Consumer Electronics - Delivering Service Satisfaction

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Electricals & Electronics

Consumer Electronics - Delivering Service Satisfaction

Consumer electronics industry has been shaping up extremely well ably supported by the advent of MNCs in India and a stronger domestic companies’ emergence. While companies have been making every single effort possible to deliver service satisfaction, it’s a great team work of the entire value chain be it manufacturers, dealers, 3PLs and service centres, which will make it work in the long run. The need of the hour is to establish stronger partnerships, build an unparalleled service network and be an ecoaware company to win over customers’ latent demands.

India is expected to rank fifth in the consumer durables market in the world by 2025. By 2020, India is expected to reach US $20.6 billion, growing at a CAGR of 13%. Among many reasons that have accelerated this demand growth, the key causes are rising disposable incomes and easy access to credit. Increasing electrification of rural areas and wide acceptance of online sales are also aiding the demand. With the government’s plans to invest in rural electrification, consumption is expected to grow in rural areas significantly. Other important factors such as growing awareness, easier access, changing lifestyles and progressive government reforms such as Digital India and Make in India will drive growth. The approval of 51% FDI in multi-brand retail and further approval of 100% FDI in single brand retail will further fuel growth in this sector.

The consumer electronics industry is characterized by high degrees of new product introduction, relatively short product life cycles, supplier variability, high levels of competition, and required speed to market. Companies producing or selling consumer electronics products must compete not only on the price, quality, and features of their products, but also on related customer service strategies. Developing appealing products is essential, but if they are not supplied to customers when, where, and how they want them, electronics manufacturers and distributors will underperform, stress One Enterprise Inc officials.

Jatinder Panjwani, Micromax informatics Ltd.

Jatinder Panjwani, AVP India operations & Head supply chain – India, Micromax informatics Ltd., avers that a robust distribution and supply chain network to ensure wide presence and a best-in-class service experience is essential. 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. Talking about the transformational landscape of consumer electronics supply chain, KK Kaul, MD, Pantos Logistics India, a subsidiary of LG Group Korea, highlights that the changes have been dramatic over these years. The customer demands have increased. Inventory management at the customer level has reduced. Today it’s the time to ensure immediate delivery and overall inventory control at the customers’ end. “The entire supply chain dynamics have changed from stocking to sell. It has also resulted in faster delivery and minimum inventory carrying at the manufacturers’ and traders’ end. We call it ‘meet the market’. Our entire emphasis has been shifted to meeting consumers’ demands in the shortest possible time to gain an edge,” states Kaul.

KK Kaul, MD, Pantos Logistics India


Supply chain capabilities are key to delivering on the industry’s value proposition. However, it also comes with a whole new set of challenges unique to its many processes, data requirements and functions. Relatively short product lifecycles (typically 6-9 months) with multiple feature changes throughout creates an atmosphere full of risk. With so many changes happening over the course of the lifecycle, you’re likely carrying extra inventory to make sure you have enough stock on hand to cover any part substitutions or adjustments. That means higher carrying costs and a greater risk to your bottom line if the product ends up as slow moving, excess or obsolete inventory, states Alexa Cheater, Product Marketing Manager, Kinaxis.

Dhiren Vora, Vice President – Commercial, Godrej & Boyce, highlights that there is a high dependency on seasonality leading to variability of demand for consumer electronics. Because of which some of the major challenges such as sales push during the off season, higher inventory levels at stocking points ahead of each peak season, demand uncertainties that arise within these, hamper efficient functioning of the supply chain.

As consumer electronics industry is a very dynamic market and the models keep on changing rapidly depending on the upgradations and application expanse, the major issues arise in making the newest model available to consumers in minimum time, informs Kaul. Consumer perception is also changing, and he has become very demanding in terms of advancements. The biggest challenge is to meet customers’ demand and the availability of the product at the counter in the fastest way and how to achieve the turnaround of the product in no time so that customers’ demands are met immediately. As LG’s manufacturing units are spread across the country, the major issue comes in terms of seasonality, transportability and the handing of products while in-transit.

