Sekaran Letchumanan, Vice President, Operations at Flex India, in an exclusive conversation with Electronics B2B shed light on Flex’s expansion plans in India. He also spoke at length about India’s chances of being the electronics manufacturing hub of the world.
Excerpts from the interaction
Que – How was Flex’s performance during the last two fiscals?
Ans – Our Fiscal 2020 results demonstrate our progress on shifting our portfolio, operating with disciplined execution, managing our costs, focusing on generating free cash flow, and being prudent with our capital. We have continued to take proactive actions and measures to protect employee safety, mitigate work stoppages, support customers and suppliers, and strengthen liquidity. Our efforts have helped us all to meet the objectives of the company despite the ongoing COVID-19 pandemic.
We recently announced quarter results in October 2020, where we have displayed solid execution, capitalized on improved demand across our varied end markets, and delivered results above our previous expectations. Even during these uncertain times, we have shown that our long-term strategy to manage portfolio mix, drive disciplined execution, and focus on free cash flow generation, is a strong and differentiating roadmap. Looking ahead, we are confident in our ability to maintain our performance while innovating and delivering best-in-class solutions for our customers.
Que – What are Flex’s India plans for this fiscal and the next?
Ans – Our plans in India are guided by our company’s overall strategy and customer requirements which ensues their in. Flex India’s plan is to grow in the country for domestic and export requirements from our multiple customers.
We see enormous potential in India with the amount of push that the government is putting forth for manufacturing.
Flex has been operating in India since 2001 and over the last 19 years we have grown from strength to strength. We are present in six locations across India, including Chennai, Sriperumbudur, Pune, Bengaluru, and Sri City serving customers through three distinct lines of business, which are manufacturing, global business services and aftermarket services.
Our expansion plans are determined primarily by our customer requirements and we invest sensibly in a balanced, global approach to meet our customers’ commercial needs in all parts of the world.
Que – How have been the recent challenges for you, especially keeping Corona in consideration?
Ans – At Flex, the health and safety of our workers in more than 30 countries remains our primary concern. The resumption of safe manufacturing was our biggest challenge. Since the pandemic struck, we kept a very close tab on developments and created a playbook to deal with the situation. We have been very vigilant in developing healthy workplace practices and have ensured that we comply with all the guidelines laid down by the local governments. We will continue to do so going forward as well.
In India we restored our operation strategically. In May 2020, we returned to production with 50 per cent of our workforce, in compliance with the Indian government mandate. We have ensured that all safety measures required are actioned. We continue to monitor the safety and security of all our workers in each facility in close coordination with our regional crisis and a country specific management team.
The second challenge was the supply chain. To manage the COVID-19 situation, since the beginning of the crisis in January, Flex assembled a global task force that had visibility into the ever-evolving supply chain events and was able to execute internal changes and work with our supplier partners to manage our supply chain. The quickly moving COVID-19 situation had created localized disruptions which required real-time analysis and mitigation.
Working with our suppliers and customers we had to analyze demand and balance the need for supply against the risk of creating an artificially constrained market. Throughout the crisis we continued to learn more about our ability to effectively respond to our customers’ needs and work to develop improved tools and processes to better support future supply chain disruptions.
Que – What are the technologies that you think are leading the electronics manufacturing space? Please elaborate?
Ans – AI, Machine Learning, 5 G and Automation are some of the main innovations that can be utilized in the manufacturing space.
At the heart of Industry 4.0 and modern manufacturing, machine-to-machine (M2M) communications are the key to unlocking factories of the future. Traditional hardwired connections between machines on the manufacturing floor are not designed for connectivity, which means these machines inherently require manual assistance from an operator. Machine-to-machine communications present the first real opportunity for touchless line maintenance, and one step closer to a fully automated manufacturing environment.
