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Ultimate Guide to Electronic Manufacturing Services

Electronic Manufacturing Services (EMS) – Ultimate Guide

Introduction to Electronic Manufacturing Services (EMS)

In today’s interconnected world, electronic devices are ubiquitous, powering everything from our smartphones to complex industrial machinery.  Behind the scenes of this technological revolution lies the intricate process of electronic manufacturing.  For many companies, managing this complex undertaking in-house is resource-intensive and challenging. This is where Electronic Manufacturing Services (EMS) providers step in, offering specialized expertise and streamlined solutions for bringing electronic products to life. This article serves as your comprehensive introduction to the world of EMS, exploring its importance, evolution, and the core benefits it offers.

What are Electronic Manufacturing Services (EMS)?

Electronic Manufacturing Services (EMS) companies are your one-stop shop for outsourcing the manufacturing, assembly, and testing of electronic components and finished products.  They act as a strategic partner, taking on the often-complex task of bringing your electronic designs from concept to reality.  Think of them as the specialized factories and expert teams that handle everything from sourcing components to assembling intricate circuit boards and packaging the final product, allowing you to focus on your core competencies like product design and marketing.

Electronic Products

Why are EMS Important?

In a world of ever-shortening product lifecycles and increasing technological complexity, EMS providers offer crucial advantages.

  • Cost-Effectiveness: EMS providers leverage economies of scale, bulk purchasing power, and optimized manufacturing processes to reduce production costs. They also eliminate the need for companies to invest heavily in manufacturing facilities and equipment.
  • Expertise and Specialization: EMS companies possess deep expertise in electronic manufacturing, including printed circuit board (PCB) assembly, component sourcing, testing, and quality control. They stay at the forefront of industry advancements and best practices.
  • Flexibility and Scalability: EMS providers offer flexible manufacturing capacity, allowing companies to scale production up or down quickly to meet changing market demands. This agility is crucial in today’s dynamic business environment.
  • Focus on Core Competencies: By outsourcing manufacturing to an EMS provider, companies can free up valuable resources and focus on their core strengths, such as product design, research and development, and marketing.
  • Reduced Time to Market: EMS providers can accelerate the product development and manufacturing process, helping companies bring their products to market faster and gain a competitive edge.
  • Access to Latest Technologies: EMS providers are constantly updating their technology and equipment to keep pace with the rapidly evolving electronics industry. This access allows their clients to benefit from the latest manufacturing processes without massive capital outlay.

A Brief History of EMS

The EMS industry has evolved significantly over the past few decades.  Initially, it focused primarily on simple assembly tasks. However, as technology advanced and manufacturing processes became more complex, EMS providers expanded their service offerings to include design support, component sourcing, testing, and logistics. The rise of globalization and the increasing demand for outsourcing further fueled the growth of the EMS industry. Read more about the history of EMS here.

The Value Proposition of EMS

The core value proposition of EMS lies in its ability to provide a comprehensive and integrated solution for electronic product manufacturing. By partnering with an EMS provider, companies can:

  • Reduce costs and improve profitability.
  • Access specialized expertise and cutting-edge technology.
  • Increase flexibility and scalability.
  • Focus on core competencies and accelerate time to market.
  • Improve product quality and reliability.
  • Gain a competitive advantage in the global marketplace..

Conclusion

Electronic Manufacturing Services have become an indispensable part of the global electronics industry. By outsourcing manufacturing to a trusted EMS partner, companies can unlock significant benefits, from cost savings and improved efficiency to increased flexibility and faster time to market. As technology continues to advance and market dynamics evolve, EMS providers will play an even more critical role in helping companies bring innovative electronic products to life.  In the next sections of this cornerstone article, we’ll delve deeper into the specific services offered by EMS providers and explore the key factors to consider when choosing the right partner for your needs.

Core Services Offered by Electronic Manufacturing Services (EMS) Providers

In the previous section, we explored the importance of Electronic Manufacturing Services (EMS) and their role in the electronics industry. Now, let’s dive into the core services offered by these providers, giving you a comprehensive understanding of what they can do for your business. From initial design support to final product assembly and even after-sales service, EMS providers offer a wide array of capabilities.

1.Manufacturing & Assembly: The Heart of EMS

  • Printed Circuit Board (PCB) Assembly: This is arguably the most fundamental service. EMS providers are experts in assembling electronic components onto PCBs using various techniques:
    • Surface Mount Technology (SMT): For small, surface-mounted components, offering high density and miniaturization. EMS providers utilize sophisticated pick-and-place machines and reflow ovens for precise and efficient SMT assembly. 
    • Through-Hole Technology: For larger, leaded components, often used in applications requiring greater durability. This involves inserting component leads through holes in the PCB and soldering them on the other side. 
    • Mixed Technology: Combining both SMT and through-hole assembly on a single board to optimize for component size, cost, and reliability. 

Read our blog on PCB Assembly Process Explained to learn the details. 

