Monday, April 13, 2020
Operatinal Efficiency of Mumbai Dabbawala by Amol Dhok Essay Example
Operatinal Efficiency of Mumbai Dabbawala by Amol Dhok Essay Amol Ramesh Dhok under the guidance and supervision of Dr. V. G. Dhanakumar, Professor of Quality, Extension and Operations Management, Indian Institute of Plantation Management Bangalore, (IIPM) and no part of this Paper has been submitted for any other degree, diploma or publication in any other form. The assistance and help received during the Completion of this Synthesis Paper and source of literature have been duly acknowledged. (V. G. Dhanakumar) Place: IIPM, Bangalore. Dated: -21-12-2009 ABSTRACT Mumbai Dabbawala system is a unique system in Logistics and supply chain management dedicate to millions of employees whose firms are adapting six sigma methodologies to improve customer satisfaction, work process, profitability, speed efficiency of all kinds. Study of Mumbai Dabbawala generally carries the practice of six sigma which tell total management commitment philosophy of excellence, customer focus, process improvement rule of measurement rather than gut feel. Their way of doing business has, therefore, become a case study destination for every management guru and B-school. CII arranged interface for who’s who of industry and business to share great management lessons from them. Their mission is to serve their customers who are mainly office goers by delivering their lunch boxes at their doorstep on time. They have 5,000 people on their payroll to ensure the prompt deliver. They steal all attention just because their service is of Six Sigma qualities. We will write a custom essay sample on Operatinal Efficiency of Mumbai Dabbawala by Amol Dhok specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on Operatinal Efficiency of Mumbai Dabbawala by Amol Dhok specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on Operatinal Efficiency of Mumbai Dabbawala by Amol Dhok specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Six Sigma is a process that helps organizations focus on delivering near-perfect products and services. If you use Six Sigma you can measure how many defects there are in a process and can systematically figure out how to eliminate them and try and achieve zero-defect status. I will show you how six sigma makes you more competitive at every level. Six sigma eliminates wasteful variation, changes business culture and sustain greater productivity, profitability and customer satisfaction rate. Dabbawala is excellent example of six sigma and most of the company should use this technique which are getting the defects in their business and who want to improve their business condition. It will show you how it could help your company to save money and make customer happier. INTRODUCTION The six sigma story began with the Motorola in 1980 where it was first developed and proven. By changing the way you look at the process, by understanding vital few factors that cause waste, error, and rework you can improve the ability of your processes to deliver higher quality to your customer and lower to cost. Although most have heard the phrase Six Sigma, which has been an industry term ever since Motorola introduced the concept in 1986, many still do not know just what Six Sigma really is. For many business organizations and by general definition Six Sigma is the measure of quality that strives for near perfection. It is a disciplined, data-driven methodology focused on eliminating defects. A Six Sigma defect is defined as anything that falls outside of a customers specifications. The results reported below by Six Sigma companies are convincing about its contribution to industry. How many customers can your business afford to lose? How much money can your company afford to lose because of mistakes? Why accept it as normal to be running processes at only three sigma or four sigma when, by changing the way you manage your processes, you could get a lot closer to six sigma all resulting benefits. Mumbai Dabbawala is an excellent example to construed execute six sigma after Motorola. Using an elaborate system of color-coded boxes to convey over 170,000 meals to their destinations each day, the 5,000-strong Dabbawala collective has built up an extraordinary reputation for the speed and accuracy of its deliveries†¦ The system the Dabbawala have developed over the years revolves around strong teamwork and strict time-management†¦ The meals are then delivered-99. 