how to align with the right ems provider - 2008-08-14

8/14/2019 How to Align With the Right EMS Provider - 2008-08-14

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How to Align WithHow to Align With

The Right EMS ProviderThe Right EMS Provider


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PrintedCircuit

Boards

-ElectroMechanical Components

ElectronicManufacturing

Services

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PrototypingServices

Printed CircuitBoardFabrication

-Electro MechanicalComponents

Electronic

ManufacturingServices

/FulfillmentDistribution

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Printed CircuitBoard Fabrication


After Sales SupportServices

NOTE:Electronics Manufacturing Services (EMS) is thenew name for the Contract Manufacturing (CM) Industry

Current EMS market trends

Best practices on choosing an EMS partner

Key elements of success to achieve with an EMSsupplier

Pros and Cons of EMS outsourcing

Brief STACI/Inservco overview

What Will Be Addressed TodayWhat Will Be Addressed Today


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Current EMSCurrent EMSMarket TrendsMarket Trends


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( )rinted Circuit Board Assembly PCBAq PCB assembly refers to the attachment of various

,electronic components onto a bare printed circuit board plus any testactivities performed at this level of assembly

CBA Valueq ( , ) , ,The value cost of goods sold or COGS of all material labor and

overhead associated with an assembled printed circuit board

( )ox or System Assemblyq Box assembly refers to the assembly of one or more printed circuit

, ,boards plus other items such as cable harnesses and enclosures into a( -final product or a largely self contained electronics assembly that

will be ).embedded into a larger piece of equipment Thisalso includes any test activities

performed at this level

ox Assembly Valueq ( ) , ,The value COGS of all material labor and overhead of the box,assembly not including the value of the assembled PCBs within the box.assembly

q

Primary EMS Industry SolutionsPrimary EMS Industry Solutions

Source: The Worldwide Electronics Manufacturing Services Market, 4th Edition 2007 Electronic Trend Publications, Inc.


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EMS Market Growth OverviewEMS Market Growth Overview

Revenue

($M)



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EMS Worldwide Market by RegionEMS Worldwide Market by Region



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EMS WorldwideEMS WorldwideMarket Industry SegmentMarket Industry Segment


EMS W ld id


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EMS WorldwideEMS WorldwideMarket IndustryMarket Industry ContCont


CAGR = 7.2%

CAGR = 6.5%

PCBA vs. Box/System Assembly Growth


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& ll Industry Segments Are Profitable Growing-ier 1 3q EMS suppliers need to be profitable to avoid strategic

financial risks

/ll Industry Segments Are Identifying Focus NicheStrengthsq / - - STACI Inservco s focus is on products with a man to machine

interface

&ergers Acquisitions Remain a Primary Strategy/or Growth Market Penetrationq / STACI Inservco s remains focused on growth opportunities in this

area

EMS Industry SummaryEMS Industry Summary


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Choosing AnChoosing AnEMS PartnerEMS Partner


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OEMs spend billions of dollars annuallyoutsourcing electronics production.Choosing the wrong supplier can result insignificant cost increases, poor product

quality, and insufficient customerrelationship issues.

Choosing an EMS PartnerChoosing an EMS Partner


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Cost Goals Achieved

q Quotation accuracy from both the OEM and the EMS provider isessential to avoid unnecessary cost short and long-term

Quality Success

q Regular process reviews i.e. audits, quarterly business

reviews, and establish consistent communication channels helpmaintain solid quality results

Meeting Production & Time-to-Market Requirements

q Effective material management and capacity planning, strong

quality yields, sufficient administrative or engineering bandwidth,and a good alignment between your business model and yourEMS partner can enhance your production pipeline

Choosing theChoosing the RightRight SupplierSupplier


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Develop an outsourcing strategy then select anEMS partner that can scale with your capabilitiesand capacity growth

q Identify your outsourcing requirements

qDetermine your cost reduction goals

qDefine your time-to-market plan

qEstablish your after sales support needs

qFind suppliers that match your business model i.e. product mix

Where Do I Start?Where Do I Start?


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Product Mix OverviewProduct Mix Overview

EMS Approach to Product MixEMS Approach to Product Mix


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valuate Suppliers on Three Key ProcessCapabilitiesq Administrative Processes what is the suppliers order

, , ,processing purchasing practices production planningcommunication process?

q Capabilities and Capacity does the supplier meet your, ,current and growth quality and technological

requirements?

q ( )Engineering Change Order ECO Management can thesupplier adequately accommodate your design changes and

improvements and balance all the manufacturing processes

to meet those needs?

q , , & -Communication Customer Service On Time Delivery Isthe supplier responsive to your everyday needs and what

/is their system processes that accommodate thisrequirement?

What Makes a Good EMS Partner?What Makes a Good EMS Partner?


