Case study:

IpexCo

Background to the design chain

IpexCo is a high-tech electronics manufacturer supplying products to original equipment manufacturers (OEMs), who bundle these products with other products and services for end-customer supply. Given the structure of this industry there are very few, very large OEMs. We typically refer to this type of supplier (IpexCo) as a tier 1 supplier.

IpexCo had a significant engineering team who were responsible for product design. Engineering worked closely with these OEM customers in product design and qualification and also with tier 2 and tier 3 suppliers upstream who manufactured various components or parts and sub-assemblies that made up the product. Initial prototypes were made in the engineering laboratories with materials procured by Engineering. The next stage was small scale production managed by a new product introduction (NPI) group within Operations. There were a number of resources in the NPI team - mainly Project Management and Buying. The NPI group was responsible for ensuring the product could be produced in volume and produced initial volumes for OEM customers. The process of getting information from Engineering was difficult - one of these scenarios where the 'paperwork' lagged behind the activity of design and supply. Different information systems used by each team did not help since Engineering used 'Agile' as their system of record; this held detailed specifications, but Operations needed the information on their SAP Enterprise Resource Planning (ERP) system in order to drive demand through the supply chain.

Thus product design (i.e. new product development - NPD) was largely the remit of Engineering and product launch (i.e. NPI) was largely the remit of the NPI team in Operations. Operations had established an Advanced Manufacturing Operations (AMO) to introduce new products. This unit had a capacity to assemble about 50 units/day. Once customer demand ramped-up, manufacture was then transferred to the large-scale production organization (capacity to assemble 100s of units/day).

Background to the supply chain

IpexCo employed a mix of own-production and contract manufacturing in supplying the products to its customers. Parts or components were supplied by what could be considered as tier 3 suppliers. Some of these parts went to tier 2 suppliers for sub-assembly - either printed circuit board assembly (PCBA) or mechanical sub-assembly - and others directly to IpexCo for finished goods assembly. Hence a problem with one part would have a domino impact throughout a rather interdependent and thus complicated supply chain. A simplified schematic of IpexCo's supply chain is presented in the following diagram.