Be it choosing the right principle or reaching out to the right customer, component distributors need to go that extra mile to strategise their business acumen in order to stay strong in the fast-changing market. Rushabh Shah, director of Madhu Subtronic Components Pvt. Ltd., is a Mumbai-based electronic component distributor. With 37 years of experience, he shares with Baishakhi Dutta of the Electronicsforu.com Network how the organisation is strategising to join hands with a new set of principles and customers. Excerpt follows…
Q) What’s unique about your team (or firm) that’s beneficial for customers to do business with you?
The founder of this company started this firm 43 years back with the intent to solve the manufacturers’ problem of sourcing the right components for their application at the right cost. We do this by suggesting the right component from the huge pool of data from various manufacturers and assist customers. Conventional trading of copy and paste has never been our style. The approach has always been to solve the customer’s problems and offer solutions.
Q) What’s your strategy w.r.t. keeping ready stock of in-demand products for your customers?
We strongly believe in keeping the stock of fast-moving goods (components that are required day in and day out) and maintaining an automatic ordering process within our ERP based on the forecast given by the end customer. We have a separate team to ensure that customers wait time is minimal and our target is zero wait time.
Q) Do you cater to startups who may not have orders matching your MoQs? If yes, how do you handle them?
We started this firm with few pennies in the pocket and we are extremely sensitive about serving small design houses and small manufacturers who cannot take MoQs, and hence we have a special retail outlet that handles this very meticulously. I strongly believe that every startup needs support and helping hand and we believe this is our responsibility to help them.
Q) In which all cities do you have offices? How do you cater to service customers who are located outside the cities your offices are in?
We are primarily based in Mumbai and have seven offices based on the models of business, i.e. retail, distribution, corporate solutions, OEM sales, online selling and kitting solutions for OEM’s.
We divide our customers into A, B, and C based on the revenue that they give us. Whether we have work or not, we visit customer ‘A’ nearly every month. We visit customer ‘B’ once in six months. Customer ‘C’ for us are those customers who do not give us much revenues but nonetheless, they are important for us as prospective customers. We visit Customer C only when any demand is triggered by them.
Q) Do you provide samples to customers who may want to try them out in their designs?
Samples are the starting point of business and some of the solutions start only with samples and after evaluation and field test the production takes place at a later stage. Hence, irrespective of the nature of the customers, we support them with samples whenever required.
Q) Do you have a team to help customers in designing their products? If yes, what role does this team play in building relationships with customers?
The core of our business is technical support. We handhold our customers right from the blueprint stage to prototyping followed by production, thus offering an end-to-end service. We have field application engineers who visit the customers and constantly engaged with the R&D departments for the same.
Our technical team travels all across the country for giving technical support from the nascent stages upto handling customer complaints. We are constantly engaged with our customers all the way from the design stage until production making us an extended arm of our OEM in the product development process.
Q) What are the top 3 qualities you would advise to customers while choosing the right sourcing partner?
- Right infrastructure to support – OEMs must visit the offices of the suppliers. This will give them an idea of things beyond the PowerPoint presentations. Most OEM customers fail to do this.
- Customer support handling – Ask the suppliers how will they handle if they have any issue with a product quality and get a flow chart on how it will be mitigated with the manufacturer
- Capacity – It is very important to check if the supplier has enough staff, warehousing facility, technical support and finance to support. Most of the customers fail to ask the right questions
Most customers, if they go through this religiously, can ensure a smooth supply chain which will save them a lot of management issues and costs in execution, and seamless execution by selecting the right partner which eventually will give them the competitive edge in this ever-competitive world.
Most of the time the production manager is always stressed, as even if there is a delivery or a quality issue of a simple product like screw not being right, then goods worth millions will be delayed before it can go to their end customers as every component is critical in the manufacturing process. Efficiency in manufacturing will get the costs down and will empower the marketing team to commit to deliveries for large projects that are time-critical.
Q) For principals wanting to expand their network in India–would you be open to having a discussion with them? If yes, what is your selection criterion for deciding which principles you want to work with?
Yes absolutely, we are in constant search of good suppliers as electronics is ever-evolving with more and more components every day.
The success mantra is largely dependent on these quality manufacturers who help us to support our OEMs. Talking about selection criteria, they must identify the owner’s vision and goals for their business and also their experience in the field and customers they work with. For us, we prefer going beyond powerpoint presentations and meet new principles for a handshake and a face-to-face discussion, which we believe will yield far better long term partners.
