Reliability – when low cost turns expensive

In just over a month’s time, the International IEEE Conference on Electronic Product Reliability and Liability is to be held in Hong Kong and Shenzhen, the city that has been described as the major electronic manufacturing hub of the world. The theme is highly appropriate not only for the increasing complexity of electronics devices and products, but also for the fact that outsourcing is increasingly dominating the worldwide electronics manufacturing scene, and OEMs are progressively losing control over the processes that manufacture their products. Add to this the fact that much of that outsourced activity is to be found in China, and the location of the conference also becomes highly appropriate.Over the last year, reports have been surfacing of PC motherboards and power management systems made in Asia that, thanks to faulty components, are giving up the ghost before time, with high associated costs of repair or replacement, and the even greater costs, if difficult to pinpoint, of damaged brand and company reputations. China does have some home-grown component manufacturers whose products are on a par with those made in the USA, but the problems can be traced in part to the attraction for the OEM and its extended manufacturing community of low-cost parts, exacerbated by the Chinese Government’s stipulation that a certain proportion of parts must be made in China.In addition, component manufacturing capacity has been reduced in the face of tough market conditions, opening the door to pirated or re-jigged parts that may find their way into consumer products that in turn, although they may be destined for the less stringent domestic market in China, can end up being exported.Supply chain executives’ concern for their products’ reliability and companies’ good names is leading Western EMS and OEM companies active in China to persuade their component suppliers to set up shop locally in China. Towards the end of October, for example, passives manufacturer Tyco Electronics reached an agreement with Flextronics to participate in the EMS provider’s industrial park complex in Doumen, in part to offset costs of logistics and to speed turnaround, but in part too to tighten up on quality issues.But, say many, the problem lies not simply with manufacturing and sourcing in China, but with choosing competent partners, and with people management. Bruce Euzent, Director of Quality and Reliability for Altera Corporation argues that companies should be more careful whom they partner with, rather than rushing to make a quick buck: "It’s all about relationships and managing the business. If you’re going to start a manufacturing partnership they [your partner] have to be competent and detail orientated. Everything flows from that. They have to have the right technology; they have to have the right equipment to make it. You shouldn’t be doing business with somebody that isn’t capable of doing what you need them to do."