fbpx

Modern Rules of Electronic Industry Manufacturing Capacities Utilization

Modern Rules of Electronic Industry Manufacturing Capacity Utilization

Modern Rules of Electronic Industry Manufacturing Capacities Utilization.

Modern Rules of Electronic Industry Manufacturing Capacities Utilization

In this fast-growing economic situation, the demand for electronic goods has skyrocketed due to the increase in buying power. Therefore, in such a scenario it will be deemed obsolete to have a conservative approach with respect to the electronics manufacturing capacities. Keeping aside excess manufacturing capacities foreseeing a surge in demand or seasonal demand is the traditional approach. However, this needs significant rethinking as the surge may be temporary and the manufacturing plants may not function at 100% capacity throughout the year.  Also There may be times when these are underutilized for prolonged periods, therefore cutting down the profits.

How to utilize Electronic Manufacturing Capacities Optimally to Increase Revenues?

The following modern rules of electronic manufacturing capacities provide the solution.

1. Use Production Planning Software for Electronics Manufacturing

Production planning and scheduling software solutions help in generating an effective and scalable production plans. The plans are based on actual capacity, material availability and customer delivery requirements. This in turn will increase the efficiency of resources, shorten lead times, and help in identifying unutilised capacities. This leads to reduced costs and increased revenue.

2. Invest in Equipment and Manufacturing Technology

Investing in new equipment and technologies not only helps in improving operations, it also enable speedy production of higher quality electronic goods. For example, the use of 3D printing to create new tooling has shown to provide promising results in aiding production and testing.

Therefore, the electronics manufacturer should make an objective assessment of the available latest technology. Based on assessment he should choose the one that best fits his product line and business needs.

3. Utilise the Concept of Shared Manufacturing

Manufacturing industry is moving in the direction of socialization, interconnection and platformization. As a result, the concept of shared manufacturing is gaining popularity.

What is Shared Manufacturing?

Shared manufacturing to put it simply is the sharing of manufacturing capacities through peer-to-peer (P2P) collaborations.

Traditional factories have difficulty balancing their manufacturing resources, production orders and manufacturing capabilities. Some factories may have sufficient manufacturing resources and capabilities but few production orders. Meanwhile others may have sufficient production orders but lack manufacturing resources and capabilities. Shared manufacturing comes to the rescue in such scenarios and bridges the gap. 

In this kind of approach, depending upon the scenario, the electronics manufacturer can either be the customer and use the manufacturing capacities of other manufacturers. Or be the producer, where he provides his unutilized manufacturing capacities to other manufacturers.

The different kinds of shared manufacturing capacities are as below:

  1. Sharing of production orders where the electronic manufacturer has too many orders to deliver on time. In such cases he may share these with other manufacturers in order to fill the gap of insufficient manufacturing capabilities.
  2. Sharing of manufacturing capacities to others who lack sufficient manufacturing resources to expand production.

For eg., a computer numerical control manufacturer (CNC) can have a large amount of production resources. At the same time, a start-up company may be unable to purchase the CNCs due to their high cost. Then, the start-up can use the manufacturing resources of the CNC manufacturer and derive economic benefits by not investing in CapEx.

contract manufacturing is a kind of outsourcing where the electronics company outsources few or all parts of its end-to-end manufacturing needs to contract manufactures. The contract manufacturers utilise their excess manufacturing capacities to produce the goods on order from these companies.

Many of the prominent and well-known electronic brands make use of contract manufacturing facilities, thereby saving cost, and increasing revenue by focusing on core business activities such as design and development, marketing, R&D , etc.

There are several listed companies in cities like Mumbai, Bangalore, Coimbatore, Kannur, Gandhinagar, Hyderabad, etc. who do big-time contract manufacturing for well-known electronic brands.

The recent announcement of the Indian government of a Rs. 76,000/- crore package for the development of a sustainable semiconductor and display ecosystem in the country will provide a major thrust to the semiconductor and display manufacturing industry.

The program aims to provide attractive incentives to companies / consortia that are engaged in Silicon Semiconductor Fabs, Display Fabs, Compound Semiconductors / Silicon Photonics / Sensors (including MEMS) Fabs, Semiconductor Packaging (ATMP / OSAT) and Semiconductor Design. This will definitely boost the contract manufacturing opportunities in the electronics sector.

To facilitate shared manufacturing and contract manufacturing in the electronics manufacturing sector, there needs to be an intermediary mechanism. Mechanism can enable electronics manufacturers to share information about their excess manufacturing capacities worldwide. And at the same time assist potential customers to get sufficient relevant information on available manufacturing capacities.

A digital technology platform like Capximize (https://capximize.com/) through its algorithm-based recommender system enables to connect these entities and provide global visibility. This platform provides up-to-date information about manufacturing capacities that deal with PCB assembly, encasing, plastic moulding/injection moulding and electronic components such as capacitors, resistors, switches, transformers, etc.

