New technologies, necessity to shorten time-to-market of a product as well as continuously changing market conditions are some of tremendous challenges that the manufacturers of electronic devices and advanced electromechanical systems face nowadays. In many cases they are able to meet growing demands of customers and optimise their supply chain only thanks to the cooperation with EMS (Electronic Manufacturing Services) providers who have necessary skills, systems and solutions for High-Mix/Low-Volume manufacturing. The EMS providers can also quickly change over and adjust their assembly lines to the specification of a project and arrangements made with a customer.
What is the High-Mix/Low-Volume manufacturing? How beneficial is it?
The High-Mix/Low-Volume manufacturing is a production type in which short batches (Low Volume) of various (High Mix) very often related to each other products are manufactured. It requires quick changing over of manufacturing processes as well as exact planning of material purchasing that is performed by a contract provider who deals with the assembly of electro-mechanics and final assembly performed on commission.
A customer who is an original equipment manufacturer (OEM) prepares a bill of materials (BOM) in which all materials used in a manufacturing process performed by an EMS providers are specified. The EMS provider is responsible for the purchase of materials as well as the assembly of a product and its testing performed according to the product specification. Some typical tasks that are commissioned to the EMS companies include:
- Components and materials supply chain management
- Quality control and tests
A good EMS provider guarantees timely deliveries of products, high quality of production processes and optimised management of supplies ordered on the basis of the BOM. However, there are more aspects of contract manufacturing that can be explored.
What decides about the good management of the High-Mix/Low-Volume manufacturing?
Contract EMS providers are able to offer original equipment manufacturers taking over of their tasks related to a supply chain and manufacturing management, performing inspections and product testing, but these are not the only things. Thanks to huge experience that the EMS providers possess, the procedures that they have implemented as well as systems and solutions they use, they can offer their customers many more added values, for instance:
The realisation of projects which seem impossible to be completed
The basis for the analysis of an order and the evaluation of the possibility of its realisation is a monthly demand forecast or placing a purchase order and sending a bill of materials. Those are basic information enabling the EMS provider to plan the purchase of materials and a production process.
It is necessary to remember that when the requisition is defined monthly, the EMS providers are able to plan the demand and purchase the materials at much lower prices because they are not forced to do quick shopping at stock prices. It helps not only to maintain a stable price, but also to guarantee the continuity of manufacturing.
In fact, it happens quite often that projects require from the EMS providers much experience, outstanding skills and technical capabilities. Below you can find an example of such an order:
A customer presented an Assel company the following requirements:
- Shipping of a final product within the maximum of 5 days from the moment of placing an order.
- Realisation of a highly fluctuating customer’s order containing 300 products.
- Limited financial responsibility of a customer for the material.
The project included:
- 300 versions of the final product (the customer didn’t know and wasn’t able to forecast a monthly demand for the final products)
- Average monthly demand for the products: 200 pieces in various configurations
- Production time - from the ground up to a final product: 2 weeks
Problematic aspects turned out to be:
- necessity of providing over 1000 types of materials both electronic and mechanical
- lead time for material taking even 30 weeks
Meeting various requirements was obviously not an easy task for the company, but its experience and a flexible approach to the problem allowed it to find a solution:
- Products were divided into smaller modules for which the customer was able to forecast a monthly demand.
- The modules were manufactured in advance (without an order for the final product). However, the maximum production volume for particular modules was settled with the customer.
- The forecast of the demand for component modules allowed to plan in advance the supply of the materials necessary for the production.
- In relation to deviations from the average monthly demand that appeared in the process, the safe amount of materials with long lead time in stock was defined. This approach enabled effective reacting to the changing demand.
- The maximum financial responsibility of a customer for every material included in the project was established.
On the basis of the example given above it is evident that the biggest problem during the realisation of the project was to reconcile material supply management and short lead time. It can also be noticed how important is effective supply management in case of the High-Mix/Low-Volume manufacturing.
Supply chain management
Contract providers realising High-Mix/Low-Volume orders are responsible not only for advance procurement of materials indicated by a customer in the BOM, but also they control if the resources arrive in sufficient time to carry out the order. Moreover, they verify the compliance of the materials with the BOM and later they label the materials in order to trace them in the production process.
Support in effective supply chain management give MRP II systems (one of systems including the MRP II functionality is Microsoft Dynamics AX). These systems together with the experience of the EMS providers and their knowledge of the market allow to determine exact delivery time, react faster to changes and define the desired size of stocks which, in fact, results in their reduction.
In the aforementioned example such an approach enabled Assel to:
- Include the material that the customer had in stock as well as the one available in its open supply chain. Moreover, this allowed to solve the customer’s problem related to the planned utilisation of excess material which was left when manufacturing in a previous factory ended.
However, the provision of materials necessary to realise the order required also:
- Penetrating the market in terms of the availability of each material that the products consisted of.
- Planning the date of the first supply serviced by Assel for each material separately.
- Validation of providers and verification of samples of materials used in the process of manufacturing mechanical elements which were made according to the customer’s documentation. It was also necessary to clarify some vagueness in the documentation.
In an ideal situation a process of supply management would follow stable, established pace. However, the demand for OEM products is fluctuating and forces the EMS providers to continuously adjust to these changes.
