Is there a way to more tightly integrate materials and process development so as to accelerate the pace of innovation?
The electronics supply chain has evolved at a relatively slow pace and there hasn’t been an effective disruption to the operating method in nearly 20 years.
The need still exists, however, for original equipment manufacturers (OEMs) to pursue a new way of creating a smarter, faster and better method to speed up the product development lifecycle in order to meet the demands of retailers and consumers. OEMs need a model that enables them to acquire increased control over the lifecycle while leveraging the ingenuity of the supply chain that supports their manufacturing suppliers.
In the past, suppliers have tried – and failed – to adapt the supply chain in order to speed innovation. These methods haven’t fared well in the market for a number of reasons. First, suppliers tried coming at it through a manufacturing approach, typically with a supply focus (either materials or equipment). Through this model, the materials or equipment created for assembling end-product were not always designed in a way where they could be implemented in the manufacturing phase; rather, they were engineered as standalones without taking the bigger picture into account. They failed to address questions such as: How will the solution interact with other aspects of the design? How does this impact the overall design process? What supporting materials, equipment or processes are needed in order to implement the new material? Because not all of these factors were consistently taken into account, OEMs missed out on including the latest technology into their products, and processes and suppliers had excess waste since their technology couldn’t be used.
Another reason some approaches failed is a lack of sufficient global distribution to reach the necessary customers in a timely manner.
Finally, some OEMs did not fully buy into the idea of working directly with a material or equipment supplier – that a design solution was just as valuable as a supply solution.
OEMs by their nature look for solutions that don’t yet exist. Although the EMS supply base has excellent solutions that exist today, and can offer high yield and steadily lower manufacturing costs, the industry as a whole is focused on process development, not product development. So how can we effectively speed innovation on the supply side without repeating the mistakes of the past?
One path forward is to develop and maintain stronger, tighter relationships throughout the supply chain, to collaborate in more efficient ways, and to communicate more effectively. H.B. Fuller’s strategy involves working in the very early stages with the OEM designer to come up with something unique. This angle targets both design services and materials, which is typically how end-customers approach new product generation.
H.B. Fuller’s acquisition of Engent is one step in that direction. This partnership has enhanced our ability to engage OEMs early in the design cycle and support programs at the systems level. The emerging technology required for the new product is developed by working closely with the OEM, typically on multiple continents, and with the OEM’s manufacturing partner. When the product is ready to receive the green light for full-scale production, H.B. Fuller deploys resources directly at the final manufacturing site, ensuring process support and a quality ramp-up of product manufacturing. This type of partnership streamlines the process for all parties involved in the supply chain. By leveraging Engent’s expertise in next-generation electronics manufacturing and technology services, as well as utilizing our own large-scale connections in the supply chain and global distribution capabilities, H.B. Fuller makes it possible for OEMs and suppliers to have a single source when it comes to global testing and developing. And by gathering all members of the supply chain in one place, improved communication and collaboration happens.
This new electronics supply model represents a shift in terms of how members of the supply chain interact and move products from concept to consumer. While the traditional model has suppliers mainly working at the manufacturing level – meaning they are focused on developing new equipment or materials – and are mostly independent of OEMs, this new approach emphasizes the entire supply chain coming together to work at the design (or “systems”) level. This is a significant divergence from the old model, where suppliers would develop groundbreaking new equipment or materials, but later learned that the assembler might not have the facilities or capabilities to use them in manufacturing lines.
Here’s how the new model works: OEMs present design challenges that are defined at the systems level. By having all members of the supply chain working jointly to solve these challenges instead of in silos, the supply chain is forced to expand its knowledge past what they sell. This gives OEMs the ability to speak at the systems level to the supply chain, thus speeding innovation and production processes through increased information transfer and better communication. In theory, this is just an ideal. To achieve it, the supply chain must interact both collectively and as independent groups within itself – from materials, components and adhesives to PCBs, manufacturing equipment, etc. In addition, all parties must act interdependently in the supply chain and attempt to proactively innovate on the OEM’s behalf. The knowledge gained and shared through working interdependently helps create a more efficient model for innovation because all parties are collectively designing products and materials, rather than just OEMs or suppliers.
