Dialling it up with logistics
Considering the essence of mobile phones in everyone’s lives, the logistics involving technological handsets is anticipated to be smooth. CARGOTALK explores the challenges in supply chain of mobile phones,filling those gaps, and how demonetisation has aff
Mobile phones have become an indispensable part of our daily lives. Due to the convenience and varied functions, people feel handicapped without their mobile phones.There is barely a single person in the developed world who does not carry a mobile phone. With the rapid influx of mobile phones in our lives,the procurement of mobile phones is always increasing. Hence, the question comes who bring the latest mobile tool on shelves on time?The mobile handsets are not easy to handle when it comes to its logistics from one point to another. On the other side, it is an industry where time plays a crucial role. Hence, supply chain need to be flexible and responsive to adapt to the fluctuations in demand. Lead times, accuracy, reliability and availability are all of significant importance. hears from the logistics service providers on the challenges faced presently and what is required to to keep up with the rapidly evolving market place.
Agreeing with the fact that mobile phone is an industry with short product lifecycles, rapidly evolving technology, to name a few, Mohit Goyal, Executive Director, TKW Management Solutions, says, “There are two ways of looking at it. Because of shorter product lifecycles and new products coming out often, we have a sea of opportunity and so we are not complaining. Although it’s fickle nature does make it gruelling in terms of on-time deliveries.”
Talking about the challenges, Manuraj Gupta, COO, All-Ways Logistics, shares, “Time is very important element for mobile phone industry. Sometime there has been space constraint with airline which put pressure on logistics forwarders. Also, mobile battery comes under hazardous commodity and there have been various restrictions been imposed by carrier in carrying batteries in passenger flight. Nowadays, a charter flight is only alternative to carry such kind of commodity and this increases the cost of transportation.”
Echoing similar concern, Goyal explains, “Also, feature-phones made way for smartphones and now 4-G phones are the next wave. Whenever a new technology hits the market, certain restrictions in terms of cargo handling do crop up. For instance – battery handling became a pain area for the industry since mid-2015.”
“We need to be updated with changes from regulation from airlines, authorities and customs,” emphasises, Pushpendra Pratap Singh, National Manager- Strategic Sales, eusu Logistics. “Being a consignee & forwarder, one tend to receive the changes from reliable sources,” he adds.
“Across the mobile vertical the time to respond to market demands and changes is dwindling swiftly. The mobile industry is amongst the most dynamic today and products have undergone rapid changes and created endless chain of innovations and new products. Customers are demanding cheaper but superior products which are further shrinking product life cycles and leading to speedy obsolescence. To influence the opportunities generated by customer’s volatile demand, the industry need to tighten their demand anticipations, sourcing, and inventory management. To succeed in these highly competitive manufactures, we need to have more refined supply chain management,” shares Ajay Khosla, ICA 2016 winner & DGM, Jaipur Golden Transport Co.
“Every year there is growth of 20-30 per cent in mobile demand/ replacement. Digitisation will increase the demand. That itself is the growth opportunity as compared to any other industry. The only need is to be informed on new technology and innovations. That will be the basic challenge in this industry due to tough competition plus new entrants coming in the market,” says Singh.
Sharing what tailormade solutions he is providing to the trade, Goyal informs, “Battery handling due to its DG nature and some unfortunate accidents made their conduct difficult such as Samsung S7 devices busting. However, no airline was willing to take the risk of handling batteries anymore on their passenger or cargo freighters, due to added security-measures enforced by HACTL. TKWs became the first company in India and in Hong Kong to counter it, by flying its own charter planes for mobile phone industry. Amply supported by some of the large players like Micromax, Intex, Karbonn, Lava to name a few, we applied for special DG-handling license in Hong Kong and run charter-program weekly. Till date, we hold the largest charter inventory for handling international logistics for mobile phones.”
