Outsourcing comes full circle

CEO at outsourcing specialist Exception, Craig Wright, answers questions relating to some of the major sourcing issues facing the electronics sector Q) How do you take advantage of growing demand for higher technology products and expertise?

A) Clearly, part of our manufacturing strategy here in the UK is to add value and invest in higher technology products supported by the highest possible level of customer service. Accordingly, Exceptions plants in Tewkesbury and Calne produce some of the most advanced PCB and PCA solutions in the market. While we produce highly efficient flex-rigid PCBs and leading-edge HDI products for use in the aerospace, semi conductor and motor sport sectors to name a few, we are also involved in fabricating very complex and large PCAs. An example of this is the Cern project in Geneva, designed to analyse sub atomic particle data in the exploration of the Big Bang theory. Most of our competition talk about technology, but Exception has a track record of delivering quality: critical for the UKs ongoing development as a leading technology developer and provider.

Similarly the service ethos of Exception is followed when it comes to production times. Both our UK production facilities lead the industry in providing product on the shortest possible lead times. Our Fastrack facility at Calne is now turning around boards and complete electronics units in a matter of hours. This service is driven by our customers demand for their products to have the shortest possible lead time to market. In this area we are currently seeing a lot of growth.

Q) How do you exploit new market opportunities and emerging niche markets?

A) We constantly review our marketing strategy in terms of industry niches and have developed an approach whereby our contract manufacturing business has created virtual business units to focus on our key client industries. In practice, this means that sectors such as aerospace, defence, exploration and medical benefit from dedicated teams that cover every commercial discipline including R&D, DFM, testing, engineering, production and sales management.

Being in front of our global customers and listening to their needs is critical to our own business development. In order to support this, Exception has invested in more customer facing commercial and engineering skills than any of its competition. With a diverse customer base we are able to specialise through business streaming whilst at the same time share learning within an effective group management structure.

Exceptions strategy is to be knowledge-based with UK manufacturing developing products for our customers, whilst recognising the optimal solution is to be able to recognize and attribute costs to a customers product in the most efficient manner during the whole product life cycle. This is supported with over 12-years experience in partnering manufacturing capability in low cost economies such as, China, Taiwan, Indonesia, Vietnam, Malaysia, and Eastern Europe while at the same time continuing to develop a global supply chain footprint with legs, in emerging markets such as India.

Q) While China will remain a hugely significant opportunity, other regions such as Vietnam, Thailand, Indonesia, Malaysia and Eastern Europe offer substantial and growing openings for high-tech/high value products and expertise in addition to cost-cutting potential. How do you approach this?

A) When it comes to offshore electronics manufacturing, its all about knowing your market and how well each potential host country matches your needs. For example, we have located our offshore management office in Penang, Malaysia, after a great deal of analysis on the relative merits of other potential host countries. Tracking economic outputs, raw material prices (such as copper, gold and laminates) as well as softer measures such as educational attainment levels and unemployment rates are key measures that our offshoring business is constantly reviewing.

Exception has its own strategic supply chain development teams whos job is to constantly benchmark global suppliers in existing and emerging markets in all areas of supply, namely: price, quality, technology, engineering support, commercial culture, education, logistics, delivery performance, political and financial risk. Failure to account correctly for any of these elements can lead to disaster in supporting a customers product.

The investment in global manufacturing and logistics intelligence gathering (thereby ensuring we continue to develop the best new suppliers, services and product areas) is one of the largest people investments Exception has made in the last two-years. Having now established a focused team in this area in Penang, Malaysia together with the ongoing development of the UK team based in Calne, Exception is confident it can continue to embrace the opportunities offered by global competition whilst combating the threats efficiently.

We believe that one of Exceptions USPs is that it does not bind the customer to one supply route in supporting its complete electronic equipment build. In essence, our successful strategy is based on being able to satisfy customers electronics contract manufacturing needs, whatever they may be, in a low risk proven environment.

Q) Where do you see the offshore market developing in the future?

A) Our experience of the offshore sector leads us to a fascinating realisation that as low cost economies develop and move up the manufacturing value chain, their needs change to resemble the profile of the European market. While the traditional offshore model sees us sourcing low cost/high volume PCBs from Asian countries, we are now seeing this develop into a much more complex scenario.
Over the past few decades of building up a network of approved PCB partners across the Far East, we have learnt a great deal about the global supply chain issues associated with offshore manufacturing. Our world-class approach to the logistics elements of PCB sourcing has recently led our VAR business (with operations in the UK and Penang) winning work from a Chinese PCA manufacturer to supply PCBs within that region. Hence, we now have a situation where Chinese manufacturers are turning to UK outsourcing partners to manage the complexities of the supply chain. Its a new take on the coals to Newcastle story.

Similarly, we are also seeing the traditionally low cost economies moving up the manufacturing value chain so that countries that once specialised in low cost/high volume mixes are now handling low cost/high spec PCBs. This obviously makes the logistics and manufacturing challenges so much more complex. We are finding that providing global OEMs with support for critical components, across the world is an area of huge potential growth for us.

Linked to this issue is the complex challenge of understanding the tax implications of manufacturing and supplying partial assemblies across several countries, with different fiscal regimes. Our VAR business is increasingly advising OEMs on their global PCB sourcing strategies from a number of perspectives, not just basic cost-down issues.
In the end, our success (and that of other UK electronics businesses) will be based on our ability to innovate and continue to add value along the supply chain.