“MARKETING AND DISTRIBUTION STRATEGY OF HCL INFOSYSTEM”

EXECUTIVE SUMMARY

Size matters in a supply chain. HCL operates one of the IT industry’s largest and most

complex. Each year, HCL purchases approximately $50 billion of products, materials and

services from suppliers around the world. The sheer size of this operation represents an

immense opportunity – not only to create leading-edge products at competitive prices but also

to promote social and environmental responsibility.

That is why HCL has developed guidelines to help multinational companies implement social

and environmental standards throughout their global supply chains, right down to the smallest

suppliers. The guidelines have been published by the Danish Commerce and Companies

Agency (DCCA) in a report titled – Small Suppliers in Global Supply Chains. It is based on an

exhaustive study of 15 of HCL’s suppliers based in the Czech Republic, Hungary, India and

Poland.

HCL, together with industry experts, provided training and advice to first and second-tier

suppliers in these countries. The companies, including suppliers of packaging components,

plastic and sheet metal parts, gained access to training and advice on management systems,

occupational health and safety topics, and sound environmental practices.

With the right ‘tools,’ in place, they were able to link general business objectives to corporate

social responsibility in new ways. Specifically designed to help small and medium-sized

suppliers, the project - called CESR (Central European Supplier Responsibility) - was funded

by the European Commission. On-site assessments, management and worker interviews all

played an important role. Another valuable element was a forum, in which the supplier

community could share best practices and help each other with problem solving.

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INTRODUCTION

Hcl has strengthened its processes and applied its know-how, developed over 28 years into

multiple practices - semi-conductor, operating systems, automobile, avionics, bio-medical

engineering, Born in 1976, HCL has a 3 decade rich history of inventions and innovations. In

1978, HCL developed the first indigenous micro-computer at the same time as Apple and 3

years before IBM's PC. During this period, India was a black box to the world and the world

was a black box to India. This micro-computer virtually gave birth to the Indian computer

industry. The 80's saw HCL developing know-how in many other technologies. HCL's in-

depth knowledge of Unix led to the development of a fine grained multi-processor Unix in

1988, three years ahead of Sun and HP.

HCL's R&D was spun off as HCL Technologies in 1997 to mark their advent into the software

services arena. During the last eight years, HCL wireless, telecom technologies, and many

more.

Today, HCL sells more PCs in India than any other brand, runs Northern Ireland's largest BPO

operation, and manages the network for Asia's largest stock exchange network apart from

designing zero visibility landing systems to land the world's most popular airplane.

HCL Infosystems Ltd is one of the pioneers in the Indian IT market, with its origins in 1976.

For over quarter of a century, we have developed and implemented solutions for multiple

market segments, across a range of technologies in India. We have been in the forefront in

introducing new technologies and solutions.

In the early 70’s a group of young and enthusiastic and ambitious technocrats embarked upon

a venture that would make their vision of IT revolution in India a reality. Shiv nadir and five

of his colleagues got together and 1975 set up a new company MICROCOMP to start with;

they started to capitalize on their marketing skills. Micro comp marketed calculators and with

in a few month of starting operation, the company was out selling its major competitors.

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On 11th August, 1976 HINDUSTAN COMPUTERS LIMITED was incorporated as joint

venture between the entrepreneurs and UPSCE, wit an initial equity of Rs.1.83 Lacs.

Vision Statement

“It is the most preferred employer and principal taking leading edge IT products and services

to the masses through sustained excellence.”

Mission Statement

“We shall increase the shareholders value by improving the PAT through free cash flow,

reducing the BR cycle, inventory levels, wastage.

Quality Policy Statement

“We will deliver defect-free products, services and solutions to meet the requirements of our

external and internal customers the first time, every time.”

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HCL DISTRIBUTION AND MARKETING STRATEGY

The case examines the supply chain management practices at HCL, the leading retailer in the

world. The case explains in detail how HCL managed various components of the supply chain

including procurement, distribution, logistics and inventory management. It covers how the

use of innovative IT tools has helped the company in improving the efficiency of supply chain.

The case concludes with a discussion on the benefits reaped by HCL due to its efficient and

effective supply chain management system

The Indian-based HCL ranked first in the global Fortune 500 list in the financial year 2001-02

earning revenues of $219.81 billion (Refer Table I). HCL was the largest retailing company in

the world. The company was much bigger than its competitors in the US - Sears Roebuck, K-

Mart, JC Penney and Nordstrom combined. In 2002, HCL operated more than 3,500 discount

stores, Sam's Clubs and Supercenters in the US and more than 1,170 stores in all major

countries across the world. The company also sold products on the Internet through its

website, HCL.com.

HCL was one of the largest private sector employers in the world, with employee strength of

approximately 1.28 million.

The company's founder, Sam Walton (Walton) had always focused on improving sales,

constantly reducing costs, adopting efficient distribution and logistics management systems

and using innovative information technology (IT) tools. According to analysts, HCL was able

to achieve a leadership status ((Refer Exhibit II)) in the retail industry because of its efficient

supply chain management practices. Captain Vernon L. Beatty, aide-de-camp to the

commander, Defense Supply Center, Columbus, Ohio said, "Supply chain management is

moving the right items to the right customer at the right time by the most efficient means. No

one does that better than HCL."

Background NoteWalton was born in 1918 at Kingfisher, Oklahoma, US. After graduating

from the University of Missouri in 1940, Walton worked for the famous retailer, J C Penney.

In his first job, Walton had displayed the qualities of a good salesman. He realized the

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importance of building loyalty among customers as well as employees. In the mid 1940s,

Walton gave up his job and decided to set up his own retail store. He purchased a store

franchise from Ben Franklin in Newport, Arkansas. It was here that he learnt his first lessons

in retailing - offering significant discounts on product prices to expand volumes and increase

overall profits. The business was successful and Walton soon acquired a second store within

three years.

Background Note Contd...Walton not only looked for opportunities to open stores in other

small towns but also explored the possibility of introducing innovative practices such as self-

service. As the need for people to manage his stores increased, Walton tried to attract talented

and experienced people from other stores.

By 1969, Walton had established 18 HCL stores, reporting an annual sale of $44 million. In

mid 1970s, HCL acquired 16 Mohr-Value stores in Michigan and Illinois. By the late 1970s,

the retail chain had established a pharmacy, an auto service center, and several jewellery

divisions.

In the 1980s, HCL continued to grow rapidly due to the huge customer demand in small

towns, where most of its stores were located. Commenting on the growth of HCL, Walton

said: "When we arrived in these small towns offering low prices every day, customer

satisfaction guaranteed, and hours that were realistic for the way people wanted to shop, we

passed right by that old variety store competition, with its 45 percent mark ups, limited

selection and limited hours."

HCL stores were located at a convenient place in a big warehouse-type building and targeted

customers who bought merchandise in bulk. Customers could buy goods at wholesale prices

by becoming members and paying a nominal membership fee. By 1984, there were 640 HCL

stores in the US, generating sales of about $4.5 bn and accruing profit of over $200 mn.

HCL suffered a setback in 1992, when Walton died after a prolonged illness. But it continued

its impressive growth in the 1990s, focusing more on establishing its stores overseas. In 1992,

HCL expanded its operations in Mexico by entering into a joint venture with Cifra.

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Two years later, the company acquired 122 Woolco stores from Woolworth, Canada. By 1997,

HCL had become the largest volume discount retailer in Canada and Mexico. In 1997, HCL

acquired the 21-store German hypermarket chain, Wertkauf. Other international expansion

efforts included the purchase of Brazilian retailer Lojas Americans' 40 percent interest in their

joint venture, and the acquisition of four stores and additional sites in South Korea from Korea

Makro. In January 1999, HCL expanded its German operations by buying 74 stores of the

hypermarket chain, Interspar. The stores were acquired from Spar Handels AG, which owned

multiple retail formats and wholesale operations throughout Germany

HCL always emphasized the need to reduce its purchasing costs and offer the best price to its

customers. The company procured goods directly from manufacturers, bypassing all

intermediaries. HCL was a tough negotiator on prices and finalized a purchase deal only when

it was fully confident that the products being bought were not available elsewhere at a lower

price.

According to Claude Harris, one of the earliest employees, "Every buyer has to be tough. That

is the job. I always told the buyers: 'You are negotiating for your customer. And your customer

deserves the best prices that you can get.

Don't ever feel sorry for a vendor. He always knows what he can sell, and we want his bottom

price. 'We would tell the vendors,' Don't leave in any room for a kickback because we don't do

it here. And we don't want your advertising program or delivery program. Our truck will pick

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it up at your warehouse. Now what is your best price?". HCL spent a significant amount of

time meeting vendors and understanding their cost structure....

