Electronic Design UPDATE
By Jim Liang, President, SINBON
In an increasingly rough-and-tumble global electronics marketplace, simply building products and hoping customers will come is a dream.
The global race to keep pace with a steadily rising tide of client demands for higher product quality, lower production costs, and condensed delivery deadlines has sparked a subtle but significant shift that is driving global electronics manufacturers to reassess their traditional roles as pure product providers.
This competitive imperative has ushered in a new economic reality for electronics manufacturers: a need to redefine conventional client-manufacturer relationships and establish an Original Design Manufacturing (ODM) infrastructure they can exploit to deliver both design and production solutions customized to an individual client's specific demands. An ODM structure combines design and production systems, enabling manufacturers to deliver customized product solutions that can be tailored to individual clients' specific needs.
Establishing, operating, and maintaining a streamlined, flexible, and ultimately profitable ODM business structure requires a top-down commitment at four critical levels within the product supply chain, from
design and production to delivery and on-the-ground service and support.
The first is organizational and structural: a commitment to align internal global design, manufacturing, and customer personnel by function and expertise. For electronics manufacturers to position themselves as total-solution providers, strategic client partners rather than simply end-product manufacturers, they must evaluate, and if necessary, re-allocate their core electrical, mechanical, software, and firmware engineering teams.
This assessment will allow companies to create a cadre of specialized, agile design and production teams equipped with the specific, functional expertise to enter the product development process earlier and more
efficiently as well as to more effectively respond to a variety of client demands.
The second critical success factor is a commitment to dedicate the financial resources to invest in the internal design software and factory hardware necessary to ensure product volume flexibility. Clients are increasingly searching for electronics providers who can deliver a comprehensive slate of production capabilities, and for companies like SINBON, this means investing in the latest workstation technologies and
software for pc-board development.
Next, electronics manufacturers need to identify the missing links in their design and production supply chain and craft alliances with strategic third-party component providers who close the technology gaps and complete the production cycle. These third-party providers offer an attractive alternative to companies faced with the costly and time-consuming prospect of creating and maintaining a proprietary technology infrastructure from ground zero.
The final critical component in the ODM system is instituting a global network of client support facilities to deliver on-the-ground customer service and support. Manufacturers must build a structured system of manufacturing, sales, and support facilities that can manage just-in-time international manufacturing facility inventories, supervise global stocking programs, and oversee shipping and delivery logistics.
Surprisingly, this basic client-service business tenet (frequently a determining factor for clients seeking a long-term manufacturing and distribution partner) is often the weakest link in the manufacturer-client relationship, but it can easily be rectified though a commitment to train and place personnel in key global markets.
The demands of establishing an ODM design and production business infrastructure can be significant, but the potential immediate and long-range results are impressive. The ODM system enables electronics providers to strengthen flexibility throughout the design and manufacturing process, condense product order-to-deliver schedules, advance production deadlines, streamline design and development costs, and deliver superior customer service.
Electronics manufacturers committed to implementing these key strategic and operational ODM principles will separate themselves from their closest competitors.
Jim Liang is president of SINBON, Taiwan, with U.S. headquarters in Smithtown, N.Y. He can be reached at jim@sinbon.com.
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