Flat Panel TV Production moves from OEM to EMS

Balancing the sourcing of the parts to get the best prices and quality while securing all the parts needed simultaneously with minimal inventory requires a finely orchestrated supply chain. The EMS in this role no longer handles just the assembly of printed circuit boards and sub-assemblies. The EMS must possess the electrical and mechanical engineering skills to properly align the FTV and perform complete final assembly and test. Elcoteq acquired the shares of Productos de Consumo Electrónico Philips, S.A. de C.V. on September 4, 2008, taking over Philips’ flat panel TV assembly operation in Juarez, Mexico. The deal included acquisition of the manufacturing assets, inventories, lease of the factory space, and the local workforce. The manufacturing concept in Juarez is based on a full flow line concept, focused on speed and short throughput time, taking just an hour for a flat TV panel to be assembled, aligned, tested, packed, and loaded as a finished product to be shipped to the customer. This operation is an example of how home communications products traditionally designed and produced by an original equipment manufacturer (OEM) can be transitioned to an EMS and how companies are starting to rethink sourcing, logistics, and localization for sourcing and manufacturing. Twelve years ago, when Elcoteq began working with Philips, its main function was assembly of printed circuit board assemblies (PCBAs) and sub-assemblies. Now, the responsibility for production of the finished FTV is up to Elcoteq. Involvement with design is another EMS change. For many years, design for Philips’ flat panel televisions took place at its design center in Singapore. As part of the Elcoteq/Philips agreement, Funai, a Japanese manufacturer of audiovisual equipment, bought the Philips United States and Canada TV business, so Funai is now Elcoteq’s customer and collaborating with Elcoteq on FTV design along with the Singapore center. Involvement with design is part of Elcoteq’s total cost of ownership concept using a design for manufacturing (Dfm) and design for x (Dfx) strategy. As an extension of the design phase, the Elcoteq engineers support what they call Accelerated Reliability Testing, which involves debugging the design and bringing a mature product to the market. Sourcing and logistics is another major component of the operation. Strategy has shifted from trying to acquire or manufacture all parts in China to a global concept that considers the location where the product will be distributed and used and logistics costs for the various parts. China was the manufacturing hub and purchasing source for PCBAs in 2006. Today, the electronic components are still purchased in Asia, but from Elcoteq’s own manufacturing plants, and larger items consumed at the Juarez plant, such as plastics, metals, and packing materials, are sourced locally. The sourced materials must arrive simultaneously, whether from around the corner or the other side of the world, so they can be assembled, aligned, tested, and packed for shipment according to a firmly delineated schedule. Maintaining inventory for large screen flat panel TVs is extremely costly and puts a strain on facility space; plus, it’s impractical to store such bulky materials. By having a defined and carefully calculated level of logistics control, the plant can operate on a just-in-time basis so the panels, which are very expensive, can be kept at the plant for as short a time as possible. Production of FTVs offers some extra challenges. The factory has to be equipped with manipulators to aid workers in lifting the heavy panels to certain positions in the line, especially as they have to be hoisted in the assembly line to an upright position for alignment, testing, and packing. Not only are the FTVs breakable, but they are expensive and used in living rooms, so the aesthetic quality of the television is important. High gloss finished areas are sensitive and have to be covered with protective tape to ensure they arrive to the consumer unblemished. Reliability and quality control are critical to the success of flat panel television production, considering that the customer wants to have 100% reliability over many years. All components must be matched, aligned, and calibrated to meet the required TV picture quality. Aligning supports final assembly and both final assembly and testing are integrated into the process. Testing protocols test the functionality and connectivity of all parts of the set. Reliability testing takes place over hundreds of hours to simulate the use of the TV by the consumer. Accelerated reliability testing includes the use of climate chambers to test television performance during humidity and temperature changes. The assembly lines are supported by traceability systems for key components and integrated quality control systems. Once a FTV is out in the field, the traceability system can be used as a link to historical data to identify all aspects of the television’s parts and production. Moving flat panel TV production from OEM Philips to EMS Elcoteq is proving to be a beneficial relationship to all. As Rob de Ridder, senior vice president for Philips said, “Our cooperative relationship with Elcoteq has now been running successfully for the last 12 years, and we are confident that Elcoteq will be an excellent partner as we continue to streamline our global supply chain for FTV products. Our move to transfer the Juarez operation to an experienced and leading EMS company in this field was a logical step in optimizing our supply base in the FTV business.” Source: The author of the article is Carsten Barth, The Elcoteq Blog.