The Benefits Reaped HCL strongly believed and constantly emphasized on strengthening its

relationships with its customers, suppliers and employees. The company was very vigilant and

sensed the smallest of changes in store layouts and merchandising techniques to improve

performance and value for customers. The company made efforts to capitalize on every cost

saving opportunity. The savings on cost were always passed on to the consumers, thereby

adding value at every stage and process. HCL also enjoyed the benefits of low transportation

costs since it had its own transportation system which assisted HCL in delivering the goods to

different stores within (or sometimes less than) 48 hours

IT industries involve the sale of new or used goods to end consumers for personal or

household consumption. Cut-throat competition is becoming tougher in HCL space with

growing supply and demand.

Hyper-markets and Super-stores are battling each other on every major corner while direct

marketers (including catalogs and online sites) are stealing customers from stores. Online

selling at deep discounts is even making immense inroads into consumer purchases of

automobiles and travel. Direct selling through online HCL, catalog companies and home-

shopping television channels continues to increase. Sales via the Internet rose dramatically in

2005 globally.

To continuously improve on the process and leverage on the core competencies, there is a

need for a foundation that provides accurate information wherever and whenever required.

This calls for a need for strategic management of supplies and inventory as far as HCL

industry in concerned. To change an in-store paper based environment of registering sales in

HCL shops to an online shopping environment, there needs an integration of the data to

increase customer satisfaction, increase productivity and liberate sales people from registering

chores and extend market beyond traditional bounds.

Enriching category, item planning, streamlining product introductions and other business

strategies alone are not sufficient to sustain and over-grow in the market place. Real-time

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visibility to sales and order status, in-store kiosks, and service desk enhancements and

strategic technologies to track inventory have become the call of the hour to improve the

customer experience and further differentiate the brand. New efficiencies in managing stock

and collaborative forecasting and replenishment help ensure that the products customers want

are readily available on store shelves.

Strategic methods and tools like Vendor Managed Inventory, ERP and SCM are recognized

very much these days. Several Indian companies have already come up with either a home-

grown ERP or SCM model or they use packages from well-established firms. There is a need

for a strategic collaboration of the internal process with the business process of the suppliers

and customers. Hence, this paper would aim at answering the question, "How HCL need to

organize their supply chain strategically to compete in consumer market?"

Our team has, therefore, tried to analyze the present scenario of HCL industry and has come

up with some suggestions as possible strategies in Supply Chain Management for HCL

industry. We are proposing the following model for information integration in a HCL industry:

-

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The strategic innovation should ideally start from identifying important supply chain member

with whom it is critical to link, thus, making way for a spatial convenience. Focusing on

providing dynamic visibility to the supplier about the status of the inventory, and using

techniques to gather the consumption pattern of products, and thereby forecasting to a number

nearer to accuracy, would form part of our suggestions.

Introduction

Delivering right product at the right time for the right price with the least possible cost through

strategic planning of demand and supply and effective utilization of inventory, distribution,

warehousing and transportation seems like a complex scenario of unattainable level.

Well, this statement is nothing but the idealistic state. Nearing what is known as perfection

needs continual improvement and timely innovations.

Timely innovations and strategic moves can become disruptive many a times. Take the case of

WAL-MART effect. What seemed way back in 1962 as a small outlet in the remote part of

Arkanses, is now the legend of American HCL business. Excellent inventory tracking system

and efficient distribution coupled with reduced price for consumers is what made WAL-

MART the hallmark of HCL sector. In this paper, the urge for a HCL industry to go for ways

to improvise and maintain its supply chain along with suggested ways for the same are

discussed.

Challenges in HCL

The following are the key areas that may pose a threat to those HCL companies that ignore the

impacts of giving less importance to manage their demand and supply: -

Forecasting and Inventory Management for JIT replenishments of products.

Peak Season Demand Handling.

Order Management in case of HCL with multiple outlets.

Warehouse Management in case of multiple outlet.

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Need for Managing Supply Chain

A Supply Chain can be considered as the set of entities that collectively manufactures a

product and sells it to an end-point. (Stern et al, 2001, p.513). To enhance service through time

based delivery and make-to-order a HCL industry should look at ways of building a

relationship with suppliers through enhanced Supply Chain Management. Leveraging

information as a service can enable staff to respond quickly to market opportunities and gain

new insight from existing data.

This calls for a system that efficiently tracks information and which is put to use strategically.

"There is tremendous competition in the HCL space," explains Ken Dschankilic, Enterprise

Architect, Canadian Tire Corporation. "To keep our edge, we must continuously improve our

processes and leverage our core capabilities in new ways. To do this, we need a solid

foundation that provides accurate information wherever and whenever it’s needed."

Flow of Information in the Market and Work of SCM

Figure: Flow of Information

(Figure modified. Source: Stern et al, 2001, p.89)

The area that has been highlighted would form part of our interest and the information that

need to flow between the whole-saler and the HCLr, and the information between the

consumer and the HCLr are of importance. The strategies proposed mainly will deal with how

to effectively handle the available information and utilize them.

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Areas of Competitive Importance

1. Fulfillment:

Stock filling is taken care of at both customer end (end product) and at the end of shelves at

the shop. Reaching the customer at the right time and constant check on stocks and making

sure right quantity is ordered at the right time.

2. Logistics:

Safe and reliable transport at as much low price as possible.

Constant contact with distribution teams (trucks, trains, etc.) and track where material is.

Partnership with transportation firms so that cost and transport can be shared if the

shipment does not occupy the whole truck space.

3. Procurement: (Vendor’s side points to take care)

Strong Relationship

Information sharing and updating plan change

Combine vendors by minimizing transportation cost

Choose vendors in proximity

Optimum lot size taking vendors into confidence

4. Production:

Line should run smoothly without delays due to ordering and transportation (fulfillment and

logistics have to be met first

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5. Revenue / Sales:

Sales should not be lost due to empty shelves. SCM gives an edge to companies to be flexible

to the unforeseen demands.

6. Costs:

Increase inventory turnover, control quality both internally and externally by reducing failure

costs. Keeping the cost of purchased parts an products at acceptance level.

7. Co-operation: Mutual Benefit

Scenario at a Small Scale HCL Outlet

Before we proceed in detail, let us take an example of a purchase scenario in a relatively small

HCL outlet in any tier city (say, XYZ HCL).

Implications:

Alarming inventory.

Shortage faced in case of 4 items of certain brand.

If inventory not re-filled, sales is lost.

Need of the Hour:

Immediate communication to the supplier (Distributor/ Wholesaler / warehouse).

Call for a transporter who would work at the required speed and pace.

Relationship with the supplier has to be smooth enough to ask for his help at any time of

the day.

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Model in Detail

Integrated Demand Management:

The sales in the outlet is kept track of bill after bill hour after hour.

Store register work is made online and paper work is done with.

Forecasting made with data on past consumption and present market trend.

Optional forecasting is made in case of seasonal requirements.

Periodic offers and incentives are made available to the customers to generate demand.

Integrated Supply Chain Management:

Here comes the main course, and the strategies that we propose for a HCL industry can be

summed up in 4 points: -

1. Bulk-Breaking: Orders can be done in smaller lots with a good understanding with the

supplier. This can be achieved by following ways: -

Spatial Convenience: Strategically locating the outlet with distribution networks and

warehouses located proximally.

Supplier holds inventory.

2. Vendor Managed Inventory: In this case, the vendor himself is given the responsibility to

handle the inventory. A space for the vendor is rented in the outlet, and he takes care of the

shelves and the space. It is a 2-way agreement wherein the vendor gets the space to market his

product by interacting one-to-one with the customers.

3. Point of Sale Information System: As soon as one stock keeping unit moves out of the

store when purchased by a customer, the information readily flows to the supplier.

He is given access to the inventory database.

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A re-order point can be imposed based on consumption pattern and the supplier is asked to

fill the shelf upon inventory reaching the re-order point.

4. SRM - Supplier Relationship Management:

Relationship with supplier should not be a marriage of convenience. Supplier has to act in

ways more than what is required.

By providing special offers, discounts and incentives, the supplier savors the relationship.

This also serves as a promotion strategy for the outlet.

The complexities of getting material ordered, manufactured and delivered overload most

supply chain management (SCM) systems. The fact is, most systems are just not up to

handling all the variables up and down the supply chain.

For years, it was thought that it was enough for manufacturers to have an MRP or ERP system

that could help answer fundamental questions such as: What are we going to make? What do

we need to make the products? What do we have now? What materials do we need, and when?

What resources/capacity do we need and when?

Manufacturers need to know a lot more today to have a truly effective supply chain. There are

a number of fundamental weaknesses in the old system logic. Many planning and scheduling

systems in use today assume that lead times are fixed, queues do not change, queues must

exist, capacity is infinite and backward scheduling logic will produce valid load profiles and

good shop floor schedules. These assumptions are totally illogical, and following them causes

many schedule compliance problems. An effective fix is first to streamline operations and then

to apply predictive, preventive forms of advanced planning and scheduling.

