“India can’t be defined as one market but as many markets rolled into one. Micromax understood this way in advance in its journey and hence since the very beginning, we have got a great distribution and supply chain network across the country. Unlike other brands, we don’t look at offline versus online challenge, instead, we view it as an opportunity,” asserts Jatinder Panjwani, AVP - Logistics & Warehouse, Micromax informatics Ltd.
What are the unique traits that make the brand ‘Micromax’?
Micromax has been creating best in class experience for our consumers. We have been building both our focus on the market and our backend as well. The key things which make us a global brand to reckon with are:
Our consumer focus: We put consumer first in all our efforts and that has led us to make products that are close to consumer demand and expectation.
Our agility: Even when you are a global player, one has to act nimble and one has to act local. This philosophy has kept the brand relevant in all our operational markets and helped us grow our reach every year.
Moving up the value chain: We are aligning our product road map as per the industry trends. All our products will be aesthetically positioned and we clearly see 4 key trends in the next 2 years: (a) Camera: We see a clear acceleration towards better image capturing, be it the better software that enhances the camera capabilities, output etc., or simply the quality of cameras on the phones. (b) Screens: The next year will see innovation on screens as well, be it the bezel less phones, curved screens, sharper resolutions, etc. As more visual data is consumed on phones, users will demand screens to be improved and brands will follow. (c.) Battery: More data, more internet, more multi-tasking through phones mean that users would want their phones to be with charge almost all the time. While the best solution is to pack more milli-amperes into the batteries but the trend will be providing quick charge capabilities to those large batteries as well. (d) Security: Two clear trends: security of the user and security of the data. With the government putting efforts towards integrated panic buttons on phones, user security will be a key trend and a conscious push towards digital payments will further enhance data security on smartphones as well. The ecosystem will have to come together to ensure that there is work towards data security both at hardware and software levels.
Asset Building: From just one factory in Rudrapur, we have built our assets and today we are a large contributor to government’s Make in India initiative. We now have 3 additional factories at Telangana, Bhiwadi and the one near completion in Madhya Pradesh. All these investments happened in 2016 and are testimony to our commitment to the business. We are hiring third party contract manufacturers and claiming Make in India. We are totally committed to it and today we have one of the biggest manufacturing infrastructure in the country, making us less dependent on any external factors for our requirements.
Therefore, while we continue to see big players entering the Indian market, we believe Micromax is set to take the big leap of being the top player in the country and growing our international dominance as well.
How complex is the supply chain for high-end consumer electronics?
We are bullish and have invested heavily in building a strong product portfolio, a robust distribution and supply chain network to ensure wide presence and a best-in-class service experience. Supply chain capabilities are key to delivering on the consumer electronics industry’s value proposition. Offline and online inventory integration is always a challenge in the new digital era. As more consumers now research for products online and make their purchase decision, the final sale happens in the offline market.
What are the crucial elements that make up for an exceptional supply chain?
India can’t be defined as one market but as many markets rolled into one. Micromax understood this way in advance in its journey and hence since the very beginning we have got a great distribution and supply chain network across the country. Unlike other brands, we don’t look at offline versus online challenge, instead, we view it as an opportunity. This enables us to identify and target the demographics of the consumers who are transacting through these channels. We have certain products that are online only and others that are focused on both offline and online channels. Both our offline and online network is very strong. In the past, we have launched some of Micromax’s products exclusively online like Canvas Spark range and Xpress range, which have done extremely well.
To build our supply chain and distribution offline network, all our dealers are one of the most important aspect to augment business growth. We are in constant touch with the dealers at all levels and take their feedback very constructively. This helps us being closer to the ground reality and consumers. Since our dealers play a pivotal role in our supply chain network, we incentivize them for our success as well accordingly.
From the trend, we have witnessed, both channels have been faring well for us and we are seeing steady sales both online & offline. We have further strengthened our distribution network from 34-35,000 to 60,000 outlets as majority of the users in the sub 5k category are offline users and are looking for compelling products that connect them digitally.
What has been one of the most challenging projects managed by you at Micromax?
Knowing that India is a vast country spread across many territories with logistical bottlenecks of their own tend to impose challenges when it comes to logistics. TAT (turnaround time) v/s infrastructure has really been a big challenge specially when the industry is growing at a faster pace. Material reach to material availability has major role to play. However, the biggest challenge in front of any logistics expert would be on time delivery without hitting the material quality and substance. One of the biggest challenges for us used to be streamlining our logistics efficiencies from the port of entry. Earlier, it used to be an ordeal for us to import goods and manage their delivery at four ports of entry and then dispatch them at their respective assembly units. Then came the delivery from these factories to the respective warehouses and from there to the retail touch points before it reaches to the end consumers. Now the entire process has been streamlined, which has not only resulted in rooting out logistical inefficiencies but has also greatly brought down the cost associated with the entire function.
Spare parts availability and quick customer service holds the key to any smartphone company in India? How have you achieved that?
For any growing brand, providing quality service must be the key. In 2016, we had more than 30 million active consumer base and even If a percentage of that faces any product issue, it’s a huge number. Our Service team took the challenge to improve the situation. For 800 front end engineers who were stationed in the service centers, we needed to build their capabilities and skills. Transparent mechanisms were initiated to strengthen and give more power to these engineers. We introduced a Project called ‘Promise’ in October16 to track individual work, create a transparent system and improve service by end of December '16. A tracker was made for the engineers and they are rated on four qualities – Process, Speed, Cost and CSAT. This was a tracker that scored them on a daily basis and month end, they were put into 4 categories that were – Golden, Green, Yellow and Red. With the help of such processes in the system, by November '16, there were only 13% products that were coming back from the service centers and rest were all serviced at the centers either on the same day or within 7 days.
