manufacturing

The importance of vendor scorecards

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Large OEMs, especially those who’ve grown through acquisition, will have thousands of suppliers, and at some point they will conclude that it’s time to streamline and focus on more strategic partnerships. Suppliers are usually awarded on a best-performing basis, so how do you compare?

Within an organisation there may be many different supplier stakeholders, and these people will have different views and opinions based on their interactions with different departments. Sometimes a decision is made based on intangibles such as a clash of personalities, old or second-hand information, incorrect data, or recent issues that are skewing longer-term performance; bad data entry, inflexibility, or issues where the supplier was not the root cause can also affect decisions. In these situations, vendor scorecards provide not only a way to objectively set and monitor performance but a way to work through issues and strengthen relationships.

Builds more predictable supply-chains

Scorecards provide a way to predict and eliminate risk. Ideally, a supplier should be made aware that their performance will be monitored and measured throughout the term of the contract so there are no surprises when a decision is made. Metrics are based on consistent and regularly scheduled audits or evaluations that are agreed to by both sides. This awareness between both parties are typically part of the contract negotiation phase. With performance data in hand, supply-chain managers can make data-based decisions regarding where to direct spend.

Provides an intuitive, easy to understand dashboard

Vendor scorecards should show data in a consistent and centralised manner, making it easy to make side-by-side reviews. Having an intuitive, easy to understand layout is critically important, otherwise nobody will use it – which defeats the purpose of having a scorecard

Helps build long-term partnerships

Scorecards have limited value taken in isolation: trends are more valuable over longer periods. Harnessing the long-term benefits is actually what makes them a very powerful tool for building, engaged collaborative partnerships. As one of the UK’s top 10 EMS companies, Chemigraphic takes vendor scorecards seriously. We regularly discuss metrics and data with our customers and our performance against an agreed set of KPIs. Through these KPIs we get to understand what’s really important to their organisation. The gains are numerous: formation of common goals, continuous improvement, contractual reviews based on past performance, more targeted and frequent communication, and ultimately the most important of all – greater trust.

Helps define what’s acceptable, what’s not

Typical scorecard measurements include on-time delivery, quality, yield, returns, warranty and communications, along with customer-specific requests. Working through the details of these metrics is very useful, as this will help to determine what’s acceptable or isn’t. On-time delivery, for instance, often leads to differences of opinion. Some OEMs will take a very strict view and penalise for any deviation – no later, but also no earlier. Is there a window of acceptability?

Empirically quantifying performance can have benefits in itself by making poor performance highly visible, but the true value of scorecards comes from cooperation to implement corrective actions. Within EMS suppliers, the performance may not be measurable purely based on internal capabilities; it’s very often subjective at the product level. For example, what’s an acceptable cosmetic appearance? No assembly is 100% visually perfect. A glaring defect in a highly visible surface should be blatant to everyone, but what about a small underside scratch or a minute speckle in a painted finish. Where is the dividing line between what acceptable and not? This is where it can be useful, or even a necessity, to have clearly documented and agreed acceptability criteria.

An EMS does not own a product design, and their extent of liability is “to the defined customer specification”, however, there can be grey areas and one of the most common is a cosmetic standard. For instance, in a plastics moulding process, there will be some visual features and acceptability may be entirely subjective. A small blemish may derive from the core process and is not necessarily a “fault”. Subjective elements can be difficult to quantify outright, but it is possible to define things like surface blemishes by size, type and location. There may be a need to extend this to viewing angles, inspection lighting conditions, viewing distance and levels of magnification. The important point is that there is a definition and agreement of what is and is not acceptable, and this may require adjustment if a selected process or material is simply not able to consistently deliver that output or within a realistic budget.

Points to other factors

Certain data may require further investigation. For example, supplier returns can be a good indicator of supplier performance, but were 100% of the returns valid? Were there defects or issues where the supplier could not be realistically held accountable? Within the complex and fast-paced transactions of a modern manufacturing environment, materials can be ‘put aside’ for a variety of reasons. Over time the pile can accumulate. When someone then eventually addresses this ‘bone-pile’, the original reasons for segregations may be lost and it can be tempting to return to supplier, causing a returns spike.

The effectiveness of a vendor scorecard regime depends on the attitudes and style of the relationship. Ideally, a supplier should commit to a process without getting defensive or obstructive and correspondingly the customer should be able to ensure those metrics captured are fair and accurate and concede when liability is closer to home.

How can your EMS contribute to product design?

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There’s a notion that Electronics Manufacturing Services (EMS) companies are only there to build sub-assemblies to order, test, distribute and sometimes provide return/repair services.

This is not true!

The prevailing myth is that when an OEM (Original Equipment Manufacturer) wants to outsource actual product design, they need to consult an ODM – an Original Design Manufacturing provider – who is likely to offer them a reboot of something they’re already making for another company.

Many experienced EMS companies (we prefer the term ‘manufacturing partner’) can provide equally skilled services at the front-end of the value chain, both designing the product as well as assembling, testing and volume production. In fact there’s a number of ways a manufacturing partner can make valuable contributions to product design.

Retain full control of your Intellectual Property (IP)

ODMs are companies that design and manufacture products for other companies to rebrand and sell as their own. In the typical ODM model, both the control of product design and the associated intellectual property shifts to the suppliers, although it does depend on the OEM’s size.

While ODMs have been scaling up in recent years, the trade-off to manufacturers buying ODM services is a significant loss of IP. Variations of PCB design, control boards and interface design have proven to be notoriously difficult and expensive to protect. For this reason, the business presumption is that an ODM will eventually become the OEM’s competitor, whereas an EMS partner works on behalf of an OEM as a service provider and not a competitor.

In a market dominated by OEMs that are rebadging standardised products which have been manufactured according to the same design, it becomes more difficult to differentiate your product from a competitor’s.

Benefit from broader EMS capabilities

A mid-size OEM might introduce 10 or 20 prototype designs in a year, or even fewer, whereas an EMS partner, set up to deliver volume and efficiency, will produce several hundred in the same time period. When EMS providers engage with customers early in the design process, they can apply their combined years of industry expertise and innovation to ensure the end result is as effective and efficient as possible. For example, we have accomplished engineering staff aligned to all aspects of design from pure PCB design and assembly to mechatronics, software engineering, COTS (commercial off-the-shelf) module integration, interface design, electrical design, enclosures, prototyping, testing and certifications or any task that brings life to a product.

Align component selection to Design for Manufacturing (DfM) principles

A customer may present us with schematics for a product design that aren’t feasible or could be improved. A problem we increasingly encounter is when hard-to-source MLCCs (Multi-Layer Ceramic Capacitors) are specified instead of more readily available polymer alternatives. It could be they’ve designed-in an EOL (End of Life) component or they’re proposing a needlessly complex PCB layout.

Early engagement allows for product optimisation using DfM principles. This is the practice of designing products with the manufacturing process in mind, choosing the best processes, materials and components. For example, we look at ways to minimise the use of new ‘active parts’ in favour of standardised, widely available components, as the design of a new part is usually only the best option from a purely inventive design point of view. DfM addresses this by asking designers to consider not what could be created, but what should be created. Minimising active parts through standardisation simplifies product design and leads to operational efficiencies through lower inventories.

