Match­ing the consumer durables pace

Fu­elled by ris­ing in­comes and grow­ing af­ford­abil­ity, the consumer durables mar­ket has seen a re­mark­able growth in the past few years. Con­sis­tent in­crease in de­mand has put pres­sure on Lo­gis­tics Ser­vice Providers (LSPs) to of­fer best of ser­vices by main­tai

Cargo Talk - - Supplychain - Ji­ten­der Pan­jwani

Consumer Durable in­dus­try is hit­ting the high­est point. As per In­dian consumer durable in­dus­try anal­y­sis by IBEF, the consumer durables sec­tor rev­enues reached US$ 9.7 bil­lion in FY15 and is ex­pected to reach US$ 12.5 bil­lion in FY16. The mar­ket is ex­pected to grow at CAGR of 13 per cent from FY05 to FY20. With the con­tin­u­ous flow of dis­pos­able in­come, buy­ers are spend­ing good amounts on to gain scale and make In­dian oper­a­tions vi­able.”

“The consumer durable in­dus­try in In­dia com­prises two parts namely–consumer elec­tron­ics and consumer ap­pli­ances. A re­cent study by Ernst & Young projects that by 2020 the elec­tron­ics mar­ket will grow at 17 per cent CAGR to reach

2,012 bil­lion while the consumer ap­pli­ance mar­ket will grow at 16 per cent CAGR gross­ing 1,885 bil­lion in the same time frame,” in­forms re­tail open­ing of the ru­ral mar­ket, ur­ban­i­sa­tion and greater brand aware­ness, prod­uct in­no­va­tions and vari­ants, eas­ier avail­abil­ity for fi­nance cou­pled with the ‘Make in In­dia’ ini­tia­tive are ex­pected to lead the de­mand surge in the years to come. Man­u­fac­tur­ers are also com­ing up with low cost ‘Make for In­dia’ prod­ucts keep­ing in view this vast un­ex­ploited mar­ket,” he added.

Agree­ing with Rathi, Aditya Gupta, Head Busi­ness De­vel­op­ment–3PL, DIESL, says, “With higher dis­pos­able in­come, im­prov­ing life­styles, more work­ing woman and other de­mo­graphic con­trib­u­tors the de­mand for consumer durables is grow­ing ev­ery year.”

But what are the im­ped­i­ments to this growth? Com­ment­ing on the same, Rathi points, “The key im­ped­i­ments the in­dus­try is fac­ing are com­plex tax and duty struc­ture, limited scale and qual­ity from do­mes­tic sup­pli­ers, in­creas­ing com­pe­ti­tion from Chi­nese and SE-based man­u­fac­tur­ers, cap­i­tal in­ten­sive na­ture of the busi­ness, chal­lenges in set­ting up and run­ning of busi­ness and in­fras­truc­ture bot­tle­necks both up­stream and down­stream.”

Ac­cord­ing to Gupta the big­gest im­ped­i­ment to growth has been high prices. “This could be due to a va­ri­ety of fac­tors in­clud­ing high and cas­cad­ing tax­a­tion struc­ture, high cost of lo­gis­tics in In­dia and higher in­puts costs. With more of lo­cal man­u­fac­tur­ing and GST be­ing in­tro­duced, we ex­pect bet­ter growth for the consumer durable in­dus­try in the com­ing years,” he be­lieves. Poor in­fras­truc­ture

Sachdeva says, “The ba­sic in­fras­truc­ture for any in­dus­try com­prises good roads, power, wa­ter, telecom­mu­ni­ca­tions, fi­nance, raw ma­te­ri­als, com­po­nents and lo­gis­tics. In In­dia, th­ese fa­cil­i­ties are not up to the mark even in de­vel­oped in­dus­trial estates.”

“The consumer de­mand is sea­sonal and high dur­ing the fes­tive sea­son. This makes trans­porta­tion plan­ning dif­fi­cult. The de­mand is de­pen­dent on good mon­soons. Due to poor in­fras­truc­ture, there is a con­stant fear of dam­ag­ing the goods be­fore reach­ing its des­ti­na­tion. Also, since the goods are high priced, the losses are large in case of dam­ages. Un­der­de­vel­oped dis­tri­bu­tion net­works in both ur­ban and ru­ral ar­eas poses prob­lems and at times in­creases costs,” notes Rathi.

The in­dus­try has been do­ing well in In­dia. Gupta jot­ted down the key chal­lenges in trans­port­ing consumer durables:

Han­dling of the ma­te­rial: The units are gen­er­ally heavy or large in size. Ev­ery stage of the sup­ply chain may not have right set of MHE to han­dle them. Lot of times th­ese units are han­dled man­u­ally which leads to dam­age and dents.

Vol­u­met­ric Weight: Gad­gets like re­frig­er­a­tor, wash­ing ma­chine and ovens are vol­u­met­ric in na­ture, where the vol­u­met­ric weight ex­ceeds the dead weight. This leads for higher cost of trans­porta­tion.

Loss of space: Due to large di­men­sions of the prod­ucts many a time the ve­hi­cle ca­pac­ity is not be­ing fully utilised both in terms of space or al­low­able weight.