  • Cable and Harness Assembly: EMS providers fabricate and assemble cable harnesses, which are essential for connecting different parts of electronic systems. This includes cutting, stripping, crimping, and terminating wires, as well as assembling connectors and other hardware. 
  • Box Build and System Integration: This involves assembling various components, including PCBs, cables, power supplies, and enclosures, into a complete unit. EMS providers handle everything from mechanical assembly and wiring to software loading and system testing. 
  • Electromechanical Assembly: This combines electronic components with mechanical parts, such as motors, gears, and switches. EMS providers possess the expertise to integrate these elements seamlessly into a functional product. 
  • Final Product Assembly and Testing: The culmination of the manufacturing process, this involves assembling all the sub-components into the final product, packaging it, and conducting final testing to ensure functionality and quality. 

2. Design & Engineering Support: Beyond Manufacturing

Many EMS providers offer design and engineering support services, adding value beyond simply assembling components. These services can include:

  • Design for Manufacturing (DFM) and Design for Assembly (DFA): These crucial processes ensure that the product design is optimized for efficient and cost-effective manufacturing. DFM focuses on simplifying the manufacturing process, while DFA focuses on making the product easy to assemble. Watch this video to learn more.
  • Prototyping and New Product Introduction (NPI): EMS providers assist with prototyping and NPI, helping companies bring their new products to market quickly. This includes rapid prototyping, pilot production runs, and design validation. Read our detailed blog on How an EMS can supercharge your PCB Prototyping.
  • Engineering Change Orders (ECOs) and Product Lifecycle Management: EMS providers manage ECOs, implementing design changes and updates throughout the product lifecycle. They also assist with product lifecycle management, ensuring that products are manufactured and supported throughout their lifespan.
  • Test Engineering and Development: Developing and implementing test strategies is critical to ensuring product quality. EMS providers design and build test fixtures, develop test software, and perform various types of testing, including functional testing and in-circuit testing. 

3. Component Sourcing & Procurement: A Critical Link in the Chain

Effective component sourcing and procurement are essential to the success of any electronic product.

EMS providers offer:

  • Global Sourcing and Supply Chain Management: EMS companies have established networks of suppliers around the world, enabling them to source components at competitive prices. They manage the entire supply chain, from supplier selection and qualification to procurement and logistics.
  • Inventory Management and Control: EMS providers can manage inventory levels, ensuring that components are available when needed while minimizing inventory holding costs. They use sophisticated inventory management systems to track component usage and forecast demand.
  • Component Engineering and Obsolescence Management: EMS providers can assist with component selection, ensuring that the right components are used for the application. They also manage component obsolescence, identifying and replacing obsolete components to ensure long-term product availability.

4. Testing & Quality Control: Ensuring Excellence

Quality is paramount in the electronics industry. EMS providers employ a variety of testing and quality control measures:

  1. Automated Optical Inspection (AOI): AOI systems use cameras to inspect PCBs for defects, such as missing components, incorrect placement, and solder bridges.
  2. In-Circuit Testing (ICT): ICT uses probes to test the electrical connectivity of components on the PCB, identifying shorts, opens, and other faults.
  3. Functional Testing: Functional testing verifies that the product performs its intended function. This may involve running software, simulating real-world conditions, and measuring performance parameters.
  4. Quality Management Systems (ISO 9001, etc.): Reputable EMS providers adhere to international quality standards, such as ISO 9001, demonstrating their commitment to quality and continuous improvement. Learn more about ISO standards here.

Read our blog on Quality Testing for Prototypes. 

5. Logistics & Fulfillment: Getting Products to Market

The final stage of the manufacturing process involves getting the finished products to market. EMS providers offer:

  • Warehousing and Distribution: EMS companies can provide warehousing and distribution services, storing finished products and shipping them to customers.
  • Order Fulfillment and Drop Shipping: EMS providers can handle order fulfillment, including picking, packing, and shipping orders directly to customers. They can also offer drop shipping services, where products are shipped directly from the manufacturing facility to the end customer.
  • After-Sales Support and Repair Services: Some EMS providers offer after-sales support and repair services, providing technical assistance and repairing defective products.

Conclusion

The comprehensive suite of services offered by EMS providers empowers companies to streamline their electronics manufacturing process, reduce costs, and focus on their core competencies. From design and engineering to manufacturing, testing, and logistics, EMS providers act as a strategic partner, helping bring innovative electronic products to life. In the following sections, we will discuss how to choose the right EMS partner for your specific needs and explore the latest trends shaping the EMS industry.

EMS for Different Industries: Tailored Solutions for Diverse Needs

Electronic Manufacturing Services (EMS) providers play a crucial role across a wide spectrum of industries, each with its unique requirements and challenges. From the stringent quality standards of medical devices to the ruggedness demanded by aerospace applications, EMS providers adapt their expertise and processes to meet the specific needs of diverse sectors.

Aerospace and Defense: Mission-Critical Reliability

  • High-Reliability Components: Aerospace and defense applications often require components that can withstand extreme temperatures, vibration, and shock. EMS providers must have expertise in sourcing and handling these specialized components.
  • Traceability and Documentation: Meticulous traceability and documentation are essential for ensuring the quality and reliability of aerospace and defense products. EMS providers must have robust systems in place to track every component and process.
  • Long Product Lifecycles: Aerospace and defense products often have long lifecycles, requiring EMS providers to manage component obsolescence and ensure long-term product availability.
  • Ruggedization and Environmental Testing: Products must be designed to withstand harsh environments. EMS providers conduct rigorous environmental testing, including temperature cycling, humidity testing, and vibration testin

