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Outsourcing electronics assembly or making in-house — what are the trade-offs?

Fin Farrelly, Marketing Manger at Filtronic, a leading manufacturer of customized radio frequency, microwave and millimeter-wave components and subsystems, shared his thoughts on Outsourcing versus in-house electronics assembly.

You are a well-established telecommunications equipment manufacturer with considerable production expertise, and you have a new contract for a big project. The strategy at first glance appears simple—you design and manufacture, expanding your design team and factory to cope with the additional throughput. But is that really the best, or the only, option?

At Filtronic we have the capacity, experience and the expertise to design and manufacture high-performance RF subsystems at Microwave and mmWave frequencies. We are equally comfortable manufacturing to a customer’s design, as we are designing and manufacturing our own high-performance products. Alternatively, we enjoy working with our clients, fusing their core competencies with ours to optimize their original design.

Designing and manufacturing everything in-house does not come without hidden costs. Increased design capabilities require recruitment or training costs, increasing manufacturing capacity requires significant investment in new capital equipment, as well as recruitment of new personnel and training. This takes time to ramp up to reach its full potential. New processes will need qualification, your IP will need to be protected, and you will need to manage a process of continuous improvement to minimize waste and optimize efficiency. With a substantial Bill of Materials cost combined with high manufacturing throughput, yield will have a direct effect on the bottom line.

What becomes of the extra capacity when the contract ends? Do you take the difficult decision to lay off staff and dispose of excess capital assets? This could be avoided by outsourcing the manufacturing, which means that you only pay for the capacity when you need it, and at the end of the contract there will be no additional cost related to capacity reduction. Nevertheless, outsourcing the whole job to a manufacturing expert can bring its own problems. There could still be delays, and these can damage reputations however they are caused. So, delegating control for the entire production run may not feel the right option either.

Contract assembly provides the answer. This strategy gives the advantage of increased flexibility and a reduced risk of disrupted schedules, as well as offering the opportunity to rapidly scale or shrink volumes without either incurring extra personnel and equipment costs or keeping a line running below capacity. The right choice of outsourcing partner can solve a lot of headaches. Working together means that best practice can be shared, and both partners can draw on their experience and the lessons they have learnt from past contracts for similar applications. Collaborating on applied continuous improvement offers real-time benefits in terms of reducing the cost per unit and maximizing yields.

Contract assembly has other well-documented benefits, among them the potential for faster lead times, scalability, and more consistent supply. There can also be advantages if a company with a broad product and technology base can draw on the specialized expertise of a contractor.

Partnering with Filtronic as an outsourcing manufacturing partner can help you meet the challenges of ramping up production without compromising on quality. Filtronic is a company with a strong commitment to in-house manufacturing, and its Salisbury, Maryland facility is no exception.

The Filtronic site in Salisbury has recently expanded production capacity to meet a growing demand for its critical communication products. The Maryland area has a considerable pool of RF expertise, as it is home to both the Goddard Space Flight Center and the Naval Research Centre in Chesapeake Bay, as well as other local critical communications experts.

The 16,000 sq. foot facility has ample space to accommodate extra warehousing and assembly areas. Of this floor area, 5,000 sq. feet are devoted to ESD component handling, and 2,000 sq. feet form a temperature-controlled space. The on-site facilities include filter measurement setups, temperature control chambers, passive intermodulation (PIM), and service and support capability for critical communications equipment.

Customers around the world trust Filtronic with the prototyping and manufacture of their own product designs, due to its first-class reputation for product quality and reliability.

If you have a contract assembly requirement or are looking to restore processes back to the US but have limited capacity or resources in order to achieve this, then Filtronic can help.

Contact us today @ 201-618-7629


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