“A business is truly successful when you empower everyone involved in it.” 1
– Nand Kishore Chaudhary
Jaipur Rugs is India’s largest manufacturer and exporter of hand-knotted and tufted rugs as well as carpets that are manufactured from fine handspun wool, silk, and cotton. The company has created a rich heritage of aesthetically designed, high-quality rugs with sophisticated textures in homes across 40 countries around the world.
In order to keep alive the fine traditional art of rug weaving, the company has built a network of nearly 41,000 skilled, home-based artisans across eight Indian states. Eighty percent of the artisans are women. A large majority of them hail from the disadvantaged communities of rural India. 2 Besides providing the rural artisans with a respectable and sustainable livelihood, Jaipur Rugs connects them with global markets and the elite icons of the world.
Jaipur Rugs was established in 1978 at Jaipur, Rajasthan. The company is a product of the zeal of its founder Nand Kishore Chaudhary (NKC) to work selflessly for the upliftment of the poor, the downtrodden, and the outcast sections of Indian society.3 Its business model is a highly inclusive one.
Jaipur Rugs manages a highly efficient and large-scale global supply chain that attempts to match the skills of its weavers with the needs of its customers.4 Page 167 Through an innovative system of organization, the activities of numerous geographically dispersed independent workers are integrated together so as to produce a consistently high-quality product.
The Jaipur Rugs enterprise has established a robust mechanism to deal with the weavers directly, so as to provide a fair return for their hard work and artistic creation. The raw material for the carpets and the wages earned for the work are delivered to the artisans at their doorstep.
By doing so, the company has virtually eliminated the role of exploitative middlemen that are otherwise deeply involved in the carpet trade. Jaipur Rugs has thus directly helped to improve the living standards of the artisan community at the grassroots, and also facilitate their social empowerment.
Jaipur Rugs abides by the principle of equal opportunity as well as wages. It also provides the weavers with welfare services such as skill enhancement, health care, and education. The company employs traditional weavers, but also teaches the craft to people who do not hail from a weaving tradition.
Jaipur Rugs exemplifies the triumph of simplicity and determination over poverty, exploitation, and ignorance. Compassion runs deep within the company’s veins. NKC and his colleagues treat the artisans very respectfully as human beings in their own right, and as equals.
From owner to weaver, Jaipur Rugs constitutes one large and happy family that annually produces more than 500,00 rugs and over Rs. 133 crores of revenue. Threads of love and regard, woven by deft hands and deep hearts, bind its people together in a tight embrace.
The Genesis of the Enterprise
Nand Kishore Chaudhary was born in 1953 in a traditional Marwari family at Churu, Rajasthan. He completed his Bachelor’s degree in Commerce, and began his career in the family’s shoe business.
In 1975, NKC secured a permanent position as a cashier at the United Bank of India. 5 To the surprise and dismay of his near and dear ones, he refused the job. His aspiration in life was to do something on a much larger scale, as an entrepreneur.
Meanwhile, NKC spent long hours contemplating upon the meaning of life. He read the Bhagavad Gita, and also the writings of Osho, Mahatma Gandhi as well as Tagore.
NKC reflected deeply upon the nature of the business that he might engage with. In due course, he came to know that hand-woven woolen rugs and carpets of high quality were in great demand. With its blend of economic and aesthetic appeal, the carpet business appeared to be the right choice for him.
Armed with this clarity and determination, NKC borrowed Rs. 5,000 from his father in order to set up two carpet looms in 1978 within the courtyard of their house. He engaged nine trained, nimble and hardworking but unemployed weavers in order to commence the enterprise. 6 Page 21
NKC soon fell in love with the weaving business. He picked up the nuances of the art of carpet weaving by observing the weavers at work. NKC took time to sit, talk with, and even eat his meals with these craftsmen. He forged a close relationship with them, and gradually developed faith in their abilities.
This trust was duly rewarded upon the completion of the very first carpet. It had been made to order for a Jaipur-based exporter. The buyer was so delighted with the quality that he invited his own karigars (artisans) to inspect it. This was a tremendous confidence-building measure for the fledgling enterprise.
Thus encouraged and emboldened, NKC decided to expand his operations. Within the space of two years, six additional looms had been acquired. The enterprise was now thriving.
While the contractor supplied the raw material, NKC delivered high quality, finished carpets in return. By 1980, this operation was yielding a net profit of over Rs. 30,000 per month. 7
Establishing the Business
NKC re-invested a substantial portion of these earnings into the purchase of additional looms. In search of good talent, he ventured into the villages located around Churu. While the village artisans were desperate for work, NKC was careful to select and engage only those who had great passion and at least some discipline towards their work. Most importantly, the individual also had to be a “good” person.