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( )ew Product Introduction NPI Capabilitiesq Domestic and offshore capabilitiesq , , , ,Design prototype documentation process development ECO

,flexibility and transition plan to production support

Good EMS PartnerGood EMS PartnerContCont

Product

ProductAnalysis

ProductDesign

PrototypeBuild

PrototypeTest

Process

ProcessAnalysis

ProcessDesign

Prod. LineBuild

Prod. Eng.Test

Product Manufacturing

ProductionCapacity Test

ChinaTransition

Plan

ProductionChina

EngineeringChangeOrders

Delivery

DeliveryLogistics

Investment Period Revenue Period


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esource Planning Systemq Inventory management production scheduling functionality

q -A closed loop system that quickly identifies misalignmentand initiates action to correct material and production

bottlenecks upon discovery plus incorporates acommunications system that notifies the OEM

q A robust process ( / / ) software people procedures thatgenerates timely information for immediate action by

-front line people

q A system that identifies production gaps and balancessupply with demand



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& - -xcess Obsolete End of Life MaterialsProcessq Inventory management that accurately tracks and maintains

& proper communication regarding E O issues thisprevents substantial materials liability issues when

established up front

q - - /End of life life cycle planning is critical tosupporting existing production revisions while the new

versions are being implemented to ensure production flowremains steady for both

q Inventory turns are the primary result of either strong&or weak E O or EOL processes for the both the EMS

supplier and the OEM



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.ake Your Decision on Total Cost vs Priceq Look at total acquisition cost and not the price alone

, , , , BOM labor test after sales service etc

q Leverage materials relationships with together with the, ,EMS supplier to achieve the best price however working

together to achieve this requires trust and openness

. . i e providing costed BOM sq - - /End of life life cycle planning for the whole product

line should be considered when making this decision of who to choose as a partner to manage the whole supply

, ,chain manufacturing and logistics requirements together

q - -Look for a long term partnership rather than a short termprice

q Establish a formal cost reduction program with yoursuppliers



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Pros & Cons For Outsourcing EMSPros & Cons For Outsourcing EMS

Pros Cons

No capital investment Lack of total organizational control

Quicker time to market

Potential communication / time zonebarriersFlexible production capacity &scalability

Responsible for offshore logistics /transportation requirements

NPI support resources Higher burdened labor rate / fixedoverhead costs to manage

Lower total cost of ownership thatconverts fixed into variable costs


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Keys to SuccessKeys to Success

With Your EMS SupplierWith Your EMS Supplier /utually complementary culturespersonalities rocesses in place to provide solutions PI capabilities .omestic vs offshore solutions /esource planning system process ost reduction plan nventory management processes established ife cycle management plan uarterly business review process


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EMSEMS

IndustryIndustry

BackgroundBackground


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What is the EMS Industry?What is the EMS Industry?

Design

Printed circuit board assembly (PCBA)

System build / final assembly

Fulfillment / distribution services

After Sales Support

EMS or Electronic Manufacturing Services TodayEMS or Electronic Manufacturing Services Today

1950's the printed wiring board and integrated circuit were invented by TexasInstruments and refined by others

1961 SCI of Alabama was a "contracted manufacturer" for the NASA lunarspace program to meet cost reduction initiatives and lead-times to land on themoon

Industry History / BackgroundIndustry History / Background


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EMS Industry HistoryEMS Industry History

Silicon Valley OEM's began to focus on the core competence of R&D,sales / marketing, and service and outsourced manufacturing as a cost effectivemeasure to ensure time to market goals

Turnkey solutions begin labor, materials, and testOutsourcing migration OEMs sold off PCBA, PCB fab and other non-corecapabilities to CM's

Wall Street CMs proved to be viable business modelServices outsourced Design, NPI, PCBA, test, materials, system build, end-of-life functions began to be outsourced to CM's

End-to-End CM's begin to provide "end-to-end" global supply chain solutions

1990s990s

Strategic Relationships EmergeStrategic Relationships Emerge

Industry referred to as "contract manufacturing" or "CM" industry

Primary focus on PCBA for commercial and defense OEM's

The vast majority of OEM's did their own PCBA in-house

Most OEM's consigned 100% of materials to CM's

1960s 1980s960s 1980s

Traditional Supplier RelationshipsTraditional Supplier Relationships


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EMS Industry BackgroundEMS Industry Background contcont

Industry changed name to EMS (Electronic Manufacturing Services)

100% turnkey of end-to-end solutions is standard from tier-1 throughtier-3

All-in-one model is established in tier-1 through tier-3 Suppliers

Facilities and equipment are not the main differentiator anymore

Cost effective strong relationships are still king!

2000 Through Today2000 Through Today

STACI Has Positioned Itself to SupportSTACI Has Positioned Itself to SupportOur Customers Future Strategic NeedsOur Customers Future Strategic Needs


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how to align with the right ems provider - 2008-08-14

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