Can volatile supply chains be tackled without traditional forecasting tools? With 15 years in the industry, Kiran M S of Indus Technologies tells EFY’s Nitisha Dubey how they do it—with rolling forecasts, smart inventory, and close customer collaboration.
Q. Besides component distribution, what services does Indus Technologies offer?
A. Over the past 15 years, while our core focus has remained the distribution and stocking of electronic components, we have expanded our offerings. We now provide value-added services such as PCB design, connector harnessing, solution support, and bills of material management.
Q. What key verticals does Indus Technologies operate in electronics distribution?
A. In electronics distribution, we operate across three key verticals: authorised distribution, factory support, and sourcing. For authorised distribution, we partner directly with manufacturers through formal agreements, distributing components with certificates of conformance (COC). In the factory support vertical, while we do not have official authorisation for some product lines, the factories still directly support us, and we provide those components with COC during the trial phase. The third vertical is sourcing, where we fulfil specific customer requests for particular brands. If a customer requires the same brand without any substitutions, we source the product globally, test it thoroughly at White Hours, and then deliver it to the customer.
Q. What are your standard lead times for various component categories (like, semiconductors, passives, and connectors)?
A. Lead times range from as short as four weeks to as long as 20 weeks. Simple components like resistors may have lead times of just three to four weeks, while more complex items like humidity sensors, temperature sensors, and microcomputer boards can exceed 12 weeks and reach up to 20 weeks. Some memory products also have lead times of up to 20 weeks.
Q. How do you manage and minimise lead times for both long and short-lead-time components?
A. You see, our engineers collaborate closely with customers to obtain projections through rolling quarterly forecasts or blanket orders. For long lead-time components, we maintain a one-quarter stock (typically three months). For example, if the lead time is 12 weeks, we hold enough inventory to reduce the customer’s virtual lead time to zero. After shipping two months’ worth, with one month left in stock, we promptly reorder from the factory. This ensures continuous availability and minimal delays. For short lead-time components, we usually hold only one month’s stock, as the shorter replenishment time eliminates the need for larger inventory. Orders are booked with the factory based on confirmed demand for the current quarter and forecasted demand for subsequent quarters, allowing us to place advance orders and align component availability with lead times.
Q. Do you use forecasting tools or methodologies to predict component demand?
A. The forecast tool is ineffective for our industry, especially post-COVID, as lead times have become unpredictable. Semiconductor chips remain in high demand, and factory lead times fluctuate. Suppose, if lead times were consistently eight or twelve weeks, we could work with customers on a fixed forecast. However, these varying due to demand and supply changes, using a fixed forecast is not feasible. We do not rely on AI-generated forecast tools, which often lead to overstocking or understocking. Instead, we collaborate directly with customers due to ongoing market volatility to create more realistic, tailored forecasts.
Q. How do you ensure on-time delivery, and what is your typical on-time delivery rate?
A. We work closely with customers to develop realistic forecasts and stock inventory based on their demand projections. Our on-time performance is excellent, and we had already been using the just-in-time method before COVID-19. When the pandemic hit and lead times extended—sometimes up to a year—we intensified our just-in-time and stocking practices, engaging even more closely with customers. This enabled us to navigate the challenges efficiently. Now that the situation has stabilised, we continue to manage operations effectively through collaborative forecasting and demand planning.
Q. Can you provide visibility into your real-time inventory levels and future availability?
A. Inventory levels are currently manageable, and lead times are more realistic for manufacturers and customers, signalling a return to a buyer’s market. In the post-COVID era, it has shifted to a seller’s market, where customers rely heavily on sellers and manufacturers for part availability, leading to extended lead times and skyrocketing prices. We have witnessed those challenges, but they are now behind us. The market has stabilised, and inventory levels are more balanced. Looking ahead, I can confidently say the market is expected to remain stable for at least the next four to five years.
Q. How do you effectively manage and streamline customer supply chain operations?
A. It is crucial for customers because any disruption in the supply chain could halt their production. The trend now is outsourcing. Customers no longer need to maintain an internal purchasing department—they can outsource their entire purchasing process to distributors like us. We are well-equipped and trained to handle stocking and purchasing, taking the burden off customers. Like, if a customer needs 100 boards, they can call us, and we will ensure those boards are delivered to their doorstep on the specified production date. This is how we manage the supply chain for our customers.
