Focus on Singapore
01 May 2009
In March, I was part of a press tour of Singapore electronics manufacturing services (EMS) and precision engineering suppliers. As someone who has worked in the EMS industry for a few decades, several key points struck me…
Firstly, Singapore’s government truly values its industrial base and works to promote it in ways that are complementary to globalisation. Secondly, Singapore’s suppliers have done an excellent job of balancing efficiency against the labour cost increases that come with market evolution. Finally, Singapore is a great place to view effective public-private partnerships focused on technology advancements and process improvements relevant to electronics manufacturing.
The intent of this article isn’t to praise Singapore, but instead to ask the question, “How can electronics manufacturing companies leverage the resources available in that part of the world to reduce costs or achieve other internal goals?”
Effective industrial promotion policy
I made my first trip to Singapore in the 1980s and have made continuing trips over the years. The one thing that continues to impress me is how well government agencies in Singapore focus in on the needs of the supply base and multinational companies (MNCs) wishing to find suppliers.
International Enterprise (IE) Singapore is one example. IE Singapore is an agency under the Ministry of Trade and Industry. They help Singapore-based suppliers wishing to expand to new markets and foreign MNCs wishing to find new suppliers. One of the challenges I saw when I worked in the corporate EMS environment was that while it was relatively easy to find good suppliers for major commodities like components, PCBs, and consumer grade custom metal or plastics components, it was much more difficult to find precision engineering suppliers for complex projects with either industry-specific quality requirements or higher mix, variable demand characteristics.
IE Singapore’s supply base search and matchmaking services make that much less of a challenge. MNCs can submit their specifications for supplier capabilities to an IE Singapore representative and they will develop a list of compatible suppliers. With offices in over 30 cities worldwide including London, Frankfurt, New York and Los Angeles, IE Singapore officers will also set up meetings with the short list of suppliers chosen by the MNC’s sourcing team, so that the team can visit and/or audit the selected companies during a single visit. In some cases, that visit may include side trips to satellite facilities in other lower cost labour markets such as Indonesia, Malaysia, Vietnam or China. They also organise trade missions of suppliers to various countries which can provide a localised “first look” to sourcing teams wishing to explore options prior to travelling to a supplier facility. An upcoming example of this is a trade mission to the UK comprising suppliers involved in medical device manufacturing in May. Programs such as this help lower costs of supplier identification and qualification on both the supplier and customer side of the equation.
The other element that contributes to lower costs is the ease of doing business. Singapore’s legal system is based on British Common Law and English is the official language of business. Intellectual property (IP) protection is very strong. This simplifies contract negotiations, patent filings and IP protection enforcement, as well as timely, accurate communication with suppliers. Movements of materials and finished goods in and out of country, and payment transfers are governed by easy-to-understand regulations and efficient systems, which contributes to predictable costs and cycle times.
A focus on lowest total cost
As with many mature labour markets, the supply base has analysed its business models and adapted the service mix to continue to compete effectively. Industry-specific certifications such as ISO 13485, ISO/TS16949 and AS 9100 are commonplace even at component-level suppliers because there is emphasis on supporting higher mix, lower volume complex products. There is a focus on internal continuous improvement initiatives such as Lean manufacturing and Six Sigma.
There is also a strong focus on analysing the needs of long-distance customers and tailoring services to support them. Logistics efficiency and cost containment are considerations in determining which facilities are used when a supplier has multiple manufacturing facilities within the region. In short, suppliers achieve cost reduction by working more efficiently vs