Automotive: Meeting Stringent Automotive Standards

The automotive industry presents its own set of challenges, including high production volumes, strict quality requirements (e.g., IATF 16949), and demanding environmental conditions. Recently we were engaging with a popular luxury EV company in America. Their quality requirements are extremely stringent as they have to provide warranties to their customers to adhere to the laws.  EMS providers serving this sector must:

  • Automated Manufacturing: High production volumes require highly automated manufacturing processes to ensure efficiency and consistency.
  • Zero-Defect Quality: The automotive industry demands near-perfect quality. EMS providers must have robust quality control systems in place to minimize defects.
  • Environmental Robustness: Automotive electronics must withstand extreme temperatures, vibration, and humidity. EMS providers must use appropriate materials and processes to ensure reliability.
  • Supply Chain Management: The automotive supply chain is complex and global. EMS providers must have expertise in managing this complex supply chain and ensuring timely delivery of components.

Consumer Electronics: Balancing Cost and Innovation

The consumer electronics industry is characterized by rapid innovation, short product lifecycles, and intense price competition. EMS providers serving this sector must:

  • Cost-Effectiveness: Consumer electronics manufacturers are constantly looking for ways to reduce costs. EMS providers must offer competitive pricing and efficient manufacturing processes.
  • Rapid Prototyping and NPI: The consumer electronics market moves quickly. EMS providers must be able to rapidly prototype and introduce new products to market.
  • High-Volume Manufacturing: Consumer electronics products are often manufactured in very high volumes. EMS providers must have the capacity to handle these large volumes.
  • Miniaturization and Advanced Packaging: Consumer electronics products are becoming smaller and more complex. EMS providers must have expertise in miniaturization and advanced packaging technologies.

Industrial Automation: Reliability in Harsh Environments

Industrial automation products often operate in harsh environments and require high reliability. EMS providers serving this sector must:

  • Ruggedization and Durability: Industrial automation products must be designed to withstand extreme temperatures, vibration, and other harsh conditions.
  • Long Product Lifecycles: Industrial automation products often have long lifecycles, requiring EMS providers to manage component obsolescence and ensure long-term product availability.
  • Specialized Testing: Industrial automation products may require specialized testing to ensure that they meet specific performance requirements.
  • Safety and Compliance: Many industrial automation products must comply with strict safety regulations.

Medical Devices: Uncompromising Quality and Regulatory Compliance

The medical device industry is subject to stringent regulatory requirements (e.g., FDA regulations) and demands the highest levels of quality and reliability. EMS providers serving this sector must:

  • Regulatory Compliance: EMS providers must comply with all relevant regulations, including FDA regulations for medical devices.
  • Quality Management Systems: Robust quality management systems are essential for ensuring the safety and efficacy of medical devices.
  • Traceability and Documentation: Meticulous traceability and documentation are required for medical devices.
  • Sterilization and Biocompatibility: Some medical devices require sterilization or biocompatible materials. EMS providers must have expertise in these areas.

Telecommunications: High-Speed and High-Frequency Expertise

The telecommunications industry requires expertise in high-speed and high-frequency electronics. EMS providers serving this sector must:

  • High-Speed PCB Design and Assembly: Telecommunications equipment often requires high-speed PCB design and assembly to ensure signal integrity.
  • RF and Microwave Expertise: Many telecommunications products involve RF and microwave technologies. EMS providers must have expertise in these areas.
  • Testing and Validation: Thorough testing and validation are essential for ensuring the performance and reliability of telecommunications equipment.
  • Network Infrastructure: EMS providers may be involved in the manufacturing of network infrastructure equipment, such as routers and switches.

Other Industries

Beyond these key sectors, EMS providers also serve a multitude of other industries, including:

  • Energy: Manufacturing electronics for renewable energy systems and smart grids.
  • Security: Producing electronic components for security systems and surveillance equipment.
  • Transportation: Building electronics for trains, ships, and other transportation systems.

Conclusion

The adaptability of EMS providers is a key factor in their success. By tailoring their services and expertise to the specific needs of each industry, they enable companies to focus on their core competencies while trusting their manufacturing to a specialized partner. Whether it’s the stringent quality requirements of medical devices or the cost pressures of consumer electronics, EMS providers offer valuable solutions across the industrial landscape.

Choosing the Right EMS Provider: A Comprehensive Guide

Selecting the right Electronic Manufacturing Services (EMS) partner is a critical decision that can significantly impact the success of your electronic product. A strong partnership can lead to cost savings, faster time to market, and improved product quality. Conversely, a poor choice can result in delays, cost overruns, and even damage to your brand reputation. This comprehensive guide outlines the key factors to consider when choosing an EMS provider, empowering you to make an informed decision.

1. Defining Your Needs: The Foundation of Your Search

Before you start contacting EMS providers, it’s crucial to clearly define your specific needs and requirements. This will help you narrow your search and ensure that you’re targeting providers that are a good fit for your business. Consider the following:

Choosing the right Electronic Manufacturing Service

2. Key Factors to Consider When Evaluating EMS Providers

Once you have a clear understanding of your needs, you can begin evaluating potential EMS providers. Here are the key factors to consider:

Factors to Consider Choosing an Electronic Manufacturing Service

3. Due Diligence and Vendor Selection Best Practices

  • Request for Information (RFI): Start by sending RFIs to potential providers to gather information about their capabilities and services.
  • Request for Quote (RFQ): Once you’ve narrowed your list, send RFQs to get detailed pricing and lead times for your project.
  • Site Visits: Visit the facilities of your top contenders to assess their manufacturing capabilities, quality control processes, and overall operations.
  • Technical Discussions: Schedule technical discussions with the provider’s engineering team to discuss your product in detail and ensure that they have the necessary expertise.
  • Contract Negotiation: Carefully review the contract terms and conditions before signing. Make sure that all aspects of the agreement are clear and mutually agreeable.

