Conference report: European Supply Chain Convention 2006

Citation

Starkey, P. and Ling, J. (2007), "Conference report: European Supply Chain Convention 2006", Circuit World, Vol. 33 No. 1. https://doi.org/10.1108/cw.2007.21733aac.003

Conference report: European Supply Chain Convention 2006

Conference report: European Supply Chain Convention 2006

Cologne, Germany, October 4-5, 2006

The first European Supply Chain Convention took place in Cologne (Figure 7) on October 4th & 5th, and was well attended by approximately 180 delegates. The convention operated as two parallel sessions, separately covering topics of interest to those involved in the PCB and EMS sectors. This review gives a summary of the joint keynote presentations and the presentations given in the PCB related part of the Convention.

Figure 7 Koln Messe – venue for ESCC 2006

Day 1, joint keynote

The Convention began with a Keynote Speech entitled “Collaborating for success” by Patrick Schoeller, the Director of Central Direct Procurement at Hewlett-Packard. HP employed 300,000 people and had a turnover of $48 billion in three market segments, namely technology systems, imaging and printing and personal systems. HP is known for its printers and 137,000 of them are shipped every day. HP also ships 82,000 PC's every day and receives an on-line order every 9s. They have a modular supply chain with three routes to market known as volume direct, value direct and volume indirect. Objectives are to serve their customers globally, delivering the latest technology, with a wide range of products and services. Patrick mentioned the situation known as “Black Friday” in the States, which is the one day at Thanksgiving when America goes shopping. Wal-Mart sell an HP laptop PC for under $400, and for that one day Wal-Mart took 221 truckloads of them! HP's supply chain is multi-tiered, with complex relationships where delegation carries some risks, not least being their inability to pursue suppliers who do not deliver. They have a system where they buy the components and sell to the OEM. By operating their own BOM (Bill of Materials) HP knows component prices and can monitor costs. They operate an executive relationship with the component supplier and allow suppliers to “rate” HP, called a reverse scorecard, measuring performance, where both parties monitor each other's performance. Of their $67 billion procurement bill, $50 billion is done through e-sourcing.

Patrick mentioned Procurement Risk Management, something he started with his team, which is the management of uncertainty. Uncertainty includes unknown demand, unknown supply, and unknown market price, so they have developed tools to cope with that, based on statistical methods, and now have a financial technique adapted to procurement, whereby a commitment to volume by HP means that they take the risk, but they have measured that risk. The supplier does not carry the risk, and can thus offer reliable pricing and predictable delivery.

Of further interest to the assembled company was the final comment that, in 2005, HP bought $450 million worth of PCBs, of which 66 per cent came from Asia, 1 per cent from the EU, 8 per cent from Japan, and 25 per cent from the United States. Collaborate they do, successful they certainly are.

Day 1, PCB Session 1: partnership and outsourcing strategies

EIPC Managing Director Frank Smulders introduced George O'Kelley, VP of Global Procurement with Flextronics, who spoke about “Working with our partners”. He put a perspective on Flextronics' position with some basic numbers: $16 billion turnover, 72 manufacturing sites, 135,000 employees, 450 customers and 13,000 suppliers. With a global spend of $14 billion, Flextronics was able to leverage its worldwide supplier relationships to achieve competitive pricing and supply chain flexibility for their OEM customers. Strategic partnerships led to increased levels of support and closer working relationships created differentiated value and provided competitive advantages on both sides.

Dr Hayao Nakahara followed with a broad overview of Asian Fabrication Competencies, beginning with the observation that “The 21st Century is Asia's Century”. 83 per cent of an estimated world PCB production of $42 billion came from Asia. Interestingly, of the $10 billion produced in China, only about 9 per cent came from Chinese national companies. The world's top 20 manufacturers accounted for $14.6 billion and the names at the top of the list were Japanese: Ibiden, Nippon Mektron, CMK, Shinko Electric. In terms of growth, although Japan, at 9 per cent was well behind Taiwan at 32 per cent and China at 27 per cent, massive investment continued to be made – $3.3 billion was estimated for 2006-2007. Overall, PCB industry growth world-wide was about 15 per cent, although recent price increases exaggerated the figure slightly. Dr Nakahara showed a series of images of big, shiny, new manufacturing complexes, all in China. There was no way that Europe could follow the Japanese model, since with the exception of AT&S there was no-one with the financial resources to make substantial investment. In Dr Nakahara's opinion, service was the key issue for the survival of European PCB fabricators.

