|Outsourced design of medical product. |
In today's difficult economic environment, one EMS provider — Zurvahn — has been in the forefront, helping OEMs to successfully ride out NPIs (new product introductions) in the face of drastically downsized or even non-existent design departments.
Zurvahn, providing flexibility, speed and focus to its customers, is an EMS provider for mid-to-low-volume production. At the same time, the company has become an integral part of NPIs for OEMs worldwide. The company does this by helping its customers design reliable products, then manufacturing those products cost-effectively, while keeping a lid on inventory requirements and delivering quality products and services on time.
Zurvahn brings a much-needed engineering service and business model to the low-to-mid-volume high-mix EMS industry. Its new business model helps fill the void that continues to plague the $65 Billion low-volume high-mix (LVHM) EMS industry that is served by more than 3,000 EMS providers in North America.
Bare Minimum Workforces
OEMs in North America have cut their workforces down to a bare minimum simply to be able to survive through this economic downturn. The downturn has been so severe that in some cases OEMs have had to downsize parts of their organizations that are usually untouchable. This has included the once-sacrosanct engineering department — responsible for the new design of products that are the lifeblood of any OEM company. Without these new products, OEMs quickly fall behind their competitors in the marketplace. Instead, they look for other ways to compete, such as cutting prices on existing products to try to make up for products that they don't have. Outsourcing the engineering design work is an excellent way to overcome this downward trend. The remaining skeleton crews of OEM engineering organizations look to firms like Zurvahn and its Technology Center to help them design their new products and get them to the marketplace. Some of the design services offered include such general engineering services as:
- Printed Circuit Board Layout.
- DF(x), design for manufacturing, design for test and much more.
- Component engineering.
- System architecture.
- Product integrity.
- Design validation.
- ICT, functional test engineering and development.
Specific Mechanical Design, Electrical Design and Software Design Services through the Zurvahn Technical Center include the company's Electrical Circuit Design and Electrical Schematic Capture — made possible by:
- State-of-the-art Altium designer for PCB design environment.
- Integration of schematic capture, PCB layout and full FPGA support with simulation capability.
- Altium design and collaboration with Pro-E and Solidworks.
- Signal integrity, capacitance and impedance matching.
The company's Mechanical Design Services incorporate:
- Pro-E 3D design and modeling.
- Industrial design.
- Mold flow analysis.
- Extensive simulation capability such as stress, heat and airflow.
- On-site 3D physical part generation.
- Generation of 3D models for products for which documentation may not exist.
And finally, there are the company's Software Design Services:
- Embedded Software for 8-, 16-, and 32-bit MCU using C, C++, Pascal, Basic, ASM, Java.
- PC software for Windows® and Linux® OS (32- and 64-bit), driver development.
- Server application environment applications (Java, Java Script, PHP, ASP), multi-user environment.
- Statistical data analysis.
Keeping Protytypes Local
Once the design is complete and the OEM is ready for manufacturing, prototypes are needed to prove that the design works. Zurvahn provides local engineering prototypes, and even provides turnkey material-handling through its proprietary Inovision Material Handling System. This reduces kitting time, improves accuracy and helps the OEM's engineering group to get their products and designs to the marketplace faster.
There is also pressure to save money by using design services and prototype building services at production sites outside of North America. But the real cost-saving needed here is in shortening the design cycle and getting prototypes to market as quickly as possible. Some OEMs attempt to do this at manufacturing sites outside of North America, because some of the costs are lower. There are several disadvantages in doing this. First, flexibility, speed and focus are what ultimately matter to the OEM and LVHM (Low-Volume High-Mix) products being readied for an NPI. Customer lead times, customer demand changes, responsiveness, cash cycle, all come into play here. In addition, building the product physically close to the end-customer market achieves the speed, flexibility and responsiveness that are crucial to the success of the product that is being introduced to the marketplace.
|Outsourced design of communication product. |
As for lower costs, materials are largely available at worldwide commodity prices, no matter where they are purchased. Offshore manufacturing holds little cost advantage for globalized material costs for NPI volumes since an NPI offers very little in the way of economies of scale.
Another key factor: offshore is slower to respond to market changes and the demands of key end-customer accounts, leading to lost profits due to delays in introducing new products. Offshore also involves higher excess inventory and more frequently upset customers at the lower volumes mandated by NPI and LVHM..
Freight, fuel and offshore labor costs are continuing to rise in absolute and dollar-denominated terms, independent of volumes, adding to the unattractiveness of non-local NPI and LVHM manufacturing.
When the OEM's product is in the LVHM stage, financing costs for multiple weeks of inventory on a ship or paying higher shipping costs for air freight — not just for the finished product but also shuttling parts back and forth to meet the time-to-market needs of the end customer — must also be considered.
Duties, tariffs and customs delays add up to overtime even at the LVHM and NPI volumes.
The ongoing cost of flying technical staff to resolve technical issues and management to the site is rarely calculated into the actual cost of the product, but these costs seriously impact the bottom line.
Reducing lead-time is the ultimate fix to forecast error and its consequences; ideally, lost sales, slow turns and high excess become obsolete.
Finally, there is serious concern over the intellectual property of OEMs, which becomes a major factor when making the decision about where to build products for NPI. OEMs do not want their technology, on which they have spent thousands and sometimes millions of R&D dollars, to be floating around Mexico and China.
Until the economic cycle rebounds and OEMs start staffing their engineering departments again, this trend is going to continue at a record pace. OEMs are going to continue to look at EMS providers like Zurvahn and its Technology Center and the Inovision Material Handling Solutions to help them design their products, build prototypes locally, and get them to the marketplace faster. Flexibility, speed and focus are everything to OEMs who are trying to get their new products to the marketplace. OEMs truly need to understand the disadvantages of trying to accomplish this outside of North America in what are typically low-cost high-volume manufacturing sites such as Mexico and China.
Contact: Zurvahn LLC, 6601 Lyons Rd., Bldg. E1, Coconut Creek, FL 33073 954-570-5565 E-mail: firstname.lastname@example.org Web: http://www.zurvahn.com