Understanding the Chain Print E-mail
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Written by Mike Buetow   
Monday, 31 October 2011 15:20



Tsunamis in Japan. Guns in Tunisia. Floods in Bangkok. Woe EMS?

It sounds like lyrics from a Warren Zevon song, but this is the harsh reality the global supply chain faces. Disruptions can come from any angle, and are often sudden and unpredictable.

If we’ve learned anything this year, it’s that EMS can thrive even in turbulent times. And one big reason why the supply chain hasn’t fallen apart is the yeoman efforts by its key players to better understand just which vectors and levers really count.

The payoff is increased business. As Mark Medlen of Riverwood Solutions noted during SMTA International in late October, some 64% of OEMs consider supply-chain management to be a competitive advantage. Yet, when one surveys the landscape of suppliers, differentiation is hard to find: Equipment sets, materials and software are often similar if not identical from shop to shop. If that’s the case then, how does an OEM differentiate itself? It’s all about execution, Medleninsists. Outsourcing “starts with having the best suppliers that meet your needs.”

Case in point: I was fortunate to co-chair a session on strategies for lowering EMS costs. One panelist, Tom Ferris, explained how Kimball jumped into Poland in 2000 with a focus on high-volume automotive electronics. Today, the mix has shifted to higher mix, lower volume production, of which medical and industrial make up 70%. During that time, Kimball’s staff has grown to 450, and the EMS firm is on track to add another 100 by next year. Local businesses are enjoying a combination of an educated workforce, low and stable wages, and a high rate of English and German fluency. But it says here it won’t stay that way. Low unemployment (2.5%), coupled with the return of Polish émigrés as other European economies sink, will inflate wages at home, and over time global businesses will be off in search of alternatives. As Kimball demonstrates, a successful company knows when to transition product lines – even if they are simply building for someone else. Divesting the emotion involved with packing up and moving a business is just part of understanding the supply chain, too.

Which brings me to my final point. In September in this space, I pointed to the failings of Denny McGuirk’s tenure as head of IPC. The feedback was overwhelming, and on the order of 30:1 in agreement with my comments. One comment in particular summed up the general feeling: “My company has forked over $50,000 to IPC during the past two decades, without measurable benefits. As a result of your wake-up call, I certainly will take pause at hastily renewing my membership, unless IPC can provide quantifiable metrics going forward.”

Going back to Medlen for a moment, he was adamant that understanding the supply chain comes down to determining the right metrics. “If you don’t measure, you can’t manage,” he says. Having spent a decade alienating its membership and seeing its global significance wane, IPC has an opportunity to right the ship. To do so, however, means choosing a leader who understands the electronics supply chain and recognizes its inherent regional variances. The right candidate will have a background in engineering, but will also have experience in sales and marketing and will have spent ample time in emerging markets. iNEMI struck gold when it hired Bill Bader at CEO in 2009. Bader had 26 years under his belt at Intel, and experience in factory management, new product development, hardware and software, and standards, and had managed manufacturing operations in three countries. While no one among the IPC staff “lifers” can in any way measure up, several strong candidates in industry fit the bill. If IPC wants to remain relevant in an increasingly outsourced and fragmented world, it will look their way.

NIST inflation. In September, I credited NIST with a few investments that actually belong to other agencies. What I reported as a $120 million investment to improve manufacturing energy efficiency is actually a US Department of Energy program, while the $70 million and $12 million pledges to develop advanced robots and launch an advanced manufacturing technology consortium fall under the Advanced Manufacturing Partnership. My apologies.

Last Updated on Tuesday, 01 November 2011 18:45
 

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