“From picking up cargo from shipper premises in China, custom clearance in Hong Kong, air cargo movement from Hong Kong to Indian airports, custom clearance at destination and local transportation to customer warehouses, we are providing end to end logistics solution to mobile industry,” Gupta says. Aggressive supply chain crucial
Considering the nature of business and the challenges logistics service providers face to maintain the availability and reliability of mobile phone market,
Because of shorter product lifecycles and new products coming out often, we have a sea of opportunity and so we are not complaining Mobile battery comes under hazardous commodity and there have been various restrictions been imposed in carrying batteries in passenger flight We need to be updated with changes from regulation from airlines, authorities and customs. The digitalisation will prompt more demand in the future The mobile industry is dynamic today and products have undergone rapid changes and created endless chain of innovations and new products
the supply chain need to meet the important subtleties. Khosla says, “In recent years’ supply chain management become more critical as many of the big mobile brands outsource their core activities like manufacturing and logistics activities and implement deferment strategies. They focus their utmost attention on sales strategies and leveraging technology to accurately forecast demand and share that data with suppliers and other intermediaries. Outsourcing SCM activities reduces turn and dwell times, which are important considerations given the short shelf life of most mobile devices. These rescheduling strategies have speed-up the blurring of the lines between cell manufacturers and 3PL service providers. A slight shift in consumer purchasing habits can have ripple effects throughout the supply chain management.”
Goyal emphasises, “Due to the huge competition among mobile phone players right from top-ofthe-line players like Samsung and Apple, down to homegrown companies or Chinese companies, logistics requirements remain vacillating. Because the production is still in China (assembly lines have moved to India but we are dependent on them for parts), it is vital to understand their work culture and dynamics too. For instance, they have CNY twice every year and supply shoots up immediately before but drops to almost zero levels post-CNY. One must match up capacities and supply-chain-cycle to meet their dynamics.”
Commenting on the same note, Gupta points, “Timely movement, airline space availability and custom clearance of mobiles are the critical component of supply chain management of mobile phones. Once cargo reaches to main port like Delhi/Mumbai, local warehousing and distribution with in total time bound schedule is critical.”
“Now increasingly industry is moving on assembling and manufacturing in India. Instead of air, mobiles parts are getting imported through ocean container, which is more economical because of bulk movement and lower freight. However, since in ocean movement, time involves is more, better planning of schedule of vessel and movement of rail and road,” he adds.
“Now a day’s mobile companies are developing their product lines and adapting their inimitable supply chains strategies to meet the ever-high needs of consumers. Cell phone manufacturers challenged to shape their supply chain strategies around the growing needs of their consumers, which often mean outsourcing logistics activities to 3PL service provider. Mobile’s supply chain required efficiency and scalability so it could avoid needless capital investments in infrastructure and avoidable inventories. Outsourcing allowed it to control variable cost model to tackle needs of an impulsive market,” stresses Khosla.
Hence to keep up with rapidly evolving world of the mobile phones marketplace, Goyal notes, “Once one get a hang of things, how the industry works, what are its challenges, how suppliers never deliver on time and how consignees expectations are never-ending; one start making sense of it. Then it is important to anticipate. Read about trends, follow how trade matured in developed economies and try and pick-up how things will unfold in our scenario.” Demonetisation was harsh
Since the government has discontinued the currency notes of ` 500 and ` 100 last year, it is imperative to understand and take mobile phones logistics service providers perspective on affects within the industry.
“Since mobile phone is a retail product; their sales dropped by more than 50 per cent immediately post- November 8, 2016. And due to the food-chaineffect, our trade has been in bad shape. Also with government pushing for e-transactions and in smaller centres; thrust of mobile phones is bound to increase and with it, the overall logistics trade,” points Goyal.
“Demonetisation has severally affected the industry. Demand has considerable slowed down during November and December. Because majority of mobile purchases is on cash. There has been pile of stock and new purchases has been put on hold. But now the industry is recovering fast and hopefully get streamlined by end of March 2017,” shares Gupta.
“Yes, it has effected for a short time. But the digitalisation will prompt more demand in the future too,” shares Singh.