Assel aims to double operations within three years

Assel began its operations in 1999 with just a few employees; today the company employs more than 500 people. Long-term strategy, active and long-term collaboration with the customer and common sense - these are the pillars of success for Assel. Evertiq spoke with Managing Director and Co-owner of Assel, Jaroslaw Prolejko. evertiq.pl: -What is the most important factor in the EMS sector? Jarosław Prolejko: We all operate in an increasingly dynamic environment, so response time to changes in customer requirements is crucial. Flexibility is extremely important. However a company, which wants to develop, also needs a portfolio of relatively big customers. This group expects from its EMS-partner a wide scope of services, which have to be built on the employees’ intellectual potential. At Assel, we put a lot of emphasis on this element. Our company could be described as a continuous course at university. We discuss the economy a lot, thus enabling our staff to act in a very conscious way. We have always tried to build versatile teams; having multi skilled staff is fundamental for us. - Does Assel also offer design services? Design services may turn out to either be a success or a trap. From a customer’s perspective, such services would have to meet the customer’s exact needs. In my opinion, having such service in the portfolio fundamentally changes the business model. I would even say that a dilemma arises on the customer’s part: if a company provides design services at a high level, they may also be capable of trade secret theft. We feel it is safer and more straightforward to offer the subcontracting part, related to the manufacturing of a product. There are so many subject areas around production, which create an added value that make design services unnecessary for our growth and development. I believe that cooperation between three parties: the designer, the product owner/producer and the subcontractor is much more effective. - What are the characteristics of Assel's ideal customer? We are looking for customers, who have a rational and healthy vision for their growth and development. From our point of view, stability and predictability are more important than the project size; yet we are rather observant when it comes to prototype size production. In such cases, we pay particular attention to the customer’s preparation to work in the pilot phase. We prefer cooperation with customers who have a clearly defined purchasing policy. In such cases when the customer is hesitant how to approach their purchasing policy, we try to help by suggesting solutions. We prefer active collaboration. My theory is that we have high expectations from ourselves and also from our customers. As an example, this applies to tight management of technical specification and documentation of a product. We intend to build long term partnerships, with growing demands during this cooperation; we lean from one another and the development of all involved stems from cooperation. - Recently you have invested in an advanced production process control system? - Yes, this is correct. We now observe a trend in equipment design, which not only produces, but also has embedded control systems. Naturally, our task is to achieve highest quality in the production process, hence we invest in systems that allow us to quickly detect potential errors. This is particularly valuable in the SMT process. Therefore, as solutions enabling full control over each and every component are now easily available, we need to use this opportunity and invest. We implemented the new control system in order to fulfill needs of a large project and we have gained a lot of experience from that. Now, we are capable of producing over 3 million units per year, using only 20 seconds for each sophisticated product. The level of sophistication is equivalent to that of a notebook. - Could you tell us more about this large project? What sector does it come from? - It is a digital product, containing numerous processors and memory units mounted on both sides of the board. The product consists of 800 to1000 components, including BGA type. The assembly time is only 20 seconds per unit and production for this product runs three shifts a day. This shows the scale of the business. We manufacture approximately 1.5 million units of more sophisticated products while the overall production equals 4 million units. Now, we are able to accommodate practically every mass production project, whether PCB assembly or box building. This would not be possible without advanced IT solutions and a team of skilled personnel. - Process digitalization is a necessity? Digitalisation and IT solutions are necessary in order to achieve scale, efficiency and price. Software helps also to eliminate many redundant processes. Four years ago we formulated a new, long-term strategy and the IT systems implementation was a crucial part of it. Our solutions are based on Microsoft's Dynamics AX platform, which works well for us. Additionally, we wrote our own applications. The comprehensive strategy not only included the implementation of the system and all its functionalities, but also the implementation of our own applications specially designed for subcontracting. - What else is your strategy based on? - The most important element is building the intellectual potential of the company. Trends in Europe and around the world are moving in the direction of narrow specialisation. This means that some unforeseen difficulties are hard to deal with. . It is our role to support a customer in such circumstances and create added value service. Hence, as mentioned before, multi skilled and well educated staff plays a key part. We also aim to stay a relatively small enterprise in terms of administration; however a very effective one in terms of cost and feasibility to accommodate projects of various size and complexity, from large to small. This is an important part of our plan: we want to be big enough to win serial production projects, but at the same time we want to be relatively small in order to be flexible and competitive. We have a comprehensive outlook at manufacturing services. Half of material turnover consists of non-electronic parts, which means our strategy also assumes final assembly and systems integration, not just strictly electronic products assembly. - Tell us about your development plans. Currently, we specialize in the cooperation with foreign customers. However we plan to adjust our strategy and pay greater attention to the Polish market. Therefore, we are in the process of expanding our sales force. In fact we want to triple it. We have to stress that it is not easy to win a big project here, in Poland. There aren't many Polish companies that have the global scale of operations for handling such projects. There is however a significant number of global investors who have located their subsidiaries and operations here. After years of building our position in terms of scope of services, we are at a stage where we can easily tender for larger orders and more demanding customers. Our intention was to first acquire resources and skills then attack the market: in that order. According to my assessments, we are able to double operations within the next three to maximum five years, both in terms of revenue and the number of projects. We assume that the split between PCBA and systems integration projects will remain the same – 50% each. Competence in system integration is being developed through the manufacturing of more advanced products. - Any new investments? - Surely. This will be a continuous process of equipment renewal, yet we do not expect a spectacular expansion unless we acquire a significant customer. Of course, as I said before, we are expanding our sales force, so the scenario of rapid growth cannot be excluded. We plan to expand our premises, in the first stage by 10-15% and 30% as a target. The intention is not necessarily to build new premises, we intend to reorganize our space in order to better accommodate existing resources. The goal of the above mentioned expansion is to have a certain reserve. We are aware that the market is not easy nowadays. News from the global industry are still rather shaky. However, we say that during stagnation there is a place in the market for such centres as Poland and we intend to take advantage of this opportunity. - Can we call the current state of the global economy a ‘crisis’? - No, we cannot say so, but we can definitely speak of a slowdown. All our customers cope with this somehow and we cannot observe anything else than a temporary slowdown. Our strategy is to show customers a wide range of opportunities in relocating projects to places like Poland. This is obviously not easy, as the "Made in Poland" brand is still being slowly built. We are trying to support this process. I would like to highlight a certain trend, which, in the future may change the face of subcontracting. One sees many signs that major economies such as UK or France initiate programs encouraging companies to move production to their native countries. We will have to face this tendency, so a fight for customers awaits us. Cost reduction will be mainly driven by material purchasing, yet administrative cuts might also be necessary. We have an advantage here. We process a billion of electronic components annually, excluding electromechanics, yet our administration is two or three times smaller than in companies of comparable size in the world.