Dhiren Vora, Vice President – Commercial, Godrej & Boyce

According to Kaul, the government hasn’t laid out any rule & regulation for transportation and the current infrastructure is not at par with the demand that we have to serve. It’s a time-consuming process if we have dispatched a consignment from Noida to Kochi and sadly, it takes 10 days. The transit times are very high because of poor infrastructure. Offering a 3PL perspective, Dr Arunachalam R, CEO, ProConnect Supply Chain Solutions, asserts, “Electronic products are highly sensitive and thus require special handling along with coordination. Monetarily they are at a higher end. There might be a possibility of pilferage and for this proper inventory management & dynamic security measures are required. Earlier the mass usage of electronics was in metros, but the network is growing and so is the reach. Reaching out to tier 2 & 3 towns at times can be challenging but at ProConnect with strong warehousing combined with transportation network, we are able to cover more than 36000 customer locations.”

Ashutosh Varshney, Canon India 

Jaideep Ghosh, Partner & National Head – Transport, Leisure & Sports, KPMG India, elaborates on the challenges and says, “There are key supply chain challenges that need to be addressed by leading consumer product companies. Even though digitization has picked up and companies are looking to digitize their operations and leverage technology to strengthen supply chain, lack of end-to-end visibility and PoS data has hampered the growth. End-to-end visibility, from production to end-consumer sales, will help streamline operations with improved forecasting, visibility and collaboration between partners. Timely fulfilment and effective supply chain planning requires high level of co-ordination and collaboration between supply chain tiers. Apart from data visibility, choosing the right partners is crucial for companies to operate efficiently and effectively. Demand skew, inventory planning and timely product movement requires effective logistic partners.”

According to Nidhi Markanday, Director, Intex Technologies, consumer durable products today have become an intrinsic part of daily lives and so have to be treated like FMCG and not as luxury or sin goods. Keeping the changed reality in mind, the industry expects the government to shift the consumer durables and LED TVs from the current 28% slab to 18% slab, prior to which the industry saw a dramatic decline in sales and consumer sentiments post-GST implementation in July 2017.

There’s a push for energy-efficient electronics, compelling manufacturers to develop new technologies to produce devices that consume less energy. Environmental concerns are paramount not only during the manufacturing process, but also throughout the lifespan of electronics devices. Reducing energy consumption is an effective way to cut costs, leading both businesses and consumers to opt for energy-efficient electronics. The pressure is on manufacturers to adopt green manufacturing processes while simultaneously producing electronics that are cheaper to use thanks to lower energy demands.


Dr Arunachalam R, CEO, ProConnect

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. Panjwani feels that this would be one of the biggest performance enhancers for 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. One of the crucial deciding factors 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.

Nidhi Markanday, Director, Intex

Sharply defining the role & importance of 3PLs, Markanday elaborates, “Third-party logistics providers specialize in integrated operation, warehousing and transportation services which can be scaled and customized to client’s needs based on market conditions, such as the demand & delivery service requirements for their products and materials. Often, these services go beyond logistics and include value-added services related to the production or procurement of goods, i.e. services that integrate parts of the supply chain. When this integration occurs, the provider is then called a third-party supply chain management provider (3PSCM) or supply chain management service provider (SCMSP). 3PL targets particular functions within supply management, such as warehousing, transportation, or raw material provision.”

According to Vora, the role of 3PLs is to offer consistent support and provide value-added services, for both the B2B and B2C segments. 3PLs will help address some of the challenges these segments face like higher inventory levels just before sale seasons, the demand uncertainties and more. By collaborating with manufacturers in the SCM process on sourcing, storage, logistics and distribution, manufacturers can focus on their core operations. Talking about the crucial role of 3PLs, Ghosh claims that electronics industry logistics is segregated and usually complex, with multiple players operating in the supply chain of large companies. Most companies face challenges of designing a common, cost-efficient infrastructure across supply chain. Such challenges in terms of reducing operational complexities and logistics costs provide huge opportunity for 3PLs.