DfM is not about discouraging creativity and new solutions; sometimes it is necessary to develop a new part. However, this approach ensures manufacturing costs stay low without cutting corners and the best results are achieved without compromising on quality or performance.

Help with front-loading the manufacturing process

Once a design is released to production, and especially after it has been validated for regulatory compliance, the costs of changing the design may be prohibitive. In fact, decisions made during the design phase determine 70% of the product’s final cost. There is often a singular, and closing, window of DfM opportunity that must be grasped to avoid later complications. Working closely with contract manufacturers while designs are still fluid ensures that both manufacturing and supply chain considerations are factored into your manufacturing plans.

By front-loading the process, an early review of all the commercial aspects of the design can be conducted, including but not limited to:

  • Design resilience and compliance aspects
  • Product and process design that balances product quality against design effort
  • The effort involved to design new active parts and costs of inventories
  • Use of alternatives for volume-friendly production
  • Use of standard parts, COTS modules, etc
  • Global sourcing and associated obsolescence issues
  • Selection of “machine friendly” packaging formats

Let’s take a look at some of these in more detail.

Designing to save cost on material spend

Component cost is a significant factor of DfM. Material spend makes a big difference to OEM profit, especially during uncertain times of fluctuating supply and currencies. By consolidating OEM material spending, an EMS provider will gain a 10-100 fold increase in spending power, providing direct access to global manufacturing channels and cutting out the proverbial ‘middle man’. This is how we can overcome minimum order quantity (MOQ) restrictions and access the very best price breaks. Also, a larger EMS material spending power means that components can be sourced in machine-friendly formats which increase automation and traceability, further enhancing product integrity and overall performance.

Factoring-in supply-chain considerations

Component availability and obsolescence issues are increasingly a problem for product design. We are well positioned to help a customer navigate through these issues. Even the most perfectly designed electronics assembly, presenting zero fabrication, regulatory or inspection issues can create critical delays and costly substitutions if components are not sustainably available.

These supply chain breaks may be due to:

  • Changes in distribution
  • Components being placed on EOL
  • Stocks being allocated as they run low
  • Or mergers and acquisitions creating ever-widening ripples

Product design engineers are often focused on component selection to achieve the desired functional performance and sometimes struggle to see beyond the immediate prototype or small-batch production stages.

We provide valuable input to help create selections that are sustainable and cost-effective, addressing future requirements when the product ramps into eventual production volumes or off-shore manufacturing locations.

Scores on the EMS doors: how real-time data dashboards drive service levels and operational efficiencies

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If you can’t measure it, you can’t improve it.
Peter Drucker, Management Consultant

The most successful EMS operations are those which combine the mass delivery and rigidity of automation with the intelligence and flexibility of those programming the machines.
Stewart Gadd, Technical Director, Chemigraphic

Not all perfect storms are a bad thing.

In electronic manufacturing today there is a cluster of trends coalescing to offer us unprecedented levels of information and intelligence about fluctuations in every aspect of our increasingly complex business.

This perfect storm is delivering instant insight into:

  • Our supply chain
  • The traceability of components through – and beyond – our production operations
  • The efficiencies of our manufacturing process
  • Ways to reduce error, ensure consistency and increase yield

It is being whipped up by a number of related trends:

  • The Internet of Things’ (IoT) offers us increasingly integrated data across all of our tech
  • Cloud computing delivers the capacity to store and analyse large amounts of this data
  • Automation delivers time-savings and efficiencies in both completing and reporting on tasks
  • Barcoding and scanning technology allows us to accurately monitor and trace components and activities at a granular level

At the very eye of this storm, however, lies the ability to act on all this available data and intelligence as quickly as it is being produced.

Without this ability to quickly reach informed decisions, electronic manufacturers will not be riding the waves to optimal efficiency but instead, drowning under a deluge of data.

And it is the use of data-driven dashboards that is the differentiator between sinking and swimming.

From information to intelligence

John Greenough, senior research analyst at Business Insider (BI) Intelligence, estimates that the number of IoT devices used by manufacturers will have exceeded one billion by 2020, with annual investments scaling up to $70 billion.

IoT investment

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Manufacturers, more than any other sector, are leading the adoption of IoT. There are sound commercial reasons for this: according to a TATA Consultancy Survey, manufacturers have seen a higher return on investment from the IoT than any other industry.

Chemigraphic have long used IoT solutions to track assets in our factories, consolidate our control rooms, monitor performance, reduce errors, optimise efficiencies and increase our analytics functionality through predictive maintenance.

But as more data becomes available across our entire manufacturing operation, the key to realising further efficiencies and quality improvements lies in how – and how quickly – we act upon all this business intelligence.

It is critical that this advanced intelligence is being viewed and acted upon in real-time: we must have an at-a-glance way to assess the sheer complexity of production and supply chain factors that affect our yields and reliability.

To do this we need to have access to data that has been configured to address customers’ specific requirements. And we need to intuitively grasp high-level information about what is happening on the shop floor – and to be able to easily drilldown into each stage of the manufacturing process if required.

  • We need the granularity to trace a batch of components, monitor a machine or review a technician’s progress
  • We need the overview to schedule tasks and switch job runs
  • And we need automatically generated (machine) intelligence reports that are distributed appropriately to highlight any variances or optimisation potentials that arise

Dashboards

Real-time data-driven dashboards at Chemigraphic

At Chemigraphic, we know the difference such real-time data-driven dashboards make.

Dashboards are displayed across our company, in every department from factory operations to sales, purchasing and procurement.

  • They are colour-coded, user-friendly and instantly readable, making it easy to identify and react to issues as they arise in real-time
  • They are an enhancement of our automated processes, helping link together our data collection, barcoding and traceability. All job numbers are barcoded – and all employees have barcodes – so jobs can be monitored and data can be isolated or collated as needed
  • They are an essential part of our commitment to customer service, realising time and cost efficiencies, driving performance, ensuring quality, maintaining responsibility and offering traceability
  • They allow us to:
    • Provide training and support to be given to staff who are encountering delays on a job
    • Ensure a smooth workflow by lining up jobs for those who are nearing a project’s completion
    • Spot trends and variances whether positive or negative, to ensure future improvements
    • Retrospectively check customer or project data against exact timestamps to identify issues or performance markers

The scores on the doors for dashboards

A recent Aberdeen Group study into Manufacturing Operations Benchmarks confirms what we discover every day as we use real-time analysis to prevent problems, guarantee reliability and drive cost-efficient optimisations.

Here’s what it discovered from a survey of 223 organisations at the cutting edge of manufacturing services:

  • About a third of these handled plant data via real-time/event-driven dashboards with role-based data accessibility, navigation, aggregation and drill down
  • Real-time operational dashboard users were twice as likely to have visibility of critical real-time areas such as quality, compliance, global operations and processes

 improve real-time visibility

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  • Because of this visibility, 71 percent of dashboard users have the ability to collect, plan and schedule, aggregate, analyse and respond to real-time manufacturing events − nearly three times the rate of non-users
  • They also have improved their time-to-decision at a rate 5 times greater than non-users

Dashboards lie at the centre of a perfect storm

Commenting on the role of automation, data collection and real-time analysis in driving our business, Stewart Gadd, our Technical Director, affirmed that:

‘Chemigraphic relies on the strength and insight provided by the data network that runs throughout the company.