9999% of the time, to the right address. By considering this fantastic example you can bring lot of changes in your business. Methodology of Mumbai dabbawala is excellent example of six sigma, JIT, TQM. Companies who are getting losses if they use dabbawala concept they will definitely improve their position in business world. Mumbai dabbawala Before cutting to the management mantras, lets understand a few facts about dabbawallas. The origin of the Dabbawalas lunch delivery service dates back to the 1890s during the British raj. At that time, people from various communities migrated to Mumbai for work. As there were no canteens or fast food centers then, if working people did not bring their lunch from home, they had to go hungry and invariably, lunch would not be ready when they left home for work. Besides, different communities had different tastes and preferences which could only be satisfied by a home-cooked meal. Recognizing the need, Mahadeo Havaji Bacche (Mahadeo), a migrant from North Maharashtra, started the lunch delivery service. For his enterprise, Mahadeo recruited youth from the villages neighboring Mumbai, who were involved in agricultural work. They were willing to come as the income they got from agriculture was not enough to support their large families, and they had no education or skills to get work in the city. The service started with about 100 Dabbawalas and cost the client Rs. 2 a month. Gradually, the number of Dabbawalas increased and the service continued even though the founder was no more. Their mission is to serve their customers who are mainly office goers by delivering their lunch boxes at their doorstep on time. They have 5,000 people on their payroll to ensure the prompt delivery of lunchboxes within Mumbai; these delivery boys travel by local trains and use bicycles or walk to reach every nook and corner of Mumbai. The lunch boxes are delivered exactly at 12. 30 pm. Later, the empty boxes are collected and taken back to the homes, catering services or hotels before 5 pm. In fact, the next time you forget to strap on your watch before leaving for office, dont be surprised to find it in the lunchbox container brought by the dabbawalla from your home! On an average, every Tiffin box changes hands four times and travels 60-70 kilometers in its journey to reach its eventual destination. Each box is differentiated and sorted along the route on the basis of markings on the lid, which give an indication of the source as well as the destination address. NMTBSA (Nutan Mumbai Tiffin Box Suppliers Association) What is NMTBSA Nutan Mumbai Tiffin Box Suppliers Association About NMTBSA History : Started in 1980 Average Literacy Rate   : 8th Grade Schooling Average Area Coverage : 60 Km per Tiffin Box Employee Strength      : 5000 Number of Tiffin’s          : 2,00,000 Tiffin Boxes,                                   i. e. , 4,00,000 transactions every day Time Taken                 : 3 hours (9 am 12 pm delivery of carriers,                                   2 pm 5 pm collection of empty carriers) Cost of Service            : Rs. 200/- Rs. 300/- per month Turnover                     : Rs. 50 core per month approx. ORGANISATIONAL STRUCTURE PRESIDENT VICE PRESIDENT GENERAL SECRETARY TREASURER DIRECTORS (9) MUKADAM MEMBERS (5000) How the dabba is delivered? ? The first dabbawalla picks up the Tiffin from home and takes it to the nearest railway station. ? The second dabbawalla sorts out the dabbas at the railway station according to destination and puts them in the luggage carriage. ? The third one travels with the dabbas to the railway stations nearest to the destinations. ? The fourth one picks up dabbas from the railway station and drops them of at the offices. ? The process is reversed in the evenings. Dabbawala methodology ? Error is horror, said Talekar while explaining the operational motto. In the event of a dabbawalla meeting with an accident en route, alternative arrangements are made to deliver the lunch boxes. For example, in a group of 30 dabbawallas catering to an area, five people act as redundant members; it is these members who take on the responsibility of delivering the dabbas in case of any untoward happenings. ? The dabbawallas must be extremely disciplined. Consuming alcohol while on duty attracts a fine of Rs 1,000. Unwarranted absenteeism is not tolerated and is treated with a similar fine. Every dabbawalla gets a weekly off, usually on Sunday. ? The Gandhi cap serves as a potent symbol of identification in the crowded railway stations. Not wearing the cap attracts a fine of Rs 25. ? There are no specific selection criteria like age, sex or religion; however, I have never seen a female dabbawalla. The antecedents of the candidates are thoroughly verified and a n ew employee is taken into the fold for six-month probation. After that period, the employment is regularized with a salary of Rs 5,000 a month. Need of the study of the dabbawala As management students, there was a lot that we learnt from this lecture,†. The belief that technology is indispensable to solve complex problems was shattered. FMCGs and other industries can learn a lot from the simple supply chain logistics and efficient reverse logistics (transfer of empty lunch boxes to the source location), ~ The concept of multi-level coding (co lour coding on the lunch boxes for identification) and reverse logistics can be implemented in industries as diverse as soft drinks (where logistics becomes an important aspect, transporting the filled bottles to retailers and collecting empty bottles back to the plants), pharmaceuticals and other FMCG