Rapid industrial change, driven largely by the increasing scope of IoT technology, is generating huge demand for interconnected devices and for the electronics on which they depend. If electronics manufacturers are to seize growth opportunities, but avoid the potential pitfalls, they need to be agile, as Dave Cleal of Offshore Electronics advises.
Transformation based on the Internet of Things (IoT) is clear to see in the automotive industry, for example. There it is vital to the functionality and control of electric, hybrid and autonomous vehicles, and Mobility as a Service (MaaS). It has applications not only in the manufacturers’ end products but in their manufacturing equipment and in closer integration of their supply chains.
Be agile and lean
To succeed in this fluid environment, electronics manufacturers must have the agility to cope with its challenges. They include fluctuating product demands and labour costs, supply chain instability and even events such as the 2008 financial crisis. While these difficulties can lead poorly prepared businesses to failure and bankruptcy, agile manufacturers respond quickly and effectively to the market’s unpredictable needs and changes.
Agile manufacturing is a business-wide approach which makes a company more competitive by connecting its staff, customers and technology into a co-ordinated, fast-reacting and proactive whole. It is not the same thing as lean manufacturing, although the two can work well together. Lean manufacturing focuses mainly on cost reduction by measuring performance, continuously improving and eradicating waste in the supply chain.
Both models can improve profitability and sustainability, and both affect a company’s approach to manufacturing and operating. They also have a common dependence on data-backed decision-making, customer-centric supply chains, IT systems and open communication throughout the organisation.
Co-operate and outsource
If manufacturers are to be agile, they must resist the traditional urge to keep everything in-house. Through partnerships and collaborative projects with other companies, they can achieve extra impact and flexibility in new and changing markets. One option for building such relationships is outsourcing.
Continually adding and vertically integrating new activities and skills within a manufacturer’s business is expensive and can result in an unwieldy organisation which is slow in responding to market changes. An agile alternative is for the manufacturer to stick to the core activities for which it is best skilled and equipped, while outsourcing others to suitably specialised providers.
Importantly, outsourcing is no longer a case of farming out work to low-wage economies. Today, many European and American companies are reshoring operations, and for good reasons. Wage differences between countries are narrowing, and with inefficiencies relating to long-distance transport, for example, lower prices cannot be guaranteed. In addition, there are crucial risks in terms of quality, delivery and customer service.
Use a Contract Electronics Manufacturer
One area in which outsourcing makes particularly good sense is the manufacture of electronic components such as printed circuit board assemblies (PCBAs) and electro-mechanical assemblies. A contract electronics manufacturer (CEM) can create value in many ways.
First, it saves the business from having to spend time and money on installing specialised systems for electronics manufacture, such as high-volume surface mount lines. Next, it takes away the time, expense and headaches involved in establishing and maintaining an efficient and resilient subcomponent supply chain for those products. The CEM will have good relationships with accredited suppliers, and when working for multiple companies its economy of scale and strong buying power will secure lower prices.
A good CEM can go further still, by helping to improve communication between design, development and manufacturing. Its expertise can make products easier and less expensive to manufacture, with better quality, functionality and performance. Above all, by reducing risks, lowering costs and shortening time to market, a CEM enables companies to respond rapidly and profitably to its customers’ changing needs.