Collecting, analysing and acting on data, whether it relates to customer purchases, productivity levels of staff or the efficiency of internal systems, is vital in measuring and improving our overall performance.

By tracking spikes, dips and other trends in the data we collect across the business, we can start to make observations on what is working well, what needs to change and successes we need to celebrate and champion.’

We intend to stay right at the centre of this perfect storm.

Mind the gap! Small data variations may suggest big problems

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Quality measurement plays a pivotal role in helping drive stability, prosperity and growth – and that’s good for everybody, especially in these uncertain times. Within the details of quality data are small differences – gaps – between predicted and actual results, and a thorough examination of these gaps, even relatively small ones, can point to wider issues of commercial management. Minding these ‘gaps’ goes beyond just collecting quality metrics and conformance data, it’s about getting to the root cause in order to be operationally-efficient and ultimately sustainable, with all the benefits this brings to customers.

We’ll look at a few areas where a rigorous ‘mind the gap’ ethos within commercial management can deliver clear customer advantages.

Scrappy data leads to higher costs

Scrap is the commonly used term for what’s rejected as “non-compliant” after a production job. The usual issues are damaged or faulty items, which can be blatant, but can also include less tangible issues as borderline tolerance issues, temperature or time-dependent failures, failures under one set of circumstances but not another identical situation, and subjective defects, especially cosmetic imperfections. Companies may absorb scrap as an inevitable cost of manufacturing but failing to at least track and investigate the causes of scrap can be a lost opportunity to identify a number of issues: inefficient manufacturing processes, supplier problems, inappropriate or poorly applied acceptability criteria, tooling issues, manual and handling issues or even poor documentation.

We make sure that even relatively small value materials are quarantined and go to a Material Review Board (MRB) that consists of sales, quality, purchasing and production, where a joint decision is made on disposition. The MRB asks questions like:

  • What’s the root cause of this material being segregated and quarantined?
  • Are defects physically repairable? Will the result be fully compliant? Will the repair be acceptable to customer? If not, will the customer concede in this instance. Should we instigate a new repair process?
  • Is there an underlying defect in supplied materials and can this be compensated by the supplier?
  • Is a material truly non-conforming or just sub-optimal? Is the acceptability criteria properly defined and applied?
  • What is the repair cost vs replacement cost vs item value? Are there other strategic reasons for extra efforts for recovery in this instance, e.g. to complete a consignment; no time to source alternatives; a one-off build is inefficient, or other reasons.
  • Is this incidence part of a trend? i.e. the individual part value may be insignificant, but the ongoing accumulated cost could be substantial.
  • Is this incidence an indicator of a wider or more systemic problem? Will the benefits of a corrective action improve capability in other areas?

This MRB process also helps to ensure that standards are correctly interpreted.

Scrapping not only has a direct effect on materials used in production and costs money but there’s time and labour spent dealing with the disposition. Monitoring the scrap data provides opportunities to build leaner manufacturing processes by looking at:

  • Who is handling the materials and how frequently?
  • What are the costs of scrapped materials?
  • Can any parts be salvaged for reuse of return?

Longer job times can actually lead to better business

Every production job has a job time. These may vary enormously – and even on repeat builds job time can vary depending on which operators have been assigned and the batch size. Typically, we put a traffic light system in place to monitor the data. From a commercial management perspective, it’s important to focus on growth and stability and ask questions around the red and amber lights:

  • Why did that job make nothing?
  • Is that a continual loss making job?
  • Was there an excessive amount of scrap on the job?
  • Did we over-run time?
  • Where did that cost occur?

Growth and stability improvements are typically made not from simply replicating sales in the best performing customers but looking at the bottom performing jobs and addressing those issues. By collecting quality data over a long time, it’s possible to determine whether there’s exceptional circumstances or a persistent problem.

The return of the return

Returns under warranty happen for lots of reasons. Where a product doesn’t function in the intended manner due to a fault then it is clear the responsibility lies with the manufacturer and it is their liability to fix the problem. However, a product may ping-pong back and forth between manufacturer and supplier before somebody intervenes to halt the process. By then there may be limited options, having been inspected by both parties without anybody accepting liability. In these instances it remains very important to maintain accurate detailed data.  There might be an underlying quality defect – a board might be delaminating after the components are mounted, for instance. This would be an issue of the materials supplied and in these instances it might be appropriate to address issues of compensation with suppliers.

The age of returns is critical too. Within the complex and fast-paced transactions of a modern manufacturing environment, materials can be put aside for a variety of reasons. Over time the pile can accumulate. When someone eventually addresses this pile of returns, the original reasons for the segregations may be lost and it can be tempting to simply return the goods to the supplier.

Detailed quality data generates lots of opportunities to improve a process. Being mindful of the small gaps in quality data makes a big difference in the long run.

A quality result: placing accuracy at the heart of medical device manufacturing

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Risk management, quality and accuracy are essential in the manufacturing of medical electronic devices. Increasingly stringent regulatory requirements apply to every step of a product’s life cycle, including the design, engineering, service, delivery and returns process.

As new ‘invasive’ devices appear on the market (those that are applied to, or used in, the body) it looks like the level of regulatory scrutiny is set to be turned up yet another notch.

Medical OEMs demand that their EMS partners can demonstrate a comprehensive quality management system. Checks, best practices, monitoring and recording must be embedded into every stage.

Traceability is particularly important, and not just to meet regulatory demands. Medical products must be built exactly to specification – using verified components and with fully defined finishes, battery types, temperature ranges, and so on.

It’s critical that the provenance of each component can be traced and that detailed records are kept of each stage of the manufacturing process. Lot traceability helps contain any issues that arise and ensures that problems are not spread.

ISO 13485 (2016)

ISO 13485 (2016)

The international agreed standard that sets out the specific requirements for a quality management system that meets the rigorous needs of the medical devices industry is ISO 13485 (Medical devices – Quality management systems – Requirements for regulatory purposes).

The latest version of this was published in March 2016. Unsurprisingly it places a greater emphasis on risk management and risk-based decision making, as well as increasing the regulatory requirements for managing the supply chain.

When Chemigraphic successfully transitioned to the new 2016 version, our NPI and sales director, John Johnston, commented:

“It’s a huge privilege for us to be involved with some of the most pioneering medical projects in the world, something we take great pride in.

In order for us to deliver the very best for our customers, it’s vital that we take quality and processes extremely seriously.

Standards such as the ISO 13485:2016 are an excellent mark of our commitment to quality, allowing us to credibly demonstrate our excellence in medical electronics manufacturing.”

Let’s take a look at how Chemigraphic is placing quality, accuracy and safety at the heart of its electronic manufacturing services for medical device OEMs.

5 critical questions medical device OEMs need to ask their EMS partner

We adopt a quality mindset.

The focus on quality permeates our culture, every level of our organisation. Every aspect of our manufacturing process is analysed continuously – and risk management informs our design, engineering, testing and supply chain decisions.