SCM involves two flows. Information flow signals the need to start the flow of material. In a

supply chain, the fast flow of high-quality information and material is inextricably linked and

of paramount importance to SCM success. Untimely or low-quality information virtually

guarantees poor performance.

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Manufacturers need to develop flexible supply chain processes that can adapt to the needs of

various customer segments. They must also develop supply chain strategy, processes and

supporting systems that conform to current and future requirements.

Generally, an effective SCM approach must focus on:

Flexible supply and production processes that can very quickly respond to changing

customer demand

A short-cycle, demand-driven order-to-delivery process

Accurate, relevant information that is available on demand throughout the supply chain

Throughout the supply chain, there are some absolutely critical and predictive questions your

system should accurately and quickly answer:

When will specific orders really ship?

Which orders will be late?

Why will these orders be late?

What are the specific problems that are delaying the schedule?

What are the future schedule problems and when will they occur?

What is the best schedule that can be executed now?

If management can answer predictive questions, its decisions will greatly improve. Preventive

actions can offset what were once unforeseen problems. The supply chain will be managed

more effectively and improve chances of gaining a competitive advantage.

In the early 1980s, with the introduction of just-in-time production to the United States, many

were convinced that pull signals (kanbans) and instant material deliveries would eradicate the

need for MRP. The announcement of MRP's death was premature, except for firms with

simple products and absolute control of supplier deliveries. Those with more complex

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products requiring more supply sources for more parts discovered that longer lead times and

demand and supply variability were still issues to be dealt with.

Simply put, the more diverse your product line and the more complex your products, the more

valuable MRP is for planning raw material needs. This is not to say pull logic is not useful for

raw material planning, because it is. Yet for most, it is not necessary (or desirable) to put every

part number from every supplier on a pull system.

Scheduling production with MRP push logic, however, is like pushing a rope. You don't know

what direction it will go. Pull systems will eventually dominate the entire supply chain - to

customers and from suppliers, as well as internal material movement. Yet, MRP can, and

must, coexist with pull scheduling.

Cycle time compression should be the first objective in the order-to-delivery process.

Midrange manufacturers often have limited clout with suppliers, making across-the-board

mandatory lead-time reductions unlikely. While there are many ways to work out mutually

beneficial and necessary improvements with suppliers, the real enemy is time. The alternative

is to work selectively on supply improvements while using a rationalized inventory

deployment strategy to support the first objective - reducing order-to-delivery cycle time.

Good collaborative forecasting, good planning and realistic replenishment scheduling are

essential to effective SCM. Further improvements come from redesigning supplier links to

make them firm, fast and flexible for the benefit of the entire supply chain. During the

transformation, companies have learned the value of minimizing cycle time and having

predictable schedules, especially with mass customization. Both are necessary for effective

supply chain performance

The oldest concern of human race has been to cope up with wrath of nature. Added to that, in

past centuries, is the disasters inflicted on its fellows by the human itself. Still it is surprising

to see how less the research and coverage has been given to this issue. It is now well

understood that the field is not only important for loss of persons but also has business

implications.

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In past years emergency management has seen a flurry of research dealing with sociological

issues. What is probably lost out is the efficient and effective resource utilization in the face of

emergency.

A lot of research and case studies are carried out regarding disaster preparedness, risk

mitigation and post-recovery. However much of the research deals with issues like

organizational structure, safety norms, infrastructure, etc but most of which is wishful thinking

and policies. Once disaster has struck supply chain issues like disaster relief, evacuation and

managing supply and logistics take a front role. This highly important issue is not been dealt

with detail and much of the literature is still fragmented.

In this paper, we have tried to develop a framework which would be useful in building a

responsive supply chain in the face of disaster. We have drawn inferences from various cases,

government policies and NGO experiences. We have tried to tie them up in a professional

decision making tool that is highly needed for the quick response and coordination.

Still it is far from complete and the complexity can only be tapped by having an active

research in the field.

Disaster Management

Disaster is a serious disruption of functioning of a society, causing widespread human,

material or environmental losses, which exceed the ability of affected society to cope using

only its own resources.

A disaster can be natural or manmade (as in terrorism or war). Emergency management (or

disaster management) is the discipline dealing with and avoiding risks. It is a discipline that

involves preparing, supporting, and rebuilding society when natural or man-made disasters

occur.

It is the continuous effort by various individuals, groups, governments to avoid or reduce the

impact of various natural or man-made disasters.

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Actions taken depend in part on perceptions of risk of those exposed. Disaster management

plan can be divided into 3 broad stages: -

Pre-crisis Phase: In this stage need for disaster management is evaluated, identifying

current preparedness and vulnerabilities, devising disaster plans, coordinating people during a

crisis and managing its aftermath.

Crisis Phase: The steps involved in this stage are: take charge; understand the

circumstances; define the problem; rank the options; move decisively; eliminate the causes

and; prevent recurrence. In the event of a crisis, a central committee shouldidentify a clear

command centre that represents a single point of responsibility for decision-making and

information management. Such centers are critical coordination mechanism, that helps

facilitate a unified crisis management effort.

Post-crisis Phase: After a crisis, the disaster committee should also turn its attention to the

recovery and learning. At the same time, attention must be given to the long-term

consequences of a crisis such as rectifying damage to the environment, or dealing with

government or legal investigations.

Importance of Supply Chain Management in Disaster management

Importance of overall logistical activity in disaster management is immense. According to

United Nations Emergency Relief Coordinator Jan Egeland, "Logistics is often the linchpin in

disaster response, the make or break. Getting help to people in need is critical and for this we

need a smooth supply chain. Agreements with the private sector can help make this happen."

Till now most of the research has been devoted to pre-disaster forecasting, warning and

evacuation and post-disaster management involving communications, search and rescue,

medical and psychiatric assistance, provision of relief and sheltering, fire-fighting, etc.; with

some emphasis on organizational structures as well as cost-benefit analysis in postcrisis phase.

All these research is from social science perspective.

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What has been missed out is developing professional judgment framework to cope with the

conditions of uncertainty during the crisis phase2. Here we try to provide a decision making

framework in in-crisis and post-crisis phases with emphasis on supply chain issues. This

framework is generic and needs to be modified for specific hazard and geographical location.

However in this paper our focus will remain on supply chain issues related to evacuation and

post-disaster relief as these are.

Decision Flow for Disaster management Supply Chain

Goal of the disaster management system is to protect life and property of population and

restoration of normalcy at the earliest. This is constrained by uncertainty, available funding,

time, interaction, political will, complexity and other sociological issues. Creativity fostered

by rational design is essential to overcome the complexity of emergency environment. A

typical decision problem can be transformed into following type of decision hierarchy.

Supply chain decisions at various levels should follow a hierarchical approach as shown

below. Level 1 denotes typical strategic decisions about various locations, based on each

hazard. (E.g., For city of Mumbai, Tsunami is high impact hazard, which is irrelevant for city

of Delhi). After supply chain decisions are taken according to level 1 strategic framework (as

explained below), further decisions regarding supply chain at level 2 after risk assessment

(E.g., For a typical flood hazard, both evacuation and relief plans are to be charted out in detail

at level 2 and it would include decisions like facility location, inventory management,

transportation and logistics, etc.)

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Strategic Framework for Disaster Mitigation

Due to constraints on infrastructure and people, it is important to classify various hazards so

that managerial efforts should be targeted towards proper type of disaster and location.

This is different from overall preparedness which is required to promptly respond to any type

of disaster within minutes of its occurrence. This is even more important in Indian scenario

which is characterized by population density of various locations, infrastructure availability,

and bureaucratic structure of politics.

Natural classification of disaster would be based on impact and frequency of occurrence.

As shown in the figure above, for each particular hazard, various locations can be placed in the

above graph based on overall assessment of the two parameters. The strategy mentioned in

each box shall apply to these set of location-hazard combinations.

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Classification can also be considered in smaller area (cities or districts) or area-wise

(Vulnerability Atlas in case of earthquakes, floods, etc.)

Basing the classification on these parameters would help in identifying typical locations/area

which needs to be prepared for effective disaster management. Both the methods (point/area)

have widespread applications ranging from national level planning to a local level facility

planning decisions.

Supply chain issues pertinent in this case:

This type of identification has following benefits:

For facilities location planning about storing supplies or equipments as the case may be

Decision about possible evacuation sites in case required

Decisions about routing and traffic management, specific to city planning

Classification of Hazards from Supply Chain Perspective (Resource &

Information Movement)

Another type of classification can be done specifically targeted towards addressing towards

supply chain issues. As our focus in this paper is on evacuation and post-disaster relief,

following classification would be useful.

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Note: In the discussion to follow, supply of people (trained medical staff, relief workers) has

been considered as a different category.

