Customer Proximity and Global Network in the “DACH-market”
Influence of strong Swiss franc for EMS set-ups
In January 2015, the Swiss National Bank (SNB) had discontinued the minimum exchange rate of 1.20 Swiss francs per Euro. Within hours, the Swiss currency gained appreciated about 20 percent on value. For all export-oriented industries – as most of the Swiss OEM companies are – overnight their products became equally more expensive. The fact is that the SNB decision resulted in a challenge for the whole Swiss economy.“After a thorough analysis of the situation, we at Enics Switzerland decided, on one hand, to increase our working hours for a defined time to be more powerful and to be able to deliver more value to our customers. On the other hand, with this serious change in our market environment, we clearly profit from the Enics global network,” says Daniel Buser, general manager, Enics Switzerland.
He explains: “We use our global sourcing and buy a significant part of our material in Euros or other global currencies. Moreover, of course, we are able to offer our customers direct and easy access to Enics’ production facilities in countries such as Slovakia, Estonia and China for volume production. For the local services, like new product introduction and/or life extension services as well as high mix production, he is absolutely convinced that they’re well worth each Swiss franc. “You see, 80 percent of the total costs are defined in the NPI phase. With our 50 years of know-how and our proven expertise, we can bring products, optimized for production, supply chain and long-term commitments to the end-customers, to the market faster. And, with our life extension concepts and after sales services they remain in the field longer.”
Triggered by the drastically changed market environment in Switzerland since January 2015, OEMs with in-house-production or using purely local partners might rethink their EMS set-up. Some already did. Enics in Turgi, for example, has since been able to establish partnerships with new customers this way.
The Swiss GMs conclusion: “We are sure that the single-point-of-contact concept is highly attractive for OEMs in the DACH market.” It provides easy communication, established quality services and highest flexibility. “SPoC means using local counterparts for highly demanding products,combined with economic benefits from a global set-up that balances our strong currency so that both our customers and Enics can continue to thrive.”
Customer Proximity and Global Network in the “DACH-market”*
Globally-anchored Electronics Manufacturing Services (EMS) companies provide their customers with the advantages of having a culturally and geographically close partner as well as the flexibility, cost-efficiency and security of a standardized worldwide network. For OEMs, this “hybrid“ concept will, and has already, changed the established electronics production set-ups. Why? Because it answers the challenges of changing market environments and helps OEMs to thrive further.
Above all, customers who are accustomed to safety-related and long life-cycle dominated branches of industrial electronics demand a high level of product quality, rapid new product introduction (NPI), reduced complexity and last, but not least, optimized total costs. With changing environments – regarding market, currency situation, legal aspects (see article about conflict minerals) – additional elements for optimal partnerships in the EMS business have to be integrated in the decision of how to set-up the electronics supply chain (see case example). So what does this mean in daily business? It means that within the different phases of the product’s life cycle, different needs and challenges arise. Consequently, the EMS partner has to provide its customers with an optimal and flexible set-up to answer these diverse, but nonetheless interlinked, needs.
Close interaction within New Product Introduction
In the early stages of a product’s life cycle, the goal is to introduce a new product with optimized producibility into the market fast. Well-led project management, smart test concepts, fast prototyping and clever design-for-manufacturing (DfM) analyses are just a few hot topics in this NPI process. Deep know-how and experience of the EMS partner, as well as close interaction and easy communication between the customer and his EMS provider, are a must. Studies show that the amount of communication is reduced dramatically with increasing distance. Research shows as well that visibility and closeness are key factors for successful cooperation.
This clearly points out that it is smarter to do NPI “next door”, where the partners are located in the same geographical area and are familiar with each other’s language, expertise, and customs. For example, if there is a technical question – and normally there are many during the NPI process – the partner can just pick up the phone and call or “walk over” to discuss the topic in person to solve it proactively, quickly and in a sustainable manner.
As soon as a product is ready for volume production, different needs gain the upper hand. To put it simply, the goals are to get the right amount of products, with the right quality, delivered at the right time and place – at an optimal cost. It might be that the local partner is still the best, most cost-efficient counterpart, for example, in low volume-high mix production. However, analysis might suggest moving volume production closer to the end customer and/or to transfer production to a location that is better suited to the required demand and lot size.
If the EMS provider is part of a global network, the customer can benefit multifold. How? He can keep his established local contact at the EMS’s proximity unit while benefitting from one common company culture and standardized processes and production facilities within its global company network. To serve the customer optimally, the local counterpart supports his colleagues within the network with his knowledge, passion and skills. Furthermore, this so-called single-point-of-contact concept (SPoC) assures the ongoing and consolidated flow of information within the EMS company network to provide the best solution for the customer. The feedback from component engineers, production managers and/or repair specialists is significant in providing information to improve the products next generation and, more importantly, to extend the life of the present one. As the customer continues to interact primarly with his well-known local counterpart, the complexity of the customer’s work is significantly reduced. As a result, he gains one of the most precious assets of all: Time for his core competences!
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