4. Building a Strong Partnership

Choosing an EMS provider is not just a transaction; it’s the beginning of a long-term partnership. Here are some tips for building a strong relationship with your chosen provider:

  • Open Communication: Maintain open and regular communication with your provider to ensure that you’re aligned on project goals and timelines.
  • Collaboration: Work collaboratively with your provider to solve problems and improve processes.
  • Mutual Respect: Treat your provider as a valued partner and respect their expertise.
  • Long-Term Vision: Focus on building a long-term relationship with your provider, rather than just focusing on short-term cost savings.

Conclusion

Choosing the right EMS provider is a complex but crucial process. By carefully considering the factors outlined in this guide and conducting thorough due diligence, you can find a partner that will help you bring your electronic products to market successfully. Remember that the best EMS provider is not necessarily the cheapest, but rather the one that best meets your specific needs and offers the best overall value.

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OLA SANKALP

Visit to Ola Sankalp 2024

CEO Shyam and Director Rajesh at Ola Future Factory

Podrain Visit to Ola Sankalp 2024

Recently Podrain Electronics was invited to visit Ola’s annual event Ola Sankalp 2024 held at Krishnagiri, Tamil Nadu. 

Podrain makes prototypes for Ola.  Read our blog on how an EMS can supercharge your PCB prototyping needs.

We were able to visit their manufacturing facility for scooters called Ola Future Factory. Ola is also building a Gigafactory to manufacture advanced cells for electric vehicle batteries. 

 

Ola Future Factory
Ola Future Factory

Indian Two Wheeler Market

The Indian Two-Wheeler market consists mainly of scooters and motorcycles. The market has experienced significant growth in recent years due to increased urbanization and government subsidies. The Two-Wheeler is also more affordable for most of the middle-class population. With the increase of delivery services for everything from groceries to medicines the Two-Wheeler also affords a way for a lot of Indians to make a living. As the cost of petrol is high EVs become more attractive over the long term even though their initial cost is higher than petrol powered two wheelers.

The market for Two Wheelers was estimated at 302.2 Billion USD in 2022 and is expected to grow to 411 Billion by 2032 which is a 3.50% compound annual growth rate (CAGR).  (Source:marketresearchfuture)

Electric Two Wheelers

Recently Electric Two-Wheelers (E2Ws) have entered the market and are becoming very popular propelled again by government incentives and the growing awareness of environmental issues. E2Ws make up around 55% of all electric vehicle sales in India. (Source:autocarpro)

Among the E2W manufactures Ola has the biggest market share currently at around 50%. TVS Motor, Bajaj Auto and Ather are some of the other big players in this market. Ola is also introducing EV motorcycles in addition to their EV scooters.

 

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Shoe Dog

Eight Lessons from Phil Knight and Nike

In 1964, Phil Knight started selling imported high-quality, affordable athletic shoes out of his car. He earned $8,000 in his first year. In 2015, Nike earned $30.6 billion. And in April 2016, Phil Knight published his memoir, Shoe Dog, in which he wrote with humour and honesty about the trials and tribulations he – and Nike – faced over that half-century.

Shoe Dog Book Cover

Shoe Dog by Phil Knight is an excellent read for any entrepreneur

Shoe Dog is an extremely well-written memoir, an absorbing story full of interesting, eccentric characters and exciting twists. But it also contains plenty of lessons for the entrepreneur. If you are looking for inspiration, motivation and reassurance as you grow your business, I highly recommend you add Shoe Dog to your personal library. I have found it an excellent resource on my own entrepreneurial journey. 

Here are eight entrepreneurship lessons I got from Phil Knight’s story.

1. Sometimes, you just have to jump.

At its core, entrepreneurship is a leap of faith. Not all ideas will work out. Evaluate them objectively, discuss with experts, make a plan. But a day will come when you have to stop thinking and take that first step. As Nike’s tagline says, ‘Just do it.’

2. Every day brings its own crisis. 

Problems come up all the time – from competitors to new technology, from regulations to finance, from supply issues to weather conditions. The problems of maturing companies are different from those of start-ups. But there’s never a time when all the problems disappear. Accept this and face each challenge with courage.

3. Keep innovating. 

Bill Bowerman, an eminent running coach and part of Nike’s story from the time it was still Blue Ribbon Sports, figured out how to reduce the weight of a shoe by one ounce, saving 55 pounds over a mile. That philosophy of iterative improvement has driven Nike ever since. As the pace of technology development gets ever more feverish, embedding the innovative mindset in the DNA of the company is essential to stand out from the competition.

4. Trust is the key.

Five interrelated factors cause a company to lose its way: lack of trust; fear of conflict; lack of commitment; avoidance of accountability; and inattention to results. Entrepreneurship is full of uncertainty. A team that believes in the vision and faces these challenges unitedly is vital to come out of the tough situations. It isn’t that everyone in the company agrees about everything; rather, it is that everyone knows that they all want the company to succeed and views their disagreements in that light. When a company is young and fragile, trust is the glue that holds it together.