Here are 5 questions that you can ask any potential EMS partner to assess their suitability for your medical device production.

  1. Do you take a proactive approach toward quality management systems? Specifically, are you positioned to respond to likely regulatory or market changes?

New developments in Industry 4.0 practices, including the Internet of Things (IoT) and machine-to-machine (M2M) communication, are helping us to deliver a more seamless and ‘mistake proof’ production process.

What’s more, should a manufacturing issue come to light later, our technology can quickly and effectively isolate the products that must be recalled.

By integrating data more comprehensively into our quality management systems, we have greatly enhanced our accuracy and responsiveness.

  1. How well can you support my risk management requirements?

Real-time notification and preventive or corrective action workflows enable us to efficiently communicate issues, streamline collaborative activities and resolve problems quickly and effectively.

At key test stations we use camera-based system verification, X-rays or automatic optical inspection (AOI) to double-check placement of materials at levels the human eye cannot identify. This allows us to compare derailed visual information against known valid characteristics of a medical device to verify the product’s quality.

  1. Are your quality control measures apparent at every stage of manufacture – and, just as importantly, are they comprehensively recorded and responded to?

We embed procedures, steps, checks and balances into everything we do. Our continual closed loop feedback system ensures a highly reliable, high quality and repeatable product.

  1. What does an analysis of your pass yields and data matrices reveal?

Our detailed data matrices document quality measures, progress levels and information about the various stages of the surface-mount technology assembly process, including testing.

They reveal, at a glance, exactly what we monitor and measure to determine if quality is being met.

  1. Do you have test strategies suitable for the rigorous requirements of medical electronics sub-assembly?

The capabilities to conduct the most suitable test is critical in ensuring quality for medical devices. The testing criteria that we can deploy includes full functional, flying probe and in-circuit testing (ICT).

Find out more about our quality-centred approach to medical device manufacturing

To find out about any of the products we have helped OEMs launch into the medical market – or to discover how we place quality at the centre of all we do – call our team on +44 (0) 1293 543517.

The ultimate guide to OEM outsourcing

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Who is this guide for?

This guide to OEM outsourcing will talk you through the things to consider when you choose your EMS partner.

You’ll find out when it makes sense to outsource, what the implications can be and what benefits outsourcing can deliver.

You’ll also learn about outsourcing beyond contract manufacturing and how your EMS partner can add value to supply chain management, design, testing and logistics.

This guide is for:

  • Established OEMs operating at production capacity or no longer wishing to maintain a production environment
  • Frustrated designers who have hit a ‘design wall’ and need a fresh pair of eyes
  • Innovative start-ups lacking manufacturing know-how
  • NPI teams wanting to reduce risk through improved supply chain management and product testing

In fact, if you’ve ever wondered exactly who would make an ideal outsourcing partner, then this guide is for you.

Outsourcing today: from EMS provider to EMS partner

Outsourcing is now a well-established part of electronics manufacture – and it has been so since the 1990s.

Just glance at any list of the top 50 electronics firms and you’ll find a number of EMS companies among them.

As the importance of outsourcing has grown, the nature of the relationship between the EMS and the OEM has changed.

 

In its guide to selecting an EMS provider, IPC observes that:

‘EMS companies have transformed themselves from board stuffers (consigned parts) to contract manufacturers (turn-key: buying the parts and performing the assembly) to offering a complete range of services including product design and product build.’

Surveying the contemporary electronic manufacturing landscape, PwC agrees:

‘Many electronic manufacturing services (EMS) companies are providing new services along the spectrum. At one end, they’re offering more design services, for either sub-assemblies or finished products. At the other end, they’re offering more testing services. The more services EMS providers offer, the more they move into new models of joint design manufacturing (JDM) and outsourced design manufacturing (ODM).’

 

Which is to say that EMS providers have become critical, strategic long-term partners rather than occasional, one-off providers used tactically for operational support.

This collaborative approach makes it increasingly important to select your EMS partner carefully. In this guide we’ll show you how to make the best choice.

We’ll look at:

  • Why OEMs outsource
  • The factors to consider when outsourcing
  • How to find a perfect partner
  • And we’ll talk you through some of the services you can expect, including product design, procurement, NPI, testing and logistics

Discover the range of services Chemigraphic can offer you

Explore the markets we serve

Chemigraphic

Why OEMs outsource

‘The traditional integrated firm is not necessarily the best way to create value. Today, almost any organization can gain access to resources. What differentiates companies now is their intellectual capital, their knowledge, and their expertise – not the size and scope of the resources they own and manage. As a result, outsourcing is being adopted by firms from across the corporate spectrum. No firm is too large or too small to consider outsourcing.’
Michael Corbett, founder IAOP

Here are five compelling reasons to outsource.

1.      To gain focus

Outsourcing allows you to focus on your core skills and competencies.

By placing areas of your manufacturing process in the hands of trusted partners, it allows you to concentrate on what you do best.

For many established OEMs this can be R&D or sales rather than upstream supply chain management and production. And that’s a great reason to outsource.

Many start-ups simply don’t have the capital to invest in their own production or design. And outsourcing enables them to acquire these skills without the wait.

2.      To gain competitive advantage

Competitive advantage can come from outsourcing for better tech, greater cost-efficiencies or acquisition of talent.

For example, OEMs are realising that onsite machine shops often sit idle – and that is neither efficient nor cost-effective. Often this ‘hidden cost’ is brought starkly to light when new tech becomes available – especially in cases like processes such as SMT assembly, where increasingly sophisticated and costly equipment is being used.

Outsourcing can remove a cost centre and help you gain a competitive advantage.

3.      To gain capacity

Capacity ceilings are frequently hit by those with long sales cycles, but they can also be reached by anyone whose marketing hits that sweet spot. Outsourcing offers both a solution without the overheads.

It’s not just your plant’s capacity that can impact on your speed to market: sometimes recruitment may fail to deliver the required talent or available capital may constrain your investment in equipment upgrades.

4.      To gain cost control

Outsourced manufacturing can offer a fixed unit price for products.

This is because EMS companies have a larger customer base and can agilely adapt their means of production across a range of resources. This agility means your EMS can minimise the cost impact of changing demand and maintain a fixed price.

5.      To gain expertise

Outsourcing adds talent and capabilities without any asset-related investments. This gives you greater cash flow and financial flexibility.

Whether you are looking to take advantage of a partner who sits closer to the upstream supply change, has a larger design team or can reduce your lead times and improve your on-time delivery rates, outsourcing is a strong option to consider.

Find out more about why OEMs outsource

Discover exactly what we offer you

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Factors to consider when outsourcing

‘If the choice [of an EMS partner] is that critical, should low cost be the only driver in the selection decision?
The answer is obviously “no” – not when the stakes are so high.
Companies should not focus on tactical cost reductions but should focus on performance superiority, often called Total Acquired Cost. Differences in hard costs such as freight and duty as well as soft costs such as cost of quality, time to market and excess travel expenses are a part of this.’
‘How to begin the process of selecting an EMS provider’ by the IPC EMS Management Council

Outsourcing is a critical business decision: here are the things to consider and the implications to bear in mind when you select your EMS partner.

