Tail wags the dog no longer
07 February 2007
Contract Manufacturers typically focus on manufacturing - the clue is in the name. In their search for cost effectiveness and efficiency they should be more attentive to other aspects of the supply chain. That is the view of Paragon – originally a kitting company who has evolved in to something far more comprehensive.
“The cost of populating a circuit board can be as little as 20% of its overall value,” explained John Mayes, Group Managing Director of Paragon. “Yet this is the 20% that most CEM companies focus on - the one week when the product is actually on the assembly line. There can be up to 26 weeks of preparation that go into ensuring that the one week in production goes smoothly and on schedule, and our goal is to make sure this happens.”
Paragon has further helped the smooth running of projects by including assembly services, more of which later, but the core philosophy has remained the same since the company’s inception in 1991.
Starting out as a kitting house, Paragon was aiming at a niche market. “We felt that there was a customer service void between the catalogue houses and the global distributors. Although they tried there was no commitment to providing a dedicated one-stop kitting service – customers usually ended up with a ‘sub-kit’. Our goal was to provide everything on the bill of materials – passives, semiconductors, emech, wound products, metalwork and even sticky labels!”
The benefits of such a service have long been recognised by the electronics manufacturing industry. Considerable human resources can be involved in managing multiple vendors, goods inwards/outwards, assembling sub-kits and so on - and human resources are a big expense. The costs and management time involved in holding stock, in terms of space, capital, write-offs etc., are also substantial. So Paragon launched its TCM® program aimed at taking cost out of its customers’ businesses.
TCM® – Total Component ManagementTM – is labelled as a total material supply chain and logistics management service. It includes full management of the Bill of Materials, including obsolescence and availability issues, inventory control and buffer stocks, delivery of components in the most convenient and efficient way for immediate use on the assembly line and as much, or as little, access to the supply chain as the customer wants. “As an example of how we try and help our customers,” commented Mayes, “we can supply reels with any number of components on rather than the customer having to take a full reel of 5000. We can then box the reels up in sequence to make it easier to load directly onto the machines.”
“Our business tends to be in the low/mid volume, high complexity sector,” said Mayes, “These are the people who have a high component count and are likely to have difficult components to source, and less resources to commit to supply chain issues.”
Having found acceptance for the TCM philosophy, Paragon’s customers then started asking the company to go a step further. The company responded to this back in 1998 with the launch of its EMM – Electronics Manufacturing Management service. Continuing the drive to reduce the number of vendors, customers were asking Paragon for a broader range of services, particularly in board assembly. This goes back to the premise at the beginning of this article – if 80% of the value of a board is in the components, why is the supply chain so often managed by the contract manufacturer? It is a case of the tail wagging the dog. Paragon’s EMM reverses that situation.
Paragon has identified the skills and capabilities of a number of contract manufacturing companies and, through its Accredited Manufacturing Partners Programme, can consequently marry up the services for the project in hand. “We are not turning our back on our belief in sticking to core competencies and becoming a CEM, we are providing a key service by managing CEM services in partnership to ensure customers get best-fit,” said Mayes.
“Our CEM partners offer a diverse range of services, with a remarkable synergy between them. When we realised this it started getting exciting. If one of our customers needs to increase volumes we can do that seamlessly by adding another of our CEM partners. If they have a new technology requirement – cable harness assembly, box build or specific sector experience, aerospace or medical for example – we can look at our partners and see who already has that skill set. The important thing is, as far as the end customer is concerned, there is one point of contact who will manage the whole account for them.”
With the EMM side of its business growing rapidly, Mayes says additional people with different skill sets have joined Paragon. “In addition to maintaining our investment in people and IT to support the complexities involved in managing customer supply chains, we have recruited, developed and equipped a team to provide the technical and engineering support required by customers who rely on us for a high quality EMS service.”
Following on from the acquisition of a specialist test services company, Mayes believes there is only one piece of the jigsaw missing: “We added PCB partners to our CEM partners, and we already had our component and test services. Finding some design partners is work in progress, but when we add them it will complete the picture.”
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