Dabbawala Business Case study
Dabbawala is an organization used as a case study in some of the world’s prestigious business universities like stanford and harvard but why because dabbawalas are able to do something unique which no other business in the world can do and this amazing ability of dabbawalas has inspired millions of companies and what is this amazing ability let me explain you with an example where you can consider zomato which will charge you rupees 60 rupees as a delivery charge if you are ordering from a restaurant which is 10 kilometers away from your home and why they charge rupees 60 because there is a zomato delivery executive who has to ride a bike use petrol and reach your home to deliver that food and for burning that fuel and to pay the delivery executive zomato will charge you 60 rupees delivery charge but now what if i tell you dabbawalas will do the same delivery for just rupees 5 which means dabbawalas can efficiently eliminate 80 to 90 percent of the logistic expenses by developing an efficient system which only uses hand drawn cards or bicycles and mumbai local train which makes dabbawalas sustainable affordable and also eco-friendly and surprisingly companies with most qualified employees are not able to develop such efficiency in their business but on the other hand dabbawalas are able to do this so effortlessly whereas most workers have not even gone to school and because of this amazing ability in the year 1998 forbes global magazine conducted a quality assurance study on the operations of dabbawalas and gave a six sigma efficiency rating of 99.999 which means only one mistake is made every 16 million deliveries and till date no other logistics company in the world is even close to this accuracy level which dabbawalas are able to achieve and now this incredible organization who delivered meals to offices for the last 130 years are now struggling and fighting for one meal a day to feed their whole family so now the question arises what is the reason which has destroyed this 130 year old legacy of dabbawalas will dabbawalas make a comeback or this 130 year old legacy will be lost forever so let’s find out in this blog
History of Dabbawalas
The business of delivering tiffin boxes in mumbai started in 1890 when the parsi and british communities living in mumbai needed a convenient tiffiner delivery service with this need dabbawala came into existence where mahadev bhawaji became the first dabbawala along with 100 other dabbawalas mahadev bhavaji delivered tiffin to british men on request and as mumbai city grew the demand of dabba delivery also grew so did the army of dabbawalas dressed in their traditional white outfit wearing the traditional gandhi camp and around 5000 dabawalas every day made sure that around 2 lakh people got their home cooked lunch on time at their offices or schools every single day
Business model of Dabbawalas
so now let’s try to understand what is the business of dabbawalas and what makes them so special dabbawalas in mumbai deliver tiffins to 2 lakh customers and have an annual turnover of around 70 to 80 crores five thousand dabbawalas are divided into 200 groups each group has 25 members they cover an area of 60 kilometers in mumbai and do four lakh transactions every single day and dabbawalas hire only those people who know mumbai streets very well which is why each dabbawala knows every building office and college which comes under his area and most importantly every dabbawala earns the same salary regardless of his job role that is approximately around 12000 rupees per month and every dabbawala is not an employee of da bawala but an equal shareholder in the dabbawala trust so that whatever profit they earn is equally distributed among all the dabbawalas
Operation of Dabbawalas
now let’s try to understand how do dabbawalas operate with such high efficiency and accuracy at 9am dabbawalas are out on the busy streets of mumbai on their bicycles and dabbawalas are very particular about time and with respect to their time discipline there is also a famous saying in mumbai that time and dabbawalas will not wait for you each dabbawala carries about 40 dhabas weighing about 65 kgs and moves with that weight in the streets of mumbai and dabbawalas believe that individually they are nothing but together they are a team and they can achieve everything so once they collect all the defense they move to the nearest railway station where dabbawalas from different area gather they all quickly sort the defense as per their destination and dabbawala coding system and this dabbawala coding system is the heart of the dabbawala system which makes sure that each bar reaches its destination so once the dabbas are sorted at the stations dabbawalas enter the local train with big wooden boxes to load the dabbas into the local train and once the dhabas reach their destination station they sort the dhabas again and distribute them among each other and each daba goes through 6 groups of people in transit but thanks to their skills and coding system it always reaches the final destination before 1pm even after the dubba is delivered only half of the job is done yet because they again collect the dabbas from the office and go through the same process until the tiffin reaches their respective homes before 6 pm and this is that system of dabbawalas that makes them so precise effective and efficient.
Speciality of Dabbawalas
what makes dabbawalas so special the specialty is that every dabbawala is a shareholder not an employee there is no retirement age for dabbawalas which means they can work as long as they want and retire at their will dabbawalas are six sigma certified which means the error ratio is 1 in 16 million that means one mistake in 1.6 crore defense they deliver and this accuracy is possible only because of their color coding system which they use it to sort the bus and this color coding system is so special and at the same time it is so simple that anyone with or without any education can understand it and this coding system is very important for the dabbawalas because most of the dabbawalas come from humble background and most of them cannot read shipping addresses and that is why this color coding system is so important for dabbawalas which solves this problem completely for them and as i had mentioned earlier the delivery color coding system is simple but yet it is nothing without the discipline and synchronization of dabbawala and also there is another important question that might come to your mind that why dabbawala model is so successful in mumbai why not in delhi why not in bangalore or hyderabad so there are two major reasons
1. Connectivity of local trains if you see mumbai local train network connects the whole city and because dabbawalas use local train as a medium of transportation it makes their service cheap and affordable and on the other hand cities like delhi bangalore or hyderabad don’t have this kind of affordable transportation connectivity which might make it difficult for dabbawalas to make their service cheaper and affordable in such cities.
