6 Things to Consider when Outsourcing High Level Assemblies
Is it time to consider outsourcing a High Level Assembly for the first time or to a new Contract Manufacturer?
It takes a high degree of trust to outsource box build, subassemblies, industrial control panels (ICPs), and even a complete product assembly to a Contract Manufacturer (CM). This is especially true for electromechanical assemblies with printed circuit board assemblies (PCBAs) which often contain hundreds, if not thousands, of unique components in the Bill of Materials (BOM).
Federal Electronics provides a unique portfolio of offerings that makes quoting simple while minimizing risks associated with outsourcing complex assemblies. This includes completely functional robotic assemblies!
The Great Labor Shortage of 2021 is here to stay according to a recent Forbes report. Outsourcing Higher Level Assemblies (HLA’s) to a reputable CM could be the optimal solution for your business.
In the best conditions, it often takes months to find new hires and many more months on top of that to fully train them for assembly of electromechanical systems. From there, variations in demand and high turnover often lead to exorbitant personnel costs that are often overlooked when analyzing your bottom line. This is in addition to lost revenue when internal scaling cannot meet demand.
Federal Electronics has a highly skilled, cross-trained workforce that can move from different types of electromechanical assembly processes with relative ease. This allows for a consistent workforce that can meet varying levels of demand from multiple industries all on different business cycles. The result of lower turnover is a workforce with decades of experience and more predictable resource availability.
The key to a highly skilled, scalable workforce is a structured, professional training program specialized in electronic, electrical, and electromechanical manufacturing. This significant investment in people has been critical to the decades of success that Federal Electronics has offered its customers.
Material shortages, labor shortages, etc. There is no shortage of shortages and the resulting cost increases. Worst of all, these rapid cost increases have no end in sight. By exploring new solutions, this challenge can become an opportunity to get ahead of the competition.
Increasing costs are piling up from virtually every sector of the market.
This is leading to countless challenges such as immediate impacts to profitability, lengthy negotiations with suppliers, and lost orders because of price increases passed down to customers. Nothing is perhaps more challenging to a business than this. But it is also an overlooked opportunity.
Now is the time to consider new solutions that may not have seemed economical or worthwhile in the past.
Increasing material costs, for example, can be offset through economies of scale. As an Electronic Manufacturing Services (EMS) company with over 70 years of experience, Federal Electronics has already built long term relationships with countless suppliers. This not only provides economies of scale but is also a source for greater negotiating power when material is scarce.
Federal Electronics also has locations in both the US and Mexico. Both locations share the same quality management system and therefore the same degree of quality and professionalism. Manufacturing in Mexico provides a unique option to significantly lower landed costs even when compared with Asia, especially for high labor content assemblies. All program management is taken care of by the Federal Electronics US customer service team making communication and logistics as seamless as any US-based contract manufacturing.
Continuous improvement, including investments in automation for both manufacturing and administrative systems, ensures Federal Electronics keeps you competitive for decades to come.
Incomplete documentation can make quoting and outsourcing prohibitive. Federal Electronics helps alleviate this challenge by using physical samples to quote the product.
Businesses often consider outsourcing before a suitable documentation package is available for suppliers to reasonably quote. This often puts business leaders in a difficult position – how to build a business case for outsourcing with a particular supplier without proper documentation for quoting.
Federal Electronics strives to be as flexible as possible in providing quotes even when the documentation package is incomplete. This can be based on reasonable assumptions that are both discussed and outlined in a Rough Order of Magnitude (ROM) quote. Better yet, if a golden sample can be provided, an actionable quote may be feasible without consuming precious engineering resources from the customer.
Building a business case for outsourcing a particular assembly is just the first step. Federal can help organizations consider other assemblies to outsource that provide even more cost savings.
There are also many tools that a reputable contract manufacturer like Federal Electronics can present as options to ensure the outsourcing transition is optimal.
Purchasing options like Kanban programs and blanket purchase orders with material on bond can be discussed to help secure material without building inventory. The option to design and manufacture subassemblies like wire harnesses can also help reduce assembly time and manage WIP.
