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tech.com
August, 2015
Who innovates manufacturing? By Philip Stoten (@philipstoten) T
he manufacturing world has been turned on its head by the outsourcing industry, and in
many ways for the better, but what about the impact this trend has had on innovation in the manufacturing process? Before the EMS revolution,
brands would spend their R&D re- source on both product and manufac- turing innovations, with many com- panies utilising the same engineers to develop a product and the manu- facturing techniques required to ful- fil it. Rather than innovation, the EMS industry has been focussed on economics, streamlining the industry to take as much of the indirect costs out and drive the costs for the brands lower and lower. Where does that leave manufac-
turing excellence? Narrow margins and the drive
for lower direct and indirect costs are two of the cornerstones of the EMS industry business model. This leaves very little “fat” for R&D within the industry and while contract manu- facturers now have huge design teams, these are largely focussed on delivering new products to the man- ufacturing line for customers. This is starting to change now with the ad- vent of IoM (Internet of Manufactur- ing), Industry 4.0 and the like. Some of the world’s largest contract manu- facturers are seeing manufacturing excellence as one of their competitive
strengths and are starting to look at how these trends might help them be better at what they already do very well.
Quickly and Economically The EMS industry is fantastic
at making things quickly and eco- nomically, and has without doubt en- abled brands to bring many new products to market faster and cheap- er than anyone could have imagined. The industry has grown by winning manufacturing business from the brands themselves, often acquiring factories, providing a solution that is more flexible and more efficient than internal manufacturing. While doing so, they have lever-
aged scale, purchasing power, and have pursued low cost manufactur- ing geographies. Much of this race has been run and with the exception of Europe, most of what is going to be outsourced has been outsourced. Now there are new competitive im- peratives and one of those is manu- facturing excellence and efficiency, particularly where it is related to au- tomation. Over the past 20 years or so,
much of the responsibility for process innovation was passed to the EMS industry’s suppliers. Capital equip- ment makers, software developers and consumables vendors have all played a role in the innovation process, leading the way in most cas-
es and doing a good job or creating processes that meet the challenges of miniaturization, heterogeneous as- sembly and regulation, such as lead- free. What they are unable to do is take a holistic approach to the whole of the manufacturing process and in- deed the supply chain, and this is what Industry 4.0, IoM or IIoT (In- dustrial Internet of Things) requires. For much of the ecosystem,
these data-driven trends have seemed little more than spin, but now we are reaching a point where the manufacturers want to see real action and are ready to sign orders for products or systems that give them some of the promised benefits. Having seen that there is no one sup- plier ready to provide a plug-and- play IoM or Industry 4.0 solution, they are taking back responsibility for the development of their manu- facturing systems and exploring what these trends can offer them- selves. In recent months I’ve talked to most of the world’s largest EMS companies about these topics and have been genuinely impressed by their commitment to implementing systems that embrace IoM and au- tomation, particularly around robot- ics.
We are heading into a period of
intense innovation in the manufac- turing process and regardless of whether we consider it the fourth in- dustrial revolution or not, it will
change the way products are manu- factured and how the supply chain operates. From the point of order to the end of a product’s life, data and automation will make products more customizable, cheaper and better and the EMS companies that embrace this will be the be the winners. r
Philip Stoten is an internation- ally recognized EMS industry expert. Known for his skills as an inter viewer, reporter and
panel moderator, Philip is a fea- tured multi-media contributor to U.S. Tech on a regular basis.
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