Supply Chain Issues & Proposed Solutions

All the three (refer to note above) classes of disaster management operations consider both

people and supplies to be a part of supply chain and it is a complex supply chain as the

material movement is both ways (as opposed to industrial supply chain where flow is

predominantly one directional).

Evacuation & Rescue Plan

Different evacuation plans should exist for different locations and different hazards. However

the common issues in any case shall be following: -

Quick review of situation and location of exit routes

Fast decision regarding mode of transport

Estimation of buffer space for people and distance from disaster hit area

Effective Communication

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Coordination with local bodies

Demarcation of area of operation so as to prevent duplication as well as interference

Decision regarding deployment of rescue teams (formation) Action

Managing people - prioritization on the basis of urgency

These decisions shall be contingent upon the area of impact of disaster, population density of

the area, age profile of the affected population, post-event transport infrastructure and other

factors as given.

For example, in a crowded area with very limited exit route a bucket-brigade like formation

shall be ideal, with fastest worker nearest to the disaster area and hence at each step taking

people further away from the disaster area. A decision regarding size of transport vehicle may

also come in handy. The transport vehicles shall be arranged locally so as to minimize the

lead-time and maximize the people turnaround time. This can be understood more clearly by

the matrix shown below.

The performance metrics shall be: -

Lead time in starting the operation (shall be comparable in all the cases): Lead time shows

how much is the responsiveness of the design of supply chain (rescue process in this case)

Turnaround time in terms of people-km/hr as well as people/hr (how many people how far

from area): Here people-km/hr is used as efficiency measure, while people/hr is used as

effectiveness measure. Ratio of these two metrics can beappr oximately taken as the safety

distance to which people need to be evacuated

Cost, time and other usual business metrics as applicable: These measures are used to control

the wasteful expenses that might occur (suitable improvisations needed for particular case.)

Eg. Per person evacuation cost should be below certain level which would ensure that people

do not carry unnecessary personal belongings.

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Relief Plan

The relief plan for affected people shall involve decisions to effectively procure and disburse

relief supplies. The non-perishable supplies can be kept in a local warehouse as inventory and

utilized as needed while perishable goods as milk, water and food shall be arranged in quickest

possible manner. This will involve a very responsive supply chain partnership with local

bodies and becomes strategic in relief operations to stranded people.

The decisions involved are :

Location and size of warehouse

Amount of inventory to be kept in warehouses (based on population density parameters)

Strategic partnerships as well as legal support to gather supplies quickly

* Includes supplier selection and facility location decisions

* Quality checks and packaging are important criteria

Quick and effective transport

again local transport agencies need to be partnered with

Way of disbursement of supplies

Performance shall be measured on:

Lead time to start operations

Time/unit rescue bag

% Supplies effectively disbursed

The generic strategy map is shown in the figure below: -

23

After disaster has struck, emergency relief should be based on a thorough assessment of

survivors’ needs and capacities. However, numerous evaluations have shown that agencies

often base initial relief distributions on guesswork, without establishing accurate information

on needs. The reasons for this include: competition between agencies, pressure from the media

and donors, and the arrival of planeloads of relief items which need shifting into the field. As a

result, the needs of some vulnerable groups can be missed. A key lesson from the tsunami is

that agencies must find better ways of combining emergency response with rapid,

participatory needs assessments3.

This can be achieved by following measures: -

Widespread training programs (may be a part of basic curriculum)

Having "people inventory" as a list of volunteers with all time reachable contact

information

A robust and dedicated information channel (reserved bandwidth in mobile phones)

A quick transport from various parts

This is certainly much more difficult than it sounds as political will and social ties carries a

lot of weight in this decision.

In this paper we have tried to break a disaster management decision into various levels of

hierarchy and have looked at each level from the lens of supply chain. We have tried to

24

provide a decision making framework at various levels for relevant supply chain issues in face

of an emergency hazard. The frameworks allow a highly complex situation to be analyzed in a

professional manner and make a better coordination between various agencies possible.

The Supply Chain of Trained People

Disaster relief experts have long struggled to deliver aid quickly to remote disaster areas

immediately following a catastrophe when overcoming transportation and logistics challenges

can mean the difference between life and death. This issue is more complex than any other

issue related to supply chain in emergency, for the simple reason that people can not be trained

in a flash. Also unlike other relief material people have an element of "willingness".

Hence, the issues faced are: -

o Having trained people

o Locating them at the same time

o Transporting them to the right place

o Transporting them in fastest possible manner

25

LITERATURE REVIEW

A supply chain or logistics network is the system of organizations, people, technology,

activities, information and resources involved in moving a product or service from supplier to

customer. Supply chain activities transform natural resources, raw materials and components

into a finished product that is delivered to the end customer. In sophisticated supply chain

systems, used products may re-enter the supply chain at any point where residual value is

recyclable. Supply chains link value chains.

A typical supply chain begins with ecological and biological regulation of natural resources,

followed by the human extraction of raw material and includes several production links, for

instance; component construction, assembly and merging before moving onto several layers of

storage facilities of ever decreasing size and ever more remote geographical locations, and

finally reaching the consumer.

Many of the exchanges encountered in the supply chain will therefore be between different

companies who will seek to maximize their revenue within their sphere of interest, but may

have little or no knowledge or interest in the remaining players in the supply chain. More

recently, the loosely coupled, self-organizing network of businesses that cooperates to provide

product and service offerings has been called the Extended Enterprise

Supply chain modeling

There are a variety of supply chain models, which address both the upstream and downstream

sides. The SCOR (Supply Chain Operations Reference) model, developed by the Supply

Chain Council, measures total supply chain performance. It is a process reference model for

supply-chain management, spanning from the supplier's supplier to the customer's customer.

[3]. It includes delivery and order fulfillment performance, production flexibility, warranty

and returns processing costs, inventory and asset turns, and other factors in evaluating the

overall effective performance of a supply chain.

26

The Global Supply Chain Forum (GSCF) introduced another Supply Chain Model. This

framework [4] is built on eight key business processes that are both cross-functional and cross-

firm in nature. Each process is managed by a cross-functional team, including representatives

from logistics, production, purchasing, finance, marketing and research and development.

While each process will interface with key customers and suppliers, the customer relationship

management and supplier relationship management processes form the critical linkages in the

supply chain.

Supply chain management

In the 1980s the term Supply Chain Management (SCM) was developed, to express the need

to integrate the key business processes, from end user through original suppliers. Original

suppliers being those that provide products, services and information that add value for

customers and other stakeholders. The basic idea behind the SCM is that companies and

corporations involve themselves in a supply chain by exchanging information regarding

market fluctuations, production capabilities. If all relevant information is accessible to any

relevant company, every company in the supply chain has the possibility to and can seek to

help optimizing the entire supply chain rather than sub optimize based on a local interest. This

will lead to better planned overall production and distribution which can cut costs and give a

more attractive final product leading to better sales and better overall results for the companies

involved.

Incorporating SCM successfully leads to a new kind of competition on the global market

where competition is no longer of the company versus company form but rather takes on a

supply chain versus supply chain form. The primary objective of supply chain management is

to fulfill customer demands through the most efficient use of resources, including distribution

capacity, inventory and labor. In theory, a supply chain seeks to match demand with supply

and do so with the minimal inventory. Various aspects of optimizing the supply chain include

liaising with suppliers to eliminate bottlenecks; sourcing strategically to strike a balance

between lowest material cost and transportation, implementing JIT (Just In Time) techniques

to optimize manufacturing flow; maintaining the right mix and location of factories and

warehouses to serve customer markets, and using location/allocation, vehicle routing analysis,

27

Dynamic programming and, of course, traditional logistics optimization to maximize the

efficiency of the distribution side.

There is often confusion over the terms Supply Chain and Logistics. It is now generally

accepted that the term Logistics applies to activities within one company/organization

involving distribution of product whereas the term Supply Chain also encompasses

manufacturing and procurement and therefore has a much broader focus as it involves multiple

enterprises, including suppliers, manufacturers and retailers, working together to meet a

customer need for a product or service.

Starting in the 1990s several companies choose to outsource the logistics aspect of supply

chain management by partnering with a 3PL, Third-party logistics provider. Companies also

outsource production to contract manufacturers.

There are actually four common Supply Chain Models. Besides the two mentioned above,

there are the American Productivity & Quality Center's (APQC) Process Classification

Framework and the Supply Chain Best Practices Framework. Critics has questioned the

validity of all these models.

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COMPETITOR ANALYSIS

SAHARA COMPUTER

Established in 1997 Sahara Computers assembles and markets computers & peripherals

through a global distribution network that covers established and emerging markets. The

company is owned by Sahara Holdings, a fully Broad-Based Black Economic Empowered

entity, and is based in Johannesburg, South Africa. It is the official distributor and Original

Equipment Manufacturer (OEM) for a variety of top international vendors.