5. Failures will happen. Be honest when they do

Knight gives multiple instances of product recalls due to quality issues, mistakes that he made and decisions that, with the benefit of hindsight, could have been better. Nike treated their customers with respect by acknowledging errors, both internally and in public. Nobody is perfect, but when the internal culture of trust is matched by honesty to customers, the circle of trust can buoy a company through some very tough times.

6. Stay humble

One interesting fact is that it was Employee No. 1, Jeff Johnson, who came up with the name ‘Nike’. Throughout the book, Knight praises Johnson, Bowerman, legal counsel Rob Strasser, first COO Bob Woodell and many others, including his wife. Knight rarely mentions his own contributions once the company is more than just a car boot shoe sale. But he was the CEO – how likely is it that he didn’t contribute anything? It’s not an accident that Knight plays down his own role. He knows that success, like sports, is a team effort – and he never forgets to show appreciation for his teammates.

7. Find an outlet for the stress.

Entrepreneurship is demanding. Because the problems never stop coming, you will be tempted to never stop working. But you can’t look after your business if you aren’t around or aren’t in good health. An activity unrelated to work is an excellent way to get a clear, fresh perspective on seemingly insoluble issues. Phil Knight loved running, and running was his outlet. By finding a relief valve and paying attention to your own physical and mental health, you can be energized to keep going, no matter what.

8. Never stop.

For almost the first decade of Nike’s existence, Knight had to work other jobs to support himself. Suppliers ignored or shot down the company’s product ideas. Its first attempt to raise capital was a monumental failure. Advertising flyers got no response. But the team didn’t give up. As an entrepreneur, it’s easy to get disheartened. But if there’s one lesson from Shoe Dog that every entrepreneur should hold on to, it’s this: never stop.

Let everyone else call your idea crazy…just keep going. Don’t stop. Don’t even think about stopping until you get there, and don’t give much thought to where “there” is. Whatever comes, just don’t stop.

-Phil Knight, ‘Shoe Dog’

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IPO

Going Public: Benefits and Drawbacks for EMS companies

These days, the business news is all about startups getting capital infusions going public. In 2021, investors’ rose-tinted glasses began to crack: the PayTM IPO imploded; Oyo and Delhivery postponed listing plans; Zomato and Nykaa went public but struggled immediately afterwards.

These examples are all tech startups, but there’s another kind of tech that isn’t often mentioned: physical tech, i.e., electronics manufacturing services (‘EMS’). When the manufacture of complex, delicate and sophisticated physical products is involved, the benefits and drawbacks of listing are slightly different.

For EMS companies – especially MSMEs – which require major capital investments to put in place the equipment, infrastructure and controls required to manufacture products at scale and to quality standards, going public makes a lot of sense.

What does ‘going public’ or ‘listing’ actually mean?

A company is ‘listed’ or ‘goes public’ when its shares are formally admitted to the trading platform of a stock exchange. That is, some portion (‘shares’) of the ownership of the company is now open for the general population of investors to buy and sell (‘trade’), under the law and stock exchange rules.

Why should EMS MSMEs go public?

Listing on a stock exchange has many benefits for any company, such as reduced debt, increased liquidity, improved employee morale, transparency and better operational efficiency. For EMS MSMEs in particular:

  1. Access to capital markets. In a previous blog, I described the ‘money maze’ MSMEs must navigate to access capital. Steady-state MSMEs can accelerate growth, expand, and uncover additional R&D and capital expenditure funding by going to the markets. This is a virtuous cycle in a way: going public enhances a company’s credibility, unlocking the hearts and chequebooks of institutional lenders who hesitated before.
  2. Distributed risk. In the initial stages, a risk-averse lending environment often compels EMS MSME founders to put their own assets on the line, supplemented by soft loans from friends and family. An IPO is an opportunity for founders to end this situation, for themselves as well as for people outside the formal lending ecosystem who helped the business get off the ground.
  3. Enhanced visibility. Listing requires a company to comply with regulatory norms regarding transparency and accountability, increasing its credibility amongst lending institutions and investors. But there’s another advantage for specialist MSMEs like EMS companies: visibility to potential customers. Listing gives such companies a platform to reach a wider but targeted buying audience without extravagant advertising. Financial credibility casts light on manufacturing quality and capability as well, a particular concern for manufacturing enterprises when choosing vendors.

What are the drawbacks of listing for an EMS MSME?

Despite these undoubted advantages, going public isn’t necessarily the right choice for all EMS MSMEs for a few reasons:

  1. Burden of disclosure. Transparency is good, but complying with regulatory strictures can be complicated and time-consuming. For EMS MSMEs, which are typically founded by people with technical expertise and little awareness of financial and regulatory intricacies, adhering to these requirements can be burdensome and costly.
  2. Increased market exposure is a mixed blessing. The Indian EMS sector is just opening up and opportunities abound in the domestic market. For EMS MSMEs, the export market is very attractive. Listing will bring such companies to the attention of global clients – but it also means scrutiny from international regulators, not just in terms of financial compliance but also on international environmental, sourcing and other compliance standards that Indian MSMEs may not yet be able to meet. Customers and compliance can chase each other in a spiral that distracts focus from running the business.
  3. Short-term pressures. EMS is a capital-intensive business which needs extended periods of investment before showing results. Rapid technological advances mean that EMS companies will regularly invest large sums in infrastructure, equipment, R&D and training to stay relevant and competitive. A large, established enterprise can do this; an MSME may struggle to keep up if growth, scale and quarterly profits fail to meet shareholder expectations quickly enough.