Day 1, PCB Session 2: innovations in PCB design and manufacture

Pete Starkey introduced three speakers whose presentations left the audience in no doubt that Europe continued to be a real source of creative thinking and innovation.

Joerg Sperling described a technology developed by Jumatech in Germany which enabled high-power components to be cost-effectively integrated with fine-pitch digital electronics on the same circuit board without having to etch heavy copper layers. On conductors where high current capability was required, copper wires, either flat or round in section, were micro-welded to tracks etched in regular foil then laminated into the structure. The technique could be used to reduce size and layer count and to eliminate connectors. No additional design tools were required and many applications had been identified, particularly in automotive electronics.

On the subject of eliminating yield loss through mis-registration, Andrew Kelley of UK-based Xact PCB described a knowledge-based expert system which enabled the automatic capture, analysis and utilisation of measurement data from manufacturing processes and allowed the pre- production engineer to model the PCB build, simulate and predict the linear and non-linear material movement which would take place through manufacture, and compensate the artwork to give a right-first-time product. Production trials with a major European manufacture had shown dramatic yield improvements.

ILFA, in Germany, typically have 600 PCB orders in manufacture at any time, and load 60 new jobs every day. Engineering Director Alexander Suellau introduced the concept of incorporating passive RFID chips directly into each panel to enable fully- automated real-time job monitoring and traceability throughout the PCB manufacturing process and beyond. Experimental batches of double-sided and multilayer boards had been successfully produced with RFID chips auto-inserted into blind holes and sealed with a UV-cured resin. Even after three soldering operations, it was still possible to write and read data to and from the chip. The target cost per board was less than 10 ecent.

Day 1, PCB Session 3: new and maturing markets for PCB manufacture in Europe

EIPC Technical Director Michael Weinhold chaired this session and his first speaker was Mark Hutton of BPA Consulting, on the topic: “Printable electronics, opportunity or threat?” He reviewed existing and emerging technologies, with the emphasis on ink-jet printing, and described some of the features of the proprietary processes of CIT and TTP. In his opinion, it was a misconception that printed electronics were a replacement for conventional technology. Rather, the concept opened up a whole range of new market opportunities, particularly in the packaging industry where the demand for “smart-label” products was growing rapidly.

Rolf Becker from Siemens-VDO reviewed trends in the automotive industry. He predicted that electronics within the vehicle architecture would increase from today's 30 to 45 per cent in the future, with a corresponding increase in the requirement for printed circuits. The focus would shift from standard technologies to flex circuits and complex multilayer and Siemens- VDO would actively pursue a zero- defect policy. It was encouraging to hear that 70 per cent of Siemens' current PCB demand was ordered from European locations, and that 80 per cent of product designs were developed in Europe. Despite their cost disadvantages, European suppliers had a strong strategic position as consequence of their flexibility, engineering support and technical capability but, inevitably, Asia's share would progressively increase.

Martin Cotton captured the imagination of the audience with his exploration of prospects presented by the incorporation of RFID into the PCB. The earlier presentation by Alexander Suellau had already demonstrated what he had predicted two years previously, and he envisaged a whole range of future scenarios where functionality could be added by interfacing embedded RFID to the active elements of the printed circuit assembly. Major opportunities existed for applications in security and anti- counterfeiting, and RFID offered enormous potential as a low-cost alternative to Bluetooth as a wireless data portal.

Day 1, PCB Session 4: fearless predictions

Chris Jorgensen, Senior Editor of CircuiTree, introduced the final session of the first day, entitled “Fearless predictions” in which the Three Wise Men of the industry: Hayao Nakahara, Hans Friedrichkeit and Walt Custer gave their analyses and opinions of where the world market was heading. Dr Nakahara looked at microvia HDI, reviewing its development since its origin in Siemens as early as 1983, to the present situation where monthly production of laser-drilled 2þnþ2 microvia was approaching one million square metres, 80 per cent as motherboards, 20 per cent as IC substrates, and growing at 13 to 15 per cent annually. Manufacture was centred in Japan and Taiwan and growing in China. He predicted that Thailand would be an area of rapid growth, but doubted whether any significant challenge would come from India.

