Whether it is choosing the right principal or reaching out to the right customer, component distributors need to go that extra mile to succeed in the fast-changing market. Rushabh Shah, director, Madhu Subtronic Components Pvt Ltd, a Mumbai based electronic components distributor with 37 years of experience, speaks to Baishakhi Dutta of the Electronicsforu.com Network about how the firm serves its customers and principals, its plans for online sales, and more.
EB: What unique service does your firm offer customers?
The founder of this company started it 43 years back with the intent of solving manufacturers’ problems of sourcing the right components for their applications, at the right cost. We do this by suggesting the right component from our huge pool of data from various manufacturers. Conventional trading has never been our style. Our approach has always been to solve the customers’ problems and offer solutions.
EB: What’s your strategy with respect to keeping ready stocks 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 system, based on the forecast given by the end customer. We have a separate team to ensure that our customers’ wait time is minimal. In fact, our target is zero wait time.
EB: Do you cater to startups that may not have orders matching your MoQs?
We started this firm with very little in our pockets; so we are extremely sensitive about serving small design houses or small manufacturers who cannot take MoQs. We have a special retail outlet that handles this category of customers very meticulously. I strongly believe that every startup needs support and a helping hand, and it is our responsibility to help them.
EB: Which cities do you have offices in? How do you cater to customers who are located outside the cities your offices are in?
We are primarily based in Mumbai and have seven offices based on different models of business, i.e., retail, distribution, corporate solutions, OEM sales, online selling and kitting solutions for OEMs.
We divide our customers into different categories—A, B, and C—based on the revenue that they give us. Whether we have work or not, we visit customers in ‘A’ nearly every month. We visit customers in ‘B’ once in six months. Those in ‘C’ do not give us much revenue but nonetheless, they are important as prospective customers. We visit such customers only when any demand is triggered by them.
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EB: Do you provide samples to customers who may want to try them out in their designs?
Samples are the starting point of business. Some of the solutions start only with samples and after evaluation and field testing, production takes place at a later stage. Hence, irrespective of the nature of the customers, we support them with samples whenever required.
EB: Do you have a team to help customers in designing their products? If so, what role does this team play in building relationships?
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 engage with the R&D departments.
Our technical team travels all across the country giving technical support, from the nascent stages up to 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 clients in the product development process.
EB: What, according to you, are the top three attributes customers should look for when choosing a sourcing partner?
There are some key points to be kept in mind. These include:
- The right infrastructure to offer support – OEMs must visit the offices of their suppliers. This will give them an idea of things beyond the PowerPoint presentations. Most OEM customers fail to do this.
- Customer support – Ask the suppliers how they will handle any product quality issues and get a flow chart on how these will be mitigated, while working with the manufacturer.
- Capacity – It is very important to check if the supplier has enough staff, warehousing facilities, technical support and finance to offer support.
Most of the customers fail to ask the right questions. If they keep these three points in mind, they can ensure a smooth supply chain which will save them a lot of management issues and costs. Selecting the right partner will eventually give them the competitive edge in this ever-competitive world.
The production manager is almost always stressed. If there is a quality issue with respect to even a simple product like a screw, the delivery of goods worth millions may be delayed, as every component is critical in the manufacturing process. Efficiency in manufacturing will get costs down and will empower the marketing team to commit to deliveries for large projects that are time-critical.
EB: Would you be open to having a discussion with principals wanting to expand their network in India?
Yes, absolutely! We are constantly searching for good suppliers as electronics is ever-evolving with more and more components coming out every day.
Our success is largely dependent on these quality manufacturers who help us to support our OEMs. With regard to what we look for in a principal, the owners’ vision and goals for their business, their experience in the field and the customers they work with are good indicators of whether we can work together. We prefer going beyond PowerPoint presentations and meeting new principals for a handshake and a face-to-face discussion, which we believe will yield far better long-term partnerships.
EB: Why should a component OEM sign you up as its distributor?
The key ingredients in the selection of a partner are the experience, years in the business, a large team, having the capabilities to provide technical support and, most importantly, building strong relationships with the OEMs. There are so many large brands in India that are not successful, mainly because they have not selected the right partner for their products. One should not go solely by 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 makes us an ideal partner for component OEMs.
EB: 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 to 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 such data during the training that we get from manufacturers from time to time. New orders are automatically generated by constantly being proactive with the customers.
EB: What is the mix of principals you represent–with respect to Indian and global component OEMs?
Our product portfolio is 60 per cent Indian and 40 per cent global. We are 100 per cent Indian at heart and this is evident from our product mix. We are also encouraging global companies to set up their manufacturing plants in India. We connect them to the respective government departments for all the help they need to make their transition smooth in India.
EB: Do you believe online sales is affecting the components distribution business? Have you started tapping this segment too?
It has not affected us 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 other products do. Having said that, it is just a matter of time before more and more companies eventually go for standardised products. But so far, this channel does not appear to be a threat.
In any case, even a small distributor can go online and sell its products to the world market. Every distributor of components has an edge and if you can take it digital, there is nothing that stops anyone from selling online. So I do believe that the online channel will be taking over some time in the future.
We are in the process of getting ready with our inventory. We are going to give Application programming interfaces (APIs) to various distributors so that their stocks are also 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.
EB: How has your organisation grown in the last two years?
We have had a decent growth and we see that this is going to get better with the current government’s Make in India initiatives.
EB: What’s your leadership style? What are the best management practices that you’ve adopted?
I strongly follow a set of rules in managing the organisation. Always take on 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. They should be able to consult you at any time. Having the right hierarchy is a must in an organisation. My experience has taught me that the most important suggestions and feedback come from the presumably unimportant person in your pyramid. Always listen to every person in your organisation and do what you believe is right for it.
EB: Any major initiatives taken in the last financial year that you’d like to share with our readers?
Yes, we have undertaken a few major initiatives. They are:
- More and more training for our staff on all the products.
- Application-oriented studies so that better recommendations of the right component can be done.
- Improving the customer experience through better and faster services—from quotation and supply to handling complaints.
EB: What are your key focus areas for the next financial year?
For the next financial year we are heavily banking on:
- E-vehicles
- Defence manufacturing companies
- Industrial automation
EB: Any views on current government policies related to imports-exports, 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 cumbersome paperwork has greatly reduced and India has become a level playing field for everyone. However, we would like to see more seamless and simple compliance procedures to ensure smooth operations, with more support in case the trading community has questions related to certain specific concerns in GST.
Recently, the government has increased the duty on components like relays, switches and connectors, which are the basic raw materials for manufacturing electronic equipment/machines. This could affect the industry, causing it to lose its global competitiveness, resulting in end products getting more expensive. This needs a serious re-visit.
We would appreciate it if the government involves our associations when making policies, as we can give a true and honest picture about electronics that is related to technology, which in turn is related to the country’s GDP.
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