Rebooting Electronics Manufacturing: Surviving The COVID-19 Crisis And Future Planning

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Here is a snapshot of what industry experts feel needs to be done when the countrywide lockdown due to COVID-19 is eased, and life becomes near normal. The article is based on a recent webinar conducted by ELCINA.

By Rahul Chopra

Did they discuss anything useful? Can I do something based on their discussions? Can you summarise the key points they 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 the first two queries seemed to be a clear ‘Yes’, the third one forced me to rethink how to present such stories.

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

The backgrounder
I have prepared this summary from a webinar held on April 16. Its title was ‘Rebooting Electronics Manufacturing – Surviving the COVID-19 Crisis and Future Planning’. In the webinar, a discussion was conducted between veterans from India’s electronics industry including A.M. Devendranath, COO, Feedback Consulting; Amandeep Singh, head purchase – digital appliances, Samsung; Amrit Manwani, president of ELCINA and CMD, Sahasra Group; Atul Lall, CEO, Dixon Technologies India Ltd; Dr Sreeram Srinivasan, CEO, Syrma Technology; P.V. Moorthy, technical advisor, BPL Ltd; and Vinod Sharma, MD, Deki Electronics Ltd. The webinar was moderated by Rajoo Goel, secretary general, ELCINA. It was organised @MMI.

Valuable tips and best practices

  • Go short-term. Scrap your annual budgets and targets. Forget your five-year plans for now. Instead, plan for different scenarios on a quarterly basis.
  • Don’t produce anything that is no longer needed! Validate your earlier purchase orders with your customers before starting work.
  • The industry needs to communicate proactively amongst its stakeholders. Inform your suppliers about 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.
  • Reduce the movement of staff to the factory by allowing two shifts to work for 12 hours and the third shift gets an off on that day; then rotate.
  • Look at realigning your shopfloor (machinery in plants) to create more space for social distancing.

The glass is half empty –the challenges

  • Consumer-facing OEMs are expecting major changes in demand patterns, as compared to what was planned for.
  • Seasonal demand for products that see an upswing in Q1 has been deeply compromised.
  • Inventories are lined up with these OEMs. Sales are nil.
  • Suppliers should expect major changes in purchase orders–past and future.
  • There is no clarity amongst OEMs with respect to what their suppliers will be able to supply.
  • Production efficiencies are not going to reach normal levels for some time to come.
  • There will be delays in production due to delayed and staggered supplies from different suppliers.
  • Costs will go up due to increasing overheads across the supply chain.

The glass is half-full – the opportunities

  • The fear of social gatherings will remain for the next few years, leading to a demand for tech products that enable social distancing.
  • The increasing US$ rate is creating more opportunities for localisation of products and has made us more competitive.
  • Consumer electronic products that are popular on e-commerce platforms are expected to recover faster – mobile devices, smart TVs, LED lighting, etc.
  • We may be back on track by Q3 (for the festival season).
  • The need to develop a local supply chain has become evident. Electronic goods sold in India will now be (increasingly) manufactured in India.
  • The components ecosystem will (be forced to) evolve in India.
  • Opportunities for exports will expand.
  • Opportunities to export to friendly nations such as the US, UK, etc, should increase.
  • Expect export opportunities to expand in sectors such as medical electronics, automotive electronics, telecom, etc.
  • Africa could be a major export destination too.
  • We might be closer to attaining the US$ 5 trillion goal now–because of the ‘China-plus-one’ need from customers across the globe!

Possible strategies for the mid- and long-term

  • Go digital: Be ready for your entire business to adopt digital and tech.
  • Go green: Nature has shown us what it’s 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.
  • Focus on values: Become a value driven organisation, think long-term and stop going for short-term gains.
  • Automate: Introduce process automation where possible.
  • Shift your best talent: Industry should reassign the roles of their best purchase people to focus on indigenisation rather than chasing the lowest price for the most expensive item on the BoM.

What our government needs to do

  • Relax the schedule for GST payments to give a breather to the industry and improve cash flow.
  • Reduce GST rates for categories such as appliances, which attract a whopping 28 per cent. Improve their demand.
  • Simplify incentive schemes to make it easy for industry to benefit. (Bangladesh’s recent policy is a great example!)
  • Develop a Star Rating for all tech products to indicate the percentage of indigenisation–so that consumers are aware and may prefer to buy products that have a stronger Indian quotient.
  • Allow factories to do two shifts for 12 hours (for firms with 24-hour work timings) and the third shift gets an off to reduce the movement of people–thereby reducing the risk of disease.
  • 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.
  • Leave us alone now. Let us do our business. Monitor, but don’t police us.

The author is the editor of Electronicsforu.com Network.

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