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    Exploring ITAR

    By Mark L. Casey | February 25, 2010

    U.S. companies that develop products and intellectual property (IP) with military and defense applications are not permitted to sell or export that technology outside of the U.S. It is obviously in the national interest to not provide our enemies or potential enemies with weapons or technology that can be used against us or our allies.

    There are two sets of laws that control the export of such technology:

    Going well beyond controlling the active export of such technology, these laws also seek to ensure that firms protect their IP from espionage and theft.

    The US Department of State contains the Directorate of Defense Trade Controls (DDTC website). From their website:

    “All manufacturers, exporters, and brokers of defense articles, defense services, or related technical data, as defined on the United States Munitions List…are required to register with DDTC.”

    In addition to the required DDTC registration, many firms invest in compliance programs to ensure that their information systems and documentation are controlled and protected from improper disclosure in a way that would violate the law. One of the firms we represent at Baselodge Group is Extrusion Technology (X-Tech). They have recently announced that they have achieved ITAR compliance certification. As a custom manufacturer of products for their customers, X-Tech can assure their defense and security customers that their IP will be handled properly.

    There are many good resources on the web to learn more about ITAR and EAR. The most direct source is the DDTC website. Another good resource is www.exportrules.com. If your firm’s products fall into the categories described on the United States Munitions List, you need to get up to speed on ITAR and EAR fast. If your products are on the list and if you outsource some or all of the manufacturing of the products, you should be in conversation with your contract manufacturer about their ITAR registration and compliance.

    Topics: Agency Certifications, Contract Manufacturing, Defense, Electronics Manufacturing, Export, Information Technology (IT), Security, Supply Chain Management, Terrorism | 1 Comment »

    Outsourcing or Offshoring?

    By Mark L. Casey | February 1, 2010

    This article is cross-posted in the Baselodge blog: http://baselodge.com/blog/2010/02/outsourcing-or-offshoring/

    I recently read an article that incorrectly defined outsourcing as offshoring. It might be helpful to some readers to review these terms and their proper application.

    Outsourcing is the use of resources outside of one’s own organization to accomplish a business need. These resources could be individuals or businesses, and they may be located in your country or around the world.

    Offshoring is the use of resources in a different country. These resources may be part of your organization or they may be a separate organization. Offshoring is typically chosen to take advantage of lower labor rates and/or specific and unique regional capability.

    Let’s use some examples.

    Example 1: You are the CEO of YourCo Inc. YourCo needs to manufacture your new product, the Widget2010. The challenge you face is that you do not own a factory. Your engineering group has designed the Widget2010, but you have to outsource the manufacturing of the product to someone who specializes in manufacturing. You have many choices as to the size and capability of the manufacturer you choose. Regardless of where the manufacturer is located, you have made the decision to outsource. If the manufacturer is in a different country, you have chosen to offshore. If the manufacturer is located in your own country, you have not chosen to go offshore.  Again, in either case, you are outsourcing.

    Example 2: Again, you are the CEO of YourCo Inc. YourCo needs to manufacture your new product, the Widget2010. Your factory in your own country cannot add the product to their mix because they are running at capacity. YourCo has another factory, however, in another country. When the decision is made to manufacture the product in that non-domestic factory, it may be said that the product has been offshored, but not outsourced.

    Offshoring is still very controversial because many believe it is the shipping of jobs “overseas.” Outsourcing is not as controversial because very few companies still try to be fully vertically integrated doing everything in-house. Therefore, most companies look to outside suppliers and manufacturers to complete their supply chain. This is the reason that outsourcing (literally, sourcing outside our organization) is widely accepted as smart business practice.

    One myth that needs to be exploded for those considering either outsourcing or offshoring is that you will need little or no business structure to manage your outsourced or offshored resources. The truth is that you will still need purchasing experts, program managers, and quality control personnel to effectively manage your offshore and/or outsourced resources.

