Can we cut costs and stay competitive?
05 June 2007
Keith Stone, Engineering and Quality Manager at ACW Technology, asks - Cost competitive UK electronics manufacturing – myth or reality?
During the last few years, the obituaries have been written for UK electronics manufacturing. Everyone was told that companies in the Far East and Eastern Europe could make what you wanted more cheaply, so why would you need to make anything here? The queue to jump ship promptly followed.
Are current manufacturing and test technologies helping UK factories to operate more efficiently and allowing UK manufacturers to be more cost competitive and win business back from their foreign counterparts? The key to UK cost competitiveness isn’t just about how the manufacturing is done, it’s about making the right choices on what to make here.
Tools and technology
Machinery can help manufacturers achieve a competitive advantage, but those manufacturing and test technologies making a genuine contribution to UK firms’ cost competitiveness against offshore competition are thin on the ground. Some of these technologies include:
Flexible equipment
Flexible machinery can make valuable savings to UK manufacturing costs by facilitating faster set up times. This is particularly valuable when working on small runs at lower volumes because changeovers between runs and the consequential downtime is reduced, and prototypes can be completed much faster.
Examples of flexible machinery include placement machines with banks of smart feeders, or machines with multiple feeder trolleys that allow a range of customers’ boards to be assembled from a common set up under program control.
Traditionally, machines use unintelligent feeders that have to be loaded in the correct pre-programmed place on the machine for that assembly. To change to a different assembly the feeders need to be stripped off and re-configured in line with the program for the new assembly. Users can spend as much as a couple of days changing from one machine set up to the next.
With smart feeders the components can be loaded onto the machine in any position and the machine will identify the components it needs for any given program and place the right parts in the right place. So for a new board set up the user simply adds any additional feeders required to the current set up and can start to run the new assembly often within a few minutes. The machine may not be best optimised in terms of run rate but for prototypes and new products you are usually more interested in the start up time rather than the best-run time. Using quick-change feeder trolleys pre-loaded with components capable of running a range of products can reduce change over times between these products to a few minutes.
The less time machinery is down, the more productive and cost efficient UK manufacturing can be.
Flying probe tests
Many in-circuit test systems typically use bed of nails fixtures to contact each individual net on the board. While high-speed bed of nails testers can keep pace with high volume production lines they have serious cost and set up limitations for lower volume products which are inevitably passed on to the customer.
For each board type to be tested, a unique bed-of-nails fixture is needed which can cost up to £25k and take weeks to set up. What’s more, there are a growing number of boards which are increasingly difficult to test with bed of nails testers because of increasing board densities causing access difficulties.
The time-to-market requirements placed on manufacturers mean that the investment in bed of nails fixtures that may quickly become obsolete are difficult to justify. Investment in a fixture too early could be wasted if the product is not the success the marketing department had hoped for! There is also the risk that even small design changes to the boards can render the fixtures useless even before they have been used. Invest too late and the fixture may hardly get used before the product becomes redundant.
Flying probe testers where the probes are physically moved under program control to the desired probe targets offer a more cost conscious solution for low volumes and fast start-ups. They are typically used for prototypes, new product introductions (NPIs) and low-volume/high-mix production applications where the cost of fixtures cannot be justified. Programs can be generated from the computer-aided design data and debugged within hours of the first board becoming available for test. This makes it much more flexible and adaptive to change.
Boundary scan
Boundary scan technology provides a means to test interconnects and clusters of logic, memories, etc., via a small test connector, obviating the need for test pads on densely populated assemblies.
The technology has to be designed in but enables a series of user advantages such as fast set up time, fixtureless test, ease of change, diagnostic capability resulting in reduced time to market and increased productivity with better yields.
Beyond technology
While the manufacturing and test technologies described above all play a role in helping UK factories to work more efficiently, with a little bit of time and investment most of these tools and techniques can be easily replicated in any country. So what else needs to be considered?
Offshore pitfalls
Having left the UK in recent years, ironically many deserters are starting to bring their manufacturing back to the UK having realised that offshoring wasn’t necessarily the right answer to their problems. Low wages aren’t everything. The promised savings from manufacturing direct in places like Asia and Eastern Europe have in many cases not been fully realised when the inconvenience, lack of flexibility and IP risk is factored into the equation. And don’t forget the multitude of hidden costs associated with managing the supply chain in these countries and getting the final product to market.
There are also many case studies where Western companies have experienced serious downstream problems like surprise deliveries, unauthorised specification changes and subsequent shipment price hikes, as a result of the massive cultural and communication barriers.
The right stuff
The UK can compete against Eastern European and Asian manufacturers on overall cost if companies make the “right products” here. The resurgence in the UK’s electronics manufacturing sector comes from low volume, high value designs. Products that typically require high levels of complex engineering input and ‘hand holding’, products that are liable to change, products that can’t cope with six weeks at sea and products that require confidentiality or IP protection. Offshore manufacturing simply cannot do these types of products justice.
Offshore manufacture only really makes sense if you’re dealing with stable, higher volume products which have a long shelf life and require little effort in terms of engineering dialog and customer involvement.
However, even then the UK can still get a slice of the manufacturing pie and this is exactly the reason that ACW has set up a new facility in China. Rather than provide competition for our two other UK-based sites, the site is run through a UK-based customer and engineering interface. The highly skilled, new product introduction phase will always be carried out in the UK and only moved over to the China facility for manufacturing when they are stable and running in volume.
This offers high-volume customers the best of both worlds – the ability to realise the cost benefits associated with outsourced manufacturing but without the risks and communication challenges typically associated with moving manufacturing offshore. Essentially, straightforward dealing without any unwanted surprises.
Overall cost
In summary, the UK’s cost competitiveness versus offshore options is not about trying to compete on the cost of the product itself. The overall cost to the customer is the important factor. For the right low volume, high value products, the UK’s manufacturing competence blended with UK design expertise will achieve the best results.
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