Hans Friedrichkeit examined opportunities for printed circuit manufacture in Eastern Europe based on a detailed demographic analysis and GDP breakdown, country-by-country. Although a number of PCB plants already existed, they were on average very small and he did not foresee the prospect of growth on a scale in any way to parallel what has happened in China, or to the extent to which automotive manufacture and EMS have developed in the region. The situation in Russia was not typical of Eastern Europe in general. Although there were an estimated 30 PCB shops, only about one third were privately owned and one third were effectively top-secret military facilities. Eastern European labour costs were low, for example, those in Ukraine being similar to those in China and only a fraction of equivalent German costs. There was also a growing local market, but Mr Friedrichkeit saw only limited scope for the region to become a significant supplier of PCBs to EU countries.

Walt Custer's view was that the world industry was back in growth mode, and inventory growth was in line with the growth in production. Q1 of 2006 had been strong globally but demand had weakened in Q2, and large increases in the prices of metals and other PCB material costs were major concerns. He believed that the Western European printed circuit industry would continue to supply “speciality” markets: quick turn, short run, prototypes, military, medical and other “sensitive” or high IP content areas, and to provide design and other support services. Passing on major cost increases would be a key challenge. He reminded delegates to be aware of the “Priceberg effect”: being competitive required a much deeper understanding of both visible costs and hidden costs within the supply chain. Above the water were the visible costs: labour, materials, and logistics. However, it was necessary to take the analysis down below the surface to the hidden costs associated with lead times, missed sales, service levels, proximity to customers, country risks, currency risks, inventory costs, and quality costs; factors which were all part of the real total landed cost.

Day 2, joint keynote

George O'Kelley, VP of Global Procurement with Flextronics, took the floor once more to open the second day's proceedings with a keynote presentation which examined the challenges faced by Flextronics in driving for growth after a flat period of three years. Their target was to increase turnover from $16 to 25 billion by 2008. With a company maxim “Creating value that increases customer competitiveness” and with the knowledge that the EMS and ODM markets have substantial ongoing growth potential, Flextronics were planning new plants in Ukraine and India. Why these locations? Mr O'Kelley explained the rationale, based on a consideration of several factors: customers, pricing, supply chain, logistics and, above all, the capability and availability of people. For example, there were enormous cultural differences between India and China, therefore a significantly different approach was necessary: local management was a key element. Success depended on open communication, a common set of goals for all parties involved, doing the homework up-front to understand all of the materials and people issues, making the decision, then being dedicated to that decision and always striving for continuous improvement in operations and communication.

Day 2, PCB Session 5: Compliance – RoHS, WEEE and More

Professor Martin Goosey, is Industrial Director of the Innovative Electronics Manufacturing Research Centre (IeMRC) at Loughborough University in the UK, and is someone who has been involved with WEEE and RoHS since their inception (Figure 8). Remarking that end-of-life electrical and electronic equipment was the fastest growing waste stream in Europe, Martin pointed out that RoHS, originally introduced as part of the WEEE regulations but now a separate single-market directive, was intended to reduce the impact of end- of-life electronics (EEE) on the environment by restricting the use of defined hazardous. Reviewing the listed substances: he provided illustrations of where they could be found in electrical and electronic components and assemblies; some obvious, some relatively unexpected – especially in seemingly innocuous examples of metal finishes where trace amounts of co-deposited stabilisers in plated tin finishes could potentially push them outside the limits of acceptability.

Figure 8 Martin Goosey (IeMRC) and Len Pillinger (BSI)

In many instances, interpretation of what materials contained hazardous substances was straightforward, but clarification of the terminology of “homogenous” materials, to which concentration limits of proscribed substances had been applied, presented many challenges and much discussion had taken place regarding what could and could not be considered capable of being mechanically disjointed into different materials.

Key issues for suppliers were to ensure compliance of their own product, but equally to ensure compliance in the products which they purchased, and an integrated approach was essential. Misinformation was a possible consequence of the long international supply chains typical in the electronics industry. Although, in UK law, if “due diligence” could be demonstrated it was possible to pass responsibility for non-compliance along the supply chain, this was not the case in other EC states. The new IPC1752 Materials Declaration Management procedure offered a format for consistent material declaration data exchange between supply chain participants, and it was hoped that this would become adopted universally. Martin's concluding comments made the point that RoHS is just one step towards a whole philosophy of green manufacturing and sustainability, where the principle of “cradle to cradle” supersedes that of “cradle to grave”.

