While contract electronics manufacturing is not a new concept in India, it has lately picked up a pace never seen before. But what has it enabled for one of India’s leading wearables and hearables brand, Boult? The company’s Co-founder, Varun Gupta, shares with EFY’s Mukul Yudhveer Singh.
Q. What levels of localisation has Boult achieved for the products it sells in India?
A. Unfortunately, India does not have the capability to produce many components, including drivers, LEDs, displays, PCBs, and semiconductors. For semiconductors, we follow the surface mount technology route; for batteries, the cells come from China, but the packaging of cells has started happening in India. Essentially, many of the primary core components come from outside India.
That said, Boult is now sourcing many peripheral components from India. These include the body, plastics, metals, silicone, USB cables, charging cables, packaging, and more.
Q. Does Boult manufacture products independently, or is manufacturing sourced to electronics manufacturing service providers?
A. About a quarter percentage of the manufacturing cum assembling is done in-house, while the rest is sourced out to EMS companies via the contract manufacturing route. Most of these EMS companies are based in northern India.
Q. While using the contract manufacturing route, how do you ensure quality standards for all the products?
A. I think our ratings across platforms have been consistent because we have maintained the quality of products we retail in India. The same has been achieved because we design products ourselves. We use 3D printing machines for prototypes.
Each piece of the different components we source goes through the same tests. Also, Boult employees and line managers are stationed at every assembly location.
Q. What do these line managers do at third-party EMS facilities?
A. These are Boult employees responsible for running these facilities as Boult facilities. The manufacturing partner must allow Boult employees to administer the manufacturing of our products. Then, Boult issues standard operating procedures (SOPs) for every contract manufacturer.
Q. While the advantages of this process are many, are there any disadvantages to these SOPs?
A. Though this is a scientific process, it often leads to extended and expensive product cycles. We know it is a relatively slower cycle, but it ends up giving a longer life cycle to the product.
Q. Are there SOPs on the raw materials sourcing side as well?
A. Raw materials sourced by Boult go through many quality checks and paperwork. The same holds for technical and non-technical components. They reach our assembly facilities only after these checks. Boult’s quality inspectors stationed at our manufacturing partners’ premises also ensure the quality standards of all our products during manufacture.
Q. Are the contract manufacturers with whom you started Boult’s journey still on board?
A. We started our journey with two contract manufacturers. Today, more than two contract manufacturers work with Boult, but the ones we began with are no longer associated with us. Our new partners are better in terms of quality standards, infrastructure, and cost.
Q. When selecting an EMS partner, how do you balance the ‘cost+ quality+quantity’ criteria?
A. Our manufacturing costs are among the highest among our competition. We understand that our gross margins are relatively lower than our competition, but we do not want to cut corners there. When choosing an EMS partner, we focus on net profitability. We partner with more than one manufacturing partner and have our own manufacturing facility. In this way, we can hedge our risks. Focusing on product design is of utmost importance in the whole process.
Q. Going forward, would you want to start manufacturing more independently?
A. We have been, and will always be, focusing more on design. Additionally, we will focus on manufacturing with stringent quality checks for all our processes, whether in-house or contracted. The control over the supply chain and manufacturing will remain in our hands.
Q. What are the advantages of contract manufacturing over in-house manufacturing?
A. Outsourcing manufacturing to a contract partner allows us to channel our energies into creating new products with better tech specs. In simple terms, it allows us to focus on technology and innovation. We are ready to pay a premium to have goods manufactured via a partner to concentrate more on the design side.
Q. Regarding supply chains, how critical is component selection in the process, and how do you approach it?
A. Component selection is the magic of the whole process. Finished products might pass quality tests, but their longevity has often been questionable. Therefore, all the components we source are tested for longevity. For example, a typical battery in India might start swelling up in about three months. That is something that no lab test can predict; hence, we do longevity tests.
Q. How many partners do you typically work with for a particular component category, such as displays?
A. We would not work with more than four partners at a time for displays. Working with more would mean difficulty in maintaining our product quality standards. We have a small number of suppliers for all component categories. These are produced in bulk for us, but we control the quality of all transactions!
Q. What is your take on competing brands in India?
A. I am proud that Indian players occupy over 80% of the market share across smart wearables and audio products. In audio, we are the second biggest and top five in the wearables category. Competition ensures that no one can take consumers for granted in terms of price, technology, and choices.