3PLs offer services in terms of increased visibility, inventory hubs, inventory rationalization and cycle time reduction. Large consumer electronics players outsource key parts of their supply chain to 3PLs, so as to reduce the burden of managing operations. Also, in a complex and volatile market such as India, where different regions require different capabilities and outlays in terms of cost and infrastructure, outsourcing operations to 3PLs leads to operational simplification. Factors such as overtime at warehouses, union charges, regional permissions, etc. can be managed by 3PLs. 3PLs also manage compliance and risk related concerns for the companies. Further, 3PLs can provide value added services e.g. packaging operations, provide supply chain visibility for high value products, which is critical for inventory availability, order status and security while in transit. The advent of GST and corresponding warehouse consolidation has created opportunities for large 3PL players to manage large warehouses through specialized manpower and build corresponding logistics capabilities.

Jaideep Ghosh, Partner KPMG India

Discussing the stringent selection criteria for 3PLs, Ashutosh Varshney, Senior Director – Logistics, Supply Chain & General Affairs, Canon India informs, “We are in continuous process of formalizing a structure to lay out a very stringent yet smooth operating process with our 3PLs. We prefer to work with one 3PL company who can fulfil all our requirements. We analyze their processes, their infrastructure, the quality systems they have adopted, the way they manage their operations and basis that we take a call for our services. All warehouses follow the same sets of standards and processes. Having said that, once we partner with a 3PL company, we sincerely believe in having a transparent & long-term relationship. Our systems get connected and we have regular interchange of information flow. Such information is shared on our customer portal, where they can view real-time status of their orders and track their shipments.”

Highlighting green procurement initiatives, Varshney elaborates, “Guided by its corporate philosophy of ‘Kyosei’, Canon Group has been conducting global environmental conservation activities. One of these activities is green procurement, in which procurement and purchasing of environment-friendly materials, parts, and products are prioritized when necessary resources are procured and purchased. Canon would like to proceed with ‘maximization of Resource Efficiency’ together with suppliers to realize global environment conservation. To attain this objective, the Canon Green Procurement Standards prescribe the conditions for starting dealings with suppliers. Each supplier is asked to develop and operate an environmental management system related to business activities and the system for management of chemical substances in products to achieve the expected performance level based on the requirements stipulated in the Canon Green Procurement Standards. Based on that, we evaluate our suppliers.”


Talking about the crucial role of 3PLs in reverse logistics, Vora opines that 3PL is going to play a big role in after sales service support along with reverse logistics. Apart from this, handling of damaged stock, service spare parts, repair and maintenance, rework, refurbishment, and so on also form an integral part of 3PL DNA. According to Ghosh, service parts logistics can provide companies with a critical competitive advantage and involves supporting the products after they have been sold. Depending on the nature of products, average restoration time can be as low as 2-4 hours, and failure to meet the service commitments can be costly. Along with well-organized facilities and warehouse management systems, efficient service parts logistics requires core competency and is typically serviced through specialized 3PLs. In some cases, outsourcing the service parts logistics also enables the companies to move the inventory off their balance sheet and onto the 3PLs. The extent of reliance on 3PLs can vary, with some companies relying entirely on 3PL for managing the end-to-end service parts logistics, while others could be relying on 3PLs for supporting after-business hour’s requirements. Key aspects of the capabilities for 3PLs to showcase include distribution centers and a network of field stocking locations, inventory and order management capability, quick turnaround time, direct delivery of parts and supplies to field service engineers and customers.

3PL provider must be capable of handling reverse loads too by following the milk run concept, using vehicle routing simulations, handling of warranty stock, return of damaged stock, defective parts, etc., all of which play a vital role. It is also essential that they provide and execute services for after sales support, distribution of spare parts, etc., through dedicated key account and customer service teams. By handling reverse logistics, 3PL partners will not only help OEMs get additional business but also enable them to play a role in e-waste management which is becoming a norm now-a-days, believes Vora. They should also be equipped with the application of appropriate information technology to integrate and standardize the reverse chain processes, especially, in the case of landling of customer calls and complaints, maintaining customer satisfaction scores and efficient feedback collation.