Len Pillinger from British Standards Institution described suppliers' obligations within the supply chain, both to themselves and to their customers, and the role of BSI in helping people to understand and to comply with the RoHS Directive. In the UK, the National Weights and Measures Laboratory would be responsible for the enforcement of RoHS compliance, although their resources were limited. However, it could be presumed with reasonable confidence that competitors would scrutinise each other's observance of the regulations and be keen to report any non-compliance. There had been some confusion about product categories and exemptions, and it seemed that there was a general lack of knowledge of basic materials science. A relevant example was the assumption that an aluminium heat sink contained only aluminium, whereas it could in fact be alloyed with more than the tolerated percentage of lead. There remained a strong anti-RoHS lobby, from bodies such as the US military, and USAF Airworthiness Advisory AA-05-01 took the cautious line: “The safety of USAF equipment must not be sacrificed in the transition to lead-free solder practices. Though there are many alternative solder alloys available to replace traditional tin-lead, none of them has passed the reliability testing required of aerospace-quality hardware.” From BSI's position as a standards authority, a significant consequence of the elimination of lead was that over 1000 test methods, particularly those for solderability and thermal shock testing, were potentially invalidated. A suggested fix was to define two reference alloys: SAC 305 (melting point 217 8C) for reflow-type processes, and Sn0.7Cu (melting point 227 8C) for wave-type processes, to enable people to demonstrate their products' suitability for lead-free soldering, and a list of supplementary criteria so that people could continue to use established standards. BSI Product Services offered a “RoHS Trusted Kitemark” scheme to help manufacturers to understand the RoHS Directive and to demonstrate to their customers that they are taking all reasonable steps to comply with it.

Gordon Biezeveld, a Project Leader at UL International (Netherlands) BV, discussed restricted substances on a world-wide basis and how UL would be able to help companies comply. Even today manufacturers could, through the application of a global compliance strategy, take dramatic steps to improve efficiency, control costs and seize market opportunities beyond RoHS compliance. Manufacturers mostly wish to manage their own compliance strategies, but some organizations may benefit by engaging outside expertise in global compliance. A respected third-party could augment a manufacturer's existing resources and in-house knowledge, providing it with the experience and capabilities needed to meet impending timelines and to guide ongoing efforts. Such organisations could look for partners like UL Inc. with deep experience in global standards, product testing and management systems. Gordon outlined the five key steps to compliance as;

1. 1.

   Define product and markets

2. 2.

   Determine compliance requirements

3. 3.

   Develop conformity assessment strategy

4. 4.

   Implement the plan

5. 5.

   Ensure continued compliance

Compliance planning should not cease after strategy implementation. Rather, ongoing commitment and vigilance were required to keep the organization's compliance efforts on track.

Day 2, PCB Session 6: future technologies – invented in Europe

Pete Starkey introduced four presentations illustrating some of the new applications being developed in Europe and the significance of these new technologies for the future of Europe's printed circuit industry.

Dr Lars Martin reviewed 30 years evolution of rigid-flex circuit technology in Ruwel, to the stage where rigid-flex circuits could incorporate up to 20 layers of flex, sequential build up, high density interconnections, blind and buried vias, copper-invar-copper layers and heat sinks – with many of these attributes available in combination, together with a whole range of surface finishes. Ruwel's proprietary Yellowflex rigid-flex construction was now available in a high-temperature- resistant version compatible with lead- free soldering.

Isola's Alun Morgan clarified the principal issues relating to high- frequency laminate properties by taking a back-to-basics approach to explain some extremely complex electrical characteristics. In plain language and with the help of samples of material components and clear diagrams, he unravelled the mysteries of signal loss and bandwidth. As transmission frequencies continued to increase, not only the dielectric properties of the base material but also the influence on skin-effect of bonding treatments on copper surfaces became limiting factors in maintaining signal integrity.

