Opening Up to Standardization

Published

June 1, 1999

Author(s)

Barbara L. Goldstein, J. Cartwright

Abstract

Today's electronics manufacturers are expected to reduce their time-to-market cycles and lower total costs simultaneously. Product development cycles and volume ramp-up times are rapid, and corresponding end-of-life production is dramatic. This environment is harshly unforgiving when market introductions are missed or product demand is not correctly estimated. In such a highly competitive market, outsourcing has become a key strategy for survival for original equipment manufacturers (OEMs). While the electronics industry's compound annual growth rate (CAGR) has been reported around 8 percent, the North American electronics manufacturing services (EMS) segment is expected to grow at a compounded rate of 25 percent through 2001 (Figure 1). Outsourcing to a network of EMS providers offers OEMs several advantages, including: greater flexibility through access to factories and best-of-breed software applications; reduced costs through better factory utilization; global support for a global customer base; shortened development schedules; and reduced time to market. Relying on a broadly distributed supply network gives OEMs enormous flexibility. They can rapidly modify their manufacturing capacity by adding or subtracting new suppliers throughout production. This flexibility has little or no impact to OEMs' investments because they own a shrinking percentage of the manufacturing capability. With this model, OEMs that previously were required to predict the exact acceptance of a product can now dynamically respond to market conditions as they change. While OEMs retain responsibility for defining high-level product specifications/architecture, electronics manufacturing leadership is shifting from OEMs to the EMS industry. The outsourcing trend currently consists primarily of board assembly. However, other manufacturing activities are increasingly fueling it, including final product manufacturing, product distribution, field support, even detailed product desi

Citation

Circuits Assembly

Volume

10

Issue

6

Pub Type

Journals

Download Paper

Local Download

Keywords

NEMI, electronics manufacturing, outsourcing, supply chain

Citation

Goldstein, B. and Cartwright, J. (1999), Opening Up to Standardization, Circuits Assembly, [online], https://tsapps.nist.gov/publication/get_pdf.cfm?pub_id=29297 (Accessed April 26, 2024)