Automation is largely going to transform the electronics manufacturing industry with IoT going to have a significant impact. The electronics manufacturing sector will have to come up with innovation and better designed components in sync with various other digital technologies like AI. Some automated additions will free up employees for more engaging tasks, while others will work alongside them to perform the tasks that are too difficult or too dangerous for humans to perform repeatedly.
With cloud and edge computing, connected intelligent devices are all over the factory floor, constantly collecting data that can be used to train machine learning models to monitor operations in real time and flag issues. In our experience, predictive maintenance can reduce downtime as much as 20 percent, a huge win considering bottlenecks on the production floor can make or break on-time shipment.
Robots of course are also in the mix, having done much of the heavy lifting for many years now. As manufacturing becomes more complex, the next frontier is Industrial Internet of Things (IIoT) to endow robots with more nuanced control and coordination. The next generation of robots will have sensors that enable them to pull information to better perform their tasks. In return, enterprises will be able to achieve greater operational efficiency and predict their production output with more confidence.
As it’s not just the production floor that is undergoing a revolution, with emerging technologies our entire ecosystem – from supply chains to logistics – can also sense risks and trigger workflows to correct issues before they become critical problems.
Que – Do you see IIoT 4.0 being adopted more in India now?
Ans – Industry 4.0 is the manufacturing movement that is reshaping the business of building products. Defined by unparalleled machine intelligence and connectivity, industry 4.0 introduces cyber-physical systems and IoT on the factory floor. Our modern manufacturing efforts are driving advancements in industry 4.0, bringing greater efficiency, quality and sustainability to the manufacturing process.
The shift to smart factories is already well underway. While robots performed a global average of 10 percent of factory tasks in 2015, by 2025, that number is expected to rise to 25 percent and as high as 40 percent in some sectors.
India has always been quick to respond and embrace the usage of newer technologies. We see the trend rising and it will continue to do so especially against the backdrop of COVID- 19. Cost and time efficiencies, the optimal utilization of manpower and market demands will all play a role in how fast these technologies are adopted.
The country is on the right path for adoption of emerging technologies. India is one of the biggest markets for these technologies to tap in. 5G is around the corner and India could change the economics of 5G just like 4G in comparison to other countries. With a large population of world’s technology graduates from India every year, the amount of both software and hardware contribution from India to these emerging technologies will be increasing multifold.
Que – How would you rate India’s adoption of IIoT vs its adoption by the rest of the world?
IIoT promises to be the next big technological revolution which will transform the manufacturing sector alongside AI and Robotics. India has slowly been deploying IIoT but is not adopting it as fast as some other geographies. There are various factors for this, and they include the lack of right infrastructure, high-speed Internet connectivity and skilled workers to capture the required data which can then be analyzed with Machine Learning, which is the critical element to IIoT adoption.
Indian government has always been business-friendly and has supported industries with initiatives like ‘Make in India’ and ‘Aatmanirbhar Bharat’. Flex had ramped up our manufacturing when the govt had announced the ‘Make in India’ initiative back in 2014.
Similarly, the Production-Linked Incentive (PLI) scheme that was recently announced by the government is an excellent move towards transforming India into a manufacturing hub. We believe that this is going to create huge opportunities for Indian businesses who are present in electronics manufacturing and it will create many job opportunities too. Some of the obvious areas with potential are components and industrial goods manufacturing.
Que – Can India be a leader in Electronics Manufacturing? What are its Advantages and Disadvantages?
Yes, India definitely has the potential to become a leader in the Electronics Manufacturing industry. The schemes announced by the Indian government are a key step in promoting our country in the field of electronics manufacturing. There are massive opportunities in India for the manufacturing industry not only for smart phones but also for industrial products.
For a start, we need to focus on the Supply Chain and the supplier ecosystem and how we can cut down on the volume of the components that are being imported into the country currently. India needs to double down on the component ecosystem and future incentives needs to be centered around this system. Once the right building blocks are provided to develop the base for electronic manufacturing , it will help in localization and India can also develop the potential to take its local products global.