    Topics: Contract Manufacturing, Cost Containment, Economics, Global Sourcing, Information Technology (IT), Services, Supply Chain Management | 1 Comment »

    Hopeful Signs from the Global Computer Market

    By Mark L. Casey | December 7, 2009

    A newly released iSupply study on the global PC and EMS market is analyzed in this article at ventureoutsource.com.  In Q3 2009 Dell dropped to third in PC shipments behind leader HP and the new #2 Acer (Taiwan).

    As we all deal with the recession, the article identifies two encouraging signs about the global economy that are revealed in the Q3 2009 data:

    “First, unit shipments rose on a year-over-year basis for the first time since the fourth quarter of 2008. Second, shipments increased at the highest sequential rate since iSuppli began tracking the market in 2003.”

    The article includes helpful charts of both the leaders in the PC industry as well as the leading EMS and ODM companies.

    Asian EMS and ODM suppliers are going strong as they supply the world’s appetite for computing, and especially mobile computing platforms. As more people and companies get comfortable with the concept of cloud computing, I predict these manufacturers will continue to enjoy strong demand for mobile devices.

    Topics: Contract Manufacturing, Electronics Manufacturing, Global Sourcing, Original Design Manufacturing | No Comments »

    The Reliability Cycle: Understanding the Booms and Busts of Reliability in Electronics

    By Greg Caswell | October 7, 2009

    The following article was written by my colleague Craig Hillman, CEO of DfR Solutions.

    The Cycle of Reliability

    The Past

    Those who interact closely with DfR realize that we proscribe to the theory of the ‘reliability cycle’. The early years of electronics, 1950’s and 1960’s, were disasters for reliability and led to the establishment of the organizations and tools currently used today (IRPS, MEOST, RAMS, FMEA, etc.). Establishment of large electronic OEMs such as Motorola, Texas Instruments, and IBM in 1970’s and early 1980’s resulted in extensive reliability practices and organizations that are still awe-inspiring, even today.

    The breakup of these organizations and the dominance of cheap consumer electronics in the early 1980’s through the mid 1990’s brought on electronics that would fail if you breathed on it too hard. Realizing that some degree of reliability was required and faced with the great uncertainties of environmental legislation, international OEMs brought new tools and new resources that rivaled the activities of their peers 25 years ago, but without the excessive costs that killed market share (think planned obsolescence: it just needs to be reliable enough). Certain electronic OEMs quadrupled their reliability staffs in a matter of few years.

    The Current

    However, the buzz in the air, even with record attendance at the Reliability and Maintainability Symposium (RAMS 2008), is we are about to hit another bust. At least in North America. Discussions with numerous OEMs indicate that reliability staffs are being slashed as concerns about a recession grow and the need to cut overhead costs increases.

    In addition, the fundamental shift in the focus of Western companies is continuing.  Manufacturing has been outsourced for years. Design is going down a similar path. In fact, the newest, sexiest companies in Western countries often have little to nothing to do with manufacturing and, lately, even design. As companies staffed with sales, marketing, finance and legal personnel have little understanding of the value of reliability staff, this has resulted in reliability activities being pushed farther into a supply chain that is increasingly being necked down.

    The degree that thousands of component manufacturers and electronic OEMs rely on a select number of suppliers is staggering.

    These kind of choke points in the supply chain are almost too many to count. Of course, the real question is what does this all mean? Well, it means a lot of things.

    One, nobody is keeping their eye on the ‘entire’ ball. The cry of ‘application-specific’, which means ‘don’t blame me’, is rising through out the supply chain. Interactions between materials and materials and process or effects of non-standard environments are not being captured until the product is at the customer. And with more OEMs moving to a ‘trust, but not verify’ your supply chain, the fox is guarding a big hen house.  A VERY BIG HEN HOUSE.

    Two, it means that there are no longer numerous gates to capture potential issues. A decision by Sumitomo to use red phosphorus was never fully vetted in part because relatively few organizations are assessing the change before they reach the consumer marketplace. Combine this with OEMs increasingly outsourcing reliability activities to their supply chain and the future is clear.