Working together at the design level rather than the equipment or material level allows compatible OEMs, material suppliers and the rest of the supply chain to be more acutely aware of each other’s projects and ideas. This leads to improved collaboration, which in turn speeds the development and innovation process, satisfying both the OEMs’ and consumers’ needs. In short, all members of the supply chain work in concert to discuss and develop new design solutions. This method enables OEMs to achieve streamlined innovation, while suppliers use their increased access to OEMs to develop solutions they know the EMSs have the capacity to manufacture.
This new approach helps supply chain parties become smarter about how to structure their business operations in efforts to better collaborate and communicate with one another. Each member in the supply chain must learn how to best interact with each other and share crucial information to help optimize the production process in the changing electronics manufacturing world.
H.B. Fuller is executing this strategy through its partnership with Engent, an Atlanta-based electronics process development company. Why Engent? While many smaller EMS companies take and implement tried-and-true processes developed elsewhere, Engent develops these processes in-house. Starting as an advanced process group and eventually spinning out of Siemens in 2002 as a standalone business, Engent now has several capabilities unique for a company its size, especially in the area of leading-edge packaging, such as multichip module (MCM), chip-on-board (CoB) and MEMS.
H.B. Fuller’s hierarchy, then, includes three parts: an advanced chemistry group that focuses on developing polymer platforms and longer-term programs; a product development group focused on customer needs of today; and Engent, which will work on next-generation processes, applications development for ideas that are roughly three years out.
New Benefits, New Demands
With the new model come many benefits, but there are also demands as well. OEMs are starting to challenge the supply chain and ask what it can do to help them innovate quicker. They want partners who have knowledge that encompasses more than just what they sell and who can offer facilities that incubate the development of technology, as well as onsite production support.
Using this method, H.B. Fuller in partnership with Engent helps provide these benefits to all involved in the process. We are looking to streamline the production process upfront for OEMs and fully leverage suppliers’ and the supply chain’s intense knowledge and infrastructure. And we are approaching the supply chain in a way that focuses on solving problems at the system/design level rather than the traditional method of suppliers selling a specific material or equipment.
This model represents an efficient method for developing products and speeding innovation, and it offers benefits at every level of the supply chain. OEMs get the innovation and help from the supply chain they need to keep pace with consumer demand and will also enjoy better advancements in technology for their products in a compressed timeframe, providing a competitive advantage in one of the most highly competitive marketplaces. Suppliers achieve maximized yields and are more involved in the innovation process – being proactive instead of reactive. And the rest of the supply chain benefits from their increased access to communication lines with OEMs.
While we believe this strategy will work for H.B. Fuller, the likelihood of it becoming the standard model is small, but there are reasons for that. It is a model better suited for materials suppliers than for capital equipment manufacturers. Assemblers tend to prefer common equipment in order to avoid having to train employees and support multiple equipment sets. When it comes to materials though, most customers want choices. The materials business is not binary. Even when a supplier doesn’t “win” a program, it tends to get some of it.
Companies with both Engent’s size and technical capability are hard to find. Materials companies as a rule don’t invest in EMS capabilities, as running a service-heavy business is not necessarily a core competency. In addition, most materials suppliers invest where there’s promise of future volume. This approach is not always going to result in a new and widely used technology.
But the new model does resonate with some OEMs, as key players see a need for early stage design capability. Even if there’s no guarantee that a new, highly commercial material will be developed, H.B. Fuller’s success will be measured on whether we continually develop our knowledge base and increase the pace of innovation.
Matt Perry is the director of North America business development, electronic materials at Engent (engentatt.com); firstname.lastname@example.org. Zhiwei Cai is director of electronic and assembly materials at H.B. Fuller (hbfuller.com).