As the number of weavers and the worksites grew, a rudimentary management system was created. One of the weavers was upgraded to the position of Quality Supervisor, and then equipped with a motorcycle in order to travel and inspect the ongoing work at the looms. The supervisor compiled a Production Progress Report (PPR) that mapped the square feet of weaving per artisan, and made payments to the workers accordingly.
After eight years of working as a contractor, with over 300 weavers and 100 looms under his charge, NKC’s annual earnings touched Rs. 1.5 million. However, the business still rested upon the greedy shoulders of the exporters. This hampered the idealistic entrepreneur’s aspiration to excel at his work, and also to make a difference in the society at large.
There was a huge worldwide market for rugs that was waiting to be tapped, if only the challenge of producing high-quality handmade carpets on a large scale could somehow be surmounted. In 1986, in partnership with his brother MK Choudhary, NKC decided to invest in additional looms as well as raw materials so as to commence the direct export of carpets. After three years of effort, the duo received their first direct order worth about a million rupees from a German customer.
NKC now decided to make the state of Gujarat his main production base. This was because the tribal people in Gujarat were artistic as well as loyal, provided that they were treated with love and respect. Moreover, the state government provided training to the tribal artisans. It even equipped them with carpet weaving looms for free.
Accordingly, NKC shifted his entire household to the town of Pardi, Gujarat in 1990. It took him three years to develop a deep rapport and bond with the tribal people, and to train them in the art of weaving high-quality carpets.
While the Churu operation continued, the Gujarat operation gradually scaled up. In less than a decade, NKC had trained 10,000 tribal weavers with over 2,000 looms. 8 Production in far-flung villages was tracked by means of communication over a wireless set. Two jeeps and twenty motorcycles ferried quality inspectors over rocky terrain. A truck full of carpets was dispatched to Jaipur every week for inspection, prior to their eventual export.
However, the fledgling enterprise received a tremendous blow in 1999 when NKC and his brother decided to part ways. Having focused almost exclusively upon developing weavers at the ground level, NKC had acquired very little expertise in operating the commercial side of the business.
Nevertheless, armed with a few looms apart from twenty years of goodwill, he started all over again. NKC’s genius helped notch up exports of nearly Rs. 40 million in the very first year.
However, problems soon cropped up. NKC tried to recruit professional managers to handle these issues. But the malady turned out to be worse than the disease. These professionals came on board with massive egos and expectations of their own. The business suffered, and started to make losses as a result. At one point, it appeared that the company might even have to shut its doors.
In this grim situation, NKC once again turned within for answers. He read the scriptures, attended satsangs, and generally remained in communion with nature. These musings helped him to discover the simple truth that all the limitations experienced by human beings actually reside within the self, and not outside. Before attempting to bring about a change in the external situation, NKC realized that it was necessary to first alter one’s own thinking and perspective.
The philosophy that NKC eventually adopted was that of “finding yourself through losing yourself”. In practice, this translated as the giving up of one’s own sense of ego and self-importance. The individual then becomes more sensitive to the needs and capabilities of other human beings. 9
This approach yielded phenomenal results. NKC’s children also began to join the business one by one.
The eldest daughter Asha graduated with a BBA from Emory University, Atlanta in 2002. She expanded the company’s customer base in the United States from specialty rug stores to mass retail and interior designers. Asha also initiated the modernization of carpet designs in order to suit contemporary tastes and trends.
The middle daughter Archana completed her BA in Textile Chemistry from North Carolina University in 2004. She began to focus on Product Quality. Archana was instrumental in setting up checks and balances at every step of the production process.
The youngest daughter Kavita graduated from the Art Institute of Chicago in 2006. She assumed charge of the Design Department at Jaipur Rugs. In the same year, NKC’s elder son Yogesh dropped out of Boston College to work full-time with his father. He played a key role in the adoption of the Enterprise Resource Planning (ERP) software by the company. 10 The entry of these family members created a visible impact on the business.
In 2006, the company went through a major restructuring. Its nomenclature was changed from the erstwhile “Jaipur Carpets” to the present “Jaipur Rugs”.
The operations of the Jaipur Rugs enterprise are handled by multiple legal entities.11 The Jaipur Rugs Company (JRC) is run by NKC along with his son Yogesh. JRC and its 22 branch offices take care of all the aspects of production, from raw material procurement to the export of finished goods. Jaipur Rugs Incorporated (JRI) manages the sales and distribution of carpets in the United States. Based at Atlanta, JRI is run by Asha and Archana Chaudhary.
