Next generation manufacturing: PCB assembly companies face adaptive, technical challenges

EMS provider industry ill-prepared for future manufacturing wave.

By Mark Zetter

Some contract electronics PCB assembly manufacturers will not survive the upcoming five waves of the next generation of manufacturing. Most manufacturing systems used today in contract electronics solutions vendors have supplier-specific protocols and data format. But there is EMS manufacturing industry standardization that exists, plus EMS providers are not known for being technologically savvy with innovation.

EMS providers are not innovators

EMS providers are not technical thinkers. They have small budgets and invest only minimally in technology. EMS provider technology is always 18 to 24 months behind technology cycles for semiconductor and OEM industry. Real manufacturing-as-a-service requires open and standardized architecture allowing systems to communicate.

The type of systems upgrades for EMS PCB assembly firms to really participate in the five waves identified below will require complex systems upgrades. EMS providers trying to make real progress in this area are Foxconn, Flex, Jabil and Sanmina, to mention a few.

Foxconn is working on artificial intelligence (AI) driven maintenance, test, automation, quality and security applications in a planning and materials management platform to be added to Foxconn’s Beacon control layer as an industrial internet platform solution applied to Foxconn’s smart factories but this is still in proof-of-concept.

Jabil and Flex are further ahead than Foxconn (based on available data), with Flex leading the way but still Flex does not have a complete technology stack. Sanmina is last with its home-built MES.

These providers are considered tier-1s in EMS industry yet none of them have a full technology stack solution to offer OEM customers who hand them responsibility for OEM supply chain management. My earlier comparison of supply chain capabilities for Jabil, Sanmina, Flex, and Celestica goes into more detail and can be read here.

Five waves of the next generation of manufacturing

Meanwhile, capable EMS manufacturing will be controlled by super performers and data aggregators in EMS industry that have limited need for capital or labor. This means really good workflows with accurate and timely execution. A research report by investment bank Barclays delves into the five waves manufacturing phases.

  1. Wave of integration and connectivity
  2. Wave of accelerated robotic advancement
  3. Wave of localization and customization of production
  4. Wave of modular and distributed manufacturing
  5. Wave of autonomous and synchronised manufacturing

Wave 5 is artificial intelligence, lights out manufacturing. Talking with OEMs and based on dozens of conversations in industry with EMS provider CEOs and CIOs, most EMS management teams have no idea of what this means for the future of their business.

1990s MES technology

Although MES is closely linked to manufacturing, today its just 1990s technology EMS providers apply to PCB assembly production then market it to OEMs as a differentiator but its old school control system architecture for supervisory control and data acquisition (SCADA) that simply closed the gap with EMS provider ERP and the manufacturing floor.

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MES links PLCs together for high level overviews about factory process for the purpose of supervision. Think: expensive dashboards that do more to impress visually than lower OEM customer supply chain costs and risk.

Industrial software manufacturing technology stack

The pyramid below was created by research analysts at Barclays and shows the ‘middleware’ aspect of MES relative to the manufacturing technology stack.

Find EMS manufacturing providers

In your search results, you can further target provider End Markets and/or Services.

EMS provider marketers and sales people today talk with prospects today about differentiation and tools they have for managing OEM customer programs and driving down BOM and program PCB assembly and manufacturing costs.


But the reality is manufacturing technology used by EMS providers today is either old, or frankenware comprised of incomplete technology stacks held together by third party vendors like SAP or Oracle who then have an additional layer of licensing deals with other vendors who actually own the IP responsible for the success of OEM customer supply chains managed by EMS providers.

The more I speak with EMS provider executives the more I’m reminded of the habitual thinking in the EMS industry keeping EMS management and companies from moving outside their comfort zone when it comes to new technologies.

Historically, OEMs are always the ones driving real technology innovation. This is in stark contrast to EMS providers today still chasing down problem and putting out fires – often of their own creation.

This has to change.

EMS provider S,G&A (indirect labor) is the second greatest cost after MCOGs for contract PCB assemblers. Proper workflow management of EMS indirect labor is also the greatest potential source for both EMS (and OEM customer) savings in the supply chain.

Contract PCB assembly manufacturers will need to step up their game to ride the next generation manufacturing wave as a quality-minded electronics solutions provider.

OEM professionals wanting detailed info about the gaps EMS providers claim about their technical capabilities v. actuality please reach out to me on Linkedin.

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