areas. For example, can the bar coding mechanism (a computerized format) which is prevalent and expensive, be simplified with just colors/ number coding? In small and medium scale organizations where bar coding systems would require a lot of resources, these systems can prove to be very efficient and cost effective. Moreover, the dependence on technology could be drastically reduced. The learning’s for a working executive are enormous too. Managers and executives alike spend a lot of their valuable time learning various concepts in people and time management. Newer mechanisms like Customer Relationship Management, etc, have been developed to assist executives in the same. But, in the midst of implementing technology and IT, basic principles in people management, sustainable relationship development and customer satisfaction have lost their meaning. Our friendly dabbawallas are a perfect example of an important principle of both business and management the thirst to serve customers in a simple yet effective fashion without falling into the technology trap. I think this is an aspect which needs to be re-learnt and implemented in any organization today. What is six sigma? The Six Sigma quality certification was established by the International Quality Federation in 1986, to judge the quality standards of an organization. According to an article published in Forbes magazine in 1998, one mistake for every eight million deliveries constitutes Six Sigma quality standards. The Six-sigma rating means that they have 99. 99 % efficiency in delivering the lunch-boxes to the right people. That put them on the list of Six Sigma rated companies, along with multinationals like Motorola and GE. Achieving this rating was no mean feat, considering that the Dabbawalas did not use any technology or paperwork, and that most of them were illiterate or semiliterate. †¢ A statistical measure of the process or a product. †¢ A goal that reaches near perfection for performance improvement. †¢ A system of management to achieve lasting business leadership world-class performance. The six sigma approach to managing is all about helping you identify what you don’t know as well as emphasizing what you should know, and taking action to reduce the errors and rework that cost you time, money, pportunity and customers. The goal of six sigma is to help the people processes aim high in aspiring to deliver defect free product and services. Many companies believe that dealing with errors is just part of cost of doing business. But you don’t have to accept that faulty logic. With six sigma you can eliminate most errors, reduce your cost, and better satisfy customer. Es sential of the six sigma methodology †¢ Define the project, goals, deliverable to customers. †¢ Measure the current performance of the process. †¢ Analyze and determine the root cause of the defects. Improve process of eliminate defects. †¢ Control the performance of the process. Working of NMTBSA beyond the six sigma! Fantastic team work!!! Almost no errors in spite that the Dabba changes hand about six times ? The collection and delivery has to happen by lunch time ? It is amazing organization ? Approximately 5000 people working ? It is over 100 year old They carry Tiffin (Lunch box) from the home of customer and carry it to their workplace of work. e. g. from say housewife in Virar will give Dabba to him which will be delivered at Air India bldg on 11floor by lunch time (1 p. m. . They work with clockwork precision, but without computer program! They even brought couple of actual dabbawala to speak (he made an excellent power point presentation) ? Even Prince Charles and many other are wondering how they are sorting the dabbas so precisely. They use cycle, local train or they are on foot. Even in heavy floods they deliver. Lacs of people get cooked home made food. You must have seen such dabbawalas in Mumbai. 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 crore p. a. ] ? Earnings -5000 to 6000 p. m. ? Zero % fuel Zero % investment ? Zero % modern technology Zero % Disputes 99. 9999% performance 100 % Customer Satisfaction. DISCIPLINE ? No Alcohol Drinking during business hours ? Wearing White Cap during business hours ? Carry Identity Cards ANALYZED FROM THE MICHAEL PORTERS FIVE FORCES MODEL I. Threat of new entrants: According to Porter, the threat new entrant is dangerous to any organization as it can take away the market share the organization enjoys. Started in 1880, the experience curve of the 125-year-old dabbawalla service serves as a huge entry barrier for potential competitors. Besides, it would be difficult to replicate this supply chain network that uses Mumbais jam-packed local trains as its backbone. ii. Current competition: Porters five forces theory states that strategy is determined by a unique combination of activities that deliver a different value proposition than competitors or the same value proposition in a better way. The dabbawallas do face competition from fast food joints as well as office canteens. However, since neither