...Electronics Contract Manufacturing: Global Production and the International Division of Labor in the Age of the Internet Boy Lüthje Institute of Social Research Johann Wolfgang Goethe-Universität Senckenberganlage 26 60325 Frankfurt Germany E-mail: luethje@soz.uni-frankfurt.de Submitted for publication to Industry and Innovation – special issue on “Global Production Networks, Information Technology and Local Capabilities”, coordinated by Linsu Kim and Dieter Ernst Comments welcome, please do not quote December 2001 2 The role of information technology for production networks in developing countries cannot be assessed without an analysis of the profound changes in the productive structure of global capitalism. In contrast to the general perception of the “informational economy” (Carnoy e.a. 1993, Castells 1996) as service- or science-based, it has to be stressed that in the "new economy" manufacturing continues to matter (Cohen/Zysman 1987). In the electronics industry, a new model of outsourced manufacturing has emerged as a centerpiece of globalized production networks: Contract Manufacturing (CM) or Electronics Manufacturing Services (EMS). This form of network-based mass production closely linked to the emergence of the “Wintelist” (Borrus/Zysman 1997 model of competition and the rise of “fabless” product design companies in key sectors of the information technology (IT) industry. Our analysis of electronics contract manufacturing explores three interrelated...
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...Table of Contents INTRODUCTION AND MAIN ISSUES 3 ANALYSIS 4 Qualitative 4 Quanitative 5 Breakeven Point (BEP) 5 Flexible Budget 6 Variances 7 RECOMMENDATION 8 Encourage, motivate, reward and recognize 8 Cellular Manufacturing System 8 Implement new accounting method 9 Extend the contract 9 ACTION PLAN 10 REFERENCES 12 INTRODUCTION AND MAIN ISSUES Danshui was a contract manufacturer that assembled electronic products for companies wishing to save labour costs by locating in southern China. Because of high demand for iPhone 4, Apple had contracted with Danshui to assemble iPhone in Plant No. 2. The contract need Danshui to assemble 2.4 million iPhone in the period between June 1, 2010 and May 31, 2011. Wentao Chen, manager of Danshui Plant No. 2 was worried because in the third month of the contract production was only 180,000 units per month. Suppose to produce 2.4 million iPhone its need 200,000 units per month. After preliminary budget has come out, the company loss of $672,000. The main issue of this case is the break contract between Danshui and Apple. The contract called Danshui to assemble 2.4 million in the period of one year, but Danshui only can produce 180,000 units per months. If Danshui still can produce that amount, it can’t reach 2.4 million in one year. This might happen because Danshui cannot find people to hire, even though they have raised wages by almost 30%. Another reason is they have problem with the...
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...CHARTER CONTROLS | Final Report | ENTRP 492Cole CheslockTyson Jones Kalsun Romero-GoertzDecember 4, 2011 | Table of Contents DISCLAIMER 3 ACKNOWLEDGEMENTS 4 EXECUTIVE SUMMARY 5 INTRODUCTION 7 COMPANY OVERVIEW 7 INDUSTRY OVERVIEW 8 External Environment 8 Key External Drivers 9 METHODOLOGY 10 SCOPE 11 FINDINGS AND RECOMMENDATIONS 12 GOVERNMENT CONTRACTS 12 OEM CONTRACTS 14 ACCOUNTING METHODS 16 ORGANIZATIONAL STRUCTURE & PLANNING 19 ONLINE PRESENCE & BRAND AWARENESS 23 Social Networking 24 MARKETING PLAN 27 Competitive Analysis 27 4 P’s Analysis 28 Industry Segments 28 CITATIONS 32 APPENDIX 33 To-Do List 33 Manufacturing Metrics 34 PRO FORMA INCOME STATEMENTS 35 ------------------------------------------------- DISCLAIMER This material is based upon work supported by Washington State University. Any opinions, findings, conclusions, or recommendations are those of the authors and do not reflect the views of Washington State University, its employees or its administration. ------------------------------------------------- ACKNOWLEDGEMENTS Our team would like to acknowledge and extend our heartfelt gratitude to the following persons who have made this report’s completion a possibility. We would first like to thank our team mentor and advisor Albert Christensen and Kristin McMahon, who provided our team with much needed support and assistance in reviewing our papers. We would also like to thank our professor Mr. Pickett...
