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Oct 26, 2015

Jaipur rugs – weaving the lives of the poor into the global markets. an inclusive business model.

Oxfam   /   Oxfam India

The rug industry can be traced back over 2500 years in India. Even today, India still remains one of the world’s largest exporters of hand-knotted rugs. However, most weavers have been living at the bottom of the pyramid (BoP) with low incomes and are often exploited by middlemen including those that own the looms and buy the completed products from the weavers. Jaipur Rugs seeks to change all that.

Started by Mr. N.K. Chaudhary with only two looms installed in his own home almost 30 years ago, Jaipur Rugs has evolved into one of the largest manufacturers of hand-knotted rugs in India. When starting the business, there were many weavers in Mr. Chaudhary’s hometown. He was told that “these are the untouchable people” and “not allowed at home”. However, this made Mr. Chaudhary realise that a person, whether from upper caste or lower caste, should be judged by his or her own efforts and worth instead of caste. Over the years, the business of Jaipur Rugs has been evolving, while the social mission has been kept at the core of its philosophy: to empower the marginalised weavers and connect them with the global market.

Approach

Jaipur Rugs has built up an integrated business system across the value chain of the rug industry, including the sourcing of raw materials, rug manufacturing, exporting and wholesaling. The business operations are supported by three different entities: Jaipur Rugs Company (JRC), Jaipur Rugs Incorporated (JRI) and Jaipur Rugs Foundation (JRF). JRC is responsible for the design and manufacturing of rugs, with headquarters in Jaipur and branch offices across India. The finished products are for export only. JRI handles the sales and export, with headquarters in Atlanta, U.S.A. The JRF, a non-profit organization, was set up in 2004 to support the social mission of Jaipur with entrepreneurship development and social well-being development programmes. The JRF also coordinates the recruitment and training of artisans that weave the rugs for JRC. The chart below illustrates how the three entities work together and build up Jaipur Rugs’ inclusive business model.

Outcomes

Over the years, Jaipur Rugs has been helping the poor, especially low-income women in India to gain access to weaver employment opportunities in their own communities, creating a local cluster of economic activity. Jaipur Rugs has built up its brand with both the design and quality of its products, and its community-rooted social mission. Jaipur Rugs changed the traditional model of middleman-owned looms and enabled the weavers to own their own looms. The 7,000 looms owned by the artisans themselves create more than 500,000 rugs per year, which are exported to over 40 countries across the world.

As of 2015, Jaipur Rugs provides sustainable livelihoods to over 40,000 home-based artisans across 600 villages in India, 80% of whom are women. As the business grows, JRF has been making continuous efforts to recruit and provide training to weavers, including selecting “masters” among the experienced weavers as trainers. JRF has also connected the weavers with beneficiary programmes including healthcare, education, insurance and financial inclusion initiatives. JRF has helped over 2,000 weavers to obtain the “Artisan Card”, which is issued by the government to recognise artisans’ social status and make them eligible to receive associated benefits including discounts on health insurance schemes, access to credit at preferential rates and scholarships for their children. JRF has also facilitated the opening of bank accounts for artisans and in some cases, provides loans to artisans to help them develop their business.

A recent impact assessment report by Grassroots Business Fund (GBF) demonstrates that Jaipur Rugs has enhanced the social status of women and created real social impact through reductions in child marriage and women’s increased decision-making powers in families.

Key Success Factors

The physical and emotional connection with the grassroots community is the foundation of Jaipur Rugs’ social-economic business model. Mr. Chaudhary believes that Jaipur Rug’s mission is not only to enable weavers to weave rugs, but also to “weave their lives”. Jaipur Rugs helps weavers to obtain subsidies from the government, which has helped to finance up to 75% of the cost of the looms. This helps weavers take the ownership of looms and become financially and socially independent.

With such a decentralised system, the efficiency of the supply chain is crucial. Jaipur Rugs has adopted an Enterprise Resource Planning (ERP) system to increase the efficiency of its supply chain with quality control functions, communication networks and progress record tracking. The logistics of delivering the raw materials and picking up the woven rugs are arranged by Jaipur Rugs, which enabled the weavers to concentrate on the weaving work.

Lessons Learned and Future Plans

Quality control in the weaving and finishing process has been a challenge for Jaipur Rugs given its huge decentralised manufacturing network. Jaipur Rugs has adopted a system to ensure quality control.

However, this is not enough, if defects were not communicated back to the weaver. Thus Jaipur Rugs hires area commanders who know how to weave and can visit every loom on a weekly basis to help correct and retrain the weavers during the weaving process if necessary. This helps reduce the number of defects significantly when delivered to headquarters.

Another approach to ensure quality control is the adoption of uniform “weaving maps”, which helps weavers easily understand where to put each strand of coloured yarn. This improves the efficiency of the manufacturing process and enables those without weaving experience to learn quickly.

In the future, Jaipur Rugs hopes to further empower the weavers and bring out their spirit of innovation and entrepreneurship. Weavers are encouraged to come up with their own design and styles instead of always sticking to the patterns on the weaving maps. As more and more weavers become motivated by the idea of “self-design”, Jaipur Rugs expects to launch more programmes to meet this objective.

Another vision of Mr. Chaudhary is to connect the weavers with customers. “We are almost there”, said Mr. Chaudhary. In recent years, Jaipur Rugs has been striving to build a platform where every customer can trace their rugs to source and truly “touch” the lives of the weavers. With the adoption of modern communication technology and business-to-business (B2B) e-commerce platforms, it is expected that Jaipur Rugs will bring the connection between the weavers and the global market to a new level.

Quotes

“We enable the poor to start weaving not just rugs, but also their own lives... I want Jaipur Rugs to be a platform of connecting the end-consumers with the artisans so that they can emotionally connect with one another”.

-Mr. N.K. Chaudhary, founder of Jaipur Rugs

The India Responsible Business Forum (IRBF) Index 2015 is an initiative by Oxfam India in partnership with Corporate Responsibility Watch, Praxis and Partners in Change, non-profits which look at corporate accountability and business responsibility.

 

References

CSR Asia, “Creating shared value through inclusive business strategies”, http://www.csr-asia.com/report/Shared%20Value%20Publication.pdf (accessed September 23, 2015)

C.K. Prahalad, “The Fortune at the Bottom of the Pyramid” (accessed September 24, 2015)

Interview with Mr. N.K. Chaudhary and Mr. Abhishek Sharma from Jaipur Rugs on September 23, 2015

Jaipur Rugs Company website, www.jaipurrugsco.com (accessed September 23, 2015)

Jaipur Rugs Foundation website, www.jaipurrugs.org (accessed September 23, 2015)

Neelima Mahajan-Bansal (2009), “The Magic Carpet”, Forbes India. 

http://forbesindia.com/article/beyond-business/the-magic-carpet/2312/2?id=2312&pg=2 (accessed September 25, 2015)

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