2. Crowded locals if you are aware mumbai has a linear geography where most of the people work in southern part of mumbai and live in the northern suburbs which makes it necessary for office goers to leave their home very early to reach office on time and because they are leaving home so early they don’t carry lunch boxes because no one can expect someone to prepare their lunch this early in the morning and even if they get their lunch boxes it is a task to get into the mumbai locals with that tiffin box because mumbai local trains are that crowded. so mumbai locals depend on Dabbawalas to deliver their defense and mumbai locals are the sole reason why the dabbawala model is so successful only in mumbai so when Dabbawalas were enjoying the success and when dabbawalas were at their peak suddenly overnight everything changed for dabbawalas and something happened which the dabbawalas have never imagined in their wildest dreams.
Fall of Dabbawalas
Everything changed for dabbawalas on 25th march 2020 when india saw the first lockdown.
dabbawala used as a mode of transportation were closed which literally put dabbawalas out of work because of which their monthly earnings of around 12 000 rupees became zero and most of the dabbawalas came from humble economic backgrounds and many don’t even have basic school education which made it extremely difficult for them to get a respectable job but most importantly dabbawalas worked as shareholders and they were proud to be working as dabbawalas but now because of zero income they are forced to take up less privileged jobs like security guards drivers cleaners etc just to make sure they can afford to feed their family every day and this kind of broke the proud spirit of dabbawalas who once worked as owners and shareholders and many even shifted to private deliveries like zomato and swiggy but then a ray of hope came when mumbai started to reopen in october 2020 when dabbawala has happily returned to work but this happiness of dabbawala seemed to be short-lived because the second deadly covid-19 wave hit bringing india and dabbawalas to their knees the country went into a lockdown again and as the covid 19 virus raged across mumbai city thousands of dabbawalas retreated to their original homes in rural locations and those dabbabalas who didn’t have a village home stayed in the city looking for odd jobs but then finally lockdown started to ease but at this point of time already many people had lost their jobs people started working from home and the demand for dabbawalas never recovered because there weren’t enough people in offices and schools because of which the demand for dabbawalas was very very less and at this point of time dabbawalas haven’t been in service in over two years and their bicycles have rusted completely before each dabbawala who used to deliver 30 to 35 dabbas every day is now delivering only 5 to 6 at abbas per day once there were 5000 dabbawalas working in the organization and now their number is less than thousand members and before they delivered 2 lakh dabbas every single day and now they are able to deliver only 5000 dabas per day and during this tough time dabbawalas are trying to survive the challenge where dabbawalas are trying to collaborate with restaurants to deliver food to customers in october 2020 dabbawala organization launched a website called digitaldabawala.com where they expanded the delivery servers from lunch boxes to last mile delivery and also customers can directly place lunch orders via the website choosing between monthly or annual subscription paid by online money transfer but this did very little for dabbawala’s revival because of which many dabbawalas who were tired and fed up of waiting have now started their own catering and delivery business so now the question comes again can dabbawala restore their 130 year old legacy or dabbawalas will be lost forever
Can Dabbawalas comeback?
So to answer this question the recovery of the core business which is the delivery of dabas depend on the loyalty of the people who once took their services which means when people return to office for work will they choose dabbawalas again over other alternatives is the big question because dabbawalas can always get their workforce back by recruiting new people but will the dabbawalas come back depends on their customers and whether they choose dabbawalas again over other alternatives and also dabbawalas are now experimenting and reinventing their business model where they are partnering with other businesses and offering them their delivery services for example recently an app-based courier service paper and parcels has tied up with dabbawala’s to leverage their network to facilitate door-to-door delivery of packages within the city and also dabbawalas are trying to urbanize courier services by leveraging their network of over 5000 dabbawalas where they are offering to make deliveries of courier with a weight limit of 3 kgs with as cheap and as less as 40 rupees per delivery to maximum 180 rupees per delivery because dabbawala’s already have a delivery network that can make a delivery at a very cheap price which kind of provides dabbawalas an advantage over other logistics and delivery businesses but right now it’s a fact that dabbawalas are struggling but there is a hope that dabbawalas might transform their business into a professionally managed logistics company as well so for now if you say the future of dabbawalas is uncertain but it is definitely promising and full of hope.
Learning from Dabbawalas
If you are running a business whether it is small business or big business it doesn’t matter dabbawalas has showed that with the right system an organization doesn’t need extraordinary talent to achieve extraordinary performance but one thing which dabbawala didn’t got it right was they never tried to diversify their income and business which was their major reason for downfall because dabbawalas could have started food catering service for people who used to get their dabbas from restaurants or any other food catering but dabbawalas only focused on their delivery business and dabbawalas remained completely dependent on only one source of income and this is a lesson for many people who only depend on one source of income because many people assume that their job is perfect and nothing can go wrong with it so did the dabbawalas when dabbawalas were confident that nothing can go wrong with their perfect business model it started failing so if you are someone who is dependent only on one source of income and believe nothing can go wrong then dabbawalas can be a lesson for you so don’t walk on the path of dabbawalas try to diversify your income source maybe try to learn a new skill that will open up alternative income sources for you or try to have a side hustle along with your job which in later future can turn into a income source and also you can start doing sip investment in wealth creating stocks which over the period of time can compound your wealth and also become an income source in the form of dividends but moreover the most enduring lesson a businessman or any other person can learn from dabbawalas is to put the customers ahead of everything else because dabbawalas always put their customers on top they always wanted to deliver their defense on time and never wanted to be late when prince charles of england visited india in 2003 he expressed her desire to meet the dabbawalas and the dabbawalas requested him to schedule the meeting such that it did not interfere with their dubba delivery timings no matter prince charles or any royal highness for dabbawalas all that mattered was customer satisfaction was their first and only priority so if you are running a business or planning to start a business then this example of dabbawalas can be an inspiration for you.