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Tech Made in India: A CFO’s Story of Streamlining Manufacturing Supply Chain

By Vishnu Priya Govindarajan

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Updated on: May 27th, 2024

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11 min read

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Forget Silicon Valley, there's a new tech titan in the East, and its secret weapon isn't billion-dollar funding rounds. It's something far more Indian: resourcefulness. India's high-end smartphone and wearables industry is thriving, blending cutting-edge design with their unique high-value yet cost-effective engineering. But what keeps the factory humming? It's not just the design and operational expertise in manufacturing.

Behind the scenes, a complex financial dance ensures everything runs smoothly. The key? Mastering the art of vendor management and keeping the accounts payable in perfect harmony. We spoke to Anand, the CFO of Theta (name anonymised), our backstage pass into the world of Indian tech manufacturing. Let us explore how he orchestrates this financial dance, ensuring every vendor is paid on time and every rupee is stretched to its limit.

Sourcing: A global game of musical chairs

A close-up of a smartphone factory, showing a smartphone on a creative city scape of circuits.

We begin our questioning at the source: From the first notification that jolts us awake to the calming tunes that lull us to sleep, a single battery silently orchestrates our lives. Anand answers with a knowing smile, “We might dance to our smartphone’s tunes, but manufacturers like us play a global game of musical chairs where raw materials like cobalt and lithium constantly switch seats.”

His statement rings true: the reality of mobile manufacturers sourcing the lifeblood of smartphones and all wearables is riddled with geopolitical tensions, fluctuating market prices, and unexpected shortages that can disrupt production schedules and inflate costs, creating a domino effect impacting the entire supply chain.

We are curious about how his own team deals with sourcing troubles since the finance team plays a critical role in mitigating these risks. He answers, “They are tasked with securing contracts with reliable vendors, closely monitoring market trends and forecasting material needs. It is essential to employ careful cash flow management and hedge strategies to protect against price fluctuations, as well as build strong relationships with vendors to ensure timely deliveries and favourable payment terms.”

Production: Automation, the helping hand

A robotic arm assembling a smartphone on a conveyor belt in a factory.

While robotic arms and assembly lines hum with efficiency, the human element remains crucial. Skilled workers ensure quality control and navigate the intricacies of production. Enquiring about his view on automation, we were surprised by his futuristic take on automation in the AI age. He delightedly answered, “The reach of automation goes beyond just our production lines; automation impacts the entire ecosystem, including my finance team.”

He continues, AI-powered automation plays a vital role in optimising production costs by automating manual and repetitive tasks in accounts payable and supply chain management, freeing up my team for more strategic tasks. Additionally, they help immensely in automating rigorous accounting practices to track production expenses, monitor inventory levels, and identify potential cost-saving opportunities.”

Compliance: Navigating the regulatory maze

A hand holding a green checkmark next to a simple drawing of a factory signifying compliance achieved.

Navigating the labyrinth of regulations across borders (both states and countries) can be a daunting task. We probed a little further about his regulatory compliance practices. He says, “Every region has its own rulebook. India's GST, for example, started out simple. However, every new mandate adds a new layer of complexity. I have to admit, sometimes we find it challenging to keep pace. Also, falling behind means fines, delays, and damaged reputations.  So, there's no room for error in this game.

He adds “New regulations come at us so fast, we're stuck in reactive mode. It makes proactive compliance planning nearly impossible.” His statement captures the essence of the challenge: The regulatory changes are currently outpacing the ability of businesses to adapt.

Packaging & Distribution: The ever-evolving logistics puzzle

A conveyor belt transporting boxes in a mobile phone factory.

Delivering delicate yet exorbitantly priced electronics across continents must be quite the challenge. He answers saying “Safe and on-time delivery requires a meticulously choreographed dance. We collaborate with logistics partners to navigate complex customs procedures, ensure secure and timely delivery, and maintain optimal storage conditions throughout the journey.”

The finance team is more than mere number crunchers. They negotiate to ensure competitive shipping rates, timely vendor payments to avoid disruptions, and manage customs duties and taxes. They also develop and implement strategies to minimise potential losses due to damage or theft during transportation. 

This preemptive financial management ensures smooth and cost-effective movement of goods throughout the supply chain.  Real-time visibility dashboards are crucial tools, allowing them to monitor vendor performance, track upcoming payments, and identify any potential delays or discrepancies along the supply chain. This proactive approach keeps the financial rhythm humming and ensures every rupee is spent efficiently.

Vendor Management: Building bridges of trust

Vendor and enterprise stakeholders shaking hands, representing a partnership in the mobile manufacturing industry.

Managing a network of vendors spread across the globe can be a challenge. Communication barriers, diverse payment terms, and potential ethical concerns necessitate fostering trust and transparency throughout the vendor network. He agrees, "A healthy supply chain relies on strong relationships with vendors.”

The finance team plays a pivotal role in building strong financial relationships with vendors. “A certain amount of transparency in invoice processing and approval workflows goes a long way in establishing trust with vendors. It helps us to establish clear payment terms, ensure timely settlements of invoices, and leverage flexible payment solutions when feasible.”

This close collaboration extends beyond logistics. By working hand-in-hand with vendors, the finance team becomes instrumental in fostering smoother communication and identifying opportunities for cost savings throughout the supply chain. This focus on efficiency allows them to implement responsible and efficient sourcing practices, ensuring ethical and sustainable operations.

A Clear Picture: Embracing automation and collaboration

A hand holding a cell phone with a picture of a factory on the screen. This highlights the connection between cell phones and the factories where they are made.

As we've seen, Anand's insights offer a valuable roadmap for navigating the complexities of the global smartphone supply chain. From strategically sourcing raw materials to optimising production with AI, and ensuring smooth logistics and vendor relationships, each step requires a well-orchestrated financial dance. 

Let's explore how enterprises can navigate their own journey and learn from Anand's experience to achieve financial efficiency and responsible practices.

Sourcing:  The global hunt for raw materials like cobalt and lithium is a complex dance, riddled with geopolitical tensions and price fluctuations. Careful cash flow management, hedging strategies, and strong vendor relationships are crucial for mitigating risks.

Production: Automation extends beyond factory floors. AI-powered tools help finance teams optimise production costs, automate tasks, and identify cost-saving opportunities.

Compliance:  The ever-changing regulatory landscape creates a constant challenge. Businesses struggle to keep pace with new mandates, making proactive compliance planning difficult. From invoice capture to streamlining the approval process, automation has become inevitable.

Packaging & Distribution:  Finance teams play a key role in ensuring the smooth and cost-effective movement of goods. Real-time dashboards and collaboration with logistics partners are essential for efficient delivery and accounts payable management.

Vendor Management:  Building strong relationships with vendors fosters trust and transparency. The finance team plays a critical role by establishing clear payment terms, ensuring timely settlements, and identifying opportunities for cost savings and responsible sourcing practices.

The journey of a mobile phone, from raw materials to the gleaming device in your hand, is a complex dance. But what keeps the music playing in the background? A well-oiled financial engine that ensures every step, from sourcing to delivery, is executed with efficiency and precision.

Image credits: Alwin Joseph

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About the Author

A bookworm transformed into wordsmith, I leverage 7+ years of marketing expertise to craft compelling narratives that might've even grabbed your attention on a forgotten billboard. Whether collaborating with industry experts or traversing uncharted trails, I'm rarely far from a book (for stories) or a backpack (for adventures).. Read more

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