Electronics Production | April 19, 2007

NCR and Redbox choose Solectron

Solectron is doing the "dirty work" for both NCR and Redbox. At U.S based company's outsourcing is changing the way companies are doing business.
NCR Corp. and redbox are named as two companies that are taking benefits of having someone else do the manufacturing "dirty work" for them.

Redbox operates a small army of DVD rental kiosks located in McDonald's restaurants and grocery store chains across the US. NCR manufactures kiosks for multiple applications and businesses.

Both companies have partnered EMS provider Solectron to manufacture either its entire line of products or only for certain segments of its business.

According to Self service the two companies has taken advantage of their outsourcing agreements with Solectron and capitalized on the advantages they offer.

Franz Kuehnrich, vice president of engineering for redbox said that order to develop, build and manufacture a kiosk suitable for a quick expansion, it would have had to shift its focus from what it already targeted as its core competency, DVD rentals, to something it had no intention of becoming, a player in the manufacturing business.

Douglas Britt executive vice president of Solectron's sales and account management, said "There's a better utilization of (the company's) working capital when you can partner with the manufacturing partner that has the capabilities of manufacturing and managing the supply chain." Is manufacturing a core competency or is it not a core competency? And we've been inviting that discussion to say that it's the time to rethink the strategy to determine what is core and what is not core."

Britt cited the high rate of growth in emerging markets Asia and Eastern Europe as another reason companies are turning toward EMS partners. The cost to develop, manufacture and then successfully deploy a kiosk network, including its supply chain and services, is too much for many
to handle. The solution, Solectron maintains, is to turn toward an EMS partner which has those resources already in place.

"If a company does not have the in-house knowledge and wherewithal on how to go quickly on a ramp up, than the safer route is to go with outsourcing. "But there is a lot of risk mitigation." Kuehnrich added, Selfservice reports.
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