The PCB, a strategic and critical component of electronics

Citation

(2011), "The PCB, a strategic and critical component of electronics", Soldering & Surface Mount Technology, Vol. 23 No. 3. https://doi.org/10.1108/ssmt.2011.21923caa.004

The PCB, a strategic and critical component of electronics

Article Type: Industry news From: Soldering & Surface Mount Technology, Volume 23, Issue 3

We have seen that business has migrated to the Far East but in case of need always the European manufacturers have been asked to (and have been able to) help. Meanwhile, it becomes apparent that the remaining supply base in Europe may not be able to do so in future. Far Eastern suppliers, this year clearly have shown that they prefer their own local and more profitable markets. They cancelled even long-standing relationships with European customers because being too busy. So, the remaining European suppliers enjoyed a rapidly growing business which contributed to the fast recovery of 2010.

The purchasing policy of many companies should be revised as well. At least the total cost of ownership should be taken into consideration. The PCB is not the commodity as it is regarded by many purchasing officers. Quite to the contrary: it is a custom made component that connects all other components in the assembly and actually enables the finished electronic product to function properly. The extensive procedures for approval of a manufacturer are underlining the importance of this product that cannot and should not be compared with bulk products like steel bars.

Other advantages offered by a supplier being close-by are: assistance when developing a new product, efficient cooperation during new product introduction (NPI), speedy help in case of fluctuations in demand, fast help in case of need and attendance for the product until phase out.

Technical advice based on expert knowledge during the concept phase can save much more money than the cheap price in a low-cost country.

Designs have become more complex but more often than not they are less than perfect. Any responsible PCB manufacturer has to invest a lot of time to detect flaws and review the data received. Experience and expert knowledge of the staff is an invaluable asset for this purpose. Staff fluctuation in Europe is much less than in Asia thus guaranteeing continuity of a high level of quality.

The ideal group during the concept phase should be a three-member party: the OEM supplying the design, the PCB manufacturer and the EMS provider for the assembly. Such a group was common in those days when OEMs still had deep integration of most – if not all – process steps. Such a group of experts will come up and justify the terms “design for manufacturing”, “design for quality” or “design for cost”, just to name a few. Too often it is forgotten that during the design stage 80 per cent of all future cost incurred are determined.

All this is reflected in the price of a PCB; however, the value of this precision product usually is not recognised. It is obvious that the ultimate target for any procurement officer is to obtain a favourable price. However, in many cases it is forgotten that “price” is only part of the truth but “cost” is the name of the game. Logistics, buffer stocks, financing, expenses for communication and quality are just a few of the additional items that usually are not considered – not talking about political and legal consequences which may influence the cost of sourcing.

Transfer of production to low-cost countries is not only a mean to reduce cost; it is directly linked with the loss of know-how. The idea to move production elsewhere and keep design here is bound to fail as the support of production eventually will follow to the new location. And this in addition is linked with a further risk of losing intellectual property.

Logistics is another potential trap. The eruption of volcanoes in 2010 had their impact on air transport. Diseases like birds flu interrupted production, reduced demand during the financial crisis influenced cargo space available in containers and the frequency of ship schedules. These things all are well known, but as long as nothing happens everybody is happy – the abrupt awakening comes only when the case arises and it will have dire consequences to the commercial success of a company.

Lower costs very often are linked with lower standards. Occupational safety, responsible use of resources, ecological awareness are self-evident to us – but in Asia? A company certified according to ISO 14000 should not be proud of this document if the difficult side of procuring the necessary components is transferred elsewhere.

Our industry – like others – has reached a cross-road: division of labour, globalisation, easy communication and logistics accelerated changes. Our industry has become a mature one. Therefore, it is inevitable that technology and know-how is developed in other regions. But, we have to be aware that we are losing technology. Already certain technologies like the cell phone business have left Europe; others, like IC-substrates never came to Europe.

Another surprising aspect is that European companies shift their business to Asia while at the same time Asian companies come and invest in Europe in order to be closer to their customers and markets. What we now need is a new concept for the supply chain. Closing ranks, earlier exchange of information, reducing expenses and improving logistics will obtain much better results and create higher value for money than procurement around the globe. The good old rule to have at least two approved suppliers in different locations of the world was dropped and in many cases it backfired already.