of these serves home food, the dabbawallas core offering remains unchallenged. They have also tied up with many catering services and hotels to cater to the vast number of office goers. iii. Bargaining power of buyers: The delivery rates of the dabbawallas are so nominal (about Rs 300 per month) that one simply wouldnt bargain any further. Also, their current monopoly negates any scope of bargaining on the part of their customers. Thus, we encounter a perfect win-win combination for the customers as well as the dabbawallas. iv. Bargaining power of sellers: The dabbawallas use minimum infrastructure and practically no technology, hence they are not dependent on suppliers. Since they are a service-oriented organization, they are not dependent on sellers to buy their product. Hence, sellers do not assume any prominence as would be the case in a product-oriented company. The strategy map framework in Porters theory allows companies to identify and link together the critical internal processes and human, information and organization capital that deliver the value proposition differently or better. Human capital is the greatest driving force in the dabbawalla community; as a result, they are not dependent on suppliers or technology, thus negating the sellers power in the equation. v. Threat of a new substitute product or service: As substitutes to home cooked food are not seen as a viable alternative in the Indian scenario, the threat to the dabbawalla service is not an issue at least in the foreseeable future. This gives them a leeway to probably expand their already existing network into newer cities as demand increases in these places as well. Dabbawala and six sigma!! Mumbai’s 5000 plus Dabbawalas are world famous for their impeccable service standards. They pick up lunch boxes/ Tiffin carriers from over 2,00,000 homes/ apartments, deliver them to some 80,000 destinations and again ensure their safe return to those homes/ apartments – all on the same day with each lap of journey en route accomplished within the specified time limits. The people at work are not from any high academic background; rather many of them are almost illiterate. They face the same crowded pavements, on-road dense vehicular traffic and overloaded suburban trains, which normal office goers often give excuses for their late comings. Their way of doing business has, therefore, become a case study destination for every management guru and B-school. CII arranged interface for who’s who of industry and business to share great management lessons from them. A Dabbawala figured among a handful few from India who got invitations to witness the marriage ceremony of Prince Charles. Sometime back, there was lso an All-Dabbawala ‘Deal Ya No Deal’ show in Sony Entertainment TV. They steal all attention just because their service is of Six Sigma quality. Every business concern is made of a number of interrelated processes. When inputs are made to traverse through a process, they result into certain outputs (products services) serving either internal or external customers. A process is termed as industrial or commercial depending on wheth er 80% or more of the values derived are from machinery or from human activity, respectively. No matter how perfect a process is, no product/ service will come conforming to exact targeted specifications. It would always vary. However, when it varies within certain Lower Specification Limit (LSL) and Upper Specification Limit (USL) as acceptable/ agreed to or specified by the customers, then it is considered to be defect free or quality product/ service. Further, every opportunity of delivering a product/ service is also wrought with an opportunity for the occurrence of defect. When the Defects per Million Opportunity (DPMO) don’t exceed 3. 4, the process is said to have met Six Sigma level. And Mumbai Dabbawalas’ DPMO is less than 3. 4 or precisely, it is 2! ‘Sigma (r)’ denotes ‘Standard deviation’ – a statistical measure of dispersion/ variance. It is the positive square root of the arithmetic mean of the squares of deviations of given observations from their arithmetic mean. Say, it is a midsummer and your organization wants to hold a three-hour business plan meet of your 100 sales persons. You look for a conference hall with right facilities and ambience, especially the room temperature which should be maintained throughout at 2210 C. And two hotels in the city also promised the same. When measured at every half an-hour interval in the one where you held your meet, it read as 18, 28, 30, 24, 20 and 18; the arithmetic mean value and ‘r’ being 23 and 4. 7, respectively. Whereas, had you gone to the other hotel, other things remaining same, the observed values of the room temperature would have been say, 23, 22, 24, 22, 23 24. Although the mean was the same 23, the ‘r’ being less at 0. 8, the service of the second hotel was more qualitative and would have given you more satisfaction. Hence the saying, ‘Company may celebrate mean but customers are bothered by the variance’. However, its process was still not conforming to Six Sigma level. With two observed values out of six not meeting the customer expectations (22! 