As a market, India is considered the next China. The opportunity there for consumer electronics alone is estimated at $20 billion. But when it comes to getting products into the hands of consumers, India carries many of the same logistical challenges as China: a huge area, a widely dispersed consumer base, and the supply/demand swings typical of these products. The GPS maker TomTom is using the supply chain solutions provider ModusLink to execute everything from custom configuration to reverse logistics in India.
Supply chain and 3PL services are a growing opportunity in India, according to a report from the research firm RCNOS:
Lucrative growth in India’s consumer electronic and durable industry has boosted the 3PL sector, generating estimated revenue of $69 million in 2010. The market is further anticipated to post a CAGR of around 36% during 2012-2014, on the back of rising demand for warehousing and transportation in consumer electronics and durable industry.
ModusLink's solutions center in Hyderabad, India, is one of 25 such centers around the world, Tom Nightingale, the company's president of sales and marketing, told us in a phone interview. "Every customer is different, so we provide everything from value-added configuration to reverse logistics, repair, and reclamation services."
TomTom wants to download localized map software and assemble its products as close to the end-user as possible. It also uses ModusLink to package, distribute, and handle accessories such as cases, covers, device mounts, and chargers in India. "We are capable of doing everything the customer requires at the 'last mile' to get fresh content to the point of consumption," Nightingale says.
Companies like ModusLink are getting more of their revenue from back-end supply chain services. Rather than handling returns and repairs themselves, OEMs are outsourcing those services within local markets. ModusLink handles the physical return services, stocks and manages parts for repair, tests retuned devices for defects or user error, and interfaces with the OEM if products will be returned to the shelf. In addition, Nightingale says, companies like ModusLink handle the collection and disposal of electronics products, since the relevant regulations vary widely.
According to the RCNOS report:
India’s huge geographical diversity requiring varied logistics expertise for each region presents the biggest challenge that needs to be addressed by the 3PL service providers. To overcome this problem, 3PL companies have to make huge investment to setup a logistics network.