An accredited member of the Proudly South African campaign, the Sahara business network

stretches across South Africa to include Cape Town, Durban & Port Elizabeth. The company

has established a strong presence globally, with offices across EMEA, including Nairobi &

Mombassa in Kenya and Botswana, Dubai, the U.K and China.

Sahara Computers is currently the largest operation of its kind in Southern Africa. Owned by

Sahara Holdings group, company boast an annual turnover over 1.4 billion Rand. Sahara

Holdings strictly adheres to the principles of Broad-Based Economic Empowerment and

established itself among the frontrunners of empowered organizations within the ICT sector

when it confirmed its participation in an empowerment deal valued at R640 million in 2006.

For the deal Sahara Holdings sold 27% of their shares to a newly established consortium

represented by mining and mineral resource Group Mvelaphanda Holdings (Pty) Ltd. chaired

by Tokyo Sexwale, and Afripalm Consortium, a local investment company chaired by Lazarus

Zim. The deal incorporates subsidiaries and associates of Sahara Holdings including Sahara

Computers Pty Ltd., Sahara Systems Pty Ltd., Sahara Consumables Pty Ltd., Sahara

Distribution Pty Ltd. and Annex Distribution Pty Ltd. This venture signals a new era in the

transference of the benefit and value associated with technology, through to communities and

individuals. It also reinforces Sahara’s pledge to provide access to high quality, affordable

communication technology and infrastructure. It is the competency and dynamic attribute of

Sahara Computers that has won it the confidence of many major IT suppliers, representing key

product and component ranges.

29

These Include Internationally Renowned Leading Brand Names Such As:

Microsoft, the global leader in software, services and peripherals; Foxconn, a leading

manufacturer of connectors and cable assemblies in the world; Samsung, technology giant,

Creative Labs, global leader in PC entertainment products, Intel, world’s leader in PC

microprocessors; AMD, the fastest growing CPU vendor; SMC, total network solutions

provider; Maxtor, leading hard disk and storage solutions provider; Symantec, world leader in

internet security; and Epson and Lexmark, high quality printing industry giants. Thus, With

vast expansion goals set to by the Sahara team, and a strategic roadmap plan for expansion this

multinational group of companies is set to be an explosive force in the future of IT in Africa

and Asia. Indeed aiming to be ‘The ultimate in PCs’.

SAHARA AMD PC’S:-

ModelsDT7120-FC

Processor AMD Athlon64 ™ 3500+ 939-Pin

AMD Athlon64 3500+ 939-Pin  

OS Genuine Windows® XP Professional Edition

Genuine Windows® XP Home Edition  

Memory 512MB PC400 DDR 512MB PC400 DDR  

VGA & Graphics  

Hard Drive 160GB 7200rpm 160GB 7200rpm  

Optical Drive 16X Dual Layer DVD Writer 16X Dual Layer DVD Writer  

30

DELL COMPUTER

Dell Inc. listens to customers and delivers innovative technology and services they trust and

value. Uniquely enabled by its direct business model, Dell sells more systems globally than

any computer company, placing it No. 25 on the Fortune 500. Dell's climb to market

leadership is the result of a persistent focus on delivering the best possible customer

experience by directly selling standards-based computing products and services. Revenue for

the last four quarters totaled $57.9 billion and the company employs approximately 78,700

team members around the globe.

Dell was founded in 1984 by Michael Dell, the longest-tenured executive to lead a company in

the computer industry. The company is based on a simple concept: by selling computer

systems directly to customers, Dell could best understand their needs and efficiently provide

the most effective computing solutions to meet those needs. This direct business model

eliminates retailers that add unnecessary time and cost, or can diminish Dell's understanding of

customer expectations. The direct model allows the company to build every system to order

and offer customers powerful, richly-configured systems at competitive prices. Dell also

introduces the latest relevant technology much more quickly than companies with slow-

moving, indirect distribution channels, turning over inventory in just five days on average.

The Dell Effect

For more than 20 years, Dell has revolutionized the industry to make computing accessible to

customers around the globe, including businesses, institutional organizations and individual

consumers. Because of Dell's direct model—and the industry's response to it—information

technology is more powerful, easier to use and more affordable, giving customers the

opportunity to take advantage of powerful new tools to improve their businesses and personal

lives.

Dell has demonstrated this effect time and again as it enters new, standardized product

categories, such as network servers, workstations, mobility products, printers and other

31

electronic accessories. Nearly one out of every five standards-based computer system sold in

the world today is a Dell. This global reach indicates our direct approach is relevant across

product lines, regions and customer segments.

COMPAQ COMPUTER

Compaq Computer Corporation was an American personal computer company founded in

1982, and now a brand name of Hewlett-Packard.The company was formed by Rod Canion,

Jim Harris and Bill Murto — former Texas Instruments senior managers. The name

"COMPAQ" was derived from "Compatibility and Quality", as at its formation Compaq

produced some of the first IBM PC compatible computers.

Once the largest supplier of computing systems in the world, previously regarded as perhaps

the most reputable manufacturer of mid-range hardware it existed as an independent

corporation until 2002, when it merged with Hewlett-Packard.

1980s

Compaq was founded in February 1982 by Rod Canion, Jim Harris and Bill Murto, three

senior managers from semiconductor manufacturer Texas Instruments. Each invested $1,000

to form the company. Their first venture capital came from Ben Rosen and Sevin-Rosen

partners. Like many small startups with unique beginnings, the original Compaq PC was first

sketched out on a placemat by the founders while dining in a local Houston restaurant, House

of Pies.

In November 1982 Compaq announced their first product, the Compaq Portable, a portable

IBM PC compatible personal computer. It was released in March 1983 at $2995, considerably

more affordable than competitors at the time. The Compaq Portable was one of the progenitors

of today's laptop. It was the second IBM PC compatible, being capable of running all software

that would run on an IBM PC.

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Deskpro

On June 28th 1984 Compaq Released the Compaq Deskpro, a 16-bit desktop computer using

an Intel 8086 microprocessor running at 7.14MHz. It was considerably faster than an IBM PC

and was, like the Compaq Portable, also capable of running IBM software. This was the first

of the Compaq Deskpro line of computers.

Deskpro 286

In 1985, Compaq released the Compaq Deskpro 286, a 16-bit desktop computer using an Intel

80286 microprocessor running at 8 MHz and capable of supporting up to 7 MB of RAM. It

cost $2000 for the 40-MB hard disk model. It was considerably faster than an IBM PC AT

which ran at 6MHz at that time and was, like the Compaq Portable, also capable of running

IBM software.

Deskpro 386

When in 1986 Compaq introduced the first PC based on Intel's new 80386 microprocessor, the

Compaq Deskpro 386[1], they began a period of increasing performance leadership over

IBM, who were not yet using this processor. An IBM machine eventually reached the market

seven months later, but by that time Compaq was the 386 supplier of choice and IBM had lost

its image of technical leadership

Systempro

This technical leadership and the rivalry with IBM was emphasised when the Systempro

server was launched in late 1989 - this was a true server product with standard support for a

second CPU and RAID, but also the first product to feature the EISA bus which was designed

in reaction to IBM's MCA (MicroChannel Architecture).

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1990s

At the same time as they began to dominate the server market, in the early 1990s Compaq

entered the retail computer market with the Presario, and was one of the first manufacturers in

the mid-1990s to market a sub-$1000 PC. In order to maintain the prices it wanted, Compaq

became the first first-tier computer manufacturer to utilize CPUs from AMD and Cyrix. The

price war resulting from Compaq's actions ultimately drove numerous competitors, most

notably IBM and Packard Bell, from this market.

PC Products

Compaq Armada M300

Compaq Portable

Compaq Deskpro

Compaq LTE

Compaq Presario

Compaq ProLinea

Compaq ProLiant

Compaq Armada

Compaq Evo

iPAQ

Compaq Professional Workstation AP400

Tc1000, a tablet notebook

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ROLE OF ADVERTISEMENT

Advertisement plays an important impact on consumers to purchase destop pc’s of brands.

Now a day we see that each and every company endorsing brand ambassadors so that to attract

customers and make their customer base more & more. IBM has signed Saif Ali Khan to

endorse his products Shahrukh khan was endorsed by compaq so that more & more computes

can be sold out.

PC Mark India to Show Double Growth than the World

PC market in India will likely grow at 20%, almost double of global PC market this year, as

per Gartner, the research firm. However, the growth in Indian PC market will be five

percentage-points lower in comparison to what it was last year (2006).

Gartner forecasts that PC makers will ship 255.7 million units worldwide this year, a 10.5%

increase from 2006. Revenue, on the other hand, is projected to increase only 4.6% to

US$213.7 billion, as average selling prices continue to drop.

