As OCM’s 25th anniversary approaches this year, we’ve been reflecting on what it takes to “go the distance” in what is a volatile industry. We’re also reflecting on the major changes that we’ve seen take place since our inception in 1988.
The Shift to Outsourcing
25 years ago, outsourcing electronics manufacturing was a hard sell. Back then, the leading original equipment manufacturers (OEMs) were vertically integrated. In fact, OCM was not founded as a contract electronics manufacturer (CEM)—that business model came in response to changing demand over time. Our early business focused on designing and manufacturing specialty microprocessor-based industrial automation modules for global OEMs, including General Electric and Husky Injection molding Systems.
In the late 1990s, vertical integration was giving way to partial and full outsourcing models (with Cisco leading the way in divesting manufacturing assets), and OCM Manufacturing shifted focus to serve an under served market: companies producing low- to mid-volume electronics products. Since that time, we have expanded our manufacturing capabilities and increased our value proposition to these clients. Particularly as manufacturing becomes increasingly complex, outsourcing makes great sense.
In 2000, we implemented our first Enterprise Resources Planning (ERP) system, replacing ad-hoc, spreadsheet-based accounting and supply chain processes. ERP dramatically increased the pace of our business. With an increasingly automated and centralized flow of information between us, our customers, and suppliers, we were able to improve customer service and overall productivity. This was truly a milestone in our CEM operation.
More generally, electronic communications have changed the manufacturing business with dramatically increased pace. For example, it used to be that the information a design engineer needed was housed in tomes of printed data books provided by every component supplier and updated yearly. Today, that information is a mouse-click away in a browser window, and component updates can occur just as quickly.
Ball Grid Arrays
It goes without saying that technological advances drive innovation in all areas of business and of life. The era of ball grid arrays (BGAs) in the early 2000s is a notable example in electronics manufacturing. With BGAs came automated soldering, hidden solder joints, and the need for X-Ray inspection. Adding X-Ray capability to our operations was a significant investment, both in capital equipment and in training.
BGAs increased the potential density, and helped reduce the size, of PCBs. Shrinking form factors continues to be one of the most defining technological developments that impacts our business.
Getting the Lead Out
By the mid-2000s, any OEM that might currently or one day hope to export its products overseas needed to be aware of pending legislation in Asia and the EU related to the reduction of hazardous substances used in manufactured products, as well as the proper disposal of electronics waste.
We chose to take a leadership position on behalf of our customers and invested in preparing our operation for lead-free manufacturing, and educating our customers about the impact to them. Our lead-free capabilities were online in advance of the EU legislation taking effect in July 2006, and our staff was certified in lead-free workmanship standards.
As the Reduction of Hazardous Substances (RoHS) legislation continues to tighten—as of this year, industries that were initially exempt from the requirements are no longer being grand-fathered—we are well prepared and experienced to guide customers in designing and manufacturing compliant products.
Working with China
Expanding our operations into China was the outcome another very significant change that has dramatically changed the manufacturing industry. It may initially seem surprising that, as a CEM focused on low-volume product lines, OCM Manufacturing would look to China for advantages, but customer need again drove the initiative.
Our goal was to provide manufacturers of low-volume products with the same quality and advantages that high-volume producers could enjoy. By establishing a closely managed offshoring model with operation in China, we have been able to provide two key services to our customers, while avoiding the much-publicized pitfalls of going to China:
- Cost reductions, particularly on products that involve high labour content
- Volume manufacturing to transitions customers whose low-volume lines flourish and expand
If we’ve learned anything over the past 25 years, it’s how to go with the flow! By staying close to our customers and our industry, we’ve been successful at anticipating change, differentiating trends from transformation, and making the best decisions for our business.
Please talk to us about partnering with OCM on your next electronics product!