distribution System, For International Food And Beverage Product Company Logistics The challenges for the International food and beverage product company logistics can be analysed on the basis of costs, efficiency, inventory levels and the service levels. Improving supply chain efficiency and effective-ness are the ongoing challenges for this industry. Issues under consideration for international logistics include: Rising logistics costs. Increased responsiveness of the food and beverage Supply Chain. Their supply chain has become more demand-driven, with order-to-delivery cycles dropping. Decreasing Inventory Levels. Focus on Perfect Order Service Metrics. Components of the perfect order are order completeness, on-time delivery, damage-free orders and invoice accuracy. SUPPLY CHAIN METRICS They are viewed by food and beverage companies as important customer service metrics. Low Accuracy in forecasting the demand and supply requirements. Emerging supply chain challenges for food and beverage companies 1. Improving on-shelf Availability of Products: On-shelf availability is becoming a critical issue for manufacturers and retailers. The keys to increasing on-shelf availability are cooperation between manufacturers and retailers and the exchange of meaningful consumer data. 2. Synchronizing Data: The current system for exchanging data among trading partners continues to produce inefficiencies in the food and beverage supply chain, including order errors, invoice discrepancies, delays in item introductions and out-of-stocks 3. Increasing the Flexibility of Ordering and delivering: Most retailers and wholesalers say they are looking for increased flexibility in ordering and delivering. With the shortening of order-to-delivery cycles, manufacturers will continue to face additional pressure on their supply chains and resources. 4. Improving Internal Cross-Functional Collaboration: Collaboration with external partners is hampered by manufacturers own ability to collaborate internally especially between the Logistics and Sales/Marketing functions. Customer teams are helping companies to improve the alignment and integration between different functions. These teams are cross-functional by design and

seek to balance cost and service tradeoffs by collaborating internally and externally

In the case of dabbawalas the logistic costs essentially include the cost of transportation by railway network. Though they have a dynamic supply chain system in force which serves the entire network of customers, they could satisfy the higher level of service at nominal rates. This is achieved by the Cost-cutting initiatives projected as follows: Collection and transportation of dabbas in standard large sized crates enables the dabbawalas to reduce the effort and rates of transport. Though they are low cost crates they are the best means of carrying the dabbas. Implementing low cost information exchange by a simple and robust coding systems specific to the dabbawalas The collective sorting done in each major and minor sectors based on the destination reduce over-head costs and improve asset efficiency. Transportation of the dabbas Direct-from-households to destined offices eliminates the use of intermediate warehouses and hence the corresponding warehousing costs. Since the dabbawalas rely on the efficient transportation of the Mumbai Metro Railway Network, they have large capital savings with regard to their own investment in transportation. Since the transportation is done by the third party, they avoid maintaining redundant transportation fleet during the periods of low demand.

RECOMMENDATIONS:
1) Manufacturing Flow Management It includes the customer-based service with flexible distribution systems, also in this case with the right flexibility of the timings. In case of the dabbawalas this issue arises when a client temporarily shift the premises of the collection and delivery. They collect the details of the change in advance and respond for the change as and when needed.

2) Product Development And Commercialization Since the dabbawalas dont focus on the product development it doesnt need any significant mention here. Some of the advertisement companies use the lids of dabbas for small levels of promotion. This could fetch some additional income apart from their charges.

3)They could make use of other modes of transport like motor cycles,vans etc to further improve efficiency and time management and consequently profits.