Q) What are the key attributes of your firm that make it the ideal partner for component OEMs to sign you up as their distributor?
The key ingredients in the selection of a partner are the experience, years of establishment, large team, capabilities to provide technical support and most importantly, building strong relationships with the OEMs. The trust that a distributor can offer to an OEM for selection of a particular brand is more far-reaching than an advertisement or a perceived value. There are so many large brands in India who are not successful and that is greatly because they have not selected the right partner for their products. One should not go solely on the numbers. One should also consider the longevity, openness, willingness and the intent of a partner. The numbers will follow thereafter. We provide all these aspects which will make us an ideal partner for component OEMs.
Q) What is the role you play in marketing and generating demand for the component lines you represent?
We do end-user marketing based on the technical edge of the product that will make it a suitable choice for replacing old components during a tech upgrade. We also assist customers in adding value in their supply chain by offering low-cost alternatives of products with either similar or higher specs. We proactively communicate with R&D heads regarding new offerings and new data that is given to us. We receive these data during the training that we receive from manufacturers from time to time. New demands are automatically generated by constantly being proactive with the customers.
Q) What is the mix of principles you represent–with respect to Indian and Global component OEMs?
We represent 60 percent Indian and 40 percent global. We are 100 percent Indian at heart and this is evident from our product line mix. We are also encouraging global companies to set up their manufacturing plants in India. We connect them to the respective government department for all the help they need to make their transition smooth in India.
Q) How do you see the role of online sales affecting components distribution business? Have you started tapping this segment too?
It has not affected to that level. A component is a complicated commodity, it has so much variety and so many changes at every stage that it becomes difficult to see it selling online the way we see other products. Having said that it is a matter of time when there will be more and more companies that will eventually go for standardised products. But so far it does not appear to be a threat.
In any case, even a small distributor can go online and sell their products to the world market. Every company in the distribution of the components has an edge and if you can take it digitally, there is nothing that stops anyone from selling online. But I do believe that online will be taking over if not soon.
We are in the process of getting this sorted with our inventory. We are going to give APIs to various distributors so that their stocks are also there on our online platform. We are working on this model and hopefully, by the next one and a half years we will be an active player in the online segment.
Q) How has been the growth of your organisation in the last 2 years?
We have had a decent growth and we see that this is going to mount more and more with the advent of the current Govt’s vision to promote Make in India initiatives.
Q) What’s your leadership style? What’re the best management practices that you’ve adopted?
I strongly follow a set of rules in managing the organisation. Always adopt dedicated staff to service customers and pay them well. Empower them to take decisions and be by their side when they fail. A leader’s job should be of a facilitator in ensuring that the team is motivated and is guided at every stage, and can consult you at any time. Having the right hierarchy is a must in an organisation. All these years have taught me that the most important suggestion and feedback comes from the presumed unimportant person in your pyramid. Always listen to every person in your organisation and do what you believe is right for the organisation.
Q) Any major initiatives taken in the last financial year that you’d like to share with our audience?
Yes, we have undertaken a few major initiatives. They are as follows:
- More and more training for the staff on the products
- Application-oriented study so that better recommendation of the right component can be done
- Improved customer experience through better and faster services from quotation to supply to handling complaints
Q) What are your key focus areas for the next financial year?
For the next financial year we are heavily banking on:
- Defense manufacturing companies
- Industrial automation
Q) Any views on current government policies related to import-export, GST and electronics manufacturing?
The current government is doing a great job in taking India to the next level. We highly appreciate GST implementation which is envisaged as one nation one tax, the burden of paperwork has greatly reduced and India has become a level playing field for everyone. However, the GST related queries for the trading community remains a concern as we would like to see more seamless and simple compliances to ensure smooth working, more support in case if the trading community has questions related to certain specific concerns in GST.
Recently the government has increased the duties on components like relays, switches and connectors which are the basic intermediaries or raw materials for manufacturing electronic equipment/machines. This would affect the industry in losing a global edge, resulting into end products getting more expensive. This needs a serious re-visit.
We would appreciate if the government involves our associations at the time of making policies as we can give a true and honest picture in the electronics which is related to technology which in turn is related to the country’s GDP.