morokoff

AI Procurement

How can a company build its procurement and supply chain processes using the Jugaad philosophy?

09.01.2025

deepseek.com

Integrating the Indian philosophy of Jugaad (pronounced joo-gaardh) — meaning “frugal innovation” or “the art of improvising effective solutions with limited resources” — into procurement and supply chain processes can create a culture of agility, resilience, and grassroots ingenuity.

Unlike top-down, capital-intensive optimization models, Jugaad is about flexibility, simplicity, and making things work in constrained, unpredictable environments.

Core Principles of Jugaad in Business

1. Do More with Less – Maximize resource efficiency and minimize waste.

2. Embrace Simplicity – Seek elegant, minimal, and accessible solutions over complex ones.

3. Think and Act Flexibly – Be agile and adapt quickly to changing constraints.

4. Include the Marginal – Innovate for and with underserved or constrained contexts.

5. Follow Your Heart – Passion and intuitive problem-solving drive action.

6. Learn Through Trial & Error – Experiment rapidly and learn from failure.

Practical Application to Procurement & Supply Chain

1. Supplier Strategy: Leveraging Grassroots & Frugal Partners

• Source from “Jugaad Entrepreneurs” – Actively seek out small, local, or informal sector suppliers who excel at frugal innovation. They often create robust, low-cost solutions perfect for emerging markets or resilient backup sourcing.
• Co-Innovate with Suppliers on Constraints – Challenge suppliers with clear constraints (e.g., “Reduce packaging cost by 30% without compromising protection”) and reward innovative, simple solutions.
• Develop Local “Micro-Supply Hubs” – Instead of relying solely on large centralized suppliers, create networks of local small suppliers who can respond quickly with flexible capacity.

2. Inventory & Logistics: Frugal & Adaptive Systems

• Create “Good Enough” Buffer Solutions – Use low-cost, locally available materials for packaging or in-house storage solutions (e.g., repurposed containers, modular DIY racks) instead of expensive custom systems.
• Flexible, Multi-Use Assets – Invest in logistics assets that can serve multiple purposes (e.g., vehicles that can handle different load types, modular containers).
• Last-Mile Jugaad – In challenging delivery environments (e.g., rural areas, dense urban markets), partner with local informal logistics networks (bicycle couriers, tuk-tuks, boat networks) who can navigate constraints creatively.

3. Process Design: Simplification & Improvisation

• “Minimum Viable Process” Approach – For non-critical procurement categories, design extremely simple, low-admin processes (e.g., delegated spot buying with basic guidelines) instead of over-engineered systems.
• Empower Frontline Improvisation – Train and trust procurement & logistics staff to solve problems on the ground with available resources (within ethical/legal boundaries). Celebrate stories of clever fixes.
• Low-Tech Digital Solutions – In areas with poor IT infrastructure, use lightweight tools like WhatsApp groups for supplier coordination, SMS-based tracking, or simple mobile apps instead of expensive, complex ERP extensions.

4. Risk Management & Resilience: Frugal Redundancy

• Build a “Jugaad Network” of Backup Options – Identify alternative materials, components, or routes that are less ideal but “good enough” in a crisis. Often these are local, slower, or non-standard but reliable under disruption.
• Cross-Train for Flexibility – Ensure team members can handle multiple roles (sourcing, logistics, basic quality checks) to maintain operations during shortages or absences.
• Design for Repair & Reuse – Procure equipment and assets that are easy to fix locally with generic parts, reducing downtime and dependence on expensive specialized service contracts.

5. Sustainability & Cost Innovation

• Waste-to-Value Initiatives – Apply Jugaad thinking to turn supply chain waste into resources (e.g., using pallet wood for in-house repairs, converting damaged goods into by-products).
• Frugal Automation – Instead of large-scale robotics, implement simple, low-cost automation (e.g., gravity-fed racks, manual conveyor improvements) that enhances productivity without major capex.
• Constraint-Driven Green Solutions – Use resource constraints (e.g., water scarcity, high energy costs) as drivers for innovative, low-cost sustainable practices.

Example: A Consumer Goods Company in Emerging Markets Applying Jugaad

• Procurement: Sources packaging from local small producers who make boxes from recycled agricultural waste, cutting costs and carbon.
• Production: Uses flexible, multi-skilled local labor to run small batch production lines that can quickly switch between products based on material availability.
• Distribution: For rural distribution, uses a hybrid model — trucks to regional hubs, then a network of motorized rickshaws with custom racks for last-mile delivery.
• Maintenance: Trains local technicians to repair factory equipment using 3D-printed parts and locally sourced components, avoiding expensive imported spare parts.
• Crisis Response: During a sudden border closure, the logistics team quickly partners with a local boat operator to move critical shipments via river routes at 1/10th the cost of air freight.

Contrast with Traditional Models

• Traditional: “Perfect solution” – Requires extensive planning, capital, and ideal conditions.
• Jugaad-Inspired: “Workable solution” – Focuses on speed, adaptability, and making the most of what’s available now.

Strategic Advantages of a Jugaad Supply Chain

1. Extreme Cost Efficiency – Reduces both capex and opex through frugal innovation.

2. Hyper-Local Adaptability – Solutions are tailored to local constraints and opportunities.

3. Rapid Crisis Response – Culture of improvisation enables quick adaptation to disruptions.

4. Inclusive Growth – Engages and develops local suppliers and communities.

5. Sustainable Innovation – Naturally promotes resource conservation and circular thinking.

Implementation Roadmap

1. Identify “Constraint Hotspots” – Map where your supply chain faces the biggest resource, infrastructure, or cost constraints.

2. Launch Jugaad Challenges – Run internal and supplier competitions to solve specific problems with limited budgets (e.g., “Reduce packaging weight by 40% with under $500 investment”).

3. Create a Jugaad Toolkit – Develop simple guidelines for ethical improvisation (what’s allowed, what’s not) and share best practices across teams.

4. Celebrate & Reward Frugal Innovation – Recognize employees and suppliers who deliver clever, low-cost solutions.

5. Build Local Innovation Ecosystems – Partner with universities, startups, and informal sector networks to source Jugaad solutions.

Caveats & Balance

Jugaad must be guided by ethical boundaries and quality guardrails. It is not about cutting corners that compromise safety, ethics, or long-term value. The goal is frugal ingenuity, not reckless improvisation.

When balanced with robust governance, Jugaad transforms from a survival tactic into a strategic capability — enabling companies to operate profitably in volatile environments while building extraordinary resilience from the ground up.

Final Thought

In an era of constant disruption and resource constraints, Jugaad moves supply chain thinking from “How do we optimize perfect conditions?” to “How do we thrive in imperfect reality?” It cultivates the entrepreneurial spirit at every level of the supply chain, turning constraints into catalysts for innovation.