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Maximizing profits during and after Business transfers

Is transferring your product’s manufacturing operations to other location causing you lost profits and net sales? Why is that? What went wrong? You and your partners should be experts on this, right?

Industrial electronics products are often going through at least one or two production transfers during their life cycle – sometimes within one company, sometimes between companies. A reliable and successful transfer of production between production sites is one key area for long term success in industrial business. Products in this business segment have typically long life cycles and the optimal production location can very much differ in different phases of the product life.

Initial industrialisation, ramp up and early production might be located close to the product development while the time of higher volume production is best suited to be localised close to the market and in a production site that is optimised for higher volumes. At the end of a product life cycle when volumes decline and when production needs are mainly driven by aftermarket needs it will often make good sense to localise the production to a production site with higher focus on a high mix of smaller volumes and with capabilities to maintain processes and equipment that might have been developed and set up several years ago.

Production transfer is then not limited to transferring documentation, components, material and any available product unique equipment or tools. It’s also very much about transferring immaterial knowledge and data traces that actively can support a seamless and successful production transfer.

Optimize your profits via mastering the following with your manufacturing partner:

Standardization
Standardisation of production equipment, processes and process material will very much facilitate transfers. This will make it possible to also transfer the programs that are needed for each production process step. Optimisations and process adjustments that have already been made are then directly utilised when next production site is taking over the responsibility.  The transfers within one company can be extremely smooth and fast, when this is assured.

Data and knowledge transfer
The next level of knowledge transfer is then about data traces. This is typically data related to measurements made in different process steps during the production flow. This measurement or result data can be from equipment used for assembly, inspections and most typically from equipment that are used fortesting the product. A standardised way of collecting, analysing and monitoring data will then be needed. When production is transferred is it then possible to seamlessly monitor if any measurement data is shifted within the process window and then give a clear indication of a change in a process capability. This will then provide a powerful tool for actively preventing any process related problems that might be related to the product transfer.

In inspections and tests it is also valuable to have a seamless transfer of historical data for identifying and correcting any found defects. Defect symptoms and fail messages in inspections and tests can be systematically linked to successful repair actions. This will then more efficiently guide new operators to find and correct any defects.

A comprehensive strategy and efficient tools for data and knowledge transfer will make production transfers within one company much more safe and predictable.

Robust Business transfer process
Robust, Industrial electronics focused, transfer process is the enabler for successful project. When transfers are made between different companies, the involvement of customer is playing a key role. There will be gaps in documentation, test and other product related data and cooperation between all parties is crucial. These data gaps are seen both in Material management and Test engineering. In case, some data does not exist, there is also an opportunity to close those product data related gaps and ensure that end customer has the access to their own data from there on. This ensures smooth transfer in the future.

Material management
Material management plays always a vital role when planning and executing transfers, but the length of the process can vary a lot based on products life cycle status.

  • In optimal situation Material Management for volume production transfers can be started as early stage as component and manufacturer selection during design stage, for example aligning component selection with manufacturing location and their component library gives a definite head start to positive price development and supports to secure the material availability when needed. This connected with component life cycle analyses supports to extend the positive development period and avoid negative changes due to e.g. component end of life. Benefits are evident in test development as well when component manufacture related changes in test results can be limited.
  • Material Management for transfers where product design has been frozen is mainly focusing on prices, availability and excess management. Component prices usually represent major element when making decision on transfers, availability is success factor for timely execution of transfer plan where plenty of resources are tied up, and minimized excess material is target where all related parties are aiming for. Prices has to be right and competitive, availability must be secured often faster than standard purchase times and excess materials avoided.  In order to succeed in all of these, material localization plans must start in very early phase. We could also say, that without making the material localization for better cost efficiency (if that was the main target for the whole transfer in the beginning), we should not start the transfer at all.

Behind all material management activities runs massive amount of critical data. Component codes, manufacturer part numbers, manufacturer information, suppliers etc. All these needs to be communicated, documented and managed in systematic way in order for transfer to be success.  Early involvement of Supply Chain from sending and receiving sites has proven to be the success factor.

Conclusion
Do not start business transfers without making a smart plan, where you are actually going to get the cost and other benefits. The cost might not always be the decision making criteria. Maybe ensuring speed and flexibility to the market generates more income for you and your partners. Without the plan, you might end up losing your profits for months due to unavailable products.

Are You interested?

Would you like to hear, how we are managing our Business transfers? Contact our Supply Chain and/or Engineering (For OEMs only) in marketing@enics.com