Download - Suntron Bringing It Home
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Every manufacturer
should investigate
doing business
stateside. ZeeVee has
made it work and there
is no reason other firms
cannot realize the same
benefits.
- Vic Odryna, Co-founder and
CEO of ZeeVee
“
”
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Z eeVee, Inc., a developer of high definition video
distribution products, recently moved its overseas
contract manufacturing operations to Massachusetts
from China, where it had been manufacturing since introducing its
first-generation products about five years ago.
During the initial product development phase, ZeeVee had
determined that U.S. manufacturers couldn’t adequately support their
business model. As the product line evolved, ZeeVee management
reassessed the decision after factoring in scale and total cost of
procurement. While generally satisfied with the relationship with its
Chinese manufacturer, a product shift from consumer to commercial
gave ZeeVee an opportunity to reconsider the best type of manufactur-
ing arrangements for its business. After extensive re-evaluation,
ZeeVee partnered with Suntron, a North America-based manufacturing
services provider whose capabilities matched those of Chinese
manufacturers, while also offering logistical, cost and manufacturing
benefits.
Eventually ZeeVee halted Chinese manufacturing and shifted
operations to Suntron, which has manufacturing facilities in
Massachusetts, just miles from ZeeVee’s headquarters. The jobs
created were a real boost to the local community, and the successful
switch has given the fast-growing company lower overall costs,
simpler logistics, and faster shipping time, as well as improved
communications, rapid prototyping, and better response-time on manu-
facturing issues.
ZvBox 160
ZvBox 180
Bringing It Home
Successful Partnership Shifts Manufacturing Back to the U.S.
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Growing HD video developer joins the ranks of firms
manufacturing in China
ZeeVee was originally founded in 2006 to connect home entertainment, computer
and the Internet. As the company matured, its focus changed from the consumer
market to commercial HD video distribution within hotels, airports, restaurants,
bars, schools, hospitals, and other areas high quality video is shown.
Before too long, the shift from consumer to commercial products began to have
an impact on ZeeVee’s high volume manufacturing business. In China, product
builds were only performed every month or two, and the units produced were
enough to last for long periods of time. The large, batch-oriented nature of
production (required to keep costs low) limited ZeeVee’s agility, making it
difficult for them to implement a continuous quality improvement process or
introduce product variations.
According to Vic Odryna, co-founder and CEO of ZeeVee, the infrequent
manufacturing operations also meant the company had to tie up huge amounts of
cash each quarter before manufacturing even began, on products that would not
be brought to market for months. Then, the products might be on a ship for two
or more months, tying up cash for even longer. “It’s almost like a pre-payment
for the product – paying for products even before we have them in the building,”
he says. Other related issues included customer fallout due to damage incurred
during ocean transit, and the headaches of dealing with replacement costs and
insurance.
The situation led to shipping logistics issues. Planned orders could be shipped by
boat cost effectively, but large quick turnaround customer orders required use of
expensive air freight options, which really boosted costs.
Eventually, Odryna asked himself if it might be time to reassess the actual cost-
effectiveness of manufacturing in China. At the same time, ZeeVee also took a
hard look at what benefits might accrue from manufacturing close to their
headquarters in Littleton, Massachusetts. They were eager to gain product
flexibility, rapid prototyping, and design for manufacturability, which would help
them sustain their high growth rates and achieve continued customer satisfaction.
Odryna asked
himself if it might be
time to reassess the
actual
cost-effectiveness of
manufacturing in
China.
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ZeeVee seeks U.S. manufacturing partner-
Suntron answers the call
Odryna assigned his operations manager the task of looking around for
possible manufacturing partners located near their design headquarters.
They eventually selected Suntron Corporation, an electronic manufac-
turing services provider headquartered in
Phoenix, Arizona, which provides
electronics manufacturing services and
solutions to support high reliability
products within the network and telecom-
munications and other markets.
During discussions, Suntron and ZeeVee
evaluated all the costs involved in the total
cost of procurement (TCP), instead of
simply unit manufacturing costs. Such
costs include the so-called soft costs, like
cash cycle times, true shipping costs, insurance, lack of flexibility,
turn-around time, fuel surcharges, custom broker fees, and travel/
support costs.
Suntron jumped at the opportunity to demonstrate that U.S. manufactur-
ing plants can be cost competitive. The state of-the-art 41,000 square
foot facility in Methuen, Massachusetts specializes in system design,
integration, new product introduction, direct fulfillment, product life
cycle management, supply chain management services, and embedded
computing solutions for OEMs and large end-users.
ZeeVee’s new product needs resulted in the need for 20
manufacturing positions. The positions were a good news
story that was a source of great excitement in the local
community, which had lost its share of manufacturing jobs.
According to Jon Saunders, Suntron’s Methuen plant
manager, “Much of the infrastructure needed for ZeeVee’s
products already existed at Suntron. The plant was already
functional, and the project was a great way for us to grow
our business.”
Bringing It Home
Successful Partnership Shifts Manufacturing Back to the U.S.
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According to Saunders, ZeeVee benefited by the flexibility that Suntron offers over a Chinese manufacturer.
“We can customize our services to what the customer needs, while larger Chinese manufacturers often offer
cookie cutter approaches that don’t deal well with fluctuations outside the norm,” says Saunders. He adds,
“We are small enough to care about the project and offer flexible services, while large enough to make a
difference.”
In just a short time, Suntron and ZeeVee got the manufacturing operations up and running. The return to U.S
manufacturing has greatly increased ZeeVee’s ability to serve its customers quickly. Suntron is working to
ensure that products hit the shipping dock virtually on the same day as they are ordered; the company offers
direct order fulfillment capabilities, which also improves delivery times. Domestic manufacturing results in
an increased flexibility that facilitates the product configuration changes ZeeVee was looking for.
The cash cycle issue is greatly reduced because U.S. firms like Suntron do not require up-front payments
for inventory. In addition, the communications benefits are enormous. Rather than waiting 12 hours or over-
night and halting production until the factory is open to get an answer to any issues and questions, ZeeVee
can immediately resolve issues and keep the line rolling.
The firm is growing rapidly, more than doubling every year, and initially ZeeVee had a concern that
working with a local manufacturing partner
might be an impediment to growth. Their fears
were assuaged because Suntron has a number of
other facilities for scalability, including a manu-
facturing facility in Mexico. Knowing that
Suntron offered other solutions should ZeeVee
require other options due to expansion gave them
a high comfort level. “As we grow, we are
comfortable knowing we have a partner who can
work with us to handle an increased volume.”
Suntron expects that as ZeeVee’s business
continues to grow and they introduce new
products, they will be growing along with them,
expanding to 30-35 employees. “Their success is
going to be our success,” says Saunders.
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ZeeVee has also met its goals of improving product design and devel-
opment. With their China manufacturing partner, all development work
required hopping on a plane for a 16-hour flight and losing a week to
complete prototyping discussions. Now, ZeeVee can get much earlier
and more detailed feedback on design prototypes, fostering productive
discussions on designing for manufacturability, an in depth analysis
that Suntron provides, which will reduce costs to build products. A
picture is indeed worth a thousand words, so getting together and
showing how things are supposed to work is essential.
“In any product development life cycle, opportunities come up to
settle issues, make corrections, and continue improving the time to
market. With Suntron, we can test parameters and correlations in the
morning, drive to the plant and test it on different equipment and get
our answers by the afternoon,” says Odryna. “When you are
working with partners halfway across the world, this level of collab-
oration is just not possible, and that makes a difference when time to
market is critical.”
Suntron’s Saunders gives a great deal of credit to ZeeVee for taking
the time to quantify what manufacturing in China actually means to
their business. He applauds the overall business savvy it takes to
look at total costs, saying, “We have been building electronic
devices and printed circuit board assemblies for 30 years, and for the
last 15 years we have been told that only niche, low-volume high
price products can be manufactured in the U.S. cost effectively. We
knew differently, and our success with ZeeVee proves that we can
manufacture cost effectively in the U.S.”
ZeeVee in turn has high regard for Suntron’s investment in U.S.
manufacturing, noting that it was Suntron’s own investment in
manufacturing that paved the way for ZeeVee to come back to the
U.S.
We can customize our
services to what the
customer needs, while
larger Chinese
manufacturers often
offer cookie cutter
approaches that don’t
deal well with
fluctuations outside the
norm. “We are small
enough to care about
the project and offer
flexible services, while
large enough to make a
difference.”
-Jon Saunders, Suntron
Methuen Plant Manager
Bringing It Home
Successful Partnership Shifts Manufacturing Back to the U.S.
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Is U.S. manufacturing the wave of the future?
According to Saunders, although labor costs in China are increasing,
manufacturing there still makes sense for very high volume items and
those that require a great deal of hand work. For example, cell phones
and disposable electronics are likely to continue being manufactured
offshore, due to the nature of the product. However, in his view, firms
should take a closer look at manufacturing products in the U.S. He also
believes that products requiring a combination of automated equipment
and skilled labor can be manufactured very competitively in the U.S.,
because machines have become more automated and higher machine
efficiency allows for greater throughput.
Odryna notes that as the technology evolves, it can be challenging to
work with people on the other side of the world, or waiting nearly two
months for cargo to arrive by boat. With onshore development, ZeeVee
can reduce shipping costs and rush charges, more easily develop new
products, and balance SKUs. The bottom line is that ZeeVee can be more
competitive.
As jobs continue to be a hot-button issue in the US, there have been a
growing number of stories reporting on a shift of manufacturing back to
the US due, in part, to rising costs in China, along with concern about
intellectual property and patent laws, and a desire to support the U.S.
economy. After several months of working with Suntron, ZeeVee said
the question other companies should ask is, Why not use a domestic
manufacturer? Says Odryna, “Every manufacturer should investigate
doing business stateside. ZeeVee has made it work and there is no reason
other firms cannot realize the same benefits.”
Ed Wheeler, Suntron’s president and CEO puts it this way. “I firmly
believe this success can be replicated by other businesses who take the
time to evaluate the total costs of off-shore manufacturing. If your
overseas manufacturing isn’t working as well as you hoped it would, try
working with a U.S. manufacturer like Suntron. Even if things are going
well, Suntron has demonstrated that it can improve cost, quality and other
logistics that will allow you to work better as a company.”
“When you are working
with partners halfway
across the world, this
level of collaboration is
just not possible, and
that makes a difference
when time to market is
critical.”
-Vic Odryna Co-founder and CEO
of ZeeVee
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I firmly believe this success can be
replicated by other
businesses who take the time to
evaluate the total costs of
off-shore manufacturing. If your
overseas manufacturing isn’t
working as well as you hoped it
would, try working with a U.S.
manufacturer like Suntron. Even if
things are going well,
Suntron has demonstrated that it can
improve cost, quality and other
logistics that will allow you to work
better as a company.
-Ed Wheeler, Suntron’s President and CEO
Bringing It Home
Successful Partnership Shifts Manufacturing Back to the U.S.
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