    The Future

    One can not begrudge OEMs for outsourcing reliability activities. As they perform fewer design and manufacturing activities, they become like their customers, the service providers. Wal-Mart, Verizon, and United Airlines perform relatively few, if any, reliability assessments on products that go into the equipment that serve them and their customers (servers, routers, controls, etc.). They expect a certain degree of due diligence from the OEMs. And now, the OEMs are passing along that due diligence to their supply chain.

    However, service providers do not completely let their suppliers off the hook. What partially, and I do mean partially, takes the place of reliability assessments are industry standard certifications. GR-63 Core, DO-160 are just some of the standards performed by neutral, independent parties that service providers rely on. OEMs, if they continue their outsourcing ways, will have to rely on a similar set of ‘reliability’ standards to assess their supply chain.

    As with most trends, some OEMs will have to suffer painfully before they realize handing over all reliability activities to the companies building or designing their product without any verification was going to lead to a ‘bust’. At that point in the future, the market place will be in search of independent reliability certifications. For those neutral parties, like DfR Solutions, able to bridge the gap between OEM and CEM/ODM and provide a clear, concise, and comprehensive reliability assessment, demand can be expected to be strong. And, maybe, we will experience yet another reliability ‘boom’.

    1 http://www.eetimes.eu/germany/201803796, SMIC passes Chartered in foundry rankings, Mark LaPedus, EE Times, 09/03/2007 4:15 PM
    2 http://www.sumitomo.gr.jp/english/discoveries/special/89_02.html. It is a snapshot of the page as it appeared on Aug 31, 2008
    3 http://www.gartner.com/it/page.jsp?id=620907, Gartner Says Worldwide Semiconductor Assembly and Test Services Revenue Increased 7.4 Percent in 2007, STAMFORD, Conn., March 12, 2008
    4 http://www.ttiinc.com/object/me_zogbi_20070305.html, Will MLCC Prices be Going up in April 2007?, Dennis Zogbi, March 05, 2007
    5 http://www.electronics.ca/reports/components/chips.html, Chip Passive Components Industry Report, 2007, Research Report # RIC9156, Publication Date: November 2007, Research in China, Number of Pages: 81
    6 http://www.taipeitimes.com/News/biz/archives/2007/10/30/2003385493, Taipei Times, Yageo marks 10 years in China, By Jessie Ho, Tuesday, Oct 30, 2007, Page 12
    7 http://www.evertiq.com/news/read.do?news=7780&cat=1, Chart: EMS Top 7 after the FLEX/SLR Deal, Evertiq, June 07 2007
    8 http://arstechnica.com/news.ars/post/20080417-apple-dell-big-market-share-winners-for-the-first-quarter.html
    9   http://www.tvweek.com/news/2008/05/worldwide_tv_sales_almost_flat.php
    10  http://www.gartner.com/it/page.jsp?id=747414
    11 http://www.gartner.com/it/page.jsp?id=745516

    DISCLAIMER

    DfR represents that a reasonable effort has been made to ensure the accuracy and reliability of the information within this report. However, DfR Solutions makes no warranty, both express and implied, concerning the content of this report, including, but not limited to the existence of any latent or patent defects, merchantability, and/or fitness for a particular use. DfR will not be liable for loss of use, revenue, profit, or any special, incidental, or consequential damages arising out of, connected with, or resulting from, the information presented within this report.

    Author:  Craig Hillman-CEO DfR Solutions

    Contact:  Greg Caswell – Consultant-443-834-9284 or gkcaswell@gmail.com for more information

    Topics: Design, Electronics Manufacturing, Reliability | No Comments »

    xTCA Front-Panel Innovation

    By Mark L. Casey | September 3, 2009

    Extrusion Technology (X-Tech) out of Randolph, MA has released a video providing an overview of their innovation in xTCA products.

    Steve Richardson and Matt Travers discuss how this has been applied to their AdvancedTCA, AMC, MicroTCA, and Ruggedized MicroTCA products.

    The link to the video is here.

    Topics: AMC, AdvancedTCA, Aluminum, Design, Electronic Components, Front Panels, Metals, MicroTCA, Product Design | No Comments »

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