2008
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16-May-08


Quality as a competitive edge
Posted by Julian Coates, VP Assembly Market, Valor

More and more we hear the message coming top-downwards in the supply chain that products have to be delivered on time, at cost, to specification; that customers expect fewer "surprises" and expect to be compensated when their business is damaged by some aspect of failure delivery by a supplier. One way of looking at the challenge is the need for every player in the supply chain to remove uncertainty from his manufacturing process.
A focus on quality brings not only reduction in direct manufacturing cost (reduced rework costs, reduced material waste), but also enhanced ability to meet customer demand. When I say "focus on quality" I am thinking about everything from right-first-time set-up and replenishment of the assembly lines, to application of DFx in advance of manufacturing so as to place the products in the mid-point of process-windows, to complete closed-loop control over inspection, test and rework processes to ensure that QA processes are enforced. You could describe these functions as "machine programming", "design rule checking" and "process traceability", but you could also define them as Quality-focused functions that enhance the ability of a manufacturer to enhance the overall quality of manufacturing experienced by the customer at the next level up in the supply chain. 

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18-Apr-08


Nepcon Shanghai - change, change, change
Posted by Philip Stoten, EMSNow

I have said before that every time I visit China the industry has moved on leaps and bounds, well this time it seems even more so! The industry here is changing and so is the trade show environment. Testing times are ahead for Shanghai's role in the electronics industry and for Nepcon's role as the predominant show in this region.


Before I even arrived at the show on day one I was reminded of the changes that are occurring in the world of electronics trade shows. Lining the road leading to the Everbright Center, Nepcon's somewhat run down venue, are banner after banner with the headline 'meet your peers at ProductronicaChina 2009'. It seems the MMI/IPC team are going to be pretty aggressive in their attempts to win the trade show war that has broken out in this region. Conversely, I am sure that Nepcon will not give up without a vigorous defense of this territory.

A few weeks ago in Shanghai at ProductronicaChina 2008, MMI and IPC had announced their collaboration for next year and repeating this announcement last week in Las Vegas, they added that a number of key exhibitors would be taking part in the event. So, where does that leave the industry? De je Vu perhaps, are we about to go through the same experience that we endured with Nepcon West in the United States? Perhaps, but here the Nepcon brand seems much stronger and allied to it is a conference run by SMTA's China Chapter. Exhibitors on the whole have always enjoyed Nepcon Shanghai and levels of satisfaction are consistently high.

If I was asked to call it, I guess I would say that MMI/IPC will come out on top. After all, Prodcutronica is a real flagship brand for the industry, Pudong is a far superior venue (and Nepcon's new venue will not be ready for several years) and IPC has the ability to mobilize its members and put on a world calls conference. Bad news for Nepcon, who have already cancelled Nepcon UK and lost the market in North America, and bad news for SMTA who will need a venue for their conference. Oh, and bad news for those vendors and of course visitors who will feel obliged to attend both next year, while the industry decides!


As the trade show world changes, so does the industry!
The electronics industry seems to be in a time of change too, with M&A activity on the rise, new regions coming to the fore and regions previously low cost trying to find their place in a new order. Shanghai is just such a region, with success built on low cost manufacturing it now has to re-establish itself as China's value added low volume, high mix, NPI region.


An exciting challenge and one which will be exciting to watch. Can the region rise to the challenge? Does it have the infrastructure, expertise and skills required? Or will it simply price itself out of the market? It has fought hard to gain its position in the industry and I am sure it will continue to fight to maintain it.


I broader terms the whole of the Chinese market is changing. No longer can you use the 'build it and they'll come' mantra. The Chinese have to offer real quality, real value and above all real agility. The market changes fast and the supply chain needs to adjust even faster. This is reflected in the kind of products generating interest at the show. It is not just volume driven, flexibility is also important and those products required for the assembly and test of complex electronics are seeing much higher levels of demand.


As you walk the show floor here in Shanghai all your senses are bombarded by the noise, the flashing lights and video screens and the smells. It is hard to think or even concentrate, hard to hear what anyone is saying. And if you turn the volume up on the presentation on your booth, the person opposite will do the same.


And so it continues, more and more competition for the attention of the visitors, more and competition for the hearts of the exhibitors and, of course, more and more competition in the electronics manufacturing market wherever you are in the world!



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01-Mar-08


New production model in Japan?
Posted by Alon Erlich, Strategic Marketing Manager, Valor

No matter how much we want things to stay the same, they always change.

