FabIndia won an award for excellence in supply chain management at the 6th TiE Annual Retail Summit. The Indian retailer distributes hand woven and hand printed textile products, organic foods, body care products, and jewellery, produced by an extensive network of rural Indian artisans. The organization has brought many of the artisans into multiple community-owned companies (CoCs), which has allowed the company to transform from a “centralized model to regional supplier companies.” Though the company now uses more of the decentralized model, it has the benefits to include job creation for thousands of rural artisans, greater access to working capital, and improved ability to source quality and cost-effective products.
Maintaining the same quality and identity across all its stores is a commendable achievement. Hence, Fabindia was recently awarded for ‘excellence in supply chain management’ at the ‘6th TiE Annual Retail Summit 2010’ held in the capital. But in maintaining that same high quality and identity, Fabindia witnessed the challenge of sourcing the resources.
To meet up this challenge, William Bissell, Managing Director at Fabindia stressed on the importance of a robust and responsive supply chain in a retail sector, he said, “The approach that a company takes to its supply chain is pivotal – we chose to look upon our supply chain as partners and to invite them to participate in the opportunities that retail presents.”
Established in1960 as an export house by John Bissell, today Fabindia is present in 44 cities in India and abroad including – Italy, China, UAE, Bahrain and Qatar through its 115 stores.
Known for its hand woven and hand printed fabric, Fabindia’s product portfolio includes non-textile range started in 2000, organic foods range, in 2004, Fabindia Sana – the body care product range, in 2006 and handcrafted jewellery, in 2008.
According to Bissell, Fabindia had a dual mandate, firstly to maintain being a profitable retail platform, and secondly, it was committed to creating 1,00,000 artisan shareholders in the community owned company that comprised its supply chain, and significantly impacted sustainable livelihoods in the rural sector. “This naturally impacts the way we respond to our supply chain and its management, it certainly makes us more interactive and participatory,” he says.
How they did it?
Bissell opines that the SCM (supply chain management) in India is still at a nascent stage, but its potential is undeniable. “Indian retail is beginning to come into its own, and with it SCM is becoming an interesting and exciting area. There is also the growing realisation that it is not enough to emulate foreign models, however, effective they might have been in their own environment – we will have to develop our own solutions, and management parameters,” he said.
With this intention, a joint venture investment fund was established under Fabindia’s subsidiary – Artisans Micro Finance Pvt. Ltd. (AMFPL). Its role was to further facilitate the setting up of community owned companies (CoCs). The AMFPL assists in establishing quality standards, providing access to market through Fabindia and in providing access to funding from banks.
He said, “This is an exciting time for Indian Retail – rapidly growing demand, and one of the best growth rates. The way we have chosen to respond to the issues of supply chain is particular to us – so in that sense, we have chosen to tread a different path.”
He further said, “Reaching out directly to the artisan whose products we retail, and looking upon them as partners rather than merely suppliers while bringing in enabling capital, technology, design and training have been areas of constant focus.”
Empowering the supply chain – CoCs
Presently, there are 17 fully operational CoCs (community owned companies) pan India. They help in strengthening the supply capabilities from where the goods are produced. A common system of stocking, production and delivery is executed, which further ensures that the profits of the CoCs are ploughed back into the business.
The CoCs facilitate the training of artisans in order to improve quality and add value to the produce and also enables the purchase of materials in bulk so as to get the best price, hence, the CoCs have evolved the supply chain of Fabindia from a centralised model to a regional supplier companies. “These CoCs have artisan share-holders, and directors. So in a way we are outsourcing the management to the grassroots where our product comes from,” he added.
But negating the option to outsource the entire SCM even in the most tiring situation he affirms, “Ours is a very well contextualised offering, and the handicraft sector is at the core. The learning curve to get the product to market would be too long and too steep for an external agency that does not have an in-depth understanding of the way our product is brought to market or the human element that is so much a part of it. For us capacity is grown practically item by item, loom by loom, artisan by artisan.”
Benefits of this novel approach:
Fabindia’s unique approach to supply chain management had many benefits, like:
- Enabling it to create 100,000 sustainable rural jobs across India
- Enabling access to working capital – the main hurdle to capacity building
- Closer to sourcing – shortening the supply chain, better quality and pricing
- Direct interface with artisans