Bhoomika Wools (BW) is the firm that is responsible for wool procurement and processing. The raw wool is inspected and cleaned at its seven warehouses in Bikaner, before it is carded and spun into yarn with the help of external partners. NKC’s brother-in-law Navratan Saraf holds charge of the management of this entity.
The final pillar of the enterprise is the Jaipur Rugs Foundation (JRF). Established in 2004, this non-profit organization receives a percentage of the profits earned by the Jaipur Rugs Company. These funds are deployed towards the welfare, training, and motivation of the artisans. The Foundation also conducts medical camps and literacy classes for the weavers and their families.
The coordination of activities across the different operational groups provides the company with access to the necessary skills, though not their ownership. The company also maintains a significant influence over the key production processes, even though it does not control them directly. This distributed approach helps to decentralize the investment too.
The Technology of Rug Production
The process of carpet production begins with the global sourcing of raw materials, and ends with the worldwide distribution of the finished products. A series of over sixty intermediate steps are governed by a comprehensive system of quality control and logistics.
Rug orders are electronically received at the company. The production process begins after an order is generated by the Production Department.
Wool is the primary raw material required for carpet production. It is sourced from auctions. The raw wool is sorted and blended, before being sent for carding and spinning.
Carding is the process of brushing raw wool in order to prepare it for spinning. During the carding process, the wool fibres are separated. Unwanted matter falls out, and the fibres are then aligned together. This process can be done by hand, or on a machine. However, hand-carded wool makes for the best quality. In fact, hand carding is actually mandatory for the rug to be classified as authentically “handspun.”
After the wool has been carded, it is ready for spinning. The process of spinning provides consistent thickness to the yarn. The wool spun by hand is considered to be superior to the machine spun variety. The quality of the yarn depends largely upon the passion and the dedication of the spinners. It takes a spinner nearly an hour to spin one kilogram of wool. The spinner delivers the spun wool in a hank, which is a unit of yarn that is in a coiled form.
The next process is that of dyeing the wool in up to 3,000 different colours. This is followed by the procedure of “opening” the yarn, whereby spindles are made out of the dyed yarn hanks. These spindles are stored in company’s warehouse until they are transported (bundled in a bag with along with the design map) for weaving to any of the 7,000 looms across 600 villages in eight states of north and west India. Artisans weave the rugs from a provided rug map.
The quality of a carpet rests chiefly on its knots. As NKC says, “Funde ki nau barabar ho, lachche ki jod barabar thuke, taadi ka tension barabar ho. Yehi basic cheezein mujhe samajh mein aa gayi.” (The shape of the knot, the joint of the loop and the tension of the thread – these are the basic things you need to get right). But the single most important aspect is the number of knots per square inch. The more the knots, the greater the detail, the more valuable is the carpet. 6 Page 22
The Logistics of Rug Production
Each rug produced by Jaipur Rugs passes through a complex and geographically dispersed supply chain. The company uses standardized as well as non-standardized processes for the assignment and movement of the raw materials, work in progress, and the finished goods. Numerous departments work in close mutual cooperation, in order to seamlessly manufacture finished carpets.
Upon the receipt of a production order, the Central Control Room determines if an existing design sheet would suffice for the fulfillment of the order. In case any changes are required, the Design Department initiates the preparation of a new “Map” or Build Sheet. These maps furnish the weavers with easily understandable instructions that explain where each strand of different colours of yarn needs to be put.
A Raw Material Card is now matched with a design. It is then printed, cut, laminated for durability, and finally pasted together. In addition, yarn samples are stapled to help avoid errors in colour selection.
The Production Department subsequently determines the approximate geographic area in which the rug will be made, based upon the required type and the quality. The Raw Material Card along with the Design Map and the requisite bundles of dyed yarn are packaged into a bag. Prepared maps are also centrally stored for future use.
This parcel is sent out to nearest Branch Office in the geographical area selected for the production of the rug. The local Area Commanders at the Branch Office assign a weaver to the job, based upon loom availability, skill level, and the weaving speed. Because the map is very simple, a weaver needs virtually no prior training for producing a new design on a given loom.
After the weaving is completed, the rug comes off the loom. The woven rug is then transported to the Carpet Receiving Department at Jaipur, along with the design map and the leftover materials (if any). From here, the woven carpet is dispatched to the Finishing Centre. Meanwhile, the surplus materials are sent back to the Stores.
At the Finishing Centre, techniques are employed to fix the residual mistakes and to accentuate the highlights of the design. Rugs are washed to bring out the natural sheen in the yarns used, and also to dislodge any dirt from the weaving process. Finally, the completed rugs are evened out, trimmed, inspected and prepared for export before they are shipped.