Turn Around Time – Customer service done on the same day – 68%
Customer service done in 7 days - 90%
Open Calls - In October’15 there were 34% open calls and In January’17, there were only 7%.
In the last few quarters, we have invested heavily and worked diligently to improve our service experience. We have a large base of feature phone users and for these valued users one of the key proposition for buying their phone is a great after sale service experience. Taking our promise a step ahead, we brought a care free user experience for all the feature phone customers offering them full replacement within 100 days of purchase, if any problem arises. Our service team is working towards improving the overall customer service experience at the service centres, which includes building a more professional environment, getting the service right at first shot and recruiting trained service executives amongst some of the other initiatives.
What attributes do you look for in a 3PL for efficient logistics & supply chain management?
Today’s day & age demands a highly responsive 3PL service provider who could devise strategies based on any situation and can adapt to any unknown or uncalled for complexities arising out of turbulent economic scenarios. I think, this would be one of the biggest performance enhancers or any 3PL to gain an edge over others. This aspect also involves inclusion and deployment of new age technology tools to enhance the entire process and can aid in offering a transparent system. The second and the most important aspect that a 3PL needs to take care of is the timely delivery of goods. No customer these days can wait for even a second to receive products what he desires and with omni-channel retailing, it has become all the more crucial to serve customers as & when the demand arises. If you fail to do so, you lose that customer for lifetime and chances are because of this one unfortunate incident, you might end up losing brand loyalty.
So, a 3PL who can guarantee you the best possible service is sure to be a favoured among all. The last and one of the crucial deciding factor in the whole scheme of thing is the cost advantage that they can bring to the table. Yes, cost is an important barometer for any organization for selecting a partner. A 3PL needs to position itself in such a competitive way that no user company can think of rejecting their offer by providing a very comprehensive mix of all the aspects that hold immense importance for the success of the entire value chain.
In the post-GST scenario, how do you see things changing for your line of business?
The company welcomes the initiative by the government to balance out equations between the offline and online market taxation and deem it to be an appropriate step. We believe that Micromax products are extremely competitive and available at consumer-friendly pricing. However, due to the mid-year change of taxation policy, we stand committed behind the sales and distribution partners and to ensure that they are not treated unfairly in the changing regime, the company is proposing compensation to the partners, which are effected by the change. We believe that partners need to earn their due incentive for making Micromax products available to the Indian consumers.
How is logistics & supply chain going to be the gamechanger?
With the introduction of GST, India has become a seamless market without any difference between inter-state or intrastate sales. This has essentially disrupted the existing ineptitude and facilitate structural re-engineering of the logistics and supply network. Service providers are being incentivized to leverage hub-and-spoke supply chain networks by operating large central warehouses and remodeling transportation routes. On the taxation front, at national level, it has resulted in more competent and efficient cross-state transportation, lesser paperwork for transporters, thereby reducing the logistics costs. Not just costs, it is also helping them save a lot of transportation time. As transporters are resorting to digital space to book trucks, the scope of online truck booking in India is broad. The revolution in the industry has been brought by truck aggregators who are providing reliable online truck booking services to transporters.
What are your strategies for growth?
In the past one year, we have made a transition from a handset company to a consumer durable company and also from a hardware company to a hardware and software company. Micromax introduced LED televisions in 2013 and today is the 5th largest TV brand in India. With an aim to be a consumer electronics brand, Micromax is now expanding its footprint into newer product categories (LED, tablets, laptops, ACs, accessories) and expects its non-mobility product segment to contribute about 25% to the overall business, offering consumers more innovative products and build a stronger business case in the consumer electronics segment.
By 2019, our vision is to take Micromax to the #5 handset player in the world from our current #10 position. The last few months not only saw us diversifying in to varied product categories but also building alliances through strategic partnerships or investments into a set of software and services players apart from building our own software solution that we have already launched in the market to bring alive our dream of an interconnected world of smart devices and consumers. We are the only handset player who has been investing on software services. We invested in more than 10 start-ups last year- Indus, Ixigo, Gaana, Scandid which are doing immensely well.
In addition to India, we currently have operations in Russia, Nepal, Bangladesh & Sri Lanka. If I talk about the current scenario, our international business is doing extremely well contributing more than 8% to the overall revenue. We are currently selling close to a million units in the international markets and are amongst the Top 2 brands across geographies. The revenue from the international business has been doubling year on year generating profits for more than three years now. We are reinforcing our commitment to establish ourselves as a clear leader with a larger vision to be among the world’s top 5 handset brands by 2019. We will be entering into markets like Armenia, Kazakhstan and Georgia in the CIS region. We are also exploring Saudi Arabia and Iran in the Middle East and cluster of countries in Africa which can allow us to expand. All this is a testament of our hard work in the past year.
Your message to new age supply chain professionals…
Supply chain and logistics is a very important function and hence there is a need to innovate at all levels. It will be heartening if we see more innovation from the professionals and they should be pushing their limits do something that is out of their comfort zone because, if they don’t disrupt themselves, someone else will.