These options, and many more, can be discussed early in the exploration stage of outsourcing to ensure the best solution is designed to suit your organizational needs and ultimately fulfill strategic objectives.
Cable Assembly and PCBA are done in-house at Federal Electronics with the engineering expertise needed for flawless integration. This provides more control and less risk than outsourcing to an integrator without these in-house capabilities.
Both costs and risks can be reduced simultaneously by outsourcing electromechanical assemblies to a vertically integrated Electronics Manufacturing Services (EMS) company. With a vertically integrated model, subassemblies like PCBA (including secondary process such as conformal coat) and wire harnesses are built and managed in-house. This reduces total overhead, eliminates margin stack up, ensures more control over production scheduling of subassemblies, and allows for subassemblies to be easily manufactured at Federal’s low cost region (LCR) electrical manufacturing facility in Mexico.
There are also vast benefits to New Product Integration (NPI). Engineers across the different commodities can collaborate far easier when within the same organization and often steps away from one another.
Vertical Integration is proof to the customer that a contract manufacturer can truly provide the technical expertise to build a high level of assembly. There is no dependency on outside organizations in understanding subassembly builds and the manufacturing processes they require.
This expertise opens the door to more value in Design for Manufacturability (DFM) exercises. Federal Electronics’ box build manufacturing engineers also have experience in designing harnesses and manufacturing circuit card assemblies.
Access to Material
The Federal Electronics ERP runs every 24 hours with new data continuously updated in the system. This, combined with a vast vendor network and material supply bond agreements, ensures material is rapidly secured for short and long term needs.
Material shortages and supply disruptions are now the unfortunate norm in the electronics industry. Any day that a contract manufacturer fails to process a customer’s new order or change in demand could result in massive lead time increases. This is especially true for higher level assemblies with extensive BOM’s.
Federal’s ERP processes customer demand within 24 hours regardless of the assembly’s complexity. All suppliers are notified of any demand changes provided by the customer within this time period.
It is also critical to have a vast vendor network when unexpected lead time changes do occur. With over 70 years of industry experience, Federal Electronics has developed countless trusted relationships to address these challenges effectively when they do occur.
This includes electronic component manufacturers, franchised distributors, reputable brokers, custom machine shops, sheet metal shops, and many others, all of which have been highly vetted for quality and dependability. Since Federal Electronics accommodates difficult to outsource programs, including high complexity, high mix, and low volume, the supply chain is qualified to do so as well.
With such a vast network of suppliers in virtually all commodities, the option to dual source components can also be considered to reduce risk and ensure business continuity. Suppliers are located locally throughout New England, the US, and in multiple low cost regions (LCR’s) providing customers with a “menu” of options in selecting an optimal or regionalized supply chain.
Don’t let the cost of poor quality affect your bottom line. Federal Electronics has a vast amount of testing capabilities in-house at the top level and at subassembly levels such as PCBA and harness assembly.
Federal Electronics is certified to ISO 9001, AS9100, ISO 13485, UL 508A, and builds to IPC Class 3. Supporting the aerospace and medical industries proves how extensive the Quality Management System (QMS) is for Federal’s manufacturing locations in the US and Mexico. These standards apply to the supply chain as required which includes NADCAP certification for specific commodities.
Quality begins with the manufacturing process and the highly skilled workforce executing such processes. Significant engineering resources are spent in developing highly repeatable processes with immense collaboration between manufacturing engineers and assemblers. The highly skilled workforce is extensively trained with tracking mechanisms to ensure specific training requirements are met depending on the assembly type and processes that take place.
The most important step to reduce or even eliminate the risk of any defects is in testing the final assembly along with subassemblies in-house thanks to a vertically integrated model. Federal Electronics has an extensive portfolio of testing capabilities, some of which are inline testing for highly automated Surface Mount Technology (SMT) assemblies. These come with the in-house technical support to ensure accuracy and operability. Testing capabilities include, but are not limited to:
- Functional Test per Customer Specifications
- X-Ray Inspection
- Flying Probe Test
- Automated Optical Inspection (AOI)
- Solder Paste Inspection
- Hipot Test
- Continuity Test
- Pull Test
- Resistance & Insulation Test