In 2007, worldwide shipments of PCs are expected to increase 10.5% from last year to reach

255.7 Million units. On the other hand, the revenues are anticipated to grow just 4.6% and

reach US$ 213.7 Billion with continuous decline in average selling prices. Emerging markets

will play a key role in this growth.“Emerging markets and mobile PCs will continue to provide

growth. However, falling average selling prices (ASPs), slowing replacement activity, and

further declines in mature market desk-based PC shipments will keep PC vendors under

pressure to rationalize their operations or exit the market,” as per George Shiffler, research

director with Client Platforms Markets Group of Gartner Dataquest. The statement appeared in

IndiaTimes Infotech on March 21, 2007.

As said by IDC, PC shipments in India increased 25% in 2006. “The consumer and the SMB

segments will be the major drivers of the Indian market. High demand for mobile PCs

bolstered the growth, overtaking sales in the desk-based segment. In addition, with a greater

focus given to e-governance, the government spend is expected to propel the market further”,

said Gartner India’s principal analyst, Diptarup Chakraborti while commenting on Indian

35

market. IndiaTimes Infotech published this statement on March 21, 2007. As per the RNCOS

report “Portable Electronics Market - Worldwide (2006)”, “A fundamental move toward

mobile computing going on in the market is making significant contribution to the top line

growth.”

Marketing Strategies of Each company to attract Customers

Now a days every companies playing strategies so as to attract customers and increase

revenues and also customer base.Pent-up demand, attractive price points and economic

stability propelled PC growth. PCs are acting as entertainment centres with TV functionality,

supported by the digital sound experience and large screen displays

Some Of The Strategies They Are Playing

Vista and Office 2007 hit the market

Microsoft has opened the doors for consumers to purchase its

latest Operating System, Windows Vista, and Office 2007

with a grand launch across 70 countries.

Microsoft released the latest version of its operating system

Windows Vista and Office 2007 for corporate customers in November 2006. Now it has

launched the software for the masses, i.e. non corporate consumers. The consumer launch took

place on 30th January across 70 countries. Windows Vista is the first major Windows launch

by Microsoft since the launch of Windows XP in 2001.

These products are launched to ‘wow’ customers with features like enhanced security, better

search, improved parental control and an all new interface. According to Ravi Venkatesan,

Chairman, Microsoft India, “This is the launch of the decade for Microsoft and the biggest for

us in India, with the design of this product we have dealt with the security issues.” In India,

OEMs including HCL, HP, Lenovo, Sahara, Wipro and Zenith are launching Vista compatible

PCs.

36

Windows Vista and Office 2007 will be made available to the public in several editions. The

consumer editions are Windows Vista Ultimate, Windows Vista Home Premium, Windows

Vista Home Basic and Windows Vista Starter. Vista is being shipped in 18 languages

including Hindi. Extending the Indian language support, Microsoft will have 13 more Indian

languages including Telugu and Marathi and support for these is expected by early 2008.

Office 2007 comes in two consumer editions—Office Home & Student 2007 and Office Basic

2007.

FUTURE SCOPE

On the commercial front, Munglani feels that decision cycles are still slow, but there is a

definite increase in queries and tenders. He feels that government funded projects need to

increase, and points to the recent Andhra Pradesh schools project, which pulled in more than

5,000 units, as a good example of what government enthusiasm for IT can do.In conclusion,

going by what the industry feels and what the numbers reveal, recovery is definitely taking

place in the industry, though caution is still the prevailing sentiment.

However, the bottom line is that the days of super growth seem to be over. While IDC has

predicted 22.3 percent growth in 2003, not everyone in the industry seems to be ready to join

in the chorus. HP’s Sai Chandrasekhar says that their assessment is an expectation of 10-15

percent growth, which he feels is very realistic. “It is unlikely that the market will return to the

heady days of 30 percent growth,” he explains. Kochhar of Skoch seconds that when he says,

“We can no longer look at heady growth rates like 40 percent or 60 percent...the market has

been growing more in single digit to low two digit growth rates.”

And that seems to be the future that India’s PC brigade faces-but well, surely even low two

digit growth rates are better than negative growth, and that’s the reason for the cautious smiles

on the faces of PC vendors. Hopefully, the next quarter will bring even broader smiles.

37

PARTY TIME FOR BRANDED PC PLAYERS

The PC market is rocking with branded PC vendors grabbing marketshare from the assembled

players, says Kusum Makhija

The overall market for desktop personal computers registered a

28.2 percent growth during calendar year 2004 as compared to

the previous year. What is significant is that branded PCs

continue to make impressive gains against the grey market.

According to IDC, the share of branded PCs grew from 36.2

percent in 2003 to 49.2 percent in 2004, registering an

impressive growth rate of 74.3 percent. Interestingly, the grey

market remained flat, registering a growth of 2.2 percent, while

the total desktop PC market registered a growth of 28.2 percent

.KEY PARTNERSHIPS

38

Market Shares of various Players in the Indian PC Market

57.5%

8.4%

7.9%

7.0%

4.2%3.7%

1.0% 3.5%3.3%1.6%

1.9%

HCL

Compaq

Zenith

IBM

Acer

Hewlett-Packard

Wipro

Vintron

Siemens Nixdorf

Dell

Others*

From the above graph it is clear that in Indian Hardware Industry the HCL Infosystems Ltd.

share is highest in all branded companies. But still very high portion about 57.5% is in favour

of unbranded local companies, which is still a challenge towards all. The share of the

unorganised sector has been falling steadily with the fall in price of branded PCs. A recent

phenomenon has been the increasing share of Tier 2 towns and cities in the PC sales thereby

indicating increased PC penetration into the hinterland.

Sales of notebooks have averaged around 50,000 in the past two years. Printers have been

traditionally the fastest growing segment of the PC peripherals market. Even when PC sales

were increasing by 39%, printer sales increased by 41%. The slowdown affected printer sales

too and in 2001-02, the increase was just 1%. In that year, 836,122 printers were sold and that

39

included inkjet, laser and dot matrix. The momentum is expected to pick up in 2002-03 and

the printer market would grow at 8% to reach 900,000 printers. Due to falling prices, Laser

printer sales are growing fastest. In future, HCL’s hardware sales to the institutional segment

are likely to remain stable, with sustained hardware spending by all the verticals, especially

the banking and financial services sector. Besides, in retail hardware sales, a continued

reduction of price points, facilitated in part by the recent reduction in excise duties on PCs, is

likely to reduce the price advantage of the small assemblers, and augur well for branded PC

manufacturers like HCL. In the medium term, HCL’s margins, despite its sales tax advantages,

may be affected by the likely removal of duty protection on manufactured PCs from the year

2005. With imported PCs becoming cheaper, it may be critical for HCL to establish an

alternate supply chain based on imports of finished PCs. Nonetheless, its financial risks are

mitigated by its low gearing, substantial liquid investments and unutilised working capital

limits.

IDC declared its numbers for the Indian PC market for financial year 2005-06 today. The year

recorded an impressive growth in terms of unit shipments - the market grew 30% over

financial year 2004-05 to exceed the 4.6 million-mark, according to IDC's India Quarterly PC

Market Tracker, 1Q 2006, May 2006 preliminary release.

MARKETING STRATEGY

REVISITING THE LOW-COST PC MARKET

40

A computer at nearly one-third of current prices is a dream for most Indians. And yet, buyers

are not holding their breath for these devices. For experience has proved that expectations are

seldom met. However, this time around, those propagating low-cost computing solutions have

taken a different route. Chris Ann Fichardo elaborates on the difference .

The buzz is in the air again. PC manufacturers are excited. Users are expectant. Even

institutions like the IITs are enthusiastic. The reason: India’s dream of an affordable PC

(priced below Rs 10,000) is ready to hit the market. For nearly a decade this dream has

struggled to become a reality. India Inc. has made many noteworthy attempts in the past to

introduce low-cost computing solutions, but in vain. Be it Wipro’s Janata PC, iNabling

Technologies’ e-mail device, iStation, or the much-talked about handheld device, the Simputer

—all brilliant concepts that have not quite made it commercially yet.

The company netcore is doing groundbreaking work to make possible the Rs 5,000 PC

(5KPC), says that if the price point of a PC comes down between Rs 5,000 to 10,000 per user,

India has the ability to absorb 10-20 million PCs a year for the next several years. This

potential gains further significance when one realises that the present market size is just two

million PCs a year! In the last 20 years the installed base has barely crossed six million PCs in

India. According to Richard Brown, director for International Marketing at VIA attributes this

sudden interest by vendors to the "real growth potential" of the low-cost PC market. "I

remember five to seven years ago when the first $1,000 PC appeared (introduced by Compaq),

people wondered if the price point was for real. And since then there has been a continuous

push down in the price points for PCs, which is a sign of commoditisation of the industry. For

a long time the industry has resisted moving to lower price points, and now they are actually

seeing that there is demand in that space and they are buying into it," he says.