 

EMS MSMEs thinking of going public should work with an experienced investment advisor to evaluate the benefits and drawbacks, and take a dispassionate decision on whether it is – or ever will be – the right time to list. It’s important to remember a few things:

The company gets an infusion of capital during the IPO. After this, money only changes hands amongst stock exchange buyers and sellers. IPOs are tedious and expensive in themselves, and the ongoing costs of compliance are onerous, as is the burden of scrutiny from shareholders, investors, regulators and customers. By listing, founders cede their autonomy, so they should be wise about deciding whether to do so, and have a clear vision for the company in either case. Being capital-intensive and R&D-dependent, EMS companies can always use more funds. Founders should ask themselves whether going public is the best way to obtain those funds.

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Arab Health 2023

Podrain at Arab Health 2023

The 48th edition of Arab Health was held between 30th Jan and 2nd Feb of this year and Podrain was there.  Spread over 20+ halls we needed all of the 4 days of the event to visit everything.

Podrain at Arab Health

We visited Arab Health 2023 held in Dubai

Two of our customers were participating and it was great to visit their stalls and see some of our work in action. It was just as exciting to see so many innovative medical products from across the world. From European countries like Spain, Poland and the UK to the USA and Japan, there were a variety of countries. India also had a big presence at the event and for two lads from Kerala, it was particularly inspiring to see a large stall from the Start-Up Mission of Kerala at the event.

There was a large and busy India stall at Arab Health 2023

We’re seeing a lot of potential to support the export of Electronics Manufacturing Services for medical devices. As an  ISO 13485 certified company we hope to be well-placed to take advantage of opportunities.

 

Next year we hope to visit again and see more of our customers present.

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CES 2023

Podrain at the Consumer Electronics Show

Las Vegas hosted the 2023 edition of the Consumer Electronics Show last week (Jan 5-8) and representatives from Podrain were there.

It was great to see products we have worked on, showcased. (Some of our customers participated in the show). We also saw many innovative products and product ideas and hope to find a way to contribute to making them a reality.

A Cool Robot on display at CES

A Cool Robot on display at CES

As the premiere event for the industry in the world, CES attracts visitors from around the world. Even those new to the USA could navigate the event easily. The transport, logistics, and general flow of events were all professional and made the experience very smooth. Of course, with the location being Vegas, there were many attractions and entertainments outside the exhibition venue too.

India Pavilion at CES

India Pavilion at CES was at a prominent location

India had a good presence through the India pavilion. Since it was also the hall with new electronics products and gadgets as well as award winners were showcased, our capabilities got a lot of exposure. However, the participation from larger firms or even some of our MSME peers was quite limited. 

In comparison, China and Taiwan have a significant presence at the event. Speaking to potential customers, especially those based in the USA and Europe, we realised they aren’t aware of India’s capabilities as a manufacturing partner in Electronics. China, Taiwan and Eastern Europe, in that order, are top-of-mind destinations. So the current India presence was a good move and there is a huge opportunity for Indian companies to pitch their services since many of these companies are looking to diversify their supply locations.

All in all, it was a pleasure and a great learning experience to attend CES. The electronics manufacturing services industry’s future seems bright!  And at the next CES, we will hope to have many more product displays by our customers. 

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Ford vs Ferrari

Lessons from Ford vs Ferrari

The 2019 film Ford v Ferrari, starring Christian Bale and Matt Damon, can be called a racing movie, or a David versus Goliath movie, or a mismatched buddy movie. As an entrepreneur, I saw it as all of those – but I also saw it as a movie with lessons about how the perspective of management has to change and adapt as a business grows from a startup with a prototype to an established production enterprise.

The movie tells, in a fictionalized recounting of history: how, in 1963, the Ford Motor Company begins its pursuit of an audacious and near-impossible goal.

Ford v Ferrari Poster

Ford v Ferrari is an entertaining movie with valuable lessons

Henry Ford II is dissatisfied with the state of the company his grandfather founded, and wants to shake things up. Young hotshot executive Lee Iacocca comes up with an idea: acquire Italian car giant Ferrari and its famous stable of hand-crafted marques. Ford isn’t enthusiastic, but allows Iacocca to make the approach.

Enzo Ferrari doesn’t want to sell his company, and says so with some rather creative and colourful insults. Infuriated, his pride hurt, Henry Ford II seeks revenge. He declares that Ford will defeat Ferrari at the prestigious, brutal La Mans 24-hour car race – a race that no American car has ever won.

He hires Shelby Carroll (Damon), a former champion racer and now car builder, and Ken Miles (Bale), a hotheaded engineer and driver. The movie recounts how they went all out to design, build and finally race a car that would win at La Mans and restore Ford’s wounded pride.