Complete or partial outsourcing?

The rule of thumb here is to outsource as much as possible to the subcontractor – simply because this is how you can gain the most benefits.

But there may be some technical aspects of the build process that you need to keep inhouse. For example, you have a product that can measure tiny particles of a specific gas in an environment. For this it would make sense to use the specialist test equipment you have already developed as it would be costly for your EMS to replicate it.

Free issue or outsourced procurement?

One of the major benefits of outsourcing is being able to take advantage of the contacts, control and management of the supply chain that your EMS offers. Free issue offers few advantages and many disadvantages.

 

While free issuing allows you to maintain control over part or all of the component procurement process, it is important to ask yourself if you want to be an expert upstream supply chain manager or a successful seller of electronic devices.

Free issuing presents a number of potential blocks to realising the benefits of outsourcing, not least of which is the need to handle the supply chain yourself and maintain a warehouse to hold stock. In addition, you take responsibility for making sure all parts are genuine and available in sufficient quantities at the right time. Delays caused by this are down to you, whereas a trustworthy subcontractor will have end-to-end processes in place to effortlessly merge the management of the supply chain with the requirements of the assembly line.

The question of offshoring

To offshore, or not to offshore: that is the question. And the answer is far from clear cut. For many situations the cost savings offered by an offshore EMS are greatly outweighed by other factors.

These factors include hard costs, such as transporting products from, say, China to the UK and other soft costs that affect your ability to deliver quality product in a timely manner, such as higher inventory pipeline levels, schedule flexibility and processing of change orders.

Even cost savings are not guaranteed. For example, the greatest cost savings with offshore production are usually found with simpler circuits requiring a good deal of manual labour. The cost difference is radically different for more complex, highly automated assembly.

Here are some of the other factors that can make a difference in deciding whether to offshore or not to offshore.

  • Product maturity
    Offshore sourcing best suits mature products because inventory pipeline, quality and schedule risks increase substantially with change orders
  • Engineering
    Design changes tend to take longer and the review process can be much more protracted
  • Component substitutions
    Offshore sources tend to use more unauthorized component substitutions which can impact performance and product certifications
  • Transportation costs
    Larger products are expensive to ship by air -mand shipping by sea can add over a month to the delivery cycle.
  • Inventory risk
    This is greater with an offshore sourcing because of the longer delivery pipeline
  • Schedule flexibility
    This important consideration is often overlooked but domestic partners tend to be more tolerant of schedule volatility.
  • Confidentiality
    Standard non-disclosure and non-compete agreements are much more difficult to monitor and enforce with offshore sources

Implications of outsourcing

Outsourcing is a business decision and it will impact on most areas of your business. Here are some critical implications to be aware of.

  • Staffing
    If you are moving an area of your business from inhouse you should have HR involvement as early as possible in the process – all UK businesses must comply with the Transfer of Undertakings (Protection of Employment) (TUPE) regulations
  • Plant and equipment
    A decision will need taking as to whether to dispose of or sell any existing plant and equipment
  • Suppliers
    You may have to review existing arrangements with suppliers – and, if you have long-standing relationships, explore if these can be transferred to your subcontractor
  • Customers
    Particularly if you are producing a specialist, niche product for just one or two customers you should communicate your intentions and explain your rationale for making the change

 

How to find your perfect EMS partner

‘Don’t just buy on price: consider the total cost of doing business with a supplier, including variable costs and intangibles such as the culture fit between your team and its teams. Pay less attention to price and more to securing a partner that can offer minimal risk and top-notch efficiency.’
Tony Allan, Medical Product Outsourcing

Automation: Automated processes Juki

It is critical that you are 100% clear about your objectives and the outcomes you seek. Once these are understood and agreed upon, you’ll know instantly if you have found a potential EMS partner or not.

1.      Define your requirements

Your objectives will vary depending on whether you are looking to outsource a single product, shift production to a higher capacity partner or are decommissioning your entire manufacturing plant.

What’s important, however, is that your objectives are clearly expressed and agreed upon by all involved. It is also vital that you prioritise your list, so that those that are critical are separated from those that would be ‘nice to achieve’.

For example, you may want to work with an EMS partner located within reasonable travel distance. Or, perhaps, you are looking for a partner with both UK and European manufacturing facilities? Or, it may be that there are complexities involved in the manufacture of your product – such as electro-mechanical builds – that must be met by your partner?

Ensure that you consider ‘softer’ factors alongside ‘hard’ requirements. The cultural fit of two organisations can impact on the long-term relationship. This can be difficult to quantify but the following tangible areas can often help you to determine whether there is a fit or not:

  • MRP/ERP system capabilities
  • Purchasing strength
  • Supplier relationships (both onshore and offshore)
  • Responsiveness and flexibility
  • Experience
  • Business practices
  • Other customers (size, type, length of relationship)

2.      Start your search

The selection process can be long, so it’s vital that your list of objectives is constantly referred to and amended should things change.

Most OEMs will combine internet research with word-of-mouth recommendations to produce a shortlist of around ten potential suppliers. Typically, these will be whittled down to three or four strong candidates.

3.      Find your potential partners

 

This is where you really start to dig deep.

Having shortlisted your suppliers a pre-qualifying questionnaire will place flesh on the bones. Tell each about yourself, your products and your objectives. And ask them some questions to find out if they really do offer a potential fit.

Based on the responses you should be able to whittle down your potentials to two or three.

At this point making a site visit is essential. This will give you a sense of the company, its culture, people and capabilities. And, often, it is more instructive than the boardroom-based sales pitch and presentations you will also invite.

Alongside the informal site visit, you should also source your own formal references and commission financial checks.

4.      The nitty gritty

Your RFQ should include estimated annual quantities for the products you require, typical order batch sizes and frequency of orders.

If the product includes drawn items these are likely to have additional tooling charges applied to them unless you specify using an existing supplier.

Make sure you are able to deliver a large amount of data – and be prepared to be asked for more. As a minimum you’ll need the Bill of Materials (BOM), drawings for parts, production build packs, manufacturing/test data, Gerber information and CAD data.

 

While the RFQ is being completed now is the time to arrange to audit the operations of each potential partner.

You’ll want to quiz all the key people who could be overseeing the manufacture of your product: this may include Production/Operations Manager, Quality Manager and the proposed Account Manager. Ask them to explain how they envisage managing all of the elements of your manufacturing – and make sure it feels seamless.

You should also carry out a quality audit of their processes and procedures. What controls are in place? How do they manage risk? How do they manage change?

If you have ethical values in place concerning waste, recycling, power usage, supply chain management or staffing then explore these thoroughly too.

Once your site audits and RFQs are completed, it’s time to discuss with your team and make the final decision.

Aspects of outsourcing: design

Increasingly as well as outsourcing procurement, build, test and distribution processes OEMs are also outsourcing design.

In many ways your EMS partner is ideally placed to understand the relationship between your design and manufacturing requirements. They already understand your business and its products and have demonstrated a commitment to a long-term relationship based on trust.

Using them enables you to liaise with a single supplier while still gaining the advantage of external designers who can bring fresh insight and solutions as you work on new products.