Contact Us for More Information

6 Advanced Tips to Scale Up Production

Capximize Expert

6 Advanced Tips to Scale Up Production

6 Advanced Tips to Scale Up Production

scale up production by optimizing manufacturing capacity

Scale up production involves having the manufacturing capacity for growth and also for expansion of production operations.

How can textile manufacturing companies in India scale up their production?

Do they have the necessary business systems, infrastructure and teams to accommodate growth?

(Or)

Do they have to depend on third parties (reliable partners) to scale up their business in a cost-effective way?

Therefore, this blog aims to provide an overview about the two broad approaches to scaling up production, i.e.,

  • Capital Investment
  • Outsourcing

The blog will also provide several other advanced tips to textile manufacturers to scale-up production and increase their business profits.

Capital Investment Vs Outsourcing

 

The textile manufacturers should weigh the pros and cons of both the options and choose the most suitable option that blends well with their business goals.

Capital investment: 

The investment made by the textile manufacturer on capital expenditure to establish manufacturing unit. Capex for example includes land, building, plant, machinery, vehicles, etc. It also considers the expansion of future business operations.

Pros

  • May improve the efficiency of your firm drastically.
  • A good capital investment can have a competitive edge as it can help in providing better goods and services to the customers than the competitors.

Cons

  • Very resource-intensive, both in terms of cost as well as time. As a result, the textile manufacturer will have less resources available for core activities like brand building, marketing, new product development, etc.
  • Capital investments continue to incur a fixed cost of capacity.  Major part includes insurance, depreciation on equipment, property taxes, rent payments, maintenance and repair. Also, this cos will incur even when there is underutilization of manufacturing capacities.
 
Outsourcing:

This approach involves outsourcing complete or parts of the production operations by the textile companies to external manufacturers. External parties  have required infrastructure in place and are ready to offer their capacities to companies looking for the same. India seems to be a promising destination in this aspect.

Pros:

  • Outsourcing is a win-win situation for both the parties. Manufacturers looking to utilize this option and the manufacturing units who are ready to outsource their spare capacities to these manufacturers.
  • The textile companies outsourcing their production operations can save cost by not investing in capex. As a result, their resources are better utilized for their core business activities.
  • Outsourcing production operations provides sustainability in the dynamic global environment. International outsourcing brings substantial cost benefits to the textile manufacturers as they can take advantage of low-labour costs and advanced manufacturing infrastructure in certain countries.

 

Types of Outsourcing

 
i) Contract Manufacturing:

It is the type of outsourcing, where the textile manufacturing company can use the manufacturing capacities of another company to produce its products.

In this approach, the company seeking the contract manufacturers should provide the fabric or garment specifications, packaging and labelling instructions, etc. to the contract manufacturer to enable him to produce the garments as per provided specifications.

Pros

  • More control over the final product as the specifications and packaging instructions are provided by the hiring textile company.
  • Huge cost savings as the textile company does not have to build a production facility and spend on human resources.
  • Launching new products is easier and less expensive.
  • Helps the textile company to focus on core activities such as marketing, branding, research and development, etc.

Cons:

Larger minimum order quantities demanded by contract manufacturers may be a deterrent for smaller companies with less orders.

ii) Private-Label or White-Label Manufacturing:

This is a kind of plug-and-play approach. This is highly suitable for small textile manufacturers who do not whish to create their own product specifications. Or they do not have the components and resources for building a product from scratch.

The private-label manufacturer produces goods for several textile retailers with varying levels of customization.  These retailers in turn sell these products under their own branding and logo. Larger companies who want to focus their resources on other core business activities can also avail this.

Pros

    – As these manufacturers take up even smaller minimum order quantities, the seeking textile company can spread its investment by ordering different types of garments instead of one.
    – Higher profit margins can be achieved as the manufacturing costs are lower when compared to producing your own products.
    – Lead time is greatly reduced as these manufacturers have the generic products already stocked.

Cons:

    – The textile enterprise will have very less control over product creation. It does not own the specifications and sometimes there may be inconsistency in quality.

How Can the Textile Manufacturers Find the Right Outsourcing Partner?

Manufacturing units having underutilized manufacturing capacities and companies looking to utilize these facilities, need access to up-to-date and reliable information to find manufacturing partners. A technology platform like Capximize (https://capximize.com/) through its algorithm-based recommender system will enable to connect these entities.

 
Other Advanced Tips to Scale Up Production

   

1. Have clear objectives: Having well-defined objectives will help the company to prioritize its areas of growth and figure out how to go about these.

2. Invest wisely in technology: Investing in technology helps scaling up production in a less expensive manner. Automation aids in gaining economies of scale and more throughput in an efficient and cost-effective manner.

3. Keep processes simple: Achieving scale requires repeatable and predictable processes and systems. Hence, keeping processes simple is the key.

4. Do your research: Researching about similar businesses that have scaled up production helps one to gain a better understanding about which ideas to implement and which one to avoid..

For More Information Contact Us