ProConnect has a separate division to work for this model with meticulous planning. It is important to get the correct contact & details of the material to be returned, also approvals for return, proper packaging of material, adherence to timeline for pick up. Proper shipping documentation from customer’s end is crucial. Coordination between three parties – customer, courier & recipient is important and so is the system visibility. “We help in moving the service centres, after service picks & we handle e waste with proper compliance norms. Numerous occasions we have handled the products through reverse logistics till they are exported abroad,” adds Arunachalam.

Offering statistical insights, Ghosh comments that the return products and volumes in the past have been low. With rising disposable incomes and increased customer awareness, product returns could increase. Reverse logistics has been treated as a crucial function for customer service and as a key cost center by major consumer electronics players. With the rapidly changing customer demands and needs, there is pressure on consumer electronics companies to not only push the products in the forward supply chain but also how the returns are dealt in the reverse logistics.

Companies prefer to outsource their reverse logistics operations to ensure flexibility and completeness of supply chain. It is crucial for companies to have robust reverse logistics in place for high quality services and customer experience. In case of product mishandling – delays, order mismatch, broken products, brand equity is at risk, even if it is not a retail point. Companies also need to focus on refurbishment and repair service centers. As return volumes of high priced products increase, it impacts a company’s bottom line. Repair and refurbishment centers are crucial for recapturing or creating value or for proper disposal of dead products. Returns need to be managed in an efficient and effective manner – sorting, repairs, reuse, repackaging, and disposal.


GST provides opportunities for companies to improve operational efficiencies by shifting to a more integrated and streamlined supply chain network, backed by data and technology. Implementation of digital e-way bill, will also streamline the processes, states Ghosh. “Large 3PL players will be crucial to manage such complex operations and the setting up of big transportation/distribution hubs near big cities will pose additional incentive for specialized large 3PL players to manage operations,” he adds.

According to Vora, network realignment will lead to savings post GST implementation. Warehouse consolidation and reduction in the primary and secondary transportation will be the major contributors. Interstate movements will also undergo a change after the GST. Faster vehicle movement will lead to a reduction in transit times (a 30-40% increase in average km/day) due to the removal of inter-state border check posts. More and more 3PL providers are becoming aggregators and are moving towards becoming asset light.

Markanday feels that although GST has been a long-awaited reform its implementation and some loose ends still remain. It hasn’t been able to address the Inverted Duty structure issue and so a Reduction in GST rates on components used for mobile phones is necessary. GST rates on some products used in the manufacture of mobile phones or used as subpart of mobile phones are on higher side like parts of Battery, shield cover which attracts 28% GST. Though the main product – mobile phone incurs only 12%, since these sub-parts in general have no other use than to be used in mobile phones, it should be categorized in the same GST rate bucket of 12%. Further, reduction in rate would ease some pressure on mobile phone manufacturers and support the Make in India agenda of the government.

Refund of Accumulated IGST/ SGST is required. The government needs to incorporate provisions that any accumulation of IGST due to local sales of products shall be refunded instead of carrying forward presently. This shall relieve industry from working capital blockage and shall help use of this fund in enhancing business. “For encouraging businesses to reach to the remotest location to have last mile connectivity and presence, an increase in refund limit under area-based exemption schemes is needed. Presently, the limit of claiming refund under the area-based exemption scheme is 29% of the IGST which should be increased to 50% and 58% of the CGST which should be increased to 100% paid through cash (after utilization of input credit). This incentive is not enough and is not in line with the expectations of the industry that has been set up in such remote areas. Such low refund amounts may even result in loss for some units based in remote locations. Therefore, government needs to bring aggressive reforms if it wants the domestic players to rule their market and be the drivers of Make in India,” asserts Markanday.

Varshney also feels that GST has really given an opportunity to relook at domestic logistics systems. “Strategies would be brought in to provide complete customer delight going in line with our tagline of ‘delighting you always’. Post-GST, we are looking forward to consolidating and cutting down on our warehousing & transportation networks, which would bring in efficiencies in our operations and give advantage to our customers in terms of speed and cost.”


