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The Platonic ideal<\/span>“Efficiency\nis doing better what is already being done.” – Peter Drucker,\nInnovation & Entrepreneurship: Practices and Principles<\/span>
The practice<\/span>
Research\nfirm Gartner defines supply chain as, “…the processes of creating and\nfulfilling demands for goods and services. It encompasses a trading\npartner community engaged in the common goal of satisfying end\ncustomers.”
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Sounds simple? But it hardly is. In fact, the\nsupply chain can be one of the most complex structures in a business,\npiecing together design, development, sourcing, manufacturing, and\ndistribution. It gets even more complex when it relies on rural India,\nwhich is scattered over 640,867 villages and are often hard to access.\nFabindia, a chain of retail stores, has spent close to five decades\nscoping India’s hinterland to connect rural Indian artisans to urban\nshoppers. Here’s how they did it.
Fabindia began its India\nsojourn back in 1960 when John Bissell, who was first introduced to the\ncountry in 1958 while on a two-year grant from the Ford Foundation,\ndecided to set up an export shop to sell home furnishings to overseas\ncustomers. Bissell, whose work at the foundation involved advising\ngovernment-based craft organizations on handloom fabrics, spent a lot\nof time traversing the length and breadth of the country.
In\n1976, the export house diversified into retail through a small store\nthat sold leftovers from export orders in Delhi’s tony market of\nGreater Kailash. It took another two decades for retail to became the\nmainstay of the company’s business.
Fifty years later, Fabindia,\nmanaged by John’s son William Bissell, is a widely recognized global\nbrand, known for handwoven and hand-made goods that connect some 55,000\nartisans from the country to consumers worldwide. In the process, it\nhas achieved two broad goals: to market the handloom tradition of India\nto the rest of the world and to provide sustained employment to\nartisans in rural areas.
The chain sells everything from\nhandwoven saris, rugs, apparel, home d\ufffdcor, and organic food in its 220\nstores across 83 cities in India, including eight stores in overseas\nmarkets such as Dubai, Singapore, Malaysia etc. It also retails its\nproducts online to 33 countries. For the fiscal year 2014-15, Fabindia\nhad a turnover of Rs1,148 crore (approximately $170 million).
But\nbehind the red and black Ikat-printed scarves, Kalamkari prints from\nsouth India, and block-printed Bagru fabric from north India is an\nextensive and complex supply chain that runs from villages across the\ncountry, covering a third of India’s over 650 districts.
The\nretailer has successfully taken its founder’s vision to enable social\nchange at the grassroots level while engaging in a profit-making\nbusiness for urban shoppers. It does this while building systems that\nencourage not just fair remuneration to India’s rural artisans, but\nalso provides infrastructure, access to technology and systems, quality\nguidelines, and timely payments to these craftsmen. Fabindia also\noffers access to capital and raw materials to artisans working with the\nretailer.
As William Bissell puts it in a Harvard Business\nSchool case study: “It seems contradictory that we pursue both a social\ngoal and a profit, but I believe that is the only way to do it.”
Through most of the ’90s and early 2000s, Fabindia grew as a retail chain expanding modestly in the country’s top metros.
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Since\nthe opening of the Indian economy through the economic reforms of 1991,\nFabindia’s interaction with artisans scattered across the country has\ngrown significantly (pdf). The complexity of the company’s supply chain\nis far different from that of a regular manufacturer that works through\ndesignated factories. “Among\nthese, Fabindia has certainly had the most visible success in terms of\nsize and brand profile domestically. Fabindia has achieved scale by\nworking through artists, intermediaries and supplier companies who have\nacted as anchors in the rural communities,” said Dutta.<\/span>
The company’s interaction with these\nartisans is very localized since it works with them through multiple\nassociations. The retailer deals directly with individual artisans who\nwork out of their homes and also with clusters of crafters and rural\nNGOs and organizations that have a crafts supply base.
In\naddition, the company uses its 11 production hubs across the country,\nwhich are basically aggregation points, to centralize orders and pair\nup vendors with artisans. Each hub has a number of field offices\nattached to it.