The finished rugs help to transform the living spaces of the customers who purchase them.
The Enterprise Strategy
Jaipur Rugs facilitates an autonomous group of geographically dispersed artisans in processing the provided raw materials into finished rugs of the finest quality. Its enterprise strategy is founded upon four pillars: a) innovative business model, b) developmental values, c) low capital intensity, and d) modern communications architecture.
Innovative Business Model
Jaipur Rugs is a family business that stresses upon the importance of keeping family values alive. The company empowers every lady of the house, by providing her access to a sustainable livelihood within the precincts of her home. It has pragmatically aligned its operational model to align with the traditional Indian community practice of women refraining from stepping outside the household for employment.
Jaipur Rugs facilitates rural women towards carrying out highly productive work within the four walls of their home. It organizes for the business to travel to the doorstep of the weavers. Through a grassroots network that requires specialized logistical support, the raw material is dropped off at an artisan’s home. 12 Quality supervisors regularly travel to inspect the looms, in order to track progress and ensure consistent output.
It is the responsibility of the supervisors to ensure that the artisans are not interrupted by a shortage of yarn, or any other disruptions to their earning capacity. They also make payments to the weavers every month at their looms. 8 When completed, the rug is picked up at the doorstep of the weavers and passed on to the next stage of the rug-making progress. 8
The artisans are thus able to operate comfortably from home, at their own pace. Mothers with young children have no trouble working and weaving at the same time. Weavers also get to decide their own work hours. They can thus work around their family’s schedules. Further, they lose no working hours in the processes of receiving and transporting material. As a result, more numbers of them can work towards financial independence.
Jaipur Rugs deploys a number of different models to engage with the weavers. It has established relationships with thousands of weavers directly. The company has also built indirect relationships with numerous other weavers through “entrepreneurs.” These are usually former weavers who employ local villagers to weave rugs on multiple looms. In addition, middlemen facilitate about 20% of the company’s weaver relationships in geographical areas where enough weavers cannot be independently located. Apart from this, the company also gets work done through “outsourcing” partners that employ artisans.
The company supports the weavers in obtaining government subsidies. It also helps to finance the cost of the looms. In deserving cases, it even lends its looms to the weavers until such time as they are able to purchase looms of their own.
The Jaipur Rugs enterprise has three kinds of field employees. A Branch Manager looks after the operations of each of its 22 branch offices. Most of them are former weavers, who have been promoted over the years when they demonstrated managerial potential.
Each branch has a posse of Area Commanders, who are responsible for maintaining communication with the weavers in a given area.
Finally, the JRF Motivators are responsible for recruiting the weavers, managing their skill training through various beneficial government schemes, and maintaining good relationships with the artisan families in general.
The company’s social values are manifested in the introduction of various developmental initiatives for the artisan community. In line with its mission to make a positive difference to the lives of rural artisans, the JRF regularly organizes health camps to provide continuous healthcare support to the entire village community. Apart from the treatment of general ailments, those with severe health issues are referred to specialized hospitals for proper care.
The Jaipur Rugs Foundation (JRF) trains weavers who have no viable work employment available to them within their surrounding area. Potential artisans are identified through an intensive campaign. 13 The mission of Jaipur Rugs is explained to them. Skills training is imparted to the new recruits by the JRF staff members as well as other experienced weavers. Through JRF’s intervention, these artisans gain access to perennial employment that is not hampered by the vagaries of the weather or the season.
JRF conducts a six-month-long Alternative Education Program (AEP) for illiterate artisans and other village community members who have not completed primary education. While the core ambit of this initiative is basic literacy and numeracy skills, it also helps to generate an understanding of health, hygiene, family life, education and the environment. The AEP essentially seeks to build the confidence and self-reliance of the participants.
The JRF’s Weaver Engagement Program introduces rural artisans to the entire process of rug weaving, and helps to provide them with a holistic perspective of their contribution. 8 Members of the grassroots workforce visit the company’s Head Office to experience the art that they create, and derive pride in their work. 14 Some of the weavers have woven carpets for 30 years without ever seeing a finished rug. They are often mesmerized by this experience.