Dam­age dur­ing tran­sit: Dur­ing pri­mary tran­spi­ra­tion there is al­ways some space avail­able in­side the ve­hi­cle. If the space is not plugged with air bags or pack­ag­ing ma­te­rial it leads to dam­age dur­ing the tran­sit with units hit­ting each other due to road con­di­tions.

De­signed pack­ag­ing should with­stand the en­tire chain, from fac­tory to consumer. The in­struc­tions should be printed on the pack­ag­ing with sym­bols

“In­verted duty struc­ture due to FTAs makes In­dian man­u­fac­tur­ing un­com­pet­i­tive for white goods such as wash­ing ma­chines, re­frig­er­a­tors and air con­di­tion­ers. Ex­cise duty on consumer durables was rolled back to 12 per cent from 10 per cent,” in­forms Sachdeva. Pack­ag­ing is im­por­tant

“As a LSP, we ex­pect an ad­vance de­liv­ery plan, right pack­ag­ing of goods and least pos­si­ble de­ten­tion at the de­liv­ery points. Also, as an LSP, we can add value by sug­gest­ing the right pack­ag­ing ma­te­rial,” ex­plains Rathi.

Gupta sug­gests that the de­signed pack­ag­ing should with­stand the en­tire chain from fac­tory to consumer. “The units should be prop­erly strapped and enough pack­ag­ing ma­te­rial Key de­mands from ser­vice providers. I would sug­gest hav­ing two ma­jor points of views: first of all, in the reach of cus­tomer there are lot ven­dors. How­ever, there is very limited ac­cess to ap­pro­pri­ate ven­dors who un­der­stand your re­quire­ment and work ex­actly to­wards it. To gain con­tact for busi­ness is es­sen­tial. Se­condly, ev­ery com­pany has DNA to op­er­ate which works on cer­tain pa­ram­e­ters. There cus­tomers are spread to mit­i­gate the re­quire­ments, fund, sup­port/ credit terms. It’s im­per­a­tive to say that like cus­tomers, ven­dors also have their de­fined arena to op­er­ate in. Cus­tomers have to un­der­stand and work to­wards mak­ing ex­act use of their ser­vices. should be used in­side the pri­mary pack­ag­ing. The in­struc­tions should be printed on the pack­ag­ing with sym­bols re­gard­ing the han­dling of the prod­uct. And last but not the least the man­u­fac­turer should im­part con­stant train­ing to their ware­hous­ing and trans­porta­tion part­ners re­gard­ing han­dling of their prod­uct,” he adds. Ac­cord­ing to Sachdeva proper pack­ag­ing is re­quired be­cause pack­ag­ing es­sen­tially in­volves pro­tect­ing the contents from the en­vi­ron­ment and vice versa. The pack­ag­ing is thus in­tended to pro­tect the goods from loss, dam­age and theft. In ad­di­tion, pack­ag­ing must also re­li­ably

I think the mind­set of han­dling cus­tomers must change. LSPs are still work­ing with old ways to serve the cus­tomers. How­ever, the cus­tomers have come a long way. There­fore, it is im­por­tant to un­der­stand the ex­act needs of the cus­tomer even if the ven­dor is work­ing with the same sort of cus­tomers in the same field. Ap­par­ently, as all consumer durables aren’t same, they are dif­fer­ent from oth­ers on scale of price, dura­bil­ity, so­lu­tions and fea­tures. Same way, ven­dors have to be open minded to han­dle the cus­tomers and their re­spec­tive re­quire­ments. Any im­prove­ments you are ex­pe­ri­enc­ing in ser­vice de­liv­ery over the years?

There are huge changes and con­stant de­vel­op­ments in the last few years, es­pe­cially in in­fras­truc­ture, roads, con­nec­tiv­ity and sup­port. At the same pace, there are lots of vi­sion­ary ideas be­ing evolved. How­ever, the mile­stone is yet to be achieved. Scal­able mod­els would surely per­form bet­ter if trans­porta­tion and ware­hous­ing in­fras­truc­ture is im­proved.

I strongly be­lieve in curb­ing the hub and spoke model and de­sign­ing the model of di­rect hit. This would surely bring lot of im­prove­ment in the cur­rent trans­porta­tion model and sim­i­larly, would ap­pre­ci­ate if we have lo­gis­tics parks in a big way in the com­ing years. be able to with­stand the many dif­fer­ent static and dy­namic forces to which it is sub­jected dur­ing trans­port, han­dling and stor­age oper­a­tions. The goods fre­quently also re­quire pro­tec­tion from cli­matic con­di­tions such as tem­per­a­ture, hu­mid­ity, pre­cip­i­ta­tion and so­lar ra­di­a­tion, which may re­quire ‘in­ward pack­ag­ing mea­sures’ in ad­di­tion to any ‘out­ward pack­ag­ing mea­sures’. Pro­mo­tional ma­te­rial placed on the pack­ag­ing is in­tended to at­tract the po­ten­tial pur­chaser’s at­ten­tion and to have a pos­i­tive im­pact upon the pur­chas­ing de­ci­sion.

Pro­mo­tional ma­te­rial on pack­ag­ing plays a par­tic­u­larly im­por­tant role on sales pack­ag­ing as it is di­rectly ad­dressed to the consumer.

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