Take, for example, business models in the Japanese Electronics industry. It all started when Japanese firms took the principles of mass production and adapted them to the Japanese economic constraints of post World War II (small markets and limited funds and consumer spending power). “Lean Manufacturing” evolved from that in the 1950s and 1960s, and was the envy of west when Japanese firms took the market in storm in the 1980s. At that point, it was the Japanese production system’s turn to influence the organization of industrial production in the United States and Europe in the 1990s, but since the American and European societies had very different institutional structures and cultural principles, the adoption process turned out to be a transformation process, and the value chain principles of “Lean” interpreted into a new business model, which was later known as the “Modular Production System” – where a clear breakdown between horizontal process segments is visible, and manufacturing capacity is kept mostly in the hands of specialized contract manufacturers, allowing OEM firms to focus on design and innovation.

 

The success of this model among US firms turned the tables and started to put the Japanese companies in a defensive position where they had to struggle to comply with the standards that were being set by US companies. The problem was that modular production strategies clash with the Japanese habit of having buyer-supplier relationships that lean towards affiliates of the same industrial group, or keiretsu – a model in which buyers and suppliers are closely tied, often in a tangled web of co-investments and joint ownerships. These tight links between OEMs and suppliers have been a competitive advantage for Japanese firms, but the qualification process for new suppliers (Japanese or non-Japanese) in this model can be very long. This, and the fact that worker mobility in Japan tends to be lower explains why Japanese firms tend to be very cautious towards outsourcing and why pooled resources of modular suppliers haven’t really emerged in Japan by the dozens.

 

So now, as globalization, commoditization and competitive pressures increase, Japanese firms find themselves in a position where they are forced to evaluate the pros and cons of the modular production system and decide whether to ignore or adopt it. The largest Japanese electronics firms have been showing reductions in global workforce of approx. 10%-15% since early 2000, yet recent surveys show increased investment in factories inside Japan. Those companies find themselves tangled in a swinging motion of shutting down business lines while opening others, shrinking production facilities while investing in new ones, all driven by opposing pressures.

 

 However, there may also be a third option – as a variation on their traditional tendency towards close alliances, some firms have chosen to shed their off-core business by turning it into a joint venture with another company who shares similar interests. And so we see more and more new joint-companies emerging over the past few years, stretching the Keiretsu concept to its limits and beyond, possibly setting new challenges in the face of the Japanese Electronics Manufacturing Market.

 

Whether this new variation of the modular production system will prove to be successful, only time will tell. The only thing that’s sure, is the fact that the transfer of business models from one society to another accelerates change in those models, and a society’s ability to harness that change to its benefit is what separates the strong from the weak and drives the evolution of the industry.

 



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01-Feb-08


Moving from better OEE to better ROA
Posted by David Bengal, VP Marketing & Business Development, Valor

Return on Assets (ROA) is a common indicator used by CFOs in our industry to measure efficiency of utilizing manufacturing resources. Many of our customers are asking themselves how they can manufacture more (increase capacity) with less resources (equipment) and therefore archiving a higher ROA. For this to take place, a manufacturer has to examine his/her current OEE strategy. One thing we learn is that decisions that impact the financial results of an electronic assembly service companies should be based on proven, real-time, consistent and trust-worthy information. Looking at our most advanced customers practices, a great amount of such data is handled by the control equipment that runs and supervises the machines and the lines. Detailed information about the plant status is available in the SCADA systems that are collecting the assembly and test information across the shop-floor. So, the first step is to make sure that you have a reliable system that captures accurate information from the shop floor.
 

OEE provides simple and consolidated formulas to compute key performance indicators that can be repeatedly used to monitor the production efficiency and to find the greatest areas of improvement.


OEE(%) = Availability rate (%) x Performance rate (%) x Quality rate (%)


The OEE formulas show how improvements in changeovers, quality, machine reliability, and working efficiency more and more will affect the manufacturer's ROE. The derived OEE percentage is easy to understand and by displaying this single number where all production operators can view it, becomes a great motivational technique.
Recently Valor had great success in communicating OEE information across the shop-floor to a large OEM customer in Japan. The large 52 inch plasma screen projecting real-time production information helped our customer to better understand how he is behaving in overall equipment utilization, production speed, and quality. By making OEE visible to everyone across the floor, our customer is able to define and communicate clear improvement targets and motivate the production teams to achieve them. 



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