It is a collective effort by semi illiterate villagers of Mumbai who are providing fresh home cooked meal to the students and working class of Mumbai for the last hundred years. For any collective action to happen there must be some unfulfilled needs and wants so towards the end of the 19th century Mumbai saw huge influx of migrants from various parts of India as lot of textile mills were getting established in and around Mumbai. These people came without their families and at that point of time there was also no concept of canteens. Since working hours were very early so they were also not able to prepare food for themselves. As these people came from different parts of country so there food preferences were also different but as a whole they wanted fresh home cooked food.
Mahadev Bache, who himself was migrant and came looking for a job identified the need and thought of this mismatch in demand and supply as a good opportunity. He was born leader, as in the 19th century itself he was able to foresee opportunity in the food servicing business and was also able to mobilize people to work with him. He recruited youth from his village but since his idea was so new at that point of time that only youth with insufficient agricultural income came forward. He started the operations in 1890 with a clear aim of providing fresh home cooked food at reasonable rates and most importantly according to the taste preference of customers. With an army of 20 dabbawalas and monthly charges of 2/- per month per customer he targeted majorly Textile mill workers as his prospective customers. Mahadev Bache was great institutional builder and always led from the back to make dabbawalas self reliant and bring out their entrepreneurial skills.
It became charitable trust in 1956 and current employee strength is around 5000 dabbawalas. Earnings per member are around 5000-6000/- per month and around 2, 00,000 Tiffin’s gets handled on daily basis with utmost punctuality. Cost of service is very reasonable at Rs. 300/- per month per customer. Whatever be the external condition customer will surely receive his/her Tiffin. The efficiency is so high that they got six sigma award as error rate is only 1 in 16 million transactions. All of them belonged to the same community ‘Maratha’ and came from few 7-8 villages near Pune. Most of them are having agricultural as their primary occupation. Although these people were not having any training in supply chain management but still their commitment and zeal made sure Mumbai dabbawala kept on increasing its customer base and won hearts of his loyal customers.
Talking about the organization structure and working style as we know that for better communication between top management and employees the institution must not have tall vertical hierarchy. So Mumbai dabbawalas follow the flat structure with only 3 layers for better communication between top management and dabbawalas. The first layer is top management, second is governing body and third is dabbawalas itself. Instead of following top down approach they follow the bottom up approach.
Although attrition rate is almost nil but still if some dabbawala leaves the organization for some or the other reason than he always finds his replacement so that work does not get disrupted. It is not a written rule but they are following it for generations as they feel that they have some responsibility towards organization. As it is quite understandable that members will play an active role in institution building if benefits which they derive far exceed the costs. So here dabbawalas were getting a decent salary of around Rs. 5000 – 6000/- per month, bonus every year and organization was investing part of surplus in building fixed assets like schools and temples in their villages.
This entire framework depends on teamwork, cooperation and meticulous timing as even if a single dabbawala takes a leave without informing in advance than it may jeopardize the operations for the whole day. Organization promotes both healthy competition as well as cooperation among members. They have 2-3 dabbawala groups in each operation area like Dadri or Church gate and Tiffin collection is group wise but transportation is shared with other groups. Competition is only up to collection of Tiffin’s and none of the group indulges into the cross cutting of the customers.
As for any collective action to succeed there must be some binding agents and here each Dabbawala is share holder of the organization just like the Amul cooperative model and it acts as a motivation for the dabbawalas to perform efficiently for the long term growth of the organization. By making them shareholders, organization has not witnessed even a single strike in 100 years. Also since they belong to same community and are from known villages so they directly or indirectly know each other and follow the same customs and traditions.
Success of any institution lies in the fact that it must provide win-win situation for both buyers and sellers. Hence dabbawalas have kept the delivery rates so nominal (about Rs. 300 per month) that one simply wouldn't bargain any further. It provides very competitive rates to the House wives who prepare fresh food for them every morning and also offer plethora of benefits to the dabbawalas. The various awards (Six sigma, Guinness book etc) and invitations (IIM A, CII etc) which dabbawalas have received over the years is a testimony to their hard work and commitment to serve the community. Coming to an end it would be apt to quote the wordings of Management guru C K Prahalad which he said regarding Mumbai dabbawalas “It is a model of managerial and organizational simplicity".
Saturday, February 28, 2009
Future of Low Cost Airlines
This article will give you deeper insight into the future of low cost airlines and why Low cost airlines business is a profitable venture.
First of all what is Airlines business, to put it in simple terms Airlines business is just a glorified version of bus operation for transporting peoples from point A to point B. And advantage of airlines over any other mode of transportation is that it saves the most precious thing i.e. time and this time can be used in any other productive work.
The objective of the low cost carrier is to provide safe, reliable and short duration air travel at the lowest possible fares. And as said by C K Pharlad, the management guru, the cheaper you can make something, the more people can afford it. Air Deccan started its operations in 2003 and in just 4 years of its operations it garnered around 22% of domestic passenger market share which I think is quite commendable performance and it clearly shows that future of low cost airlines is very bright.
