Consumer electronics is one of the biggest segments in the electronics industry. Gaurav Dureja, director, Ambrane India, one of the key manufacturers of consumer electronics in the country, talks about the demand-supply challenges faced in this domain in a conversation with Sneha Ambastha, Electronics Bazaar.
EB. How does consumer electronics drive the growth of the electronics industry?
The electronics sector is typically divided into the consumer electronics, electric utilities and general electronics segments. However, it is the consumer electronics (CE) segment that drives most of the growth in the sector. In the future, growth in electronics will primarily be driven by manufacturing, and the demand for smartphones, mature tablets and mobile accessories. Nearly 60 per cent of future market growth will be driven by mobile phones, televisions and other mobile computing devices. This trend is not a huge surprise, considering industrialisation and the rise of the Indian middle class.
EB. What do the consumer electronics manufacturers need to do to improve supply chain management?
To leverage the opportunities presented by the explosion in consumer demand, CE manufacturers need to tighten their forecasting, sourcing, distribution and inventory management strategies. But to succeed in the extremely competitive CE space, manufacturers must introduce a more refined and sophisticated approach to supply chain management. Entirely new capabilities need to be built to understand consumer needs and respond to them even while retaining flexibility in production, distribution and logistics. Special focus needs to be put on reverse logistics and risk mitigation to ensure better service to customers.
EB. Are there any plans in the coming year to invest in capital equipment for electronics manufacturing?
Investment in capital equipment is directly proportional to product demand. At Ambrane, we have all the resources to invest and increase our production capabilities, as and when we see the demand going up. Having said that, I must say that Ambrane has not only witnessed phenomenal growth in sales over the last three years, but has invested substantially in the Make in India initiative by increasing production and reducing the dependence on imports.
EB. Do you have any special programmes for ‘Made in India’ suppliers or MSMEs?
We do encourage suppliers who manufacture in India as long as they meet our stringent quality standards.
EB. Which types of electronic components do you procure?
We procure all the components (that meet our quality norms) that are required for the power banks and tablets that we manufacture locally.
One of the major challenges is getting the right PCB (motherboard) suppliers or ICs, the lack of which can increase failure rates in the field.
EB. How important is it to source the correct component from the right vendor? What is the business impact of not doing so?
Sourcing the correct component is extremely important. It ensures consistency of supplies and quality. It also helps us in building consistency in our market, sales, prices and brand. Not sourcing the right component from a suitable vendor will affect our consistency which, in turn, will impact our brand image.
EB. What categories of electronics materials/services do you procure regularly?
We regularly procure all the components (meeting our quality norms) that are required for the power banks and tablets that we manufacture locally.
EB. Do you follow any specific process to let the suppliers know about your company’s requirements?
Yes, we have a procurement team, which keeps the suppliers informed about all our best practices and the norms laid down by some key industry veterans working as consultants for us. These consultants assist our suppliers to gain knowledge about all our requirements and keep updating the process.
EB. Do you have any specific turnover or quality certification requirements for your vendors?
As mentioned earlier, the procurement team follows the best practices and processes (as defined by our consultants). While the certification criteria are product-specific and confidential, in general, they measure up 100 per cent to (and in some cases, exceed) the statutory requirements of Indian and international certification standards.
EB. Is there any specific process for vendor enrolment?
Yes, Ambrane follows a standard process for all vendor registrations, which is shared with any vendor approaching us. By following this pattern, the enrolment process becomes smoother and faster.
EB. How do you classify and define potential, approved and preferred suppliers?
Ambrane has laid down certain mandatory conditions such as vendor capabilities, associated brands, the level of production capacities that are free to consistently fulfil our requirements, and the use of best practices like Six Sigma.
EB. Do you have any vendor development programme?
There is great synergy between Ambrane and its vendors. We share our sales and production plans with our key component suppliers, as well as share new designs or emerging product requirements from the market, with them. This helps in aligning and developing the right vendors and managing JIT inventory, thus reducing our cost of production and helping us introduce the right products at the right time.
EB. What are the typical ‘hard-to-find’ categories for which you can say that vendor development is a challenge?
One of the major challenges is getting the right PCB (motherboard) suppliers or ICs, the lack of which can increase failure rates in the field. We are trying to establish our own PCB design, development and manufacturing unit to overcome this challenge. This will help Ambrane to improve and supply the best quality products to its customers.
EB. How do you find suitable alternatives for a failed (end-of-life) component?
At Ambrane, we believe in introducing state-of-art products. This not only gives us the advantage of very low failure rates in the field but reduces our dependence on end-of-life components. But we do stock some critical components for post-warranty/end-of-life support.
EB. How do you find a suitable alternative for a component supplier who vanishes from the business due to bankruptcy or other business pressures?
Well, I must say that Ambrane has been lucky not to have faced such a situation till now. This may be due to the industrious work of our procurement team. However, as a policy, we do follow the 70:30 formula in all our procurement processes. This effectively means we have multiple vendors for the same component.
EB. What is your company’s take in situations such as low-profit or low sale product line closures by suppliers, which leads to no customer support being offered by them?
As I mentioned earlier, Ambrane believes in state-of-art products, introduced after deep market research and by driving costs down through volumes. However, at times, a product may not be as successful as we expected it to be. In such a situation, we do stop production but continue to honour our commitments to our customers—in terms of post-sales support, replacements or upgrades. At Ambrane, we believe that customer delight comes first.
EB. How do you combat the counterfeit or grey market?
That’s a challenge but we have introduced bar coding on our entire product range, which helps our service team identify counterfeits from original Ambrane products. However, I would look forward to some media support to help us educate customers on the technical and quality aspects of products. The grey market is not where Ambrane products compete. We provide consistent quality and assured after-sales support. We work hard to delight our customers.
