Dabbawallahs of Mumbai

Service Operations Management

Harish Shetty Prasanna Rajappa

1114021 1114033

Sridhar Kanukollu 1114046 Yogesh Thakar 1114061

Dabbawallahs of Mumbai

1. How does a services supply chain differ from a manufacturing supply chain? Do you

need different set of measures to assess the effectiveness of a service supply chain?
(a) Services supply chain differs from manufacturing supply chain on following points: -

Flow of Information: Information flow is the backbone of services supply chain enabling decentralization of divisions and work. There is less physical transfer of material required; technology can be used to pass on information very fast and rapid. However in manufacturing, there is a need to transfer physical goods for distribution purposes. Inventory: As services have simultaneity of production and consumption, and they are perishable, inventory management is not an integral part of service supply chain as compared to manufacturing one. Quality: Owing to the heterogeneity factor, the continuous service provided by the supplier may not be perceived as uniform quality by consumers. So, the SLA plays a major role in meeting customer expectations whereas product specifications and product performance determine the quality in manufacturing SCM. Capacity Planning: Comparatively higher number of skilled workforce requirement makes the capacity planning crucial in services SCM. The demand in service industry is highly inelastic and with high perishability, capacity planning becomes complex Demand management: The services supply chain has less flexibility to deal with uncertain demand due to inability to inventory the service. Movement of goods: In a services supply chain, there is little or no movement of goods between supplier and consumer. Bundling: Services can be bundled to extract better consumer surplus (and sell more services). So, in a services supply chain, there are mostly multiple services offered whereas in manufacturing supply chain, the possibilities of product bundling are less. Pricing: In a service supply chain, due to simultaneous consumption, the end pricing is difficult to pre-estimate. Also, there is little value addition through physical materials. Hence pricing in the services supply chain is very complex task. Outsourcing: In a services transfer from supplier to a consumer, the consumer can choose to outsource the supplier need either fully or completely have it in-house. It is difficult to outsource partially and produce partially in house. Alternatively, in a manufacturing supply chain, the consumer can produce some and outsource rest of them.

(b) Measures to assess the effectiveness of services supply chain. -

Service Effectiveness: Ability to serve the right customer at the right time than competitors. Make the customer feel that he has got value for money regarding the service consumed. SLAs: Due to heterogeneity in services, the quantification of a service is not the same across all consumers. So, the measurements are specified in terms of SLAs. SLAs should

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Dabbawallahs of Mumbai incorporate clearly measurable and quantifiable service specifications in a range and not absolute values to have client and supplier on the same page.
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Customer Satisfaction: Customer satisfaction is the highest priority in services supply chain. The satisfaction can be measured through creation of customer satisfaction index addressing critical experience or touch points. Employee Satisfaction: Another important contributor to success in services is the relationship built by the employees with the customers. The number of employees in interaction with the customers may vary based on the level of customer interaction. However a higher employee satisfaction and retention will maintain the quality of service provided.

2. What are the economics of Dabbawallah meal distribution network? Is it a sustainable and a scalable business model? (a) Economics of Dabbawallah meal distribution network. Economics of a system can be explained on the following factors:
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Efficiency: The dabbawallah model offers the best cost effective service and value for money. The business motive of Dabbawallah is non-profit, but at the same time it is fulfilling the basic needs of the partners and the Trust appropriately. A nominal fee is charged to the customer with volumes driving the profit centers (see Exhibit-1). Growth: The dabbawallah partners are highly productive and over the years they have been able to manage the growth in customer base with existing infrastructure and addition of more dabbawallahs. Of late they have also started providing new services such as supplying lunch to school children and contracting with caterers as a part of expansion. Liberty: The Trust considers dabbahwallahs as partners and not employees. The partners take responsibilities for their actions; the mukadams back the dabbawallahs in times of need; the public namely the pedestrians understand the urgency of the dabbawallah system and give them the free of way. Equality: All partners in the Dabbawallah get the same pay irrespective of age, experience and type of work. The operations are fully decentralized and each group is responsible for their work.

(b) Is it a sustainable and scalable business model?

The model is sustainable:

People always prefer for home food because of taste, hygiene and low cost. But people find it difficult to carry lunch boxes at rush hours in the Mumbai local trains. At the same time, preparing food very early in the morning is also difficult for house-wives. Dabbawallah system identified the ignored need and built business on basis of the same. The pricing model of dabbawallah makes it one of the cheapest but home food offering for the customers compared to other alternatives such as restaurants, fast foods or road side vendors. In other words, the system does not skim customers with the prices they charge. It is always beneficial to customers monetarily to go with dabbawallah system.

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Dabbawallahs of Mumbai
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The reliability of the system and high work ethic as well as commitment makes the dabbawallah system operationally very efficient. The system does not use high end technologies. The partners are always employed from the same community and speak one single language making them a homogenous group.

Is the model scalable?

The model is heavily dependent on the suburban railway infrastructure and longitudinal geography of Mumbai. This makes logistics of distribution highly feasible and viable. The ability to mass transport dabbas using the rail network and the associated low costs is one of the key factors in the system. As long as the growth in business is along the same regions, the business model is scalable. The model cannot grow in areas where there is no nearby similar suburban rail network and they have to resort to other modes of transport. On the similar lines, the model cannot be replicated to other cities as the geography of the location plays a major role in providing the service.

3. What is your assessment of the future of Dabbawallahs? Do you have any suggestion for Raghunath Medge?

(a) Assessment of future of dabbawallahs:

Dabbawallah system thrives on three major pillars efficient and reliable work force, willingness of people to have home food (yet not carry the lunch box themselves) and cost effective model.
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The efficient and reliable work force continues to exist. There are many aspirants in the mavla villages that are still willing to work as dabbawallahs with the hope of becoming mukadams one day. There will always be a demand for home food during lunch. Hence, the sustenance of the model is strong given the continuing market opportunity. The business model is very cost effective as it uses the reliable local suburban train network and there is no profit motive yet overall welfare motive.

(b) Any suggestions for Raghunath Medge:

The dabbawallah model is operationally efficient. So, there are no improvements/suggestions on operations front. But we have suggestions on marketing and diversification front.
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Since, more families have dual income; cooking food at home for lunch is becoming a distant phenomenon. Still, the demand for quality food delivered at office desk is there. Dabbawallah system could enter into partnerships with good quality caterers to address this upcoming need.

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Dabbawallahs of Mumbai
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Mr. Hedge can target bachelors and college students living in hostels and relying on mess food. The strength of dabbawallah system is their network and their honest and truthful partners. Mr. Hedge can diversify and provide services such as day time document delivery/courier service, free sample deliveries, etc. by riding on the same infrastructure that they are comfortable with. They can also tie up with businesses and market products that require more market penetration.

Exhibit 1: Cost benefit analysis of Dabbawallah distribution model R evenue portion Total number of customers Average charge per customer (Rs. 150-200) Compulsary monthly contribution fromdabbawallahs Total revenue in INR E xpensesportion Total number of dabbawallahs Average salary payment to dabbawallahs (Rs. 5000-6000) Total expenses in INR Net ea rning for the T s rust before ta a interest inINR xes nd 175,040 175 15 33,257,600

5,142 5,500 28,281,000 2,351,000

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