Q. What is your strategy for handling supply chain disruptions caused by raw material shortages or geopolitical issue?
A. At Indus, we have been following two or three key methods since our inception, with one of our strengths being ‘equivalent suggestions.’ For instance, if the lead time for a voltage regulator from a specific manufacturer suddenly extends—from four weeks to 20 weeks—due to raw material shortages, factory issues, or other unforeseen circumstances, we step in to support the customer. We work with them to suggest alternative, equivalent components that are more readily available, have shorter lead times, and are price-competitive. This is one of the key value additions we provide. Without such support, manufacturers could directly serve customers, but our role as distributors is to offer alternate solutions and guide customers through the transition. Since customers may be unsure if the alternatives will work, we provide free samples and allow time for testing and approval. If technical or application support is required, we assist during this process. In industries like automotive, where field approvals are stringent, we provide hands-on support. While simple parts might get approved within a week, more complex parts may take up to six months. By working with us, customers always have viable alternatives at hand.
Q. How do you handle returns or replacements of defective components?
A. We have a robust return material authorisation (RMA) process to handle any quality issues customers encounter. When a customer faces a problem, our RMA team contacts them to understand the issue, whether it arises during the testing phase after the product is assembled on the board, during the final testing stage, or if it is a field failure. The RMA team gathers initial feedback from the customer and reports it to the manufacturer. Manufacturers often provide valuable insights on corrective measures. Sometimes, the problem stems from incorrect handling by the customer, such as supplying the wrong voltage or incorrect component placement, as even minor mistakes in placement can cause issues. In the first week, after a customer reports a quality issue, we work to address it promptly. If the issue persists and is determined to be a genuine problem, we request a failure sample from the customer and send it to the factory for analysis. The factory conducts a failure analysis within a week and informs us if it is a material defect, in which case we replace the product. In case it is not, they report the root cause, such as over-voltage, improper handling, or board-related problems like electromagnetic interference (EMI). We handle every case with care to ensure thorough resolution.
Q. What issues arise when customers skip testing stages before production?
A. When it comes to direct factory supply, the product should function as expected. Typically, customers go through various stages—sampling, prototype development, pilot runs—before moving into full production. When a project is methodically advanced to the production stage, the likelihood of failure is minimal. However, if, due to time-to-market pressure, a customer skips some of these crucial testing phases and rushes the product to market, they may encounter unexpected issues during production or at the last minute. In such cases, we step in to assist. But such failures are rare when dealing with direct factory supply. Additionally, we have a robust RMA process in place to manage any issues professionally.
Q. How does Indus Technologies ensure the protection and safety of its operations?
A. As a distributor, we do not handle safety and regulatory compliance directly, but the manufacturer ensures it. We take electrostatic discharge (ESD) precautions seriously, receiving products in ESD protective packaging without handling them by hand and delivering them to customers in the same packaging. Additionally, we advise customers to follow proper safety protocols on their shop floor.
Q. Do you also offer design support or technical advice for component selection?
A. Yes, this is one of our unique selling points. We have an in-house research and development (R&D) company to support this need. While Indus primarily focuses on distribution, our sister company, Radio Studio in Chennai, houses a team of qualified R&D engineers. We also have an app development team to handle the software side, providing both hardware and software support to our customers. For startups that prefer not to invest in their own R&D or engineering, they can come to us with just a concept or ‘black box’ idea. We guide them from the circuit design stage through to prototyping, offering full support throughout the process. From vision to prototype, we ensure comprehensive assistance to help bring their product to life.
Q. How does Indus Technologies support customers in FPGA (field-programmable gate array) design and circuit optimisation?
A. We have a full range of expertise, from standard programmers to an FPGA testing team. We assist customers in selecting the right components, developing circuits around them, and optimising designs based on their specific applications. Since FPGA has numerous end uses, we offer various configuration options and guide customers through the design process. Our team includes R&D engineers, firmware and hardware developers, and PCB designers, all working to optimise circuit design. With advanced technology in place, we provide comprehensive design support, helping customers navigate the entire design phase efficiently.
Q. How do you maintain competitive pricing while ensuring product quality?
A. Our approach focuses on offering competitive pricing with excellent quality. Often, customers choose high-quality products, such as those made in Germany, but these can come at a high price. There is always a trade-off between price and quality, but we assist customers in finding solutions where they do not have to compromise on quality while still benefiting from competitive prices. We suggest alternative options, such as Taiwanese or Korean brands, that offer the same quality but at 25-30 per cent lower cost. This way, customers can enjoy both cost savings and maintain the high standards of quality they need.
Q. Do you offer any price breaks for bulk orders, long-term agreements or strategic partnerships?
A. We establish agreements through both annual and quarterly contracts, depending on the customer’s production needs and timelines. For confirmed orders, we offer applicable discounts. However, if the product is still in its pilot phase or not yet established in the market, customers may not be able to provide long-term projections. In such cases, we also work on a quarterly basis. The type of contract we enter into varies based on the product the customer is developing and the components we provide, allowing flexibility in how we manage customer orders and discounts.