And, of course, design and manufacture go hand-in-hand: the closer and earlier they communicate the less issues you will face.

For this reason, even if you are not outsourcing your design, it makes business sense to involve your EMS partner at the early stages of the design process – changes at this stage have much less cost and project impact than changes at manufacturing.

Aspects of outsourcing: New Product Introduction (NPI) and testing

Chemigraphic

It’s critical that you assess your EMS partners New Product Introduction (NPI) process as part of your selection.

There is a wide range of processes used to manage the production of new products and it’s vital that you understand exactly how your EMS partner is managing theirs.

Any product or product variant that is being built for the very first time must be put through an NPI process to reduce risk and increase efficiencies. Above all, you need to ensure that future production volumes can be met cost-effectively and quickly.

This goes well beyond Surface Mount Technology (SMT), Plated Trough Hole (PTH) and final assembly. It is the inspection and test that can really make or break things here. It is essential that the Manufacturing Defects Analysis (MDA) involves AOI and X-ray and that testing incorporates in-circuit, flying probe, electrical safety and functional tests alongside boundary scans.

Aspects of outsourcing: assembly

How much of your shop floor do you intend to transfer? Outsourcing PCBA assembly, for example, is a tried and tested approach but you may be missing out on the greater efficiencies that can be gained by creating a clear divide between the OEM and the EMS in terms of assembly responsibility.

Here are some things to consider when you outsource your assembly.

  • Knowledge Much of the expertise required to build and test your products may well reside only in the heads of your staff. Working out a way to transfer this is essential.

Even if you have assembly documentation things may have evolved on the shop floor and not be reflected in a paper trail.

It’s highly possible too that your existing staff may need re-training to take on new responsibilities.

  • Plant and Equipment You’ll need to decide on a case by case basis whether to dispose of plant and equipment, sell it on or transfer it across to your EMS.For test equipment that is specifically calibrated, if you want your EMS partner to test your product but plan to retain other products sharing the same test inhouse, a second piece of equipment must be bought.
  • Stock One of the immediate benefits of outsourcing is your reduced raw material stock holding.You need, however, a plan to deal with what you have. Most EMS partners will be happy to take on key items that have been stored correctly and are priced in line with current market value.in accordance with manufacturer’s guidelines, are the correct revision (including bare PCBs, programmable items) and remain cost neutral – i.e. the unit cost they pay from you is the same as the price they would pay new through the supply chain.

Aspects of outsourcing: logistics

In its simplest form, outbound logistics concerns the storage, transportation and distribution of your products.

Typically, your EMS partner will allow you to call-off products when you need them. They will be delivered in their own branded packaging.

While this allows you to inspect it before it is sent out it is also fairly inefficient. You must maintain a layer of logistics overheads that are not strictly necessary – and this adds time and expense to each order.

Most low volume, high complexity (LVHC) products will require some degree of configuration, but this can be carried out by your EMS partner during manufacturing.

In the current market, the speed of order to fulfilment is a competitive advantage. B2C companies, such as Amazon and Argos, have created a culture of very fast delivery times, and these expectations have filtered into the B2B market as well.

Your EMS partner can help you by using sophisticated systems and processes such as configure-to-order, late-stage configuration, postponement manufacturing, mass customisation, supply chain pipelining and agile manufacturing.

To achieve this, however, your partner must have invested in the tech and talent to offer you:

  • Automated material requirements planning (MRP) systems that link directly to sales forecasts
  • Material purchase orders operating in “real time” via electronic data interchange (EDI)
  • NPI procedures that document every stage of the product’s journey
  • Control systems capable of managing multiple revisions to documentation for build data and engineering changes

And, of course, once the product is out there, you still face the possibility of returns.

Handing over responsibility to your EMS partner, means no longer needing to worry about customers failing to get a repaired unit back from you on time. And you no longer need to hold stock of finished products or spares.

Why choose Chemigraphic as your EMS partner?

Put simply, we help you reduce your time to market and simplify your supply chain.

We are here to work with you so you can focus on the core areas of your business.

We do what we do very well.

And so do you.

We’ll make a great team

Wear it’s at: the manufacturing challenges of wearable technology

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John Johnston, NPI Director, Chemigraphic

Wearable tech has come of age.

Most of the heavy-lifting has already been done, which is why so many start-ups are keen to use their focus and agility to bring new wearable products to market.

Multiple technology and component solutions are already in place, so there’s no need for a huge R&D budget or large resource team.

Start-up OEMs can now focus on innovation. They can develop a prototype and then rely on the skills, knowledge and network of an EMS partner to overcome the manufacturing challenges posed by wearable devices.

There are three key challenges:

  1. What works for small-scale design validation and prototyping may not translate smoothly to a volume ready manufacturing process.
  2. There is a risk of enduring a lifetime of sub-optimal manufacturing efficiency if you’re not aware of all the options available for materials, components and build. These need to be implemented at the beginning for the best results.
  3. Unnecessary costs and delays can be incurred if you lack access to a reliable network of specialist suppliers in an effective supply chain.

The wearables market

watch tracker

Wearables burst on the scene with the fitness tracker boom in recent years but such simple tech has quickly run its course, to be replaced by more sophisticated alternatives.

As the market has developed it has matured: more complex devices such as smartwatches now dominate and specialist devices aimed at the military and industrial market are proliferating.  Other key sectors for this technology are medical, where applications include condition monitoring systems such as heart rate trackers and industrial, in which human-machine interfaces such as augmented reality vision systems are used.

  • The global market is now worth £10.2m.
  • It’s growing at a healthy 6% each year.
  • China is far and away the largest market, followed by USA and India.

Sensors and switches

‘From an electromechanical perspective, a wristwatch and a smartwatch are polar opposites and require a different design. Contact and operability are of paramount importance for smartwatches: they must provide a satisfying, tactile experience, a high life-cycle and a consistency of operation.’ Eric Ewing, Senior Product Manager at Panasonic

The more ‘smart’ functions you incorporate into your device, the more important your position and choice of switches and sensors becomes.

For sensors, they must be placed incredibly accurately – and tested extensively – to ensure they are sensitive enough to relay accurate data that can be transferred to other devices.

For switches on devices worn on the head, such as listening devices and smart glasses, a light actuation force is required. However, for easily accessible wearables that are within the user’s direct field of vision, a high actuation force is needed to avoid operating errors from knocks and bumps.

Protection and flexibility

Tactile switches for wearables also need to be able to work properly in different environments over many years. Worn close to the skin the salt contained in sweat is a major threat to unprotected components, but protection is also required against water, damp, moisture and dust penetration.

The components must be fitted to withstand the inevitable knocks and bumps of daily life – but they must also be encased in flexible materials that stretch and adapt.

Wearables demand a manufacturing partner who can creatively respond to restrictions on how components can be used and where they can be placed. To avoid costly changes late in the manufacturing process, early engagement is critical.

Beyond electronics themselves, successful material selection for wearables requires experience in working with products where hygiene, sterilisation, durability, adjustability, waterproofing and stain resistance are all factors in play.

  

Batteries, charging and connectivity

Battery life is one of the biggest challenges for wearable tech. Space is limited, so the more efficient the electronics the better. This also means that the user will be less likely to suffer discomfort through heat.

