WASHINGTON – Electronics manufacturers who have retooled their operations to boost profits are emerging from the recession faster than their counterparts in the automotive and industry sectors, according to survey of North American manufacturers.
High-tech manufacturers also have found ways to provide new services related to their products lines, according to the survey by management consultant Accenture. These emerging services are increasingly seen as a complement to manufacturers’ traditional product business, allowing them to add value to the product lines.
Post-recession profitability among electronics manufacturers is keeping pace with other sectors like consumer products and is outpacing automotive and industrial sectors, the survey found. More than half (55 percent) of electronics manufacturers surveyed said they have surpassed pre-recession profitability levels. Another 15 percent of manufacturers surveyed expect to reach pre-2008 profitability levels this year, Accenture found.
A key reason for the return to profitability is that electronics manufacturers are increasing providing services like installation and maintenance of their products. Seventy percent of respondents said they are offering these value-added services with their product lines.
Still, electronics manufacturers said they are more uncertain about future customer demand than other manufacturing sectors. “For electronics and high-tech manufacturers to address their high levels of uncertainty about future customer demand, they need to better leverage their supply chains by making them more dynamic and flexible,” said Greg Andrews of Accenture’s Electronics and High-Tech group.
Along with a greater emphasis on complementary services, Andrews said manufacturers need to integrate their manufacturing operations with emerging networking technology. Manufacturing experts have been touting emerging “cloud-enhanced services” as a way for North American manufacturers to add value to their products, reduce operating costs and become more competitive in global markets.
Meanwhile, manufacturers in a range of sectors from automotive, health care, aerospace and avionics are under growing time-to-market pressures. Hence, said Accenture’s Richard Bergmann, manufacturers seeking to integrate technologies like high-resolution displays into new products must strive to reduce production cycle times.
“An adaptable, cost efficient global manufacturing network not only improves financial performance, but can help respond to fast changing market demands,” Bergmann said.
Interesting since there are EMS providers that already offer value-added services, such as product fulfillment, supplier managed inventory and logistics management. Are these electronics manufacturers using a third-party, like a Flextronics, or are they facilitating these services in-house? And what is the cost to implement these programs vs. the profits margin they yield from them?
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