Excessive production capacity has disturbed the laminate manufacturing & distribution earnings and the same is expected in plywood which is the biggest earning contributor to the retailers, whole sellers and even manufacturers. The new license issued in Uttar Pradesh are estimated to result in new 300-400 hot presses in next 2 years for plywood. This huge addition will further pressure the entire trade and thus cause disturbance in the chain across all the levels.
What the Plywood Industry witnessing today is the greatest confusion of all times. Choosing to go with a “DISTRIBUTOR’ or RETAILER” has become confusing for manufacturers although more people are trying to approach the retailers directly. In the past, there has not been any need for manufacturers to sell directly to retailers nor to the whole sellers/ distributors wanted it to slip this way. But at present, the supply has gone 3 times above demand causing severe damage to the market practices and payment etiquettes. This turning of situation had repeatedly been reminded by The Ply Reporter to the industry - ‘ALWAYS DO YOUR HOME WORK BEFORE PUTTING UP A NEW UNIT OR ADDING CAPACITY.’
The excess supply diminishes the value of the product, eventually the whole product chain suffers. The not so perfect yet the perfect example is the season when onions or tomatoes or any vegetable become very costly or scarcely available, its taste great to consumers, Farmers earn and whole sellers too earn well but when there is excessive production, the crop loses its attraction, value and even taste, with that profitability loses at every end. This leading to a point where few (fittest) survive, others (mediocre) struggle.
The Producers’ are directly approaching to retail counters now, is equally desired by the retailers who desperately wanted to remove the middle men in between getting margins. They never got this opportunity as they did not have that strength. Now with the rise in number of manufacturers, over-supply, multiple brand policy, the retailers have got their much awaited opportunity. Off late the cases of delayed payments, rising defaulters and bad rotation of money is largely an outcome of irrational supply from all sides. Manufactures’ direct supply to retailers has indirectly led to blockage of Distributors/suppliers money which was invested on retail counter since years.
Excessive production capacity has disturbed the laminate manufacturing & distribution earnings and the same is expected in plywood which is the biggest earning contributor to the retailers, whole sellers and even manufacturers. The new license issued in Uttar Pradesh are estimated to result in new 300-400 hot presses in next 2 years for plywood. This huge addition will further pressure the entire trade and thus cause disturbance in the chain across all the levels.
Whether retailers are able to sustain the direct marriage with factories is a different thing but merely 3.0 % of the retailer aside, 97.0 percent of the retailer’s neither have administrative capability, mindset, nor space and finance to sustain the direct buying from manufacturers. Distributors are needed and will always be in commodity driven, consumer durable segment. Though manufacturers are going against it, but the cases related to payments and various type of disputes are not hidden. This issue has distributors’ views as a lead story which will help many to rectify and improve their market standpoint. For any factory, distribution policy is crucial move and one must think thrice before any move.
Pragat Dvivedi
Founder Editor
Mail to “dpragat@gmail.com”, ( M) 9310612991.