The most efficient organization in the world: The Dabbawalas of Mumbai

In 1998, Raghunath Megde (then president of the Mumbai Tiffinmen's Association) told Subrata Chakravarty, the lead author of the 'Fast Food' article by Forbes that “the dabbawalas make a mistake almost never, maybe once every two months" and this statement was extrapolated by Subrata Chakravarty to be a rate of "one mistake in 8 million deliveries.” [1]

Later, in 2001, Forbes Magazine awarded the dabbawalas its Six Sigma certification based on a 99.999999% delivery accuracy rate (1 error for every 16 million transactions).

The dabbawalas are an organisation made up of 5,000 workers delivering nearly 200,000 lunchboxes (or carrying out 400,000 transactions) every day. Started as a lunch delivery system in 1890, the dabbawalas have grown to be one of the most efficient organizations in the world in their 125 years of existence. The brilliance of this organization may easily be forgotten by the Mumbaikars who rely on the dabbawalas for their lunch daily; however outsiders not only admire but aspire to emulate the practices of this organization. Leading companies such as FedEx, Tata and Amazon have, in the past, tried to study the system of the dabbawalas in an attempt to achieve a similar accuracy in their transactions, invited the dabbawalas to teach their managers and explain to them their model. These companies achieve their accuracy through the use of technology. However, the dabbawalas differ from them immensely in this regard; the delivery system relies completely on the individual workers, “a system built around train schedules, bicycles and delivery men.”[2]

Theirs is a low-technology system. The only modern technology involved is a website and a SMS service which allows people to send in their last minute orders. Even the lunchboxes themselves are sorted by the workers on the basis of simple colour coding or a group of symbols. This simplistic approach to India’s greatest logistical supply chain is one of the reasons for their success as well. And their story is one of a kind.

The story of the dabbawalas is interesting, to say the least, from an economic point of view. The numbers are staggering and give but a glimpse into the success of this organization. The dabbawals are a 0% fuel and 0% investment organization, with an annual turnover of approximately Rs36 crores. The New York Times reported in 2007 that the organization had been growing continuously at 5-10% per annum[3]. An ISO 9001:2000 certified organization (certified by the Joint Accreditation System of Australia and New Zealand), which seems on the outside to be a humble lunch delivery system but is in fact a carefully crafted logistical supply chain with unrivalled accuracy (equivalent to six sigma or greater), guaranteeing on-time delivery, every time.

For any chain serving an exponentially increasing consumer base to survive for 125 years is a feat in itself; when one considers the dabbawalas’ success, it would be wrong to consider only their survival and not their accuracy and efficiency. The dabbawalas’ business model has been studied and analysed by industry and management experts and professionals, by scholars from schools including Harvard Business School. Yet their code, their structure and indeed their organization is tough to decipher, simply because it is so simple. Here is a company of semi-literate workers following management principles that have shocked even the most educated scholars.

The supply chain is built around the concept of frugal innovation. Frugal innovation (or engineering) refers to reducing the complexity of and cost of a good or product by removing nonessential feature. This concept is the basis of the dabbawalas’ supply system, as explained by Karl Moore:

“We recounted a few lessons that we took away from the [dabbawalas] experience. For one, frugal innovation goes beyond clever R&D. It has a lot to do with process – in this case, maximizing the efficiency of the supply chain. Second, sometimes less is indeed more. No fuel, no capital investment, almost no modern technology, and yet a high quality of service: that’s frugality at its best. And third, the circumstances of the operating environment matter a great deal when it comes to frugal innovation. 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.”[4]           

These are innovations that follow management principles to minimize production cost, or as in the case of a logistical chain, handling and inventory costs. And of course, above all, the principle of sustainability, which is by no means left up to chance. However, by no means does frugal innovation imply a compromise on quality. In fact, quality is the prime differentiating factor when frugal innovations are concerned.  

In the case of the dabbawalas, it is the repetitive nature of the transactions which contributes to their extremely high accuracy. This, coupled with largely visual content as a basis for delivery, makes the large number of orders to be fulfilled everyday slightly easier. The use of the various modes of transportation within Mumbai, especially the trains, with fixed standard sorting points is key to their success. Meticulous planning and efficient on field execution (due to predictability, in part) over the years has contributed to the development of an elegant, yet simple, logistics system. One which has evolved yet stayed essentially the same for over a century.

The last reason for the success of the dabbawalas is a close bonding between the workers. The structure is a simple one, where every dabbawala is a shareholder and contributes to the success of the organization. This feeling of closeness and equality is also why there have never been any strikes by the dabbawalas throughout their existence, a factor that has always kept up efficiency and promoted a sense of trust that is absent in the corporate world.            

[1] Pathak, Gauri Sanjeev. "Delivering the Nation: The Dabbawalas of Mumbai." South Asia: Journal of South Asian Studies 33.2 (2010): 235-257.

[2] “The Dabbawala – Six Sigma Sharing” Retrieved from www.themarkofaleader.com

[3]  “In India, Grandma Cooks, They Deliver” from The New York Times

[4] Moore, Karl. “The Best Way To Innovation? – An Important Lesson from India” Retrieved from www.forbes.com