JRF also conducts Management Development Programs for young women, in order to tap into their natural leadership ability. Most of the women weavers have spent the greater part of their life in executing domestic chores. They have never attended school. This program helps build the confidence of the women towards taking up leadership roles in their village, and also prepares them for assuming managerial positions within the Jaipur Rugs enterprise. Further, they help to subvert the traditional gender imbalance within rural societies.15
Financial inclusion has been a major gap area in the development of rural communities in India. Jaipur Rugs identifies locally accessible banking services, and also helps the artisans to open bank accounts. 16
Low Capital Intensity
Jaipur Rugs works on very low fixed costs by decentralizing the work. Rug production is done purely on a “pay for performance” basis. The payments are determined by the quality and the quantity produced.
Further, most of the manufacturing operations such as the dyeing, washing, machine carding, machine spinning and most weaving looms are outsourced. Besides reducing the capital requirement, these features allow for significant operational flexibility too. 4 Page 173
Modern Communications Architecture
A combination of human talent, an electronic network, and logistical infrastructure helps Jaipur Rugs to institutionalize quality and to maintain the company’s influence over the entire process of rug production. An ERP system is deployed to optimize its geographically diverse supply chain. Another interesting process is the design and creation of the build sheets (known as “maps”) that provide easily understandable instructions to the minimally educated weavers.
The well-designed communication network of Jaipur Rugs facilitates the delivery of raw materials, regular communication with the weavers, and the monitoring of the progress of the work that takes place in remote villages with limited resources. These communication channels help the company to manage a highly labor-intensive process very effectively. 4 Page 173
NKC founded Jaipur Rugs upon the core principle of preservation and enhancement of human dignity. He thereby managed to subvert the antiquated social practices that shunned the poor, the women and the artists. NKC thus brought dignity back to the art and craft of rug making.
As a result, 41,000 Indian artisans, as well as their clientele across 40 countries of the world, subscribe to the company’s philosophy of responsible manufacturing. Most importantly, the incomes of the artisan have gone up as a result of their engagement with Jaipur Rugs.
Owing to its innovative and socially beneficial business model, Jaipur Rugs has received several awards for outstanding performance in the carpet industry.
The CNBC TV18 Emerging India Award was conferred in December 2014, in recognition of the company’s efforts towards the benefit of the society as well as the underprivileged. The NASSCOM Foundation presented the Social Innovation Honours Award to Jaipur Rugs in 2014 in recognition of the creative leveraging of Information and Communication Technology by the company to create solutions that address gaps in social development. In the same year, Jaipur Rugs also won the Bihar Innovation Forum Award as well as the IndiaMART “Leaders of Tomorrow” Award.
NKC has ceaselessly championed the cause of the downtrodden and the socially underprivileged people in India for nearly four decades now. His personal efforts over the decades have been duly recognized too. The Ernst & Young Entrepreneur of the Year Award was conferred upon NKC in 2010. 17
NKC also received The Times of India Social Impact Award for 2012 in recognition of his efforts to provide livelihood opportunities for people living below the poverty line in remote and distant areas.
The Way Forward
NKC looks upon Jaipur Rugs not merely as a source of income or profit, but as a medium for putting human talents to good use. He considers the enterprise as an opportunity to promote holistic community development, and as a way of life in itself. 18
The vision of NKC is to have one hundred thousand people working with Jaipur Rugs by the year 2020. Going forward, he would also like to enable the weavers to secure a greater share of the wealth that they produce by making them as stakeholders in the enterprise. 8
NKC considers it beneficial to help establish an emotional connection between the end-users of the rugs and those who actually make them. To that end, every loom is likely to acquire a barcode soon.
Intense competition in the hand-made carpet industry is a source of apprehension for Jaipur Rugs. The risk of high client concentration by virtue of two-thirds of its revenues being derived from Jaipur Rugs International is also a matter of concern.
The development of dedicated and loyal people at all levels of the organization will remain a challenge. Deepening the relationships between its 40,000 virtual employees and its global customers is also a priority. These requirements hold the key to the scalability of the company’s operations in the future.
In response, Jaipur Rugs has outlined six strategies to help meet its future endeavors:
a) Expand the Core Offerings: Jaipur Rugs aims to offer a full product line of rugs, and also expand the product line to include curtains, furniture, and complete interior-decor solutions.
b) Country focus: Continued focus on penetration of the US market. Outside of US, focus on seven high potential countries: South Africa, Turkey, Italy, UK, UAE, Japan, and Germany.
c) Capacity Building: Make design as the company’s core competence, by attracting new talent and developing new creations based on customer insights.
d) Adaptive Organization: Redesign the organizational structure, in order to better align the activities with the respective functions.
e) Efficient Supply Chain: Build distinctly separate supply chains for low end and high-end products, with a continued focus on three main aspects: a) time, b) transparency and c) trust.
f) Financial prudence: Exercise financial prudence by monitoring important metrics.
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