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Extending New Efficiencies to the EMS Environment
December 31, 1969 |Estimated reading time: 5 minutes
The introduction of efficiencies in electronics manufacturing services (EMS) has significant cost-saving implications. Faster, coordinated line operations; rapid logistical response from suppliers and distributors; and more accurate data are just a few examples of the ways electronic manufacturers have improved operations.
By Ed Price
A fraction of a percentage point compounded over tens of thousands of units adds up to real numbers over the life of a production run, and when efficiencies translate into a faster time-to-market, the strategic advantages further multiply the revenue equation. Over the years, leaders and innovators in EMS have sought such advantages through investments in new equipment and technologies, innovative approaches to production management, and offshore relocation.
However, old habits and the global nature of a modern EMS environment present unique challenges to the industry from a communications standpoint. With an emphasis on globalization and outsourcing, the electronics manufacturing chain is highly decentralized. An OEM may be in one location, designer in another, prototyping handled somewhere else, and volume production facility in yet another. Often, two or more of these functions are not even on the same continent. Throw suppliers into the mix — and a few closely guarded trade secrets — and it is easy to see how communications can get bogged down.
Out with the Old, In with the New
The biggest barrier to major productivity gains in EMS is in the industry tendency toward non-communication — a vestige of a time when competitiveness depended upon proprietary knowledge. Minimal communications also minimized the opportunity for vital information to end up in the wrong hands.
This mentality is anathema to efficient operations. Just as highly networked production lines depend upon real-time communications between automated machines, more rapid data exchange between partners fuels faster opportunity response and can mitigate risks, such as inventory liability.
Yet while production managers readily embrace the latest in highly networked technologies to enable better device-to-device communications, they remain fearful of opening communications channels in the supply chain. There has never been an environmental thought process applied to information technology in EMS, but this has to change to open the window of opportunity.
In the logistics industry, communications are transparent. Every party to a package has up-to-the-minute access to a parcel's whereabouts, from drop-off to final delivery. Online tracking provides a clear view to sender, recipient and vendor, instilling confidence that the service is working to the customer's satisfaction.
This level of visibility enhances the ability to answer questions and resolve problems. Simple inquiries are answered instantaneously, while more vexing problems can be handled in minutes, rather than hours or days.
Under such a system, significant costs would be driven out of the EMS process through introduction of greater efficiencies, as well as value introduced through more rapid opportunity response, faster time-to-market, and improved partner loyalty and satisfaction.
A Window on the World
In EMS, sophisticated communications tools typically are only deployed enterprise-wide. Customers, partners and suppliers are shut out of the process, resulting in attention paid to why things cannot be done, rather than how changes can be made quickly and correctly. By eliminating costly delays in the decision-making process, what used to take days now can be accomplished in moments.
By taking advantage of innovation like Web-enabled technologies to infuse their supply and partner chains with instantaneous access to the data that pertains to each party, contract manufacturers can make internal and external communications function as one. And by merging all parties onto one virtual network with unlimited access to information, collaboration is the natural result. With a literal and figurative real-time view into their outsourced processes, OEMs and their customers can respond instantly to each other's rapidly changing needs as if operations were located onsite. This allows modifications to be made quickly, easily and cost effectively — even in low-volume, high-mix projects.
Similarly, seamless knowledge transfer to, and centralized management of offshore production facilities eliminates the "re-learning" curve associated with high-volume production startup, removing redundancy from the equation, while focusing on quality control and customer needs. Furthermore, supply needs are immediately and proactively calculated, and logistics arranged quickly and efficiently, drastically reducing inventory liability.
These changes are considerable, resulting in significant administrative cost, staffing and materials savings, which can be passed on to customers or used to increase margins.
OEMs will well appreciate the benefits they were able to reap by implementing supply chain management (SCM) and enterprise resource planning (ERP) solutions to manage their own production floors. Now, imagine the benefits a contract manufacturer could provide by implementing similar systems on a virtual basis that would enable an OEM to access all the information available from that contractor's production floor back to the OEM on a 24/7 basis.
One company* has made a multi-million dollar software and technology investment that makes such virtual channels possible. Specifically, the company has developed a virtual manufacturing portal,** which offers OEMs a real-time view onto the shop floor and into the supply chain. OEMs are given 24/7 online access to information and control of their product and supply chain throughout the manufacturing process. This approach using Web technologies has been a significant factor in several recent OEM sub-contract awards.
A global provider of end-to-end infrastructure availability solutions, who is accustomed to working with contract manufacturers for a wide range of manufacturing needs, has found the virtual portal to be a catalyst in how they manage and think about outsourced manufacturing projects. The firm's manufacturing engineer now has immediate, direct access to information from the manufacturing floor to the supply chain, including the number of projects running, total number of purchase orders, as well as highly specific information such as what's the status of a particular project.
The firm also is able to effectively manage materials — typically a process that can mean one to two weeks to get a single answer. Now, the customer can create customized queries that identify when they can have a desired quantity based on material lead time, existing demand and manufacturing capacity. If the desired quantity is not available within a specified timeframe, the portal produces a summary report that details the constraints on the project, which can be e-mailed directly to the company* for the customer and program manager to discuss and resolve.
Conclusion
This level of communication and access to information is unprecedented. Surely, a new Industrial Revolution is to take place within this market and it will happen through information technology, where significant investments are applied to the innovations making such virtual channels possible.
*Milford Manufacturing Services** The Looking Glass
Ed Price, president, may be contacted at Milford Manufacturing Services; (508) 478-8544; Web site: http://www.milfordmfg.com.