Rebooting Electronics Manufacturing

Did they discuss anything useful? Can I do something based on their discussions? Can you summarise their key points discussed?

Those were the three questions asked by a friend from the industry, when I tried to share insights I had gathered from ELCINA’s recent webinar. While the answer to first two seemed to be a clear ‘Yes’, the third one forced me to rethink how to present such stories.

Hence, I present a bulleted list of key points. If this format helps you to understand key points discussed in a 1.5 hour meeting (within 10 minutes) and take informed decisions, this could probably be the best format going ahead.

THE BACKGROUNDER

I have prepared this summary from a webinar held on 16th April. It’s title was “Rebooting Electronics Manufacturing-Surviving the Covid-19 Crisis and Future Planning”. It was a discussion between veterans of India’s electronics industry including A.M. Devendranath, COO, Feedback Consulting; Amandeep Singh, Head Purchase-Digital Appliances, Samsung; Amrit Manwani, President-ELCINA, CMD-Sahasra Group; Atul Lall, CEO, Dixon Technologies India Ltd; Dr. Sreeram Srinivasan, CEO, Syrma Technology; P.V. Moorthy, Technical Advisor, BPL Ltd; Vinod Sharma, MD, Deki Electronics Ltd, and moderated by Rajoo Goel, Secretary General, ELCINA. It was organised @MMI.

VALUABLE TIPS & BEST PRACTICES

1. Go Short-term. Scrap your annual budgets and targets. Forget your 5 year plans for now. Instead plan for different scenarios on a quarter-wise basis.
2. Don’t produce anything that is no longer needed! Validate your earlier purchase orders with your customers before starting work.
3. Need to communicate proactively amongst our stake-holders. Inform your suppliers, what you no longer need, and what you do. Inform your customers what capacity you have (to supply them)–and align their demands with your supply.
4. Reduce movement of staff to factory by allowing 2 shifts to work for 12 hours–and 3rd shift gets an off on that day, and then rotate.
5. Look at realigning your shop-floor (machinery in plants) to create more space for social distancing.

THE GLASS IS HALF EMPTY (CHALLENGES)

1. Consumer-facing OEMs expecting major change in demand patterns, as compared to what was planned for.
2. Seasonal demand for products that see upswing in Q1 has been deeply compromised.
3. Inventories are lined up with them. Sales are nil.
4. Suppliers should expect major change in Purchase Orders–past and future.
5. There is No clarity amongst OEMs with respect to what their suppliers will be able to supply.
6. Production efficiencies are not going to reach normal levels for some time to come.
7. Delay in production due to delay and staggered supplies from different suppliers
8. Costs will go up due to increasing over heads across the supply chain.

THE GLASS IS HALF FULL (OPPORTUNITIES)

1. The fear of social distancing will remain for the next few years. And, demand for tech products and social distancing are tightly linked.
2. Increasing US$ rate is creating more opportunities for localisation of products and has made us more competitive.
3. Consumer electronics products that are popular on Ecommerce platforms are expected to recover faster–Mobile devices, smart TVs, LED Lighting, etc.
4. We might be back on track by Q3 (festival season).
5. Need for developing a local supply chain has become evident. Electronics goods sold in India will be now be (more) manufactured in India.
6. Components eco-system will (be forced to) evolve in India.
7. Opportunities for exports will expand.
8. Opportunities to export to friendly nations such as US, UK, etc should increase.
9. Expect export opportunities to expand in sectors such as Medical electronics, automotive electronics, Telecom, etc.
10. Africa could be a major export destination too.
11. We might be closer to attaining the US$ 5TN goal now–because of China-plus-1 need for customers across the globe!

POSSIBLE STRATEGIES FOR MID & LONG TERM

1. Go Digital – Be ready for your entire business to adopt Digital and Tech.
2. Go Green – Nature has shown what its capable of, and how things improve when we are not fiddling with it. We need to ensure that we do not go back to our wrong ways.
3. Go Values – become a value driven organisation, think long term, and stop going for short term gains.
4. Automate – Process automation to be brought in where possible.
5. Shift Your Best – Industry should reassign role of their their best purchase people to focus on indigenisation rather than then chasing lowest price for the most expensive item on the BoM.

WHAT OUR GOVERNMENT NEEDS TO DO

1. Relax schedule for GST payments to give a breather to the industry and improve cash flow.
2. Reduce GST rates for categories such as appliances which attract a whopping 28%. Improve their demand.
3. Simplify Incentive schemes to make it easy for industry to benefit (Bangladesh’s recent announcement policy is a great example!).
4. Develop a Star Rating for all tech products to indicate percentage of indigenisation–so that consumers are aware and may prefer to buy products that have stronger Indian quotient.
5. Allow factories to do two shifts for 12 hours (for firms with 24 hour working timings) and 3rd shift gets an off to reduce movement of people–thereby reducing risk of disease.
6. Incentivise firms in accordance with the value they add–so everyone tries to add higher value irrespective of which layer of the ecosystem they occupy.
7. Leave us alone now. Let us do our business. Monitor but don’t police us.

Author – Rahul Chopra, Editor, Electronicsforu.com Network

DISCLAIMER-CUM-REQUEST by Author: I have not been able to cover ALL the wonderful points discussed. Therefore, I request the panelists and even those who attended–to add any key points missed.