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The Dabbawala System: On-Time Delivery, Every Time Case Analysis

Executive Summary
Describes the Mumbai-based Dabbawala organization, which achieves very high service performance (6 Sigma equivalent or better) with a low-cost and very simple operating system. The case explores all aspects of their system (mission, information management, material flows, human resource system, processes, etc.) and the challenges that the Dabbawala organization faces in a rapidly changing environment. An outside consultant proposes the introduction of new technologies and management systems, while the leading logistics companies (e.g., FedEx) come to Mumbai to learn about the Dabbawala system.

Background Summary
Business Description A dabbawala is a person in India, most commonly found in the city of Mumbai, whose job is to carry and deliver freshly in lunch boxes to office workers. History and IPO date This service originated in 1880. In 1890, Mahadeo Havaji Bachche and Ananth Mandra Reddy started a lunch delivery service with about 100 men. In 1930, he informally attempted to unionize the dabbawallas. Later a charitable trust was registered in 1956 under the name of Nutan Mumbai Tiffin Box Suppliers Trust. Founder and Organization NMTBSA was headed by a President Raghunath Medge, who is still in this position. He was assisted by a general secretary, a treasurer and a director. Apart from that two committees oversee the functioning of dabbawala system: -The Operational Committee established in 1890 and headed by Sopan Mare -The Charitable Trust set up in 1954 and headed by Raghunath Medge Business Model and Delivery Process The business model is simple: Dabbawalas collect freshly cooked meals in boxes from the homes of Mumbai residents and deliver them to the workplace for a (very) modest monthly fee. The delivery process: 5,000 Dabbawalas deliver 200,000 boxes per day using only bicycles and various modes of public transportation. Their supply chain is made up of a complex series of collection zones, sorting points, and delivery zones, supported only by an elaborate manual coding system. The codes are made up of only numbers and colors because 50% of the employees are illiterate. Traditionally, the dabbawalas relied on wordof-mouth for acquiring new customers. Financial outlook:  Mumbai dabbawala revenue in 2009 was about Rupees (Rs.) 470 million ($9.4 million). On average, Rs.300 was collected per month from each customer  Since 1983 the dabbawalas has been operating under an owner-partner system based on a profit-sharing model. At the end of the month each group independently calculated its profit and it will be equally divided among the group’s members.  Each dabbawala, regardless of role, gets paid about eight thousand rupees per month.  The New York Times reported in 2010 that the 125-year-old dabbawala industry continues to grow at a rate of 5–10% per year.

Principal Values of the Company - Disipline [no alcohol drinking during working hours, wearing white caps during business hours, carry identity caps]; - Team work; - Honesty; - Sense of deep service commitment.

Market analysis
Dabbawala’s Stenghths:  Highly efficient supply chain;  Good time management;  Successful implication of Six Sigma standard based on a 99.999999 percent delivery accuracy rate (1 error for every 16 million transactions);  High customer satisfaction;  Low operation costs;  Location advantages: Dabbawala system is built on a combination of characteristics that is unique to Mumbai. SWOT analysis

Strengths 1. Simplicity in organization with innovative services 2. Coordination, team spirit and time management 3. Low operation cost 4. Customer satisfaction 5. Low attrition rate

Weaknesses 1. High dependability on local trains 2. Funds for the association 3. Limited access to education

Opportunities 1. Wide range publicity 2. Operation cost is low 3. Catering

Threats 1. Indirect competition is being faced from caterers 2. Indirect threats from fast foods 3. Change in timings 4. Ticket restaurant

Industry competitors and position, Markets, Operating results The Dabbawala system: on time delivery, every time. The Dabbawala system is the first meal delivery service in India founded by Mahadaev Haji Bache. There is no close competitors in their industry, except for indirect competitors as fast food companies and restaurants.    They take the first place in the market as deliverers of the food Meals are delivered in 99,9% of the to the right address The system the dabbawalas have developed over the years revolves around strong teamwork and strict time-management

Strategies, Core competencies Dabbawalas function on strict management principles:    Their main beliefs are: work is worship, customer is God, time is money, and unity is power. They must wear their uniform, must report on time, must respect customers and always carry identification cards. Decisions are made instantly without meetings and conventions.

