Providers of repair services require components to serve their customers; however, vendors are more inclined to supply components to the manufacturers. This makes managing the supply chain of components a challenging affair for repair services. B. Nagendra, purchase manager-operations, Repair & Return Technology (India) Pvt Ltd, speaks to Sneha Ambastha from Electronics Bazaar about the challenge of procuring components for repair work.
EB. Do you think repair services are given adequate importance in the growing electronics industry?
While purchasing a product, you can never be sure if it will fail or will work for a lifetime. If the product fails within the warranty period, you will get it repaired and if it fails again after the warranty period is over, you will still have to get it fixed. Anyone would prefer to spend about ₹ 1000 to ₹ 2000 on repairs rather than investing possibly ₹ 20,000 on purchasing a new product. A good repair industry is a requirement everywhere. For example, if you were going to purchase a Nokia phone but discovered that there are no Nokia service centres in India, then you will prefer to go in for Apple’s iPhone, an MI phone or any other brand that has service centres close by.
EB. Which are the types of electronic components you procure?
We procure LED panels, LCD panels, set-top boxes, medical equipment, display units, motherboards and laptops. We usually deal at the product level, whereas, for repairs, we work at the components level. We require very specific components in our line of work.
EB. What category of electronic products or services do you procure regularly?
We need all the components related to LED/LCD display panels. This is our core business. Apart from this, we have other operations too. Right now, we have some direct customers like Samsung for LED panels. When these panels come in, we do the component level testing. It may be ICs, LCD ICs (which are different from semiconductor ICs), and then there are polymer sheets. So regarding the category of electronics, we procure LCD panel parts.
EB. How challenging is supply chain management for the electronics repair industry?
Currently, whatever products we work with, whether these are LCD /LED panels or set-top boxes and ACs, consumers are only aware of the price of the entire product. But we deal with repairing or replacing individual components in these products. So pricing is one challenge we face in the repair industry. The other challenge is in procurement. Let us look at the example of our company ‘Repair and Return’. We have been in the service industry in India for about a decade, primarily in LED and LCD panels, at the component and not at the board level. So we search for these items everywhere, in the international and the domestic market. For this, we need to spend a lot of time. Subsequently, we need to identify if there is a regular supplier for the component or not, and also ascertain how genuine the vendor is; but this comes later. It’s more important to find out if the part is available globally. After finding this out, we need to identify how genuine that vendor is. Because how do we come to know about the quality of support? So there are many things to be looked at, and if you go online, you will not find direct suppliers in countries like China or Taiwan, though most of the manufacturers of LED panels, LCD panels, set-top boxes, satellite units, semiconductors, etc, are in those countries. But these components are not listed on the websites of the manufacturers directly. So if you want to search for a component on Google, you will only find the name of that component but not of its manufacturer, place of manufacture or supplier. If suppliers are directly accessible online then it would be easy for us to contact them directly, negotiate the pricing and close the deal based on our requirements.
If you search for a product based on its number and brand name, you will find it everywhere, even on online retails stores like Amazon, Flipkart, etc. However, if you try searching at a component level, most of the components we need do not even have a part/model number.
EB. Do you follow any specific process to let suppliers know about your company’s requirements?
We directly give the specifications of the components to vendors. We look at the defective part on the panel—the part number is available on the component. We go to the website and check for the components based on the part number, and identify the suppliers for that. Then we give the specifications.
Let’s just suppose that we need components for an LED panel. We first find out the manufacturer of the panel, who typically does not supply the parts to the market but directly to the TV manufacturers. Neither do such manufacturers supply to other repair vendors. But we need their support, too, so that we can bid for a repair project.
EB. Do you have any specific turnover or quality certification requirements for your vendors?
As per our business standards, we prefer ISO certified vendors, because we are certified for ISO 9001-2008 and for Environmental Monitoring Systems (EMS) too. We want to maintain that process of certification so that even our customers can benefit from it.
EB. Do you follow any specific process for vendor enrolment?
Yes. Once the vendor is ready to supply, before we make a purchase from it, we first validate the company, analyse it, check if it is ISO certified, find out how long it has been in the business, how long it has been into design, who’s the constant contact person, etc. Apart from these details, there are certain formalities that have to be followed since we are ISO certified.
EB. How do you classify and define potential, approved and preferred suppliers?
‘Approved’ implies that they are certified. With preferred suppliers, we need to get the sample and if it meets our requirement, then we rank these vendors accordingly. For example, if we need about 1000 wafers, I will not get them from a new vendor but will get only samples. We have a quality team that tests the samples under various test conditions. If the parts comply with all the test requirements, then we go with the preferred supplier. They can be unregistered suppliers, too; so we need to check if they meet our terms or not—quality wise, certification wise, their payment terms, etc.
EB. What are the typical ‘hard-to-find’ categories for which you can say that vendor development is a challenge?
The repair industry itself is a challenge, because here you will not get the parts directly. The requirement of this industry is for parts and not products. The vendors investing in the manufacturing industry definitely earn well from it; however, in the repair industry they do not, because the requirements here vary.
EB. How do you make sure that no vendor sells you a faulty product?
Let’s look at a situation in which we purchase about 1000 line items every month, for which we have around 10 vendors. Now, before we register these vendors we get the samples from them. After these samples go through and pass all the tests, we register them. At this stage, we sign an agreement that if there are any problems with the items we get from them, then they will replace these free of cost.
EB. How do you find a suitable alternative for a component supplier who vanishes from the business due to bankruptcy or business pressures?
Even when we get a component from one vendor, we still look for alternative vendors for that component. So we do not rely on one vendor alone. Registering a vendor itself is a challenge and a long process; so we make sure we connect with at least four vendors for a particular component.
EB. How do you combat the counterfeit or grey market?
For any new part requirement from an existing or a new vendor, we get samples and test the parts. If we need 10 new components, we get five samples of each from a vendor and get these tested. The tests are done based on the quality parameters and specifications of the original component. Once the quality is certified, we keep that standard for a vendor as a ‘golden piece’. This is done every time there is a requirement for a new component. Every month, when we have such requirements, only after the tests are done do we register a vendor for that particular range of components. And we do not pay completely until we are satisfied with the parts.
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