Lithium ion is the preferred battery option for longer life from a smaller space. This hazardous material can cause issues for transport, shipping, handling and storage. And at least two big names – Samsung and FitBit – can attest that the risk to users should not be taken lightly either.

Wearable devices tend to use Bluetooth for connectivity rather than Wi-Fi. Tests have shown that Bluetooth technology can use 3% of the energy required by Wi-Fi.

Wear it’s at

Wearable tech is a growing market. Beyond the consumer market, sectors such as medical, military and industrial are increasingly relying on IoT-enabled wearables.

Potentially, manufacturing and supply chain considerations still pose significant challenges to OEMs. These are challenges that the best EMS providers have been meeting for a long time.

Engage early and you’ll be wearing a smile. 

The challenges facing unmanned vehicle design

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Unmanned vehicles are in the news again

Just before Christmas 2018, hundreds of flights were cancelled at Gatwick Airport following reports of an unmanned aerial vehicle (UAV) – or drones as they are better known – being repeatedly sighted near the runway.

For three days there were 140,000 passengers and over 1,000 flights affected but, despite strong police and military involvement, no credible suspects are yet to be identified.

Unmanned vehicles in themselves are nothing new

Even if we just consider UAVs – as opposed to unmanned sea vehicles (USVs) or unmanned ground vehicles (UGVs) – history tells us that unmanned vehicles (UVs) are not a recent invention.

Nearly 170 years ago the earliest recorded UAV flight was when the Austrian military attacked Venice using unmanned balloons with baskets stuffed with explosives.

UVs remained the preserve of the military for many years. By 1916 the US created the first pilotless aircraft for use in World War One and it was rolling out the first remote-controlled during World War Two.

Until the 80s drones were still largely considered an unreliable and expensive toy, but Israel’s UAV-led victory over Syria in 1982 changed this.

UVs are the disruptive tech par excellence

UVs are set to transform our society – our military capabilities, our industrial operations, our commercial services and our daily life.

It still remains true that today many of the most notable drone flights have been conducted for military purposes.

But not for long.

Goldman Sachs predicts that by 2020, 30% of what is estimated to be a $100 billion global UAV market will be consumer or commercial rather than military.

Already drones are widely used for agriculture, aerial photography, geodesy, law enforcement, advertising and building safety.

In the near future UAV taxis may be on the cards, Amazon has been publicly investigating UAV deliveries since 2014 and drones may emit radio/video signals – or other forms of bandwidth – for connectivity in rural areas.

Meanwhile, under the ocean and across the roughest of terrains…

UV potential is already widely used by oceanographers and the oil and gas industries to carry out work in depths that would create a host of problems for manned sea vehicles. In the surf zone and on land, UGVs are used to scan and neutralise mines. Across difficult terrain, they are reducing operational demand for troops travelling cross-country and in commercial plants, they are used for surveillance.

In fact, UVs in general tend to be used to accomplish the 3 ‘D’s – work that is too dull (or repetitive), dirty or dangerous for humans to carry out.

And herein lies one of the biggest challenges for OEMs when they begin to design UVs.

The design challenge of UVs

An experienced, quality EMS partner will reduce manufacturing risk, increase operational efficiencies and overcome technical challenges for OEMs entering the UV market.

Typically, UVs are put to use in hazardous – or at least challenging environments.

  • UGVs must withstand the knocks and bumps of rugged terrain
  • USVs often operate in deep sea environments and must withstand intense atmospheric pressure and the corrosive force of salt water
  • Surf zone mine sweepers face the risk of explosions and the pounding force of the ocean as they prepare the way for troops

To design UVs that can withstand such situations an in-depth understanding of suitable casings is essential, as is the ability to pack a lot of functions into a small space.

Many UVs are reliant on as large a battery as possible to deliver sufficient operating times. And the larger the battery the more compact the space for other essential electronics.

Rapid improvements in battery technology mean that the energy density of lithium-ion batteries is improving by 5 to 8 percent every year: their lifespan is expected to double by 2025.

But system integration can unlock equally mission critical doors for UVs as their power sources can.

System integration is vital for designing efficient, effective and robust UVs. It takes a specialist EMS partner to skillfully design and integrate custom PCB assembly with sub-assemblies and modules, enclosure design, fabrication, cabling and wiring.

All these elements are used to create complex, multi-tier systems that marry robotic functionality with vehicular design. And each design is made ready through testing, software, programming and calibration.

Factors such as size and weight are critical here – but so too is longevity, resistance to environmental forces and reliability. Materials must be selected to offer protective enclosures that are able to withstand factors such as immense pressure, intense heat, corrosive forces and jolts, impacts and explosions.

Yet, these rugged exterior and interior casings must protect incredibly complex and intricate electronics that are at the forefront of developments in navigation, control systems, robotics, communication and connectivity.

Where IoT capabilities are employed for security or data collection, it is also vital that the electronics are not only robust enough to handle challenging environments but also offer maximum security and defence against cyber-attacks.

All of these layers of complexity call for a specialist EMS partner – and for one who can confidently prototype for successful and effortless integration into wider systems.

Why choose Chemigraphic as your UV EMS partner?

Chemigraphic has been supporting complementary market sectors that include the oil and gas industry, aviation, aerospace, military and transport for many years. Our knowledge of and experience in designing, assembling and fulfilling products destined for hostile and challenging environments means we can help you design, prototype, and run rigorous tests to ensure reliability and the best possible results for your UV.

Feature photo by Lance Cpl. Rhita Daniel.

Time to start getting over Brexit?

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Chris Wootton, CEO, Chemigraphic

Times are changing for the UK and its place in manufacturing, globally. Whilst it is unclear what the exact nature and repercussions of Brexit will be, it’s clear that OEMs and the EMS industry as a whole is taking urgent steps to mitigate risks. Whatever the deal (or no deal) it’s almost inconceivable that there’s not going to be any disruption. So what can we do about it? How can we get over it?

View the situation from all angles

To protect their customers, EMS providers are having to take a highly, proactive global outlook by seeing the situation from all angles and mitigating risk and disruption wherever possible. Some are better set-up to cope with this change. At Chemigraphic, we are the only UK EMS with a Business Continuity Management System that is aligned to the international standard ISO22301. This is a “whole of company” BCMS that risk-assesses and drives mitigation into literally every aspect of business resilience – not just the obvious things such as facilities and services incidents. By default, this means that we are exceptionally resilient and well-placed to endure any external pressures.

Anticipate the extra material demands – and act!

We are noticing an increase in customer demand to mitigate the risk of supply shortage, which further absorbs more materials, and we understand this is true of wider industry. EMS companies are carrying more stock than they traditionally would which is creating unnaturally high demand for materials. We’re seeing that customers who have already reviewed their requirements with regards to Brexit have modified their forecasts and taken increased call-off offers to build their buffer stocks. When all the customers ask for more stock the net effect is that EMS companies get very busy! However, we are telling customers there is still time to create some contingency. While this will not be in the form of Finished Goods Stock, although time is running out we can still protect the supply of materials to get parts landed into the UK. We are doing whatever we can for customers who share this information, but it may be very difficult to find materials for project without upfront visibility.