“The production hubs and field offices act as\nnodal points for interaction with the artisans that constitute the\nsupply chain, which is one of the most unique in the world,” said\nPrableen Sabhaney, head of communications and public affairs at\nFabindia Overseas.
While most artists have the skill and the\ncraft, they don’t have the acumen to decipher fashion trends for the\nseason. So Fabindia acts like a conduit between their crafts and the\nmarket.
At Fabindia, a large proportion of products carry some\nelement of the handmade, which requires an ability to communicate with\nartisans and institute quality control as most artisans work largely in\nIndia’s hinterland. For instance, an 18-step process is required to\ncreate a simple pattern in Bagru print, a traditional form of\nblock-printing using natural dyes perfected in the northern state of\nRajasthan.
And the company has spent years putting processes to\nensure newer collections reach the stores on time. Recently, the\nproduct range has become more diversified as well.
As for\nremuneration, Fabindia follows a bottom-up structure. It asks artists\nwhat it costs them in terms of—time, energy, skills, and raw material\nto hand-make a certain fabric or accessory and pays accordingly.
Analysts\nwho track the sector believe that Fabindia’s unique model sets it apart\nfrom other domestic or export-focused handicraft companies purely\nbecause of the sheer volume of artisans it works with.
“In\nhandicraft, there are several companies that have created substantial\nexport-led supply bases, which tap into craft both from the rural\nartisans as well as those based in smaller urban centers,” Devangshu\nDutta, chief executive at consulting firm, Third Eyesight said. <\/span><\/p>
Sabhaney\noffers that challenges span from co-creating contemporary products\nwhile using traditional techniques to quality issues, since the\nproducts are created in environments that are very different from where\nthey are finally used. The company also works hard to provide access to\nraw material and capital across many hard-to-access areas—and doing all\nof this at scale.
“The ability to do this and not lose anything\nin translation has been and will continue to be Fabindia’s strength,”\nadded Sabhaney.
The takeaways<\/span>
As\nthe market evolves with e-commerce and the entry of foreign brands,\nwhich has altered consumer preferences and style-cycles, Fabindia knows\nit needs to quicken its response to these changes.
Not all of\nthe innovations the company has tested remain. In a unique ownership\nstructure created by Bissell, Fabindia set up supplier regional\ncommunities (SRCs), which were community owned companies, self-managed\nby a group of artisans, weavers and craft workers in a particular\ngeography back in 2007. According to a case study by INSEAD (pdf),\nthese SRC’s “offered artisans joint ownership of resources and access\nto common facilities. It also trained artisans and developed new\nhandicrafts. The SRC allowed Fabindia to consolidate supply capacity\ninstead of dealing with single-loom weaver units, and to implement a\nstandard system for production and delivery control.”
The 2010\nbook, The Fabric of Our Lives reveals how production worked under the\nSRC model. A number of dedicated designers and sourcing officers worked\nclosely with rural artists giving them design inputs in tandem with the\nlatest trends in the market and order quantities through dedicated\ndistribution centers in key villages. These designers worked with the\nweaver to develop samples. They were then shown by the designers that\nrefer it to a product selection committee. The fabric was then approved\nand the cost price finalized. The quantity of fabric to be produced the\nfirst time was pre-determined by software based on a minimum stock\nrequirement ratio and an order is given to the weaver to make the\nproduct. The weaver produced the requisite amount of fabric in a month\nand brought it into the distribution centers.
But the SRC model has now been diluted as the company looks more innovative ways to engage rural artisans.
In\nthe company’s next vision plan, it is focusing more on cluster\ndevelopment that will basically help bring artisans up to speed with\nthe processes and market trends.
“There are plans for a greater focus on the handloom and hand-craft sector,” Sabhaney said.
“There\nis a much bigger focus on the social aspect, there are going to be\nsignificant investments in developing clusters and bringing them up to\nwhat is required around the country,” she added.<\/p>\n