On today’s Manufacturing Geek podcast, Julie Fraser of Iyno Advisors, will discuss her outlook on the issues and opportunities for Electronics Manufacturing in 2013.
This podcast includes a discussion on:
- Emerging trends for Electronics Manufacturing in 2013
- Growth and profitability in the face of constant change
- The “smart products” revolution
- Impact on supply chain in heavily regulated industries
- Replacing existing systems and ROI
- Supply chain and operation information
Q: What is the outlook for the electronics industry in 2013?
A: The outlook is pretty good if everything continues as it is right now. Most of the forecasts I’ve seen call for moderate growth. What we are seeing is that the U.S. and emerging world economies appear to be improving; of course, recovery is always an uncertain process.
Regardless of the overall economic situation, more and more consumers worldwide are using electronics. Many are also experimenting with traditional consumer electronics and other types of smart products. Multifunction consumer products and industrial electronics as well are starting to grow quite rapidly. The ones that leverage cloud-based applications, so that they can constantly be updated, are particularly attractive.
I expect we’ll see reasonable growth. Additionally, because of the large piles of cash that many of the electronic companies are sitting on, I expect that big companies are going to begin to get into some of the smaller niches in the market by buying out startup companies that have great new products.
Q: What must electronic companies do to position themselves to be growing and profitable in the face of constant change in market needs and demand, along with ever-increasing price pressures?
A: To position themselves well and be profitable has always been a challenge for electronics companies. Consumer electronics is growing really fast, but all the electronic segments need to be more like consumer electronics.
As people bring their devices—and their expectations of user interfaces—into every aspect of their lives, companies will need to continue to innovate in order to deliver what people expect, whether at work, in special environments, or at home.In the face of uncertainty, the challenge is to balance the need to innovate with cost effectiveness.
The price pressure on electronics will continue to grow, so companies need to be more efficient in all aspects. As the proliferation of opportunities and market niches continues, this need to be efficient—and the challenge of being efficient— will be highly significant. Historically this was impossible. You could either be more efficient or you could have more variety (i.e., innovation), but not both. But now it is required.
In addition, some of the smart products that electronic companies’ products are built into are going to be a big part of the path to success.
Q: How can companies take full advantage of the smart products revolution?
A: There are two aspects to this. One is to use them in their own businesses. Not just electronics companies—any type of business needs to be using mobile, cloud, and social technologies. They need to take advantage of the increasingly good interfaces on these products to improve process support with accurate information. They need to do that both internally and with their trading partners.
Two, for the electronics companies specifically, they need to become providers to the companies that are designing and making smart products. This means they need to find and understand all those customers, in automotive, aerospace, household appliances, medical devices, and industrial equipment, just to name a few. The list goes on and on—I know people building smart devices into clothing.
Many of these industries have safety and environmental impact regulations. Traditional computers, telecommunications, and consumer electronics may not have these regulations to the same degree, especially when compared to medical and transportation products.
Q: What is the impact on electronics of the heavily regulated industries that have a few big OEM segments, such as medical devices, defense, and automotive? What do electronics companies need to keep in mind, both as a supplier and with their suppliers?
A: In regards to their supply chains, electronics companies need to keep in mind that these customers have extremely high standards for quality and traceability. Again, it’s well beyond what they’ve been accustomed to in the past. We’ve talked about traceability and genealogy in the electronics industry forever, but these customers bring an additional focus to the subject.
You have to really get things right, at every stage, and ensure that trading partners are operating as part of your enterprise. This is mostly an information exchange issue around timely transactional information, ensuring that the partner knows what to execute, when, and to what specifications. In addition to execution, it also relates to enabling innovation and response to new market dynamics and opportunities.
I mentioned earlier that a lot of companies are involved in these decisions, which compounds the supply chain challenge. If companies cannot quickly implement automated information systems across their new and old facilities, and then extend out to their trading partners, they are going to face a severe challenge in being competitive.
Finally, cloud-based, collaboration-focused systems will be a critical complement to any core system that companies have in place for their business execution and transactions.
This is the second part of our interview with Julie Fraser, principal at the Cummaquid, Mass.-based consultant Iyno Advisors, in which she addresses the coming year for the electronics industry. You can find the initial session here [insert link].
Q: If information is part of the issue, and electronics companies do not have modern systems, can they reliably replace current systems and expect to get a return on that investment?
A: The first thing to consider is that some of the systems that are “modern” really are not a replacement, but more of an addition. For example, very few companies have a really robust supplier management and supplier quality system that goes across their enterprise and all their trading partners. Some that do have ones that are cumbersome and expensive; therefore, only a few large OEMs implement them, and their trading partners feel a little bit handcuffed by them.
Today, there are systems to help with this issue that virtually any electronics company—anywhere in the supply chain, regardless of size—can begin to implement. They will be a critical addition to their core information systems, regardless of what they are.
Likewise, there are electronics companies with old or inadequate systems in certain areas of their operations. They all need to come up for review, be they supply chain, manufacturing plant floor, quality management, or analytical systems. They need to be closely thought through.
Typically, once a system is in place, companies fail to do a thorough review of advances available. Until you do that, you can’t build a business case for change or addition. You may have a case; you may not. But the key is to stay up to date about what is out there, and see whether the advances are substantial enough to make a difference for your company.
Q: What ideas do you have for companies creating a business case for information to feed supply chains and operations?
A: The principal advice is to do a realistic evaluation about how effectively you communicate today with your own facilities and trading partners. Where you see deficiencies, it is worth working out whether there is a viable business case for closing those information gaps.
We’re finding that leaders are not only doing things like crowdsourcing and other collaborative innovations, and including their trading partners in that networked activity, but they also are sharing quality and operational data with those partners as well with as all their own facilities. They are doing this in ways that are more digestible, timely, and effective than what companies have done heretofore. All this information sharing can lower costs, improve customer satisfaction, and drive greater success and innovation.
Also, be realistic about whether you can keep up with current processes and systems. This is key to building a business case. If you are not keeping up, you may need to invest in upgraded systems.
Overall, I certainly recommend that companies not sit on their cash, if they do the review and can see the benefit.