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...its production in China, would invest $100 million to bring some of its Macintosh manufacturing back to the U.S. next year. Apple's move isn't surprising. It follows a continuing pattern of American companies bringing manufacturing back home due to rising labor, supply and production costs in China. "China isn't cheap anymore. And you also worry about the political risks and the environmental cost of doing business there," said Anderson, whose firm creates consumer drone technology. He moved his company's production out of China two years ago, setting up manufacturing facilities in San Diego and Tijuana. Anderson said making his products closer to his customers has actually turned out to be cheaper. Instead of manufacturing in bulk as he did in China, he ramps up production as orders come in. He also saves on shipping and other distribution costs. "Coming back to the U.S. has been a huge win for us," he said. Apple's move may not generate many more new factory jobs, though, since tech manufacturing today is so automated, he said. "It's not like you need workers sitting on workbenches to assemble computers," Free said. Also, since so much of the country's manufacturing base has eroded over the years, finding American workers with the skills to immediately start on the factory floor can be a challenge, he said.The easiest way for Apple to jumpstart production here would be to contract with its existing Chinese manufacturer Foxconn Technology Group which already has two...
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...Continue to Manufacture Products in the USA? Jacob Bromwell has manufactured all its products in the USA since its inception in 1819. Although manufacturing in the United States is not the most cost-effective solution, our “Made in USA” appeal is a critical component of our marketing message and distinguishes us from our direct competitors.[i] Furthermore, “Made in USA” is becoming increasingly embraced by younger, more stylish consumers.[ii] This is a major competitive advantage, and therefore, we will continue to manufacture all our products in America. How Will Jacob Bromwell Improve Operational Efficiency? We have determined that it is more cost-effective to shut down our plant in Michigan City, Indiana, and outsource our manufacturing to a third-party contract manufacturer in the United States. After months of research, we have secured agreements with contract manufacturers. These companies will manufacture, assemble, and label our products at their facility. These companies also specialize in short-run metal stamping, and are experienced, knowledgeable, established (some in business for over 35 years), and are cost-competitive. Under this new model, the manufacturing operations of the business that were previously done in-house will be outsourced, including: product manufacturing, component parts manufacturing, product assembly, and labeling. During Year 1, we will take advantage of MistyMate’s large warehouse facility to store, pack, and ship all of...
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...TIMOTHY A. LUEHRMAN Stryker Corporation: In-sourcing PCBs In late May 2003 executives in Stryker Corp orations Instruments business were actively considering a change in their sourcing strategy fo r printed circuit boards (PCBs), a key electronic component of many of Stryker Instruments medi cal products. Currently, Stryker purchased PCBs from a small number of contract manufacturers. The Instrument s business anticipated spending more than $10 million in each of the next two years on PCBs, an amount that would increase as the Instruments business grew. In re cent years, the performance of some contract manufacturers had been unsatisfactory with respect to quality, delivery and/or responsiveness and Stryker had repeatedly found itself looking for new suppliers. More generally, contract manufacturers tended to operate on thin margins with scant capital. Ba nkruptcies were not uncommon, and even without bankruptcy, a financially weak supplier was simply less reliable. Given recent events and the shaky appearance of several current suppliers, Stryker Instruments had resolved to address the issue. Stryker Instruments manufacturing managers stud ied three options for improving the situation. Option #1 was to maintain the current basic...
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...Broadening Your Perspective Broadening Your Perspective Ideal Manufacturing Company is an Illinois-based company which produces a farm and agricultural related machinery products. Research department is the only department in the company that has been contributing a new products for several years. The research department facilitates only in-house manufacturing departments and assist them in producing farm and agriculture related machine products. The Ideal Company has never sold his research department’s services outside Because of the increasing cost of this department, company is now considering to offer its services outside to absorb the increasing cost. In order to gain the control of its research department management has decided to implement an activity based costing (Kimmel, Weygandt, & Kieso, 2011, "Broadening Your Perspective"). a) Overhead Rates for Activity Cost Pools There are four different cost pools based on the activities of the research department, which includes Product Development, Prototype Testing, Market Analysis and Product Design with the total annual costs of $3,600,000, $1,400,000, $1,050,000,and and $2,350,000, respectively (Kimmel, Weygandt, & Kieso, 2011, "Broadening Your Perspective"). The management should look into the overhead rates based on activity for each pool, which would help the management to take a decision and control the cost. The rates and calculations for each activity cost pool are shown below. Activities...
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...Webster University Abstract Recently there has been a great deal of discussion as to whether companies should continue producing in-house or outsource their manufacturing needs. Great motivation towards outsourcing is directly linked to the cost advantages that such a factor will provide. The cost advantages, as well as quality measures of continued in-house production or outsourcing is determined by the best interest of the company. This paper examines causes and after effects of outsourcing manufacturing activities. Firms that have made a reputation of producing products in-house often consider cost reducing manufacturing firms in terms of outsourcing projects. Often when companies choose to move forward in outsourcing a manufacturing need, they too have to consider how this will affect the quantity and wellbeing of its employees. Closing a plant and/or deciding whether to offer any severance packages or job placement aid for the soon to be displaced employees need be of high priority. Background Why Companies are Outsourcing their Production Needs Outsourcing has become an increasing trend amongst many manufacturing companies searching for advantages over their competition. Steadily looking for ways to offer the lowest possible prices to the price demands of their customers, is the motivation behind the search. The American company population found outsourcing was a viable option twenty years ago and to this date it still reigns. Outsourcing however to other countries...
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...Busiku Siagwelele Relson TABLE OF CONTENT 1.0 Executive Summary This report aims to prioritize, analyse and evaluate the current issues of Jot management. The report starts with te 4main issues Jot is currently facing, the issues have been categorised in two, (i) issues that threaten the business (ii) plans relating to expansion and market. For the first issue, which is late delivery of Christmas product, the team recommend that Jot should distribute to the product preferring the major customers over smaller retailers. The second issue, fault in new flying spaceship, insulation should be improved. Near soring to voldania, Jot should implement the proposal as manufacturing in China is expensive. Jot should also accept the proposal to launch a new product range. Finally, ethical issues are addressed and recommendations are made. Financial and strategic analysis have been added in the appendices. INTRODUCTION Jot was established in 1988, it is a company that is specialized in relatively small range of 34 products aimed at only 2 age groups (the children between 3-5 and the children between 5-8). 3.0 Industry background Toy market is a highly seasoned market with most sales occurring in pre – Christmas periods (October – December) 86% of the world’s toys are Prioritisation of issues facing jot The 4 main issues may be categorized as: Top priority – late delivery of Christmas product The top...
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...Airplanes for commercial use and cargo delivery. Boeing Company also engages in different sectors of defense, space, engineering and security industry. They are more known for their work in the earlier. They produce aircrafts for numerous commercial airline companies of numerous countries. The Commercial Aircraft Manufacturing Industry is an extremely competitive industry. According to Huber (2012), there are at least a dozen competitive players in this industry. Companies such as Airbus, Cessna Aircrafts, Dassault Aviation, Bombadier and many more are competing with Boeing. These corporations are aggressively attempting to increase their market share every year. A. Industry Trend The Commercial Aircraft Manufacturing Industry is currently and will continue experiencing a rise. According to Radical Departures (2013), the market outlook reports of the top aircraft manufacturers in the world foresee the industry to grow consistently for the next two decades. Simultaneously, the aircraft industry will also grow. The Aircraft manufacturers predict the world’s aircraft fleet to double in amount over the next twenty years. The Growth Trend of Commercial Aircraft Manufacturing Industry is due to the increasing need of Airline Transportation companies for new aircrafts for business use. These companies seek to replace the aging aircrafts being used. The main reason for the companies to desire to replace their current aircrafts is due to maintain the efficiency and smooth flow of their...
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...Running Head: Riordan Manufacturing Learning Team C: Richard Gioia, Tifany Read, Timothy Bergeron BSA/310 6/22/2014 Riordan Manufacturing Incorporated owned and operated by Riordan Industries, which is a Fortune 1000 enterprise with current revenues in excess of $1 billion US dollars. Riordan Manufacturing currently employs 550 people and has projected annual earnings of $46 million US dollars. Riordan Manufacturing is broken up into multiple plants. Plastic beverage containers are currently in production in Albany, Georgia, custom plastic parts production is in Pontiac, Michigan, and plastic fan parts production is in Hangzhou, China. The research and development facility currently resides at the corporate headquarters in San Jose, California. The majority of their customers are automotive parts manufacturers, aircraft manufactures, the Department of Defense, beverage makers and bottlers, and appliance manufactures. The mission of Riordan Manufacturing focuses in achieving and maintaining reasonable profitability to assure that the financial and human capital is available for sustained growth. Using Six Sigma, leading edge R&D and exceeding ISO 9000 standards, are the attitudes and abilities by which Riordan Manufacturing are defined. Riordan Manufacturing will continue to lead the industry in using polymer materials to provide solutions to meet their customer’s challenges. The responsibility of the Stakeholders for the Riordan Manufacturing Service Request is...
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...1. Despite its growth and size, why isn’t Inventec very profitable? Inventec isn’t a profitable company due to three reasons: increased competition, loss in profit margin from notebook manufacturing, and loss of contracts. Inventec was one of the first Taiwanese companies to open an original design and manufacture plant in China in 1991. During that time, the company had been successful in the venture. However, in 2001, the Twainese government eased the restrictions on high tech investments in China to capitalize on the lower operating cost. Additionally, Inventec lost some of the contract that it held with Cisco to manufacture VOIP phones. All these decisions affected Inventec’s stock and their profitability. 2. What are the drivers of the average profitability of the Original Design and Manufacturing industry? The average profitability of the ODM industry is due to their ability to produce products at a lower cost. Clients of the ODMs would take the product specifications and have competitive companies bid on the projects. Thus, giving clients a chance to receive valuable design at lower costs. ODMs offered clients the chance to collaborate to develop a better product. Additionally, these companies since they were located on the main land in China were able to produce products at a lower operating cost, including lower cost of labor. Lastly ODMs are able to take advantage of the offering limited products. Since this was the case, ODMs did not have to worry about...
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...often outsource major functions rather than support these functions in-house. Companies that specialize in manufacturing products for other companies have become very successful. These companies are called contract manufacturers and they have become successful in industries such as electronic products, clothing, drug, plastics, and custom manufacturing. A simple definition of a contract manufacturer is an organization capable of manufacturing and/ or purchasing all the components needed to produce a finished product or device. The use of contract manufacturers has dramatically changed the way traditional manufacturer companies now operate. Depending on the situation, contract manufacturers will take various roles for a company. Similar to the outsourcing of manufacturing, many companies outsource the product design function. Product design differs significantly depending on the industry. For consumer products, understanding consumer preferences and market testing prospective products are very important activities. For pharmaceuticals, extensive clinical test are often required that involve carefully controlled experiments to test both the safety and the effectiveness of a potential product. Companies that specialize in the design of products have highly developed processes to support the activities needed for an industry. Given the potential advantages of using contract manufacturers for producing products and specialized design firms for designing their products, a firm...
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...the practice of using overseas contract manufacturers, explain. Although the ASR 9000 could be configured and upgraded according to customer needs, there isn't a whole lot of other features or build options similar to that of Dell that can be achieved here. The inherent design of ASR 9000 comes up selecting the chassis (box). The box would have up to eight slots for "line cards" and cards can be upgraded with more ports. The fully upgraded and loaded router will have capacity of 6.4 terabits per second, so they definitely the customer can select their choices of configuration and capacity. Although not very exhaustive this type of customisation to build router according to the customer capacity needs is important , the beauty the customer can select in a way that he can go for lower capacity but upgrade at later point in time. This is essential in routers product market Yes definitey the Pull system conflicts with the practice of using overseas manufacturers. This is because in order to be effective for Pull system to work the Supply chain lead time should be very minimal so that the firm can immediately react to the new orders. In case of using contract manufacturer overseas the firm will still have to do the traditional forecast of the demand and plan for it as opposed to completely Pull system where the firm will start the product build only after receiving the customer order. But the vision of CISCO is go towards the lean manufacturing 'pull' in order to realize the...
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...Virtual Organization Strategy FIN/370 October 20, 2012 Riordan Manufacturing is a Fortune 1000 company that employs 550 people with projected annual earnings of $46 million dollars. The company was founded by Dr. Riordan in 1991 and subsequently the company name was changed in 1992 to Riordan Manufacturing after Dr. Riordan obtained venture capital to expand the company. The corporate headquarters is located in San Jose, California with additional manufacturing plants in Georgia, Michigan, and China. Products include plastic beverage containers, custom plastic parts, and plastic fan parts. The company is a leader in the industry of plastic injection molding. (Virtual Organization Portal, 2012) Riordan Manufacturing wants to expand operations and they have three options when considering expansion. The three options are going public via IPO, acquiring another organization in the same industry, or merging with another organization. The company must consider the strengths, weaknesses, opportunities, and threats of each option before making a final decision on how to expand. Additionally, considerations on the financial effects of globalization, exchange rate risks, and mitigating the exchange rate risks should be analyzed if the company decides to go international. Strengths Riordan manufacturing is looking for ways to expand their business. They narrowed it down to three options which are going public through an IPO, acquisition of another organization...
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