- Following COVID 19 lockdown, electronics and electronics components supply chain have been impacted heavily
- Prime Minister Narendra Modi has urged the nation imports – with the slogan “go vocal about local”
- India’s electronics consumption is about USD 200 billion, of which electronics manufacturing industry is approximately worth $ 85 billion
- The panel pointed out towards the supply chain as the lifeblood of electronics manufacturing
As India starts to open lockdowns imposed due to COVID 19, many electronics and electronics companies are looking forward to resuming operations. Considered to be an $85 billion industry, the manufacturing electronics segment in India, contributes nearly 3.3 per cent to the country’s GDP.
Though the industry as a whole faces a lot of challenges ranging from how to safely operate amid Corona virus to thinking about consumer spending in the coming times, the one challenge that almost every player in the electronics sector faces relates to the supply chain.
A panel discussion hosted at India Technology Week two days after PM Narendra Modi made the go ‘vocal about local’ statement, discussed the ways to reboot India’s electronics supply chain. The panel moderated by PVG Menon, President & CEO, VANN Consulting, pointed out towards the supply chain as the lifeblood of electronics manufacturing.
Speakers at the panel organized by EFY Group include veterans like Sunil Raina, President & Business Head, Lava International, Sunil Banwari, COO, AT&S India, Deepak Sharma, CCO, Sterilite Technology, Col Sharath Bhat, SVP, Kaynes Technology & Arushi Thakur Upadhyay, Associate Director, Industrial Practice, Frost & Sullivan.
Challenges
1. Being efficient with less workforce (33% at restarting)
2. Safety of the workforce, ensuring no one catches COVID 19
3. Availability of raw materials and components workforce
4. Managing supply chains both local and global
5. Movement of components, raw materials and finished goods
6. Importing components from COVID affected areas
7. Increased logistics costs both air and land
8. Is COVID 19 leading to the formation of a “new normal” in the electronics industry?
9. Responding to the closed economic zones and declining consumer spending
Opportunities
1. Focussing on all aspects of costs and looking at ways to reduce them structurally
2. Developing ways to be more efficient with limited resources
3. Focus more on design as well as manufacture in India
4. Changing the crisis into a big opportunity for business as well as the country
5. Emerging new product markets especially in the medical electronics domain
6. Turning the crisis into a business opportunity both for the nation as well as your company
7. Developing an ecosystem that is self-dependent
What you can do (Tips from the veterans)
1. Focus on suppliers. At the same time focus on your supplier’s suppliers. Keep a close eye on the entire value chain to ensure you are not impacted due to sub-supplier issues
2. Improved cash management – As the sales channels may not be fully open, start managing how you pay to your suppliers.
3. Constantly update and if necessary redefine Business Continuity Plans, as the existing one may not work in the Corona virus scenario. The pandemic is a classicaly “Black Swan” event and it is almost impossible to plan for that
4. Do micro-management of everything arriving and leaving your facility. Each and every aspect fo the supply chain has t be examined and re-examined
5. Revisit existing order books and assess whether or not clients will accept orders they had placed when the times were normal.
6. Invest money into technologies that can help you combat the challenges. For example – automation and industry 4.0.
7. Try to figure out ways to turn fixed and recurring costs into variable costs.
8. Try to localize production as much as you can. It will help bring down costs in the short as well as long-term.
9. Focus more on value addition to all the imports that you do. Being able to export more than we import will make us global champions.
The government needs to play a big role
1. Government needs to work hand-in-hand with industry to help them overcome this crisis and restart operations. Proactive intervention in the form of Policy support needed to help Indian companies, just as the government in China and many other countries are doing.
2. Make anti-dumping laws stronger and make sure these are implemented practically.
3. Extend performance-linked schemes to electronics beyond mobile phones to encourage investment in more electronics products
4. Improve logistics networks within the country. Utilize the inland waterways as these can be more economical than air and land freight. This is important for developing a local ecosystem of electronics and components.
5. Pay close attention to infrastructure development, labor costs and helping MSMEs and other sectors wherever possible
6. Back companies that are doing R&D, especially in areas like Industry 4.0 and Automation.
7. Ensure Policy stability with a view to having long-term stability – not send wrong signals by formulating policies for short duration like 3-5 years.
8. Create success cases by choosing champion companies. A lot of others might feel encouraged to follow these champions.
9. To overcome the problem of logistics bottlenecks, land for electronics manufacturing clusters should be developed near sea ports. Many of the companies are looking at exporting, and hence this will help reduce lof=gitics related bottlenecks. The concept of Free Trade Zones (FTZs) and Free Trade Warehousing Zones (FTWZs) should be looked at carefully
10. Women should participate more in the electronics manufacturing sector, like they do in countries like China, Vietnam etc. We should amend labour laws to encourage employing women in this sector, and also offer focussed skill development programs for them.
Story by Mukul Yudhveer Singh
