Posted on 08 Dec, 2016 by Neil Sharp
Earlier this year, we wrote a blog about five of the more common myths relating to electronics manufacturing. You can read the original post here. The last point centred on product complexity - something we have seen stop an outsourcing initiative dead in its tracks.
Of course, we would be lying if we told you every single part of a product or machine could be outsourced to an electronics manufacturing services (EMS) provider. For example, a design that contains a large amount of pipework (gas), heavy duty pneumatics, hydraulics, or sits on a base consisting of several tonnes of metalwork will probably sit outside most UK EMS providers' comfort zones.
That said, a number of projects that struggle to get off the ground over concerns relating to size, shape or complexity can easily be outsourced - providing the project is approached in the right way.
Let's take a look at how an original equipment manufacturer (OEM) and EMS supplier can work together to overcome some of these concerns.
Size doesn't matter, really
If it's small, light and portable then it's easy for an OEM to visualise their own product being assembled, tested and shipped by an EMS partner. Most consumer electronic gadgets we use on a daily basis have been outsourced for decades and so have a wide range of "portable" industrial, medical and military electronic devices.
However, once the physical size of the product or machine starts to increase, so do the fears and concerns around outsourcing – and these are valid. A fully-populated control cabinet housed within a two-metre enclosure is going to require very different assembly skills, handling equipment and logistical support, compared with something the size of a smartphone; or laptop; or flat screen TV. You can see where I'm going with this.
But that doesn't mean the item can't be outsourced - it simply means a different approach is needed. So, if you're struggling to visualise how an EMS supplier would be able to support such a large product, then why not invite them in to take a look before deciding yourself that it can't be done?
A good EMS provider should be able to see through the physical size, shape or perceived complexity of your product. Rather than view it as a single entity, they will be looking for opportunities to split the item out into much smaller sub-assemblies. Once they have identified an initial set of sub-assemblies, they will then take a deeper look, in case any of them can be broken down further. At this stage, and as a general rule of thumb, the more sub-assemblies they identify the better.
There are a number of benefits for both parties in taking this approach. Firstly, splitting out the build into smaller sub-assemblies allows the EMS supplier to use their in-house labour more efficiently. Higher levels of traceability are also achieved, particularly when multiple staff need to work on the product across multiple disciplines - i.e. through-hole, wiring, final assembly etc. By breaking down each element of the build like this it can be controlled, monitored and measured in far more detail. Transportation and shipment also become more manageable. Finally, there is an opportunity for the OEM to start selling elements of their product on a spares basis, leading to potentially lucrative revenue streams that have been previously unobtainable.
Of course, after the EMS supplier is awarded the contract they may decide to "group" some of these sub-assemblies together. Splitting out the build can result in tangible benefits, but it can also lead to an increase in works order creation, processing and paperwork, which the EMS supplier will need to tightly control. At this stage, though, the OEM is simply looking for guidance on whether their product can be outsourced to begin with. The finer details around how the EMS supplier would then manage the requirement internally is something to be discussed further down the line.
Unless the OEM has previously split out the product or machine into multiple sub-assemblies, it's common for the build documentation to remain at a "top level": one product; one data pack. If the OEM decides to move forward with the EMS supplier they will need to send all the build data they have (parts list, drawings, schematics, programming files, test specifications etc.) across.
Where large products or machines are concerned, it's quite common for OEMs to omit a number of "consumable" items from the bill of materials (BOM). Crimps, fasteners, cable ties, sleeving etc. are typically held line-side with production operatives helping themselves to parts as they need them. The cost of this kind of material is extremely low and it's more efficient for the operator to have direct access to this kind of stock, rather than having to wait for another department to supply them with the quantities they need.
Although this approach makes a lot of sense, and has probably never been an issue before for the OEM, it can cause problems when transitioning from "in-house" to "outsourced" manufacturing. If all the parts aren't documented, how does the EMS supplier know they are needed in the first place, where to fit them, and how much they cost? A good EMS provider should be able to identify which consumables are needed and have robust New Product Introduction (NPI) procedures in place, to ensure each piece of material is captured, regardless of whether the OEM has listed it.
However, there is still a risk that some of these items fall outside the standard line-side stocking agreements the EMS supplier has in place. Specialist equipment - for example, dedicated crimp tools - may also need buying, which, in some cases, can cost several hundreds of pounds and be on extended lead times.
The advice, therefore, is to ensure that, as an OEM, you document all of the material required for the build. How you choose to supply consumables internally or capture the cost is down to you. But, without having them documented somewhere in your build pack, there is a real risk that additional cost, confusion and delays will be introduced during the NPI stages.
And even if you decide to retain manufacturing in house I would still recommend this process is carried out. Over time, production operatives naturally build up "local knowledge" of the materials required and build processes used. Not all of this finds its way back to the engineering team or onto paper, posing a risk should those staff leave your company or when other operatives are asked to help.
Breaking down a large assembly into manageable "chunks" is really just the start of a much longer and detailed process. For example, the EMS supplier will also want to understand if there are any additional assembly or test requirements that take place prior to shipping to the end user. If the product being considered for outsourcing forms part of a much larger machine, or "end-to end" solution, they will want to know if there is a particular sequence the OEM needs each section supplying back in. Having this level of understanding from the outset enables them to work on a solution that neatly "dovetails" into the rest of the project and any requirements of third party contractors.
Providing an outsourcing decision is reached, the OEM and their EMS partner should then work together to create a detailed project plan. In addition to confirming delivery timescales and shipping sequences, the plan should also identify any additional resources that are required. For example, will the EMS supplier need support from the OEM engineering or quality teams during the NPI build? When will this resource be needed and are all parties aware? Are additional contractors required and has each party agreed to ownership for their stage of the project? Finally, have the HR department been notified of the decision? If there are staff implications - for example, the redeployment of skills or the potential for redundancies - they should be involved from the outset.
A fresh perspective
Hopefully this blog post has been of use. It can sometimes be difficult to visualise just how a product or machine so large could be outsourced, particularly when the same internal processes have been followed for a number of years. But before you convince yourself that the benefits of outsourcing are out of reach, why not invite a select handful of EMS providers in to give you their opinion?
Worst case, you might lose an hour or so of your time showing them around. But what if it could be done? What if there was a way to break down the product into smaller sub-assemblies and outsource the majority of your manufacturing and test operations? What would you then be able to focus on?
Exciting, isn’t it?!
Image by Glen Wallace