Their primary market includes manufacturers of capital equipment for semiconductor devices and for thin film applications, including flat panel displays, solar cells, and data storage media.
Before approaching us, the OEM had already begun to outsource a number of their products to a local EMS provider - the owner of which had previously held a senior position within the OEM before setting up his own manufacturing company. As a result, a natural relationship between both parties already existed and the EMS provider held a “healthy” degree of product and test knowledge from day one.
However, over time, with the launch of new product variants by the OEM, along with aspirations of satisfying global markets, increased levels of pressure were loaded on the local supplier to perform.
Put simply, the OEM had outgrown them.The “fit” was no longer right and the OEM needed to investigate an alternative solution to remain competitive.
During our early discussions with the OEM, it emerged that their key criteria for additional partners were financial stability, the ability to manage complex supply chains, and demonstrable experience in delivering new products to market.
They had decided that the risk of transferring all of their manufacturing away from their incumbent supplier immediately was too great.
The amount of working product and test knowledge the incumbent had was significant and the OEM recognised that they had been guilty over the years of simply letting them “get on with it” when it came to making build and test instruction amendments.
The OEM felt uncomfortable in losing this safety net and a decision was made to dual source. They hoped this approach would allow them to increase output/ meet future demand, while minimising the risk of putting all of their manufacturing requirements with a new, single source supplier.
The OEM’s product range is wide and varied, with the majority of final assemblies built around a single platform. This presented both opportunities and threats.
To minimise stock liabilities, all minimum order quantities (MOQs) we were presented with were discussed with the OEM first before any purchase orders were placed. This allowed the OEM to check their own stocks and those of the incumbent supplier (bought on their behalf) before committing to more stock.
Detailed build and test instructions were created; the OEM accepting from the outset that they may need to support us in some areas due to the amount of historic knowledge that had been built up, but not necessarily documented, by the incumbent supplier. Each product variant was run through our NPI process with general observations and more specific DfM advice formally captured within accompanying reports. To help make this process as smooth as possible, the OEM nominated internal team members in advance to work alongside our production operatives and test engineers during the initial builds.
Following NPI approval by the OEM, a dedicated lean production line was created.
Economic batch sizes of each printed circuit board assembly (PCBA) were held line-side, along with all other top level materials, allowing us to configure finished units to order within the two-week turnaround.
Throughout this phase, any queries or concerns were fed back to the OEM through a combination of monthly site visits and tailored customer service reports (CSRs), helping to ensure that actions were assigned and completed in time to avoid unnecessary delays.
During this period, we identified that the customer supplied packaging used to transport finished units was not robust enough. Several units had pierced the cardboard boxes used and resulted in scratched/damaged metalwork. This had not been an issue for the incumbent supplier, as each delivery had been hand delivered to the OEM due to the close proximity of both factories. However, with over a hundred miles between us and the OEM, a better solution was needed to ensure the units could be delivered via a courier anywhere in the UK, and indeed the world.
Working closely in conjunction with the OEM and our packaging partner, we developed a bespoke packaging solution. The original cardboard box was upgraded to a double wall option and each unit was suspended inside a custom foam insert frame. This frame guaranteed that the unit itself would not come into contact with the inside walls of the cardboard box and provided adequate cushioning from external forces.
We made it clear from the outset that a dual source approach would make it difficult for either EMS provider to secure the very best supported pricing on behalf of the OEM.
In addition, there was a real threat that each partner would end up committing to the same minimum order quantities or pack sizes and effectively double up the OEM’s future stock liability. Through micromanagement, we were able to control this well but it continued to consume unnecessary resource within the OEM.
The second phase of our agreement, therefore, focused on a cost reduction programme. We were confident that, based on the increase in forecasted demand and assuming the OEM outsourced all of their manufacturing to a single supplier, there were significant cost savings to be realised, which could then be passed onto the OEM.
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