For better understanding I will divide my article in 4 parts
1. How low cost airlines manage to offer cheap tickets
2. Potential of low cost airlines
3. Problems faced by Low cost airlines
4. Future of Low cost airlines considering Indian scenario
Coming to first point i.e. how low cost airlines manage to offer cheap tickets
1. Low cost airlines have less turnaround time. Turnaround time is the time taken to get the plane ready for next flight.
2. Higher load factor i.e. more passengers fly per flight as compared to full fledged carriers.
3. No food or drink is served inside the plane free of cost.
4. It uses the secondary airports for its operations.
5. It encourages the travelers to book the tickets online.
6. Almost every space is available for advertisement so as to earn revenue.
Now the Potential of low cost airlines
Well as you know the population of India is 1.1 billion but only 12 million i.e. only 1% travel by air every year whereas in the US which has a population of one fourth of that of India more then 3 million people travel by air everyday. Remember its every day, whereas in Indian context it was every year. On an average the daily flights in India is only 400 whereas in the US it is 40,000. Mind blowing…… So in short huge potential.
Now the problems faced by Low cost airlines
1. The biggest problem at the moment is poor airport infrastructure.
2. Price of air turbine fuel is one of the highest in the world. And fuel constitutes 40% of operating cost of LCC.
3. Out of 450 airstrips only 61 are fully functional. Because of this LCC has to compete with the full fledged carriers for using these airports.
4. Almost all the parking bays are with the full fledged carriers
Now the Future of Low cost airlines considering Indian scenario
1. All the Macro Economical Factors Political, Economical, Socio-cultural and Technological are in favor of the growth of low cost airlines.
2. India has a huge middle class population of 300 million and even if 10% of that can afford to travel by low cost airlines then it’s a huge number.
3. With the booming Indian economy more and more companies are establishing their centers in smaller cities like Agra but these are poorly connected and low cost carriers provide better connectivity between smaller cities and major metros at affordable rates.
4. Tourism industry is growing at 8.8% and with rising disposable income more and more people are traveling by aero planes.
5. Government is undertaking Modernization and Privatization of airports.
Conclusion:-
I believe for the growth of India good air connectivity at affordable rates is must. LCC saves time by reducing travel time and it saves the money by giving cheap tickets.
Just like cheap mobile has brought revolution in communication industry, low cost airlines will bring revolution in the way common man travel in India.
Amit Goel
IRMA
First of all what is Airlines business, to put it in simple terms Airlines business is just a glorified version of bus operation for transporting peoples from point A to point B. And advantage of airlines over any other mode of transportation is that it saves the most precious thing i.e. time and this time can be used in any other productive work.
The objective of the low cost carrier is to provide safe, reliable and short duration air travel at the lowest possible fares. And as said by C K Pharlad, the management guru, the cheaper you can make something, the more people can afford it. Air Deccan started its operations in 2003 and in just 4 years of its operations it garnered around 22% of domestic passenger market share which I think is quite commendable performance and it clearly shows that future of low cost airlines is very bright.
For better understanding I will divide my article in 4 parts
1. How low cost airlines manage to offer cheap tickets
2. Potential of low cost airlines
3. Problems faced by Low cost airlines
4. Future of Low cost airlines considering Indian scenario
Coming to first point i.e. how low cost airlines manage to offer cheap tickets
1. Low cost airlines have less turnaround time. Turnaround time is the time taken to get the plane ready for next flight.
2. Higher load factor i.e. more passengers fly per flight as compared to full fledged carriers.
3. No food or drink is served inside the plane free of cost.
4. It uses the secondary airports for its operations.
5. It encourages the travelers to book the tickets online.
6. Almost every space is available for advertisement so as to earn revenue.
Now the Potential of low cost airlines
Well as you know the population of India is 1.1 billion but only 12 million i.e. only 1% travel by air every year whereas in the US which has a population of one fourth of that of India more then 3 million people travel by air everyday. Remember its every day, whereas in Indian context it was every year. On an average the daily flights in India is only 400 whereas in the US it is 40,000. Mind blowing…… So in short huge potential.
Now the problems faced by Low cost airlines
1. The biggest problem at the moment is poor airport infrastructure.
2. Price of air turbine fuel is one of the highest in the world. And fuel constitutes 40% of operating cost of LCC.
3. Out of 450 airstrips only 61 are fully functional. Because of this LCC has to compete with the full fledged carriers for using these airports.
4. Almost all the parking bays are with the full fledged carriers
Now the Future of Low cost airlines considering Indian scenario
1. All the Macro Economical Factors Political, Economical, Socio-cultural and Technological are in favor of the growth of low cost airlines.
2. India has a huge middle class population of 300 million and even if 10% of that can afford to travel by low cost airlines then it’s a huge number.
3. With the booming Indian economy more and more companies are establishing their centers in smaller cities like Agra but these are poorly connected and low cost carriers provide better connectivity between smaller cities and major metros at affordable rates.
4. Tourism industry is growing at 8.8% and with rising disposable income more and more people are traveling by aero planes.
5. Government is undertaking Modernization and Privatization of airports.
Conclusion:-
I believe for the growth of India good air connectivity at affordable rates is must. LCC saves time by reducing travel time and it saves the money by giving cheap tickets.
Just like cheap mobile has brought revolution in communication industry, low cost airlines will bring revolution in the way common man travel in India.
Amit Goel
IRMA
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