10 C), the DPMO worked out to 333,333. 33 (i. e. , 2/6 multiplied by 1,000,000), which was hugely far from the required 3. 4! Benefits of higher Sigma level* Sigma Level |DPMO |Cost of quality | |2 |308,537 |Not applicable | |3 |66,807 |25-40% of sales | |4 |6,210 (Industry Average) |15-25% of sales | |5 |233 |5-15% of sales | |6 |3. 4 (World class) |lt; 1% of sales | | | | | The figures in third column indicate that if, for example, you purchase a product at Rs. 10,000/- from a company operating at 4 Sigma Level, you are being made to pay about Rs. 1500-2500/- (i. e. , 15-25% of sale price) towards the cost of inefficient processes deployed by the company to manufacture the item. Putting it in other way, the company concerned can reduce the price of the product by Rs. 500-2500/- if it fixes its faulty processes or improves/ recreates the processes. This measure would also help the company to increase its market share tremendously. Why do six sigma? Six sigma allows you to achieve the constancy of the purpose that is secret to success, focusing your efforts on understanding the variation in your processes and defects that results. Here are the basic results. Money Money is generally most important reason for using six sigma. Here are few questions to consider: †¢ What is cost of scrap? †¢ What is cost of rework? †¢ What is cost of excessive cycle times and delay? †¢ What is total cost of poor quality in your organization? What is cost of business loss because customers are dissatisfied with your product? Do you know the answers of these questions in terms rupee. If so then you know how important it is to reduce process variation and defects. If not, then you need to get the knowledge that gives you power to make necessary changes. Customer satisfaction Six sigma focuses on the critical- to quality expectation of your customers than what matter most. By using six sigma management methods, your company can target the vital few factors in your processes that are allowing variations and defects that keep you from meeting the critical to quality expectation of your customers. Quality Another reason for using six sigma is the value and impact of committing to quality as a very particular way. Consider only following advantages of improving quality †¢ It inspires employees. †¢ It instills a culture and an attitude. †¢ It creates an image in the market †¢ It attracts investors. Growth As you identify and correct process variation, you save expanses which mean money to invest in growing your business. As you meet requirement and expectation of your customers more effectively and achieve higher customer satisfaction you increase your income which means money to invest in growing your business. Competitive advantages Six sigma allows you to become more competitive regionally, nationally or globally. A company that reduces its costs of doing business, meets the expectation of its customers more effectively earns reputation for quality and pride will certainly enjoy advantages over its competitor. Conclusion Six Sigma, as developed by Dabbawala, is an extension of many existing quality tools and techniques, but with the addition of business accountability. This resulted in process improvement gains that increased productivity and profitability. Six Sigma organizations become forward moving organizations by adapting new tools and techniques and overcoming learning disabilities. A gauge of quality and efficiency, Six Sigma is also a measure of excellence. Embarking on a Six Sigma programme means delivering top-quality service and products while virtually eliminating all internal inefficiencies. A true Six Sigma organization produces not only excellent product but also maintains highly efficient production and administrative systems that work effectively with the companys other service processes. In administrative processes, Six Sigma may mean not only the obvious reduction of cycle time during production but, more importantly, optimizing response time to inquiries, maximizing the speed and accuracy with which inventory and materials are supplied, and fool proofing such support processes from errors, inaccuracies and inefficiency). Much can be achieved from programmes like Six Sigma with the active, consistent, innovative, continuous and widely apparent participation by top management. When implemented strategically, Six Sigma can help companies turn over working capital faster, reduce capital spending, make existing capacity available, produce better results from the design and RD functions. Such outcomes also foster a working environment that stimulates employee development, motivation, morale empowerment and commitment. References ? www. google. com ? Six Sigma for managers Greg brue ? What is six Sigma Pete Pande and Larry Holpp ? www. wiki. compedia ? www. Mumbai dabbawala. com 13 MEMBERS GENERAL SECRETARY
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