This case offers various lessons on controlling complex processes efficiently with a small error rate. Even in this technology driven world, the Dabbawalas are rendering an excellent service with the help of a brilliant supply chain. Core competencies:  No over-reliance on technology. Sure, the dabbawalas are now using Web technology and SMS for orders, but for the most part this is a fairly low-tech operation. It relies on trains and barefoot men. No computer chips. No social networks. Just guys busting their humps and a reliable train service. The lesson for organizations? Don’t expect technology to solve your issues — usually the issue has more to do with process, execution and expectations than it does bits and bytes. Create an integrated performance chain. In other words, the dabbawala system keeps its eye on the sum — not the individual parts. When you boil it down to simple terms, a performance chain is really just a system of moving pieces. Focus too much on those individual pieces and you get hung up in the details and, as a result, are less efficient. Concentrate on the entire system and flow of products and information and you have a much better chance of success. Acute visibility. The beauty of the dabbawala-based system is that all of the dabbawalas understand exactly what is happening and when — to the minute. If certain deadlines and hand-offs are missed, people don’t eat. It’s as simple as that. Make sure everyone within your chain understands what he or she needs to do, where they need to be and what needs to happen for the chain to be successful. Keep it simple. Real simple. One of the key lessons any organization can learn from the dabbawalas is the simplicity with which this system works. The dabbawalas are intimately aware of what their customers value (food delivered on time, every day). And, just as importantly, they don’t try to do anything other than that. They don’t overcomplicate

things. They don’t add extraneous value. They simply understand what their customers want, and they focus 100 percent of their time and energy on meeting that need.

Major problems
     Low level of technological usage and awareness; Lack of education; Dabbawala operates within just one city – Mumbai; The company provides only delivery services; The world is developing, but they don’t. Lack of trustworthiness. Before they could just leave the food at the door but now they are even not able to enter. Every time they need to prove they trustworthiness Monsoons and other nature factors influence of on the operation efficiency

Advantages and Disadvantages of Potential Solutions
Solution 1: Use SMS texting service for order inquiries and include a payment gateway for online booking. Advantages: - Сustomers will be able to take advantage of making orders via gadgets. With increased economic growth in India and increased middle class the quantity the usage gadgets such as smartphones is getting more and more popular. Disadvantages: - Currently Dabbawala employees are illiterate and can’t use and afford this type of technologies to provide the service. Solution 2: Train & Educate employees Advantages: - Employees will learn how to use technology. - Order making facilitation - Increased market share Disadvantages: - Currently workers illiteracy allows the company to take advantage of dabbawalas acute sense of commitment and high group coherence - Pledge: “Our people are suitably educated for our job. In fact it is better not to have educated people who would ask too many questions. By the time their questions are answered our uneducated dabbawala will finish the task”. Solution 3: Expand to other cities Advantages: -Increased Market share and market capitalization, increased profits, increased company awareness Disadvantages:

-One of the main reasons the Dabbawalas are so successful in Mumbai but haven’t yet expanded to other cities is that their system is built on a combination of characteristics that is unique to Mumbai. Solution 4: Governmental license or Government standard, certificates and license of Dabbawala Advantages: -Increased delivery speed -Increased trustworthiness Disadvantages: -Indian Red Tape is famous all over the world -Standard introduction may take reasonable time Solution 5: To include cooking of food in addition to the delivery Advantages: -They become more independent Disadvantages: -The delivery system become too complicated

6. Recommendation and Reasons for Choosing Solution: They should better use SMS texting service for order inquiries and include a payment gateway for online booking, they should expand their production and start to cook by themselves, made internship for new workers and give basic education for old one. They would better not to expand in other cities because in Mumbai there is a specific infrastructure, which helps Dabbawalas do their work very efficient. In other cities it may not work. They also should not use other means of transport because they will lose their originality and speed.

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