December, 2012 Continued from previous page
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EMS and OEM Relationships: the Next 10 Years Some OEMs and EMSs struggle
Challenge No. 2: Making distant manufacturing work better, and achieving profitable regional manufacturing.
The OEM executives recognize
that choosing distant manufacturing suppliers in countries with less intel- lectual-property (IP) protections can put their designs at risk. Therefore, the Think Tank executives recom- mend that OEMs align their sourcing strategies with the degree of their products’ IP risk. For example, one OEM’s hardware product may be “vanilla” — with the true competi- tively IP being in their software; in that case the OEM could feel more comfortable outsourcing the hard- ware manufacturing to China, for ex- ample. Conversely, and OEM whose hardware has competitive advantage would be wise to choose manufactur- ers whose IP protection they ab- solutely trust — perhaps nearby re- gionally. As for making regional manu-
facturing most profitable, it’s impor- tant to remove costs without necessi- tating low labor rates or large vol- umes. To do this, the Think Tank ex- ecutives said we should leverage the most efficient manufacturing tech- niques and automation for manufac- turers for all of their customers’ re- gions — even deploying 3D printing technologies for very low volumes — anywhere in the world.
Challenge No. 3: Leveraging EMS and ODM companies but without compromising the OEM’s intel- lectual property.
OEM executives are watching
their IP migrate out of their hands to component manufacturers and ODMs with reference designs, while ODMs’ margins erode in part from OEM customers’ increasing de- mands, and the huge EMS houses like Foxconn continue to leverage re- turns to scale, and grabbing other ad- vantages making it more difficult for other EMS providers to profit from value-added services. For these chal- lenges, the Think Tank executives addressed how to change the dialog among multi-tiered suppliers — to promote win-win supply-chain rela- tionships and interactions. For ex- ample, OEMs should be honest about what they do best and outsource the rest — without micromanagement. Trustworthy pairings of OEMs and EMSs can jointly go after strategic customers — sharing costs, risks, IP ownership, and profits.
Challenge No. 4: Developing needed technologies for society’s future needs, even if doing so is disruptive of current practices.
The Think Tank executives
used abundant technology innova- tions to solve our tech-industry prob- lems. Ideas included developing pow- er sources other than the traditional ones; creating ulta-low voltage prod- ucts for regions without legacy elec- tricity; using 3D printing for single units anywhere in the world, using biological processes as alternatives to electron sources; and having smart phones be so “smart” that they serve nearly all the needs of society (health, safety, entertainment, pro- ductivity, nutrition, production). It should be noted that some re-
gions of high productivity, especially China, have abundant supplies of
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coal and use this as a primary energy source, creating enormous amounts of particulate matter in the atmos- phere, which migrates around the planet. The Think Tank executives spoke seriously about ecological re- sponsibility, and feel that competi- tive forces are driving them to locate manufacturing in areas that are not optimal. They called for industry- wide support for encouraging region- al manufacturing.
Challenge No. 5: Racing to create responsible designs and supply chains given customers’ rapidly increasing concerns over energy efficiency, worker safety, and a healthy environment.
to comply with the proliferating envi- ronmental and social requirements from customers, standards, and gov- ernments around the world. The Think Tank executives decided that it’s far better to design products to a uniform set of forward-thinking re- quirements — such as global stan- dards, and coveted awards that em- phasize all of the above strategies for better products, profits, people pro- tection, and the planet. The DfE Online™ training pro-
gram, gets OEM and EMS product teams on the same page for reducing costs and meeting customers’ true needs through minimizing hardware mass, hazardous substances, assem-
Page 19
bly time, failures, transportation, disassembly time, and e-waste. Finally, OEM-EMS relation-
ships of the future are going to de- mand goal alignment. With insuffi- cient communication, EMS compa- nies and their OEM customers have worked at cross-purposes with each other. It’s essential that supply- chain partners align their corporate goals. It’s really very simple: goal alignment helps everyone. This will be increasingly important to the successful EMS and OEM relation- ships over the next 10 years. Contact: Technology Forecast-
ers, Inc., 2000 Santa Clara Ave., Alameda, CA 94501 %510-479-3478 Web:
www.techforecasters.com r
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