Q. What is your process for managing price fluctuation in the market, especially for critical components?
A. Stocking is essential, but there is always a cost-benefit consideration between inventory levels and price fluctuations. We cannot hold annual stock for customers only to face a scenario where prices drop while our inventory costs remain high. We carefully optimise between inventory and pricing. For highly price-sensitive components, such as DSP parts that fluctuate daily, we maintain cautious, minimal stock. Yet, for more stable components like optocouplers, we take longer-term positions and stock accordingly. Our approach is flexible, balancing inventory exposure based on the stability and price sensitivity of each component.
Q. What post-sales support do you provide for handling component failures or technical issues?
A. In addition to our sales team, we have two key teams: product marketing and application teams. The application team, led by field application engineers (FAEs), works closely with the customer’s design team to help select the right components. As I mentioned earlier, they balance the trade-off between price and quality, ensuring that the suggested parts are competitive in the market without compromising on quality. Meanwhile, the product marketing team, specifically the product manager, collaborates with both the customer and the manufacturer. Once a part is selected with the help of the FAE, the product manager works to secure the best pricing and long-term support for that component. They ensure that the chosen part will support the customer’s needs over the long term, such as the next ten years, and negotiate a price roadmap. It is a collaborative effort between these teams to deliver a complete, tailored solution to the customer, optimising both technical and financial aspects.
Q. How do you gather customer feedback and integrate it into your service improvements?
A. We offer a feedback option on our website, allowing customers to share their experiences. Additionally, our post-sales team follows up with customers after delivery to inquire about any issues they may have faced, whether related to pricing, delivery, or logistics. Customers are encouraged to provide honest feedback, which is handled with the utmost confidentiality. This feedback helps us continuously improve our services and refine our processes to enhance customer satisfaction.
Q. How do you mitigate the risk of component obsolescence, especially for long-lifecycle products?
A. Obsolescence is a natural part of our supply chain. Any part produced by a manufacturer can eventually become obsolete. However, manufacturers typically provide ample notice through product change notifications (PCNs) or modification notices. The product manager plays a vital role as the liaison between the manufacturer and the customer. They stay informed of any PCNs or changes and promptly update the customer, allowing enough time to adapt. In cases where a product is discontinued without a replacement, the distributor steps in, guiding the customer from one manufacturer to another without compromising the product’s performance.
Q. What are your policies on vendor-managed inventory or consignment stock?
A. We offer vendor managed inventory (VMI) services, where we manage a rolling forecast and maintain sufficient stock in both local and overseas warehouses. We regularly pull inventory from our overseas locations to our local warehouses to ensure availability. If lead times are extended, we adjust accordingly by increasing local stock levels. When lead times are stable, we rely more on local inventory to meet customer demand efficiently.
Q. Do you offer an online portal for real-time components, availability, order tracking and pricing?
A. We are currently developing an online portal, Semicon360.com, for real-time product availability. The website is in progress, allowing customers to browse products, add them to the cart, and make purchases instantly using credit cards or UPI payments. Traditionally, we have operated as an offline B2B distributor, but with growing demand for online transactions, we are expanding into e-commerce. Semicon360.com will make semiconductor products available online. While the portal is being built, we are also assembling a team to handle real-time order processing and logistics, as well as placing orders with manufacturers to ensure smooth operations once the platform is live.
Q. Could you share any plans or new developments you are in progress with?
A. Like I said, our online portal is an ambitious project aimed at offering e-commerce solutions for both prototype and production support, with no minimum order quantity—customers can even purchase just one piece. Also, we have expanded globally by registering in Dubai to serve export customers better and reach the global market.
Q. What was last year’s growth, and what’s your expectation now?
A. From last year until March 2024, we experienced a 25 per cent growth. We anticipate similar growth this year, especially with three new product lines added. Although new lines typically take about six months to generate revenue, we are committed to promoting them. Therefore, I expect our revenue to increase by more than 25 per cent in the upcoming year.
Q. Can you share your valued views about EFY?
A. Yes! EFY has been a companion of mine since my college days. During my engineering years, we relied on EFY for student projects, visiting shops to buy components and building circuits. That is where my journey with EFY began. Now, as an entrepreneur, over the past 30 years, EFY has remained an integral part of my journey. The magazine features valuable cover stories on entrepreneurship and electronics and has been a trusted resource throughout. Still, I believe EFY should focus more on the export market as well. At this event, I saw a lot of international interest in India, thanks to its growth story.
While EFY already covers a wide range of topics excellently, highlighting other markets would expand its readership to foreign audiences. This could promote India’s growth and encourage global investment.