Ensure your supply chain has landed UK stock

Bringing it into the UK is one of the easiest things they can do, providing they have space. Most of the big distributors and manufacturers are happy to do that. We say to them that we anticipate using X amount of material and they’ll build this into their planning and UK stock-holding. Typically, they will not demand a full commercial obligation.

Look ahead through the supply chain

Any products that are sourced from central Europe will suffer transportation problems, but who’s to say what the knock-on effects will be if ports are locked up? What if distribution centres come to a standstill because of the European content? When this happens, it won’t matter whether it’s been sourced through the US, Asia or Europe, so we remain cautious. We’re looking at scheduled deliveries of materials and making sure we’ve got the right sort of commitment from the supply chain. It’s about being intelligent and doing the appropriate thing. If a customer placed a significant order or an underwriting agreement, we could go out and secure all that stock and have it provisioned. However, this is dependent on the types of materials, value, volume and lead times. It may also be necessary to have an SLA (Service Level Agreement) and Brexit contingency plan with the supplier. The key is to proactively stay ahead of supply chain issues; a good EMS partner should be doing that.

Consider expediting new development projects and consolidate stock

It is more prudent to accelerate timescales rather than defer decisions; building robust solutions and supply chains is best done now. Delaying new projects sacrifices precious time in advance of an unknown situation. Bulking together new and existing projects also offers scalable costs benefits.

Look into Customs Clarifications

We are already considering what this change could do for the price of parts and components. Identifying custom clarifications, checking the World Trade Organisation (WTO) tariffs and potential EU import tariffs can give an idea of what is to come. In a no-deal Brexit, in time the UK will be able to move away from EU regulations, creating the potential to reduce and change them. With this in mind, we are looking at pricing arrangements to see if prices are fixed or if they can be reviewed. UK-based suppliers may be more competitive due to a weak pound and we can enter into trade agreements with new international markets.

Be sensible!

Above all, the general precaution is to have some kind of contingency plan, engage with the supply chain, and start talking about taking some sensible decisions. If you have an absolutely critical process, you need to build in contingency, safety stocks and have a plan. A lot of our customers started doing that at the tail-end of last year but we’ve also heard of companies who only began doing this in February this year!

Best practice in managing a product’s end of life

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Apple’s announcement in November 2018 that is was to cease the reporting of iPhone sales volumes really worried investors. A flattening of sales, combined with doubts over Apple’s projected innovation, impacted on its stock price. Around the same time, Chinese tech giant, Huawei, beat it into third place on smartphone sales and even set their sights on surpassing the leader, Samsung, with promises of foldable screens and artificial intelligence. Technology pundits began suggesting the unspeakable: the very beginnings of the iPhone’s end of life.

foldable phone

Source: World’s first foldable smartphone unveiled

OEMs can sometimes struggle to manage product end of life effectively. Instead of managing the process from an early stage, they focus all their attention on maintaining sales. History shows that even Apple can be caught off guard.

The iPod – From 1000 songs in your pocket to none

Apple introduced the first-generation iPod in October 2001 with the slogan “1,000 songs in your pocket”. Second, third, fourth and fifth generations followed until September 2007 when Steve Jobs unveiled the 6th Gen iPod “Classic” with a new, thinner chassis and a better battery life. The last hardware update occurred in 2009, and then in September 2014, it was finally discontinued. Apple CEO Tim Cook told us one of the reasons at the 2014 WSJD Live event: “We couldn’t get the parts anymore, not anywhere on Earth”. Even Apple, the first US company to achieve a $1,000,000,000,000 market value is subject to the same pressures as every other large electronics manufacturer.

ipod classic

There are many reasons that a product may enter an EOL process: component shortages, technology barriers, functional redundancy, competitor activity and a lack of investment that causes old or worn tooling can cause and accelerate product decline. It remains a truism that all good things must come to an end; what makes a difference is how you manage it.

Best practices and strategies for managing EOL

Since product decline is inevitable, lifecycle support is an essential service that an EMS partner should provide to its customers. Different solutions can be applied to end-of-life situations: some products get superseded by newer models or versions, meaning only slight tweaks to the manufacturing and sourcing procedures. Other products may simply need support as they dwindle, which can involve investing in enough stock and parts to last the predicted period before obsolescence. Sometimes it’s necessary to re-invest in alternatives. We can advise our customers, ensuring money and resources are not wasted. 

Manage EOL early within a Product Lifecycle Plan

Every product goes through a similar Product Life Cycle (PLC) – introduction into the market, growth, maturity, and then a decline with EOL. Products should, therefore, be managed within a Product Lifecycle Plan, covering all aspects of the product development, from conception to the disposal of the product and components. Start-up manufacturers often overlook this critical aspect but a skilled EMS partner will be able to help develop such a plan.

 Product Life Cycle Curve

Allow products to evolve

Although the iPod was eventually doomed by component shortages and alternative technologies, Apple foresaw the trajectory of the smartphone and rightly predicted how the iPod would become all but redundant. Is that possible with the iPhone too? Ask most tech companies which product is likely to replace the smartphone and the most probable answer will be something “wearable”. The Apple Watch is likely to see many evolutions, as it changes in shape, size, and functionality to communicate with a plethora of smaller IoT devices that are likely to surround us in the future. In an ever-changing global landscape, agile lifecycle support for products is critical. An EMS manufacturing partner can help you make the evolutions from one generation to the next.

Manage component shortages by investing in stock to guarantee a lifespan

As we saw in the iPod example, component shortages can accelerate product decline and in extreme cases force an OEM into sudden and radical design changes. An EMS partner can assist during times of shortage by staying on top of these issues and combining financial leverage to secure large amounts of stock on behalf of clients as well as buffering to provide uninterrupted supply. Chemigraphic operates a demand-based MRP (Material Requirements Planning) system, which ensures on-time delivery, material presentation requirements, stock accuracy and component batch traceability.

Change management

New regulatory requirements, responses to field performance issues and specification adjustments can all drive the need for design and process changes. Following the introduction of RoHS compliance, for instance, many components became unavailable available, due either to the rationalisation of component manufacturers’ production lines, or to have had their part numbers changed. To assist our customers – many of whom are exempt but have stringent approval criteria to meet – we have introduced a fully comprehensive process to verify that the RoHS approved alternative is acceptable before offering it to our customer for their approval. An experienced EMS partner provides flexible and responsive change management to ensure cut-in is effective, controlled and pain-free.

Don’t overlook the value of returns, repairs, and warranty.

Customers may choose their EMS partner to manage aspects of their returns procedures, typically for in- and out-of-warranty support, root cause analysis; or to repair/refurb products to sell as used. Revenue can be gained through these channels that may influence a decision to maintain or discontinue a product. Chemigraphic frequently takes on aspects of this process, since we have access to the components as well as testing experience to rectify product faults, plus the automation and logistics skill to make this process as efficient as possible.

Communicate clearly to customers

Customers will be more critical of businesses that cannot smoothly manage the transition from older products to new versions. Some customers will not upgrade, so it remains particularly important to clearly communicate when and what is being eliminated and help them find a solution.