Introduction

The Consumer Durables industry consists of durable goods and appliances for domestic use
such as televisions, refrigerators, air conditioners and washing machines. Instruments such as
kitchen appliances (microwave ovens, grinders etc) are also included in this category. This
industry includes all those goods which are durable i.e. products whose life expectancy is at
least 3 years. These products are hard goods that cannot be used up at once. According to
recent industry reports, the steadily growing market for consumer durables is estimated at
Rs. 300 billion.

Segmentation of the Consumer Durables Industry: The consumer durables industry can be
broadly classified into 2 segments: Consumer Electronics and Consumer
Appliances. Consumer Appliances can be further categorized into Brown Goods and White
Goods. The key product lines under each segment are as follows:

The Consumer Durables industry consists of durable goods and appliances for domestic use
such as televisions, refrigerators, air conditioners and washing machines. Instruments such as
cell phones and kitchen appliances like microwave ovens are also included in this category.
The sector has been witnessing significant growth in recent years, helped by several drivers
such as the emerging retail
boom, real estate and housing demand, greater disposable income and an overall increase in
the level of affluence of a significant section of the population. The industry is represented by
major international and local players such as BPL, Videocon, Voltas, Blue Star, MIRC
Electronics, Titan, Whirlpool, etc. The consumer durables industry can be broadly classified
into two segments: Consumer Electronics and Consumer Appliances. Consumer Appliances
can be further categorised into Brown Goods and White Goods.
Consumer Durables Industry in India
Consumer durables/light electricals market in India increased at 11 per cent CAGR between
FY12-17 to reach Rs 1.4 trillion (US$ 21.70 billion). The industry is expected to grow at 13 per
cent CAGR and reach Rs 3 trillion (US$ 46.54 billion) by 2020. Urban markets account for the
major share (65 per cent) of total revenues in the consumer durables sector in India. There is
a lot of scope for growth from rural markets with consumption expected to grow in these
areas as penetration of brands increases. Consumer electronics exports from India reached
US$ 270.08 million during April-December 2017. Also demand for durables like refrigerators
as well as consumer electronic goods are likely to witness growing demand in the coming
years in the rural markets as the government plans to invest significantly in rural
electrification.
Under the Budget Scheme 2017-18, the government retained its focus on rural economy by
continuing the pro-poor and pro-farmer schemes.
Growing awareness, easier access, and changing lifestyles have been the key growth drivers
for the consumer market. The Government of India's policies and regulatory frameworks such
as relaxation of license rules and approval of 51 per cent foreign direct investment (FDI) in
multi-brand and 100 per cent in single-brand retail are some of the major growth drivers for
the consumer market.

Salient Characteristics:
Durable Supply Chains of the Past
Supply chain management in the consumer durables industry has been focusing on push and
sell in the past. The key feature of the Supply Chains of the past are:
1. The push system was used as market was small, buying power restricted and high margin
requirement of the dealers
2. Forecasting was based on historical data and was mostly inaccurate
3. Supply Chain was seen as the mere means to transport goods
4. Requirements of each model were planned in ad hoc manner and were far removed from
actual market demand
5. Long Order Cycle times (up to 3 months)
6. Fragmented industry meant focus on Link Optimization rather than Chain Optimization
However, things are beginning to change which is also reflected in numbers such as:

 Logistics cost as a percentage of Total sales coming down by 1%

 RM inventory holding days reducing at a CAGR of 1.5% for the last 5 years
 FG inventory holding days been reducing at a CAGR of 1.2% for the last 5 years
These facts prove that Consumer durables companies are increasingly appreciating the
importance of SCM to reduce logistics costs, inventory and improve inventory turnovers when
sales growth has been declining and margins shrinking.
New Age Durable Supply Chains
The change in competitive landscape along with other factors such as a dip in the industry
growth rate, a drop-in penetration levels, decreasing profitability have necessitated a chain
in the Supply chain management processes for the industry. The focus has shifted from Supply
Chains to Value Chains with key players identifying the prime movers of a value chain namely:
- Waste reduction
- Speed of delivery to the customer
- Collaboration with customers to shorten product life cycle
- Develop tighter value chains to avoid shortages
- Make to order replacing forecasting
- Automatic replenishment of inventory at dealers
Optimizing the supply chain activities has been the focus of supply chain managers in their
quest for creating value, considering value chain for growth has potential to achieve
organizational effectiveness- without compromising on operational efficiency – as value chain
not only strives to withdraw activities that do not add value to its primary activities, but also
introduces support activities such as infrastructure, human resources, finance and
technology. Benefits of Efficient SCM are:
1. Efficient Sourcing
2. Demand Planning
3. Inventory Optimization
4. Order Management
5. Tracking
6. High Inventory for High Demand Periods
7. Reverse Logistics
8. Reduced vendor payments due to better on-time delivery and improved availability
9. Increased revenues from improved availability of high fast-moving inventory
10. Working capital reduction due to improved inventory management and reduced order
cycle times

Following are the key features that cover Supply Chain activities of a product
or service:
1) Sourcing of raw materials and components for a product OR skills / abilities for a
service
2) Manufacturing or creating a finish product OR service
3) Ensuring the product / service is transported, warehoused and always available
for the targeted users;4) Delivering to the end consumer
Key factors to consider and strive in each process:
1) costs effectiveness;
2) optimum utilization of resources - both the human and inventory;
3) efficiency and dependability on suppliers, manufacturers, and retailers;
4) strong planning and the ability to come up with contingency plans.