Lou Gaviglia, Nypro interview - Mar '06

Venture Outsource talked with Lou Gaviglia, officer and vice president, contract manufacturing, with global plastics supplier Nypro. Transcripts from that discussion follow.

VO: As a global plastics supplier, how does Nypro actively manage relations with contract manufacturing partners to ensure value is actually added to the EMS-OEM customer relationship?

Gaviglia: Nypro has developed a strategy that enhances the EMS relationship with the OEM by providing the EMS provider access to our in-depth global design and engineering resources. We have a team of people that deals solely with the EMS and ODM market space. Our goal is to maintain a very close relationship with the OEM for early supplier involvement (ESI) and new product insight, while servicing and providing mechanical expertise to their contract manufacturing partners. Nypro offers a wide range of initiative and industry leading technologies.

Nypro also helps to manage the relationship by utilizing extensive systems that manage demand supply; daily order tracking, and the transfer of inventory, globally. This service gives both the EMS and OEM instant visibility to the status of any order; level of inventory, and any ‘after exposure' all on a global basis. The system works so well, our customers have adapted it as their tool to manage their deliveries.

VO: What two primary challenges do you see facing VENDOR-EMS relationships moving forward as supply chains become increasingly more sophisticated and OEMs demand greater materials liability visibility?

Gaviglia: Being a custom fabricator of highly cosmetic parts, we see very few OEMs giving their EMS partners control of the AVL on plastics that have value-add and decoration. At the same time, we fully understand there are increasingly fewer OEMs with in-house manufacturing. Consequently, we maintain our close relationship with the OEM on design and ESI, while simultaneously engaging their EMS partner(s) to ensure continuity of supply from prototype through ramp and production - addressing engineering change notices and any potential assembly line issues.

Clearly, the largest challenge would be with global plastic suppliers potentially infringing on the EMS/OEM relationship. However, this activity would only help both Nypro and the EMS companies to offer more competitive solutions to the OEM.

VO: In your opinion, what has allowed Nypro to develop into one of the leading, global plastics producers and suppliers to the EMS industry and, what challenges do you see ahead that must be addressed to maintain and build upon your current position?

Gaviglia: Many ODM and EMS companies have integrated vertically into a number of technologies. Because of the capital and engineering constraints for decorative plastic enclosures, very few have integrated into plastic molding. Most products in today's consumer market have some form of cosmetic, secondary operations. Meanwhile, in the end, the plastic enclosure is what the OEM's customer sees on the shelf.

Plastic decoration technology has advanced to an nth degree in the last four years. Very often, in the cell phone and PDA markets we are producing millions of units of a handheld device that could have three or four different decoration technologies on the same device (i.e. painting; vacuum metallization, EMI shielding, in-mold-decoration (IML)). Additionally, design and ramp timelines are continually compressing.

A typical cell phone today is designed, through prototype, and ramped-to-volume in less than four months and the program has a life span of 12 to 18 months. Missing the ramp on a new cell phone could cost the OEM millions of dollars. The core competencies to service this marketplace takes years to acquire. It has proven to be more cost effective for major EMS providers to find the right partner for this technology. This as been a great advantage for Nypro in today's outsourcing world.

The main challenge for us is keeping our technology roadmap ahead of the curve by understanding what the next wave of decoration technology is and how we can maintain our lead in providing these services to our customers.

Lastly, Nypro enjoys the competitive advantage of a global footprint with the ability to do the same, or similar product work, across multiple sites. Transferring tools around the world with our unique tooling concept allows the same program to be up and running in another geography in less than one week.

VO: What is the last book you read and why did you choose to read this particular book?

Gaviglia: ‘On the Street Where You Live' by Mary Higgins Clark. I like mysteries and suspense. Her style of writing keeps you guessing and she puts enough plots in the story that every one of her books is a page-turner.

VO: Thank you, Lou.

Gaviglia: You're welcome. Thank you.

VentureOutsource.com, March 2006