Effective supply chain management for LED luminaire manufacturing

Much depends on the best practices followed to manage the supply chain when manufacturing LED lighting products, because the shorter the lead time, the less complex the inventory management will be.

By Kartiki Negi

Wednesday, September 17, 2014:  Advances in technology and continuous R&D activities have helped the LED lighting industry to evolve at a very fast pace. This dynamic sector also witnesses fast-changing trends; hence, managing a huge supply chain is quite a challenge. Much depends on following certain best practices to manage the complex supply chain for manufacturing LED lighting products, because the shorter the lead time, the less complex the inventory management will be. Effective supply chain management can, therefore, increase the efficiency of the complete production process.

Speaking at the seminar ‘A to Z About Manufacturing LED Products in India’, organised by the EFY Group on February 22, 2014, during EFY Expo 2014, Ajay Goel, CEO, Goldwyn, said, “Supply chain management plays a crucial role in the LED lighting industry, especially for Indian manufacturers, who are generally small players compared to the global manufacturers. In this industry driven by fast-changing technology, one must understand the fact that the life of a product can be as short as 9 or 10 months. It is very likely that just after a year, one might not see the same product moving into the market again. Parameters such as the time line for developing new products, the volume of products and the time line for investments are also important considerations.”

According to Ajay Goel, the following factors must be kept in mind while managing the supply chain for LED manufacturing.

Minimum stock levels: Stocking is a major concern in supply chain management today. With technology evolving so rapidly, the products or components in stock today may not be relevant in the future. One has to therefore identify local sources that can offer global quality levels and price competitiveness.

Procurement from a minimum number of suppliers: There are about 50 global manufacturers of LEDs selling in India, some of the important ones being Cree, Philips Lumileds, Osram, Nichia, etc. Indian LED lighting companies tend to choose either the low cost LED manufacturers to procure components from or they switch between different manufacturers quite often. “This is not a good practice,” said Ajay Goel. “Choose a minimum number of suppliers and procure components from them regularly. You will not only develop a rapport with them, but they will also give you a good price. If you keep changing suppliers, you will not get the right components at the right price,” added Ajay Goel.

Choosing authorised dealers: The LED industry has attracted a lot of dealers, distributors and stockists. With so many dealers in the market, one has to be careful about the authenticity of a product as some of them might be selling rejected stocks. Hence, one must buy only from authorised distributors, even if it costs a little more, explained Ajay Goel.

Quality assurance of purchased parts: Maintaining the quality of a product is a major requirement; hence, the components procured should also be of assured quality. For example, it is important to procure LEDs that conform to the LM79 standard. “A lot of Chinese and Taiwanese companies offer LEDs which are practically half the price of that being offered by reputed players. These products do not comply with any standards. If the LEDs do not meet the desired standards specifications, they may either deteriorate fast or may change colour quickly,” said Ajay Goel.

Similarly, the driver, which is the most important part of an LED light, should be of a renowned brand. “One has to be careful while choosing LED drivers as there are many Chinese as well as Indian manufacturers, who offer LED drivers at low cost with no warranty or papers. If the drivers are not reliable, the lights will fail every two months. In such a case, a manufacturer will have to spend more money on servicing and repair and will also lose credibility in the market,” said Ajay Goel. “Users should also keep in mind that the drivers made in Europe may not work in India because these products are not made keeping in mind the problems of voltage fluctuations and high power that we face in India,” he added.

Optics are also crucial for LED lights. There are many big players in India, China and Taiwan, but “…the buyer should always ensure that optics are made of good quality material. Sometimes, poor quality materials may exhibit properties that are similar to good quality materials, but after some time, they deteriorate, affecting the optics immensely. So, one has to be very careful about buying optics from a reliable supplier,” informed Ajay Goel. He also warned against using cheap diffusers as they may reduce the life of the light.