Though the movie title is Ford v Ferrari, the rivalry between the two is really just the catalyst that sets the plot in motion. The story is really about the two mavericks, Shelby and Miles, and their experiences working with the Ford Motor Company as they develop the world-beating car that Henry Ford II demands. Both men are creative, open to experimentation, and have hands-on experience of how races – and racecars, and drivers – operate. Their confrontation is not with Ferrari, but the ‘company men’ of Ford: the men who adhere to the corporate way of doing things because they are convinced that the tried and tested processes and procedures are the best.

In a memorable scene, Shelby’s proposal, in a red binder, goes through fully fifteen mid-level managers around the Ford HQ. All of them are cautious, reliable, trustworthy, solid and intelligent men. But this is an unprecedented project with a high degree of uncertainty – i.e., a prototype.

Shelby was a racing driver before he became a car designer and builder, and instinct honed by years of experience tells him what needs to happen for the project to succeed. How does he know? He just does. But the mindset of Ford’s middle management is different. This, after all, is the place where mass production was perfected. What they want is reliable, repeatable, structured and iterative answers – in a word, predictability.

This scene beautifully illustrates the contrast between the mindset required for prototyping – flexible, creative, willing to trust that years of experience can speed up decision-making to the point where it almost seems like a miracle of intuition – and that required for production, where it is vitally important for every stage and step to be carefully planned, executed, supervised and documented.

Both perspectives are important to the success of any entrepreneurial effort. Shelby and Miles, however brilliant they were, would have been very unlikely to beat Ferrari at La Mans without the money, facilities and production power of the mighty Ford Motor Company at their backs. When they want something done, it gets done because the company has the muscle to get it done. At the same time, Ford would not (and historically, did not) have much success building a La Mans-winning car without the experience and experimental, creative attitude of Shelby and Miles. The company struggled to solve the basic challenge of keeping the car moving for 24 hours without overheating or catching on fire.

The movie shows that being flexible and open to new ideas, adapting and pivoting as needed is a vital attribute of management when developing prototypes and new answers to challenges. Once the solution is determined, making it consistent and repeatable demands the rigour and discipline of the production mindset. The wise manager cultivates the ability to do both – and the ability to know which one to apply in which situation.

I highly recommend Ford v Ferrari to my fellow entrepreneurs: it’s a highly entertaining movie with superb racing scenes, great acting and some very funny dialogue, and it delivers several excellent lessons about business, management and leadership that any businessperson can relate to.

Spoiler alert: 

So, did all the hard work of Shelby and Miles, and the hard lessons learned by the Ford Motor Company pay off? Yes – in 1966, the Ford GT MK II defeated Ferrari at Le Mans, and just to prove it wasn’t a fluke, they did it again the next year.

 

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The Goal

The Goal – A book that I highly recommend

The Goal by Eliyahu M Goldratt is among the most important management books of the 20th century. It has significantly influenced my journey as a professional engineer, employee and entrepreneur.

My first manager gave me the book when I started my career twenty-odd years ago. I am grateful for many gifts of learning from him, not least of which is that he placed this book in my hand. It made a huge impression on me, as did his act of trusting a green 24-year-old with so much responsibility and giving me a great tool to learn how to deliver.

The book is written as a novel, quite different from the majority of management books. Most of the action takes place in a manufacturing plant. The protagonist, plant manager Alex Rogo, is facing two crises: his supervisor has given him a 3-month ultimatum to turn around the plant’s fortunes, and his wife has left him. One day, Alex meets his old professor at an airport and begins a series of conversations that help him identify his true goals and navigate towards them. By using this novel-like structure, Goldratt is able to lay out several valuable ideas without preaching.

As an engineer on the factory floor, I could easily relate to the lessons of The Goal. The concept that stayed with me the most was what Goldratt calls bottlenecks. The common-sense principle is that the weakest part of the system constrains the efficiency of the whole system. But there are lessons everywhere in The Goal, and as I gained more work experience, I began to appreciate them even more. When the entrepreneurial bug bit in 2014, seeing the principles of The Goal in action influenced how I approached the setup and operation of the business.

Here are a few things I learnt from The Goal:

Know the ‘true’ goal

If we don’t have clarity on what we are trying to achieve, we may waste a lot of effort without making progress.

Identify the bottlenecks

Everything is interconnected, and the weakest part holds the stronger parts back. So, understanding how things are connected, finding and focusing on the constraints is vital to getting better results.

System is more important than its parts

Designing a system or process that is more efficient is key – even if it means that a few individual steps or parts are less efficient. In other words, when we think of optimization, we should think big, because local optimizations may interfere with each other.

Knowledge and help are everywhere if we just look

Alex Rogo is trying to do everything himself and failing miserably. Over time, he realises that he and his team – all people with years of experience – can do more collectively than any of them were able to do on their own. Even his wife, who knows nothing about his work, contributes to solving some of his most pressing challenges because she has a fresh perspective
 

A fresh environment can give birth to new ideas

The problems at the factory are overwhelming, and the questions posed by Alex’s professor seem unanswerable until Alex takes his son’s hiking club on an outing. He is then able to relate the problem of how to keep the kids together and reach their campsite on time to the issues he is facing at the plant.

Asking people can be better than telling people

Alex’s professor never tells or advises. Instead, he asks Alex and his team questions that force them to think and work things out for themselves. Because of this, they develop the habit of considering things carefully, collaborating, finding their own solutions, and figuring out the right questions to ask.

      The Goal was first published in 1984. Many great, transformational ideas about management, operations, systems and other concepts have come about in the four decades since then, but the fundamental lessons of the book remain relevant even now. They apply to any industry, even those that did not really exist in their current form in 1984, such as software and services. As the book demonstrates, the ‘bottleneck’ framework can even be used to deal with the challenges in our daily lives.

Over two decades after I first read it, The Goal is still very meaningful to me and I often gift it to others (most recently, our Head of Operations). I highly recommend The Goal to entrepreneurs, employees and anyone who is looking for a rational approach.

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PCB Components

Why We Need to Near Source Electronic Components

Why we need to Near Source Electronic Components

The past two years have offered some harsh lessons to all in the PCBA industry on the value of inputs. For a long time, the cost paid was the only consideration. The supplier might be located on the other side of the world, but if the cost was marginally lower, the choice was clear. But the pandemic changed all that. The cost of logistics / transport that used to be negligible ballooned beyond expectations. And for some parts – no matter what cost we were willing to pay – the availability just did not exist.

PCB Assembly

PCB Assembly

In India, we import more than 90 percent of the components required for assembling PCBs locally. These imports come from 4 countries – China, Taiwan, Vietnam, and Malaysia. A break down at one source country, as we saw in 2020 and 2021, drives up the cost of doing business for all.

Here’s our experience with supply trends for some of our major inputs:

Bare PCBs:  

Bare PCBs are the stronger point in our supply chain. We have seen reliable suppliers of Bare PCBs based in Tamil Nadu and in Gujarat. We (and many of our customers) have been able to source Bare PCBs in the past 18 months with no major issues. Supply lead times have remained consistent and price increases have stayed within tolerable limits.

Assembly Machinery: 

Machinery needed for PCBA is mostly manufactured outside India by majors like Yamaha, Fuji, Panasonic, and Siemens. While prices have stayed stable, lead times have increased considerably. What used to be available in 4 weeks now takes 4 months to get delivered. We’ve had to plan and order earlier than ever before for any capacity enhancements or repairs and replacements.

Other Components / Services: 

Integrated Circuits (IC’s), their component resistors, capacitors et al, solder paste etc. are mostly imported and have all seen prices and lead times zoom up. 52 weeks is now the new normal! Companies like Micron, TI, Cypress, Infineon, Latis, NXP have factories based in China, Taiwan, Malaysia, and Indonesia. When supply and manufacturing centers were shut and major ports slowed down, component shortages have visibly hit every industry from automotive to computers and mobile phones. Even stocks held by major distributors Avnet, Future, Arrow, or online suppliers like Digikey, and Mouser could not tide the industry over for long.

This is the area where India needs to attract investment and build manufacturing capacity. 

What Next:

The government has already recognised the need for building an electronics components manufacturing ecosystem. It is doing its part by offering Production Linked Incentive programs and other sops to encourage manufacture of components in India. It is now up to us in Industry to pick up the challenge and partner in building a strong local eco-system for components. 

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Agriculture Technology

Agritech: High-end Hardware Applications for Indian Agriculture

The global human population is projected to reach 9.8 billion people by 2050. Food security is a critical concern worldwide. Resource availability, distribution and access imbalance, higher agricultural and dairy output, and sustainability are major challenges.

The Indian agriculture sector is valued at over $370 billion. It employs 40% of the population and contributes nearly 20% of India’s GDP. Agritech is vital to ensuring our nation’s food security issues. A 2020 E&Y study estimated that the Indian agritech market could reach $24 billion in the next 4 years. Another study put the number at $35 billion.

Over 1,300 Indian startups are working in the Agritech space as of October 2021. They use AI, ML, IoT and other digital technologies to improve productivity, efficiency, revenue and profitability for farmers. In 2020, Indian agritech startups received $242 million in funding in just ten months.

These Agritech startups offer a range of products and services including sensors, signal conditioning, processing and security, power management, connectivity, and positioning. As a precision-engineering EMS manufacturer, Podrain works with IoT-driven Agritech startups to create the hardware required for smart farming. Some of the many applications are:

Precision agriculture and farm management.

Geospatial and weather data, IoT sensors for humidity, temperature and other variables, resource and field management, energy and water use, and robotics on farm equipment.

Farm infrastructure and equipment.

Industrial automation using machinery, tools and robots to seed, harvest, and handle materials. Greenhouse systems, temperature and humidity monitoring, environmental controls, irrigation and water management, heating and ventilation monitoring.

Dairy farm optimisation.

IoT sensors monitor the health parameters, milk production, eating patterns and nutrition, fertility and reproductive cycle of individual cows, and overall herd health. Diseases can be detected early. Digital milk analysis devices measure fat and water content, SNF and contaminants at every stage.

Cultivation and land use.

GPS data have applications in land mapping, soil quality, crop placement, soil sampling, weed identification, determining the right time to harvest, pest management and optimum pesticide use, and water availability and irrigation, among many others.

PCBs are a foundational component of IoT-based digital technology. Podrain has vast expertise in developing customised solutions and solving highly complex problems for our clients. We apply our talents to the vital area of agritech. It presents a large and growing opportunity to harness the power of digital technology to improve the quality and quantity of agricultural and dairy output, and the economic well-being of 40% of India’s population.

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