Steve Thomas of Conductive Inkjet Technology discussed the principles of production of flex and rigid PCBs by digital printing. Although direct deposition of conductive materials by inkjet was an attractive route in theory, in practice the inks generally available gave limited conductivity unless sintered at temperatures incompatible with organic substrates. Nanoparticle silver inks offered a possible solution. However, CIT had chosen to investigate a practical process which produced the conductor image with an ink-jetted catalytic resin, on which was subsequently deposited a metallic film of copper or nickel by electroless plating. To demonstrate their capability, they had developed an integrated reel-to-reel process line, able to produce copper-on-polyester RFID antennae at a rate of 100m²/h.

Sebastian Aubry, from SPCI, a division of the French CIRE Group, demonstrated what could be achieved in high-speed signal control by modern applications of the Multiwire principle, where a polyimide-insulated and adhesive-coated copper wire of 63 or 100m diameter was tacked point-to- point on to an adhesive coated ground plane, then laminated and processed through the same route as a normal multilayer. Because of the uniformity of the wire and the absence of interstitial via holes, skin effects and impedance characteristics were more easily predicted and controlled than in conventional constructions. The international VLDI2010 programme (VLBI is Very Long Baseline Interferometry, used in geophysics and geodetic monitoring) depended heavily on Multiwire technology to achieve very specific PCB properties. An exciting new development was the ability to substitute wires with optical fibres for electro-optic applications.

Day 2, PCB Session 7: new laser technologies for European PCB processing

This session on new laser applications was moderated by Steve Gold, Editor of PCB007.

John Kennedy of Coherent explained how the limitations of conventional de- panelling techniques, which relied on V- scoring or break-out tabs and often resulted in stress-related damage to laminate and components, could be overcome by laser cutting. Coherent had drawn upon their long-term experience to develop an optimised de- panelling system using CO₂ laser technology. Their equipment was built around a slab free-space resonator with a laser wavelength of 9.4m and short pulse rise-and-fall time. By operating in a multiple-pass mode, excellent edge geometry could be achieved with the minimum of charring or re-deposition of debris or breakdown products.

LPKF's Innovation Manager, Dr Mark Huske, discussed applications of laser technology in the cutting of flexible and rigid printed circuit materials. Techniques based on the NdYAG 355nm UV laser gave excellent results on polyimide flex and had already become significant in coverlay production. UV wavelengths were not suitable for glass-reinforced materials, so alternative methods using CO₂ lasers had been developed in parallel for cutting FR4. Obvious advantages of laser-cutting were the ability to cut complex shapes without stressing the material and the small effective tool diameter. Of particular benefit to the flexible circuit manufacturer was the elimination of the cost and lead-time associated with hard tooling.

Uwe Altmann explained how Orbotech had approached the challenge of fitting images precisely onto distorted surfaces in the development of their laser-direct- imaging systems. Their latest equipment was capable of resolving 15m lines in 25m photoresist, with the facility to dynamically scale the image to achieve perfect registration with existing features on the panel. Now that suitable high sensitivity solder resist materials were available, laser-direct-imaging had enabled solder mask registration as tight as 25m annular ring to be consistently achieved, with 20m annular ring as a roadmap objective.

Day 2, EMS and PCB Joint Session 8: Round Table Discussion: Competitiveness of the European Supply Chain

Figure 9 John Ling discussing the Prosurf project

Figure 10 Hayao Nakahara and Hans Freidrichkeit

Philip Stoten, Editor of EMS Now, moderated a lively session of open discussion in which a panel of market analysts and senior executives of major OEM, EMS and supply companies discussed the future of Europe in the world electronics industry. Participants were Hans Friedrichkeit, Dr Hayao Nakahara, Udo Bechtloff, Julian Coates, Patrick Brunet, Tilo Brandis, Rich Heimsch, Luc Godefroid, Michael Brianda, Erwin Brunner, Roland Chochoiek and Peter Bollinger (Figures 9 and 10). Some interesting opinions came out of the discussion: that Europe needs to be better organised to out-innovate its competitors, and to be able to connect those innovations with local manufacture; that Europe is not doing a good job of marketing its capabilities, and is not focused sufficiently on using its leverage effectively; that world competitiveness could result from a combination of Western European and Eastern European solutions; and that the European PCB industry is not getting its fair share of profit out of the supply chain. This Round Table discussion brought the two days to a close, but raised a large number of issues which affect all involved in the European supply chain for the electronics industry.

Pete Starkey and John LingOctober 2006