Fluctuating demand management
Good practices applied by High-Mix/Low-Volume manufacturers ensure short reaction time to changes in the product demand as well as making effective decisions related to purchasing (cancellation of some purchase, delaying and speeding up delivery).
For example, daily starting of an MRP II loop in Assel enables us to react immediately to the fluctuating demand on the customer side. Thanks to this approach it is possible to adjust both the supply chain and production to changes in orders.
Changes in the demand on the side of a customer have one more consequence which is not used surplus of ordered parts called excess material.
Transparent management of excess material
Generation of excess material results from changes in the demand on the customer side, minimum volume of orders defined by providers as well as engineering alterations (e.g. substitution of one element with another).
However, the solutions applied by the experience contract High-Mix/Low-Volume providers, which include proper procedures and MRP II systems, enable them to optimise their purchase process, precisely manage excess material and adjust faster their supply chain and production to changes. As a result, the amount of excess material is reduced, minimising, at the same time, the responsibility of the customer.
A significant feature of well-organised material management is the possibility to provide customers with reports regarding general engagement as well as relation between material engagement and demand. Such transparency in excess material management based on reliable and up-to-date data is incredibly important for the financial security of customers and their trust in actions taken by the EMS providers.
Planning of the production process aims at the timely delivery of products ordered by the customer and includes the planning of the demand for materials and human resources as well as the supervision of particular production stages (according to the logic of subsequent manufacturing operations).
In the example given above experience, skills, proper procedures and used systems allowed to provide OTD (On-Time Delivery) at the level of 98%.
Properly arranged systems and well-thought internal procedures based on our experience of 40 years combined with our control processes enable us to guarantee flexible reacting to the necessity of implementing changes in the production and materials, ensure that the materials entering our production line are in compliance with the customer’s BOM, provide a high quality of assembly and offer many additional benefits and functionalities such as:
- precise control of the production process and online reporting regarding the production advancement, test/inspections conduction, test results and the range of possible service operations
- efficient management of many products manufactured in short batches
- performing of short, optimal product changing over regarding, for instance, SMT lines ensured by dedicated and extended range of machines.
- advanced computerisation of production environment facilitating the implementation of engineering changes in a controlled way as well as determination of the workload of particular devices used in the production process
- optimisation supporting Lean initiatives thanks to the reduction of three basic causes of loss: excess transport of parts, stock in the process of production and material delivery time.
- management of component and material supply chain
- assembly of electronics and electro-mechanics
- quality control and tests
Moreover, High-Mix/Low-Volume producers often offer a range of added values resulting from the solutions applied by them such as supply chain management, support in designing or aftersales services (service, refreshing of a product).
Material management in the production
The next added value offered by the contract EMS providers is a skill of material management in the production (planning of stock in the production) resulting from the possibility for identification of the material that was labelled right after the delivery.
The implementation of traceability procedures is of high importance for many customers due to the specified regulatory requirements as well as aftersales service. It is a vital factor for those customers who operate in demanding industries, for instance, railway, automotive, military or medical devices which look for contractors with an ISO 13485 certificate.
In Assel there are applied two levels of traceability control.
The first of them is a product traceability procedure which provides some information about where the board is and at which stage of assembly. It also collects data regarding the results of inspections and tests, and informs about the necessity to implement some corrections. The procedure functions according to a previously defined manufacturing product route (manufacturing activities, inspections, etc.).
A full product traceability procedure allows, in addition, to save information regarding the components that are installed in the product and from which batches they come. This information can be very useful in case of serial faults and the necessity to withdraw a product from the market (e.g. by medical devices producers), because it allows to withdraw only a few pieces or a whole batch of the product instead of all manufactured medical devices, for instance, in a given period. This can significantly decrease the costs of such an undertaking, which are high anyway.
The data obtained in the traceability procedures are stored according to the requirements specified by the customer.
Inspections and tests
Products manufactured in the production process undergo various inspections and tests performed in compliance with customer’s specifications. Those can be visual or manual inspections that allow to control the appearance and parameters of a product, automatic inspections performed by optical inspection systems (AOI, 3D AOI), functional tests verifying basic functionalities of a device or in-circuit (ICT) tests enabling the examination of a structure and components on the board. Some customers have higher requirements related to tests, for instance, 3d X-Ray or safety tests (High voltage test, Environmental test) ensuring the highest product quality.
Good EMS providers dealing with High-Mix/Low-Volume orders are able to build their testing systems according to clients’ specification and methodology.
Support in the certification process of products
A quite significant part of cooperation between EMS providers and their customers is support in fulfilling the certification requirements of such processes as CE, TÜV, UL or Intertek.
Obtaining these certificates is necessary to place a product on the market (e.g. CE in the European Union). The fulfilment of requirements means that certain procedures (defined by particular norms) have been introduced and maintained enabling a unit to obtain a certificate from a certification body.
It is a quite complicated and arduous process. The EMS providers not only are acquainted with these requirements, but also they implement them, perform audits, prepare documentation necessary in the process of certification as well as they actively support their customers during this certification procedure.
As you may have already noticed, an adequately chosen EMS producer can be a trust-worthy, long-term partner able to manage challenges related to the High-Mix/Low-Volume production. Furthermore, they can offer many added values that result from their unique solutions and procedures as well as knowledge and experience. This combination ensures not only the perfect production quality, but also the reduction of production costs.