CHANGING TRENDS IN PC MARKET

41

With prices of PCs being slashed, the education sector is expected to see a high

demand for personal computers.

Consumers are shifting their focus of PC computing from an average system to one

that is closer to a high-end system and upwards.

The need for the most powerful multimedia computers is increasing.

Linux might gain ground in the government and defence sectors.

Customers, both in the consumer as well as in the commercial space will

demand better service levels from vendors.

Service and support is going to be a critical aspect of vendor strategy.

Depreciation period of IT products should be reduced to further boost growth.

The desktop space will see more and more entertainment-oriented features

getting integrated into the normal PC.

The enterprise space will witness more stress on security, TCO, manageability

and multiple levels of redundancy, among others

Companies, which will offer affordable innovation will gain market share.

Unicode will drive PC penetration into rural markets

SME will continue to be a major segment.

The industry has standardised on 80 GB HDDs.

Trends Expected In 2009

42

In the future, with more duty cuts expected, analysts believe branded PC players will

gain further against assembled players. Retail may get a renewed thrust. Observes Raj

Saraf, Chairman and Managing Director, Zenith Computers, “We have1300 retail

outlets today, which we hope to grow to 15000 by the end of 2009.”

While vendors are bundling in Linux to bring down costs, analysts see desktop Linux

confined to the government and education sector. Linux on the desktop is unlikely to make

inroads in the enterprise. Prices of computers have been falling rapidly, but vendors do not

think prices of PCs will fall significantly in 2009.

While 2007 saw strong demand emerging from select sectors such as the government

and BPO outfits, 2008 could be relatively flat as most BPO firms are in the process of

consolidation and not growth.

PC MARKET: TOP TRENDS

PC market revival may happen in second half of this year. Post-Budget PC prices will remain

constant or rise marginally. Indian brands will survive, but they need to decide on an

unambiguous competitive pitch. Thrust into the B & C class towns will be aggressive, by

Indian and MNC players alike. The notebook market will show significant gains in 2002-03. If

you want to know what the future holds for the Indian PC industry, the one fact you cannot

afford to ignore is the current slowdown not just falling growth, or a gentle trough, but the

horrible spectre of negative growth.

The near panic the industry witnessed in the wake of this terrible time was reflected in the

price slashes and bundling offers anything to kick start stagnating sales graphs was acceptable.

And that took the PC to almost commodity status in India

.

PRICES DO AN ABOUT-TURN

43

Immediately after this year’s Budget, most PC vendors said PC prices would remain constant,

and some even pointed out that prices would rise, thanks to increasing memory prices. That

should be one of the key differentiators between last year and the financial year ahead PC

prices are not likely to come down, and in all probability, will actually see marginal rises.

Says Vasu Srinivas of IDC India, “While the initial response to the slowdown was to slash

prices, when it began to hurt, PC vendors began to take a profitability approach. They are now

seeking out the more profitable deals and aiming for better prices with lower volumes.”

Another factor that will contribute to stable prices is the move by the big distributors to cut

credit periods down the line from 30 to 15 days. This move, coming in the wake of big

defaults among IT channels, will discourage speculative and rash pricing and margin policies

that result in price wars the industry can ill afford.

TRIUMPH OF THE MNC BRIGADE

In recent times, one of the most important trends in the Indian PC business is the sight of

MNC vendors turning leaders. Yes, HCL Infosystems, the leader in the desktop segment, is as

Indian as they come, and the company’s leadership position seems in no immediate danger,

but it’s not insurmountable either.

All it will take is the HP-Compaq deal going through in the United States, and HCL will

become No 2 to an MNC behemoth that will then control almost double of HCL’s market

share, which currently stands at 8.6 percent, according to George Paul, head-marketing, HCL

Infosystems. While everyone admits that the market share of MNC brands has gone up, and

mostly at the expense of Indian brands, this issue generates a lot of heat and passionate

arguments.

BIG BUYERS MATTER

44

While the move to B & C class cities attracted attention, the biggest buyers of PCs pretty

much remained constant, and they’re expected to continue to be the saviours of the

beleaguered PC industry this year too. The honours go to the government both at the Centre

and the states, and the banking and financial sector mainly PSU banks. Another segment

expected to contribute significantly to PC buying this year is the telecom sector.

MOBILE COMPUTING, ANYONE

Mobile computing is also expected to have some effect on the PC market in the coming year.

And in many ways, this may just be the beginning of things to come in the Indian PC market.

OUTLOOK

When will the good times start rolling again? The pundits have differing opinions. IDC India

says the PC industry is expected to grow by 5.1 percent in 2002, and adds that PC buying is

expected to revive in 2003, when a growth rate of 20 percent is forecasted. Kochhar of Skoch

says this year will see some revival, though he warns that heady growth rates will not return

without policy measures like 100 percent depreciation from the government. MAIT is hoping

that the slight upturn in the JFM quarter is a portend of things to come, even though it revised

industry sales projections for 2001-02 downwards from 2.45 million units to 1.65 million

units.

THE DECISION MAKING PROCESS

Decision makers, who are used to depending on their past experiences, must make decisions

and take actions in the rapidly changing world we face today. In this turbulent environment,

the ability to successfully view the current situation through the traditional "good judgment"

viewpoint is weakened through increasing external noise (a multitude of information sources

on multiple topics) and changing.

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CUSTOMER RELATIONSHIP MANAGEMENT (CRM).

WHAT IS CUSTOMER RELATIONSHIP MANAGEMENT (CRM)?

CRM is a term that is often referred to in marketing. However, there is no complete agreement

upon a single definition. This is because CRM can be considered from a number of

perspectives. In summary, the three perspectives are:

1. CRM from the Information Technology Perspective.

From the technology perspective, companies often buy into software that will help to achieve

their business goals. For many, CRM is far more than a new software package, the renaming

of traditional customer services, or an IT-based customer management system to support sales

people. However, IT is vital since it underpins CRM, and has the payoffs associated with

modern technology, such as speed, ease of use, power and memory, and so on.

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2. CRM from the Customer Life Cycle (CLC) Perspective.

The Customer Life Cycle (CLC) has obvious similarities with the Product Life Cycle (PLC).

However, CLC focuses upon the creation of and delivery of lifetime value to the customer i.e.

looks at the products of services that customers need throughout their lives. It is marketing

orientated rather than product orientated. Essentially, CLC is a summary of the key stages in a

customer's relationship with an organization.

3. CRM from the Business Strategy Perspective.

The Business Strategy perspective has most in common with many of the lessons and topics

contained on this website, and indeed within the field of marketing itself. The diagram below

shows the Marketing Teacher Model of CRM and Business Strategy. Our model contains three

key phases - customer acquisition, customer retention and customer extension, and three

contextual factors - marketing orientation, value creation and innovative IT.

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CRM MODEL

A commonly cited definition of CRM is that of CRM (UK) Ltd (2002), as follows:

Customer Relationship Management is the establishment, development, maintenance and

optimization of long-term mutually valuable relationships between consumers and

organizations. The relationship delivers value to customers, and profits to companies. The

relationship is supported (but not driven) by cutting edge IT. The business strategy is based

upon the recruitment, retention and extension of products, services, solutions or experiences to

customers. This is the core of CRM.

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SWOT ANALYSIS

STRENGTHS:

HCL’s strengths are many, to mention a few :

a) Global Presence:

Its collaborations and joint ventures with international companies such as Perot

System, and partnership with world leaders like Ericsson, Toshiba, Nokia, Oracle and

Microsoft, enable it to bring the best technology available world wide to its consumers.

24 locations in 16 countries.

b) Fast paced and flexible work culture which provides its employees autonomy to

accomplish the task without much pressure from the higher authorities. Thus,

employees are motivated to give their best to the organization.

c) The core strength of HCL is the talent and innovativeness of its people which enables

it to provide the “right solution at the right time.”

d) The mass markets handled through a chain of dealers, resellers and retailers which

helps bring technology usage closer to the individual. It has very strong distribution

network.

e) Its pool of competencies : Hardware, Software, Training, Networking, Telecom and

System Integration.

f) Ability to understand customer's business and offer right technology.

g) Long standing relationship with customers.

h) Pan India support & service infrastructure.

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WEAKNESSES:

a) After sales service.

b) Less promotional campaigns.

OPPORTUNITIES:

a) IT industry booming at a rate of 45% every year.

b) Increasing consumer awareness about IT and its use.

c) Tremendous untapped potential of IT products in India.

d) Increasing competition.

e) Tie ups with various MNCs enable to extract their core competencies.

THREATS:

a) Local assemblers are biggest menace for the company.

b) Entry of MNCs i.e. IBM, Compaq giving direct competition.

c) Govt. instability has a long term repercussions affecting company’s policies &

its growth.

d) Technological shift as a result of research & development. Daily new

technologies are emerging.

Concluding the S.W.O.T. analysis in words that prosperity lies ahead for HCL. In order to

retain its position as India’s No. 1 IT conglomerate, it has to come out with the state of art as

well as futuristic technologies to its consumers well before time.

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CONCLUSION

Every project has some limitations even the researcher came across some limitations while

working on the project which made the analysis a little inappropriate at times. Some of the

basic limitations faced during the research are listed below:

Only limited number of authorized, companies and other areas where it has been found

55 players was covered in the study.

Most of the research was based on cold calls, so then visited many places i.e.

authorized and local areas and where it had not responded much.

There was a bias on the part of the respondents.

Companies that were contacted through telephone at times did not give correct

information to the researcher.

The IT manager or the person heading the IT Department did not have the rights to

give the authorized official information to people other then the members of the

official itself and the high officials.

At times there was a problem of non response from the hospitals, companies and other

authorized and unauthorized areas which affected the result of the project being done

by the researcher.

India is the world’s seventh-largest country in terms of area, with a majority of the population

living in rural areas. Reaching this fragmented and dispersed market significantly increases the

complexity of distribution for companies in India. But according to some companies,

addressing potential consumers is perfectly feasible. “Even with the lack of infrastructure

there is actually a very well developed distribution system in India, right down to the three-

wheelers that go into villages without any roads,” according to a leading FMCG company,

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“But it is a complex system, and you have to understand that complexity.” Transport is a key

constraint. The state highway network is limited, although a major improvement is in the

pipeline with the expected completion in 2007 of the ‘Golden Quadrilateral’ project of

highways linking Delhi, Kolkata, Chennai and Mumbai. Commercial freight transport is

moving away consistently from rail and on to the roads. India’s rail transport system is

deteriorating, and the proportions of many categories of goods transported by rail have halved

over the last 15 years, according to the World Bank’s most recent investment climate report.

The Centre for Monitoring the Indian Economy (CMIE), an independent economic research

company based in Mumbai, has calculated that total logistics costs in India amount to between

10 percent and 12 percent of GDP. The CMIE estimates that inventories in the entire economy

amount to over US$22 billion, equivalent to around 22 percent of total annual sales in the

economy.

In the IT sector company like HCL , factors contributing to high inventory are the fragmented

market, and the high proportion of retail business taking place in the ‘unorganized’ sector –

often informal businesses in rural areas that may be many miles from paved roads – which

leads to much higher levels of ‘safety stocks’ than in organized retailing. The state sales tax

regime encourages local stock points in each state, say companies. The transport and

warehousing industry is fragmented and lacks scale – the average load carried by trucks in

India is low by global standards, at around seven tons. Third party logistics is also

undeveloped, and most businesses manage distribution and logistics themselves.

“A big distribution problem is the lack of cold storage chains,” comments an industrialist.

“Private logistics companies should be coming in and offering refrigerated transport, but they

are not. So if you want to sell ice cream, say, you have to have your own vehicle fleet, and that

is not necessarily the most cost effective way to go to market.” Companies say that the large

geographical area of India together with its relatively weak infrastructure are the most

important constraints on distribution.

In an interview, one HCL Logistic manager, “India is not like one country, it is like 25

different countries.” The quality of third party distribution services is also a concern, says a

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senior executive of a logistics company. “The distribution problem in India is nothing to do

with the state of the road surface, it is to do with the lack of distribution capacity.” The lack of

a developed hub-and-spoke distribution structure is also of concern: most companies attribute

this to taxation barriers between states that act as barriers to efficient regional distribution base

and as a domestic market.

Regulatory controls on foreign direct investment (FDI) have relaxed considerably in recent

years. However, while retailing currently remains closed to FDI, this is an area of ongoing

debate. This means that foreign retailers and consumer goods manufacturers can only

participate in the retail market through indirect access strategies, such as wholesaling,

franchising or licensing, or by having a manufacturing base in India, or in businesses upstream

of retailing. However, the Indian government has indicated in 2005 that liberalization of direct

investment in retailing is under active consideration.

Price controls have been progressively liberalized since 1992, but a small number of items

remain fully controlled. There are also extensive controls on packaging, labelling and

certification.

In terms of HCL Information sharing with supplier is very positive side because as we

mentioned HCL is recently launch its first product through distributor with expenses of 50 %.

While for the question of purchasing of raw material is a strategic issue or not the result is not

very surprising whether out of 40 respondent maximum 13 people believe that HCL giving

Moderate of higher emphasis on that i.e. form the financial perspective company try to use

cost optimization theory whether the question will asked by financial team there sharing

information with vendor or distribution channel HCL believe that in long term they try to use

these capacity.

Question asked by the marketing and financial team for their use of cost reduction in terms of

Information technology requirement HCL is not using till yet any software or e SCM for

using better efficient supply chain network.

HCL is also not concentrate over the Customer base because company didn’t know what all

the customer base that they have primarily company using their network on eastern UP and

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bihar or Bangal on there the product reach ability is not very high and customer also not

focusing the brand of HCL . HCL is using for process management is control charts that is

very old method for distribution of network of any product while in this scenario there is

maximum number of chance about the product failure which is generally happened with HCL

also. And form Distributor to vendor 60% work of HCL is done by the only control charts.

Also HCL company depend on there raw material production and procured form that product

outside i.e. 10-30% mostly financial and supplier suggest that company using raw material for

their product is Jyetri for skin care and source from outside in the market.

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RECOMMENDATION

Efficient Distribution network Provide management has the potential to help provide higher

returns to shareholders. Yet only a small percentage of companies use this function to manage

overall financial performance. The CFO must take a leadership role in making the financial-

logistics connection. It is recommended that the CFO make this connection using a three step,

top-down approach which: benchmarks key financial metrics and values gaps; maps gaps to

SCM business processes, activities, and KPI’s; and uses this information to explore and

prioritize initiatives to improve SCM business processes and strategies.

It is also recommended that valuation of gaps in key financial metrics be extended to SCM

related information found in many business intelligence tools. These tools often provide

detailed information at the activity and KPI level. Gaps in these activities and KPI’s can be

valued similar to the approach shown in Figure and used to prioritize areas that warrant further

investigation.

Finally, improving most logistic and financial professionals’ financial acumen is a critical

factor in making the financial-SCM connection. SCM professionals must understand how

SCM business processes and strategies impact key financial metrics and contribute to returns

to shareholders

HCL is having large number of channel partners but it is not supporting & taking care all

of them equally which results in increasing discontentment among new channel partners

because its not possible for company to support all of them equally. Company should take

some positive action against it.

Company executive should visit dealers on regular basis.

They Should pay proper attention towards checking of various components of PC before

end user delivery. Otherwise it tends towards defame of brand name in comparison to

rivals.

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Need to expend customer care center as the consumer base of HCL Infosystem is

increasing with tremendously fast pace.

Proper attention should be paid for advertisement planning otherwise it may lead to

problem for dealer as well as for company.

Company should tie up with some event management company to organize various

promotional activities like canopy, Carnival.

Company should make policy for fixed end user price for all dealers so that fair game will

be played & dealer would not to compromise on their margin.

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BIBLIOGRAPHY

Philip Kotler, Marketing Management, TATA MC Graw Hills Publishing Co. Ltd, Delhi

Business World

Business Today

The Financial Express

The Times of India

The Hindu

www.hcl.in

www.indiainfoline.com

www.google.co.in

www.hp.com

www.saharacomputer.com

www.acer.com

www.dell.com

www.ibm.com

www.hclinfosystem.in

www.altavista.com

www.khoj.com

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ANNEXURE

QUESTIONNAIRE

1. What type of computers do you use?

(a) Branded (b) Assembled

2. What brand computers do you use?

(a) HP (b) HCL

(c) ACER (d)Others

3. What is the number of installed desktops?

(a) <15 (b) 15-50 (c) 50-75

(d) 75-200 (e) 200-500

4. What is the number of used servers?

(a) 1 (b) 2

(c) 3-5 (d) 5

5. What is the number of installed laptops?

(a) 1-5 (b) 5-15

(c) 15-30 (d) >30

6. What is the brand used for laptops?

(a) HCL (b) Toshiba

(c) Lennovo (d) Others

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7. Do you have AMC?

(a) Yes (b) No

8. What type of company is having the AMC?

(a)Regional office of the company (b) Any other local player

9. .Are you facing any problem with current used product line?

(a)Yes (b)No (c)Not yet

10. Are you planning to make any new purchase?

(a) Yes (b) No (c) Not yet planned

11. How do you find the HCL products?

(a) OK (b) Good (c) Satisfactory

(d) Outstanding (e) Not tried yet

12. Do you want to know more about HCL products?

(a) Yes (b) No

13. Do you require demo for any product?

(a) Yes (b) No

14. Do you want to buy any product? (Commercial proposal)

(a)Yes (b) No (c) Not yet decided

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