Companies have been quite vocal about the changes that they need from the government. On this, Kaul adds, “Our transportation policy is critical to develop logistics industry. There are n number of various size of vehicles moving around carrying goods. Size of vehicles, weight of vehicles and the regulations to move those vehicles on the road need urgent standardization. No transporter since the last 5 years has invested into vehicles because of hurdles when they move on the road. There should be specified route planning for the easy movement and connectivity from one part of the country to another. Then there are additional challenges that are plaguing the growth of the industry. We need to have a better control of manpower movement. Unionization needs to be abolished. Government needs to be come up with a crystal-clear logistics movement policy. There needs to be minimum & maximum norms as per seasonality of business. We don’t have port to operate, which is the biggest logistics bottleneck in India.”

We have vast inland waterways but there is extremely poor network connectivity. If the government finds a way to develop inland waterways transportation, it will be a tremendous help to the industry. For Ghosh, with changing consumer mindsets and evolving industry, it is crucial for the consumer electronic companies to understand this change and leverage the new trends and technology to optimize and strengthen their operations. Consumer electronics companies need to embrace agility in supply chain by opting for data-driven logistics as reduction in technology costs is leading to availability of huge amounts of data and information on supply chains.

Organizations will need to build up their technological and analytical capabilities to leverage and benefit from this data. “Right from production to warehousing to last mile delivery, OEMs will need to adopt flexible automation solutions to increase the agility and elasticity of the logistics and production infrastructure so as to be able to meet market fluctuations, cost effectively. Reverse logistics also gains prominence as consumers become more aware and demand for higher value for money and organizations looks at re-creating value through responsible handling of returns and refurbishments. The economic value of automation/ digitization, reverse logistics and sustainability initiatives will create more stringent methods of evaluating vendors and supplier driven innovation more and more important,” avers Ghosh.


For making a supply chain lean and optimized, wastage needs to be eliminated, processes and costs need to be optimized throughout the supply chain. All the departments and functions of the organization need to work in an effective collaboration. Companies typically need to optimize and reduce things like unnecessary complexities in the system, lead time optimization, product movement optimization, inventory management at all touchpoints and evaluate major cost headers. “From procurement of raw materials to the last leg of transportation, all the nodes need to be analyzed and optimized. Effective sales and operations management can help in optimizing procurement functions. Manufacturing can be automated upto a large extent to ease manpower costs.

With advancements in technology, factories and warehouses can be automated to simplify operations and reduce costs,” opines Ghosh. Visibility of data throughout supply chain, from production to retail PoS, will help in further driving supply chain optimization. Also, as infrastructure improves, lead times will reduce along with transportation costs. This will also help in timely fulfilment of products. With optimized lead times, customer demand can be met through smaller shipments, which help in managing inventory levels. All processes will also need to be analyzed and studied to evaluate the criticality. This will further help in process optimization at all touchpoints and make the supply chain lean and optimized.

With increasing economic reforms and economic stability, ecosystem currently offers a lot of opportunities for both 3PLs and manufacturers. With GST and increasing focus on digitization and technology, the entire ecosystem will evolve. For manufacturers the new policy presents opportunities to re-organize their manufacturing footprints based on demand centers simultaneously increasing the existing capacity/greenfield capacity and relying less on finished goods imports.

Simultaneously, India is undergoing a phase of infrastructure development, with transport hubs coming up in different regions. This will provide additional benefits to the supply chain Dhiren Vora, Vice President – Commercial, Godrej & Boyce With recent changes in government regulations, GST network re-alignment will leverage the following: Direct Plant dispatches; Movement across state boundaries; Larger and modernized warehouses; Warehouse Consolidation through closure of small warehouses. We are moving towards CII Warex certification for our warehouses. We are also using Warehouse Management Systems (WMS) to improve productivity. With real-time MIS generation, we are continually reviewing the performance of our 3PL partners. As the market evolves, organizations, both 3PLs and manufacturers, will look to integrate technology in their operations. Automation companies are providing customized solutions to optimize operations and costs for large scale players. Warehouse and factory automation will not only reduce manual intervention but also increase operational efficiencies and reduce operating expenses. Companies should look to leverage the changing dynamics and improve their operations to achieve a lean and optimized supply chain. In a nutshell, technology adoption, ease of use of products & services, evolution of digital India that is changing the lives of every citizen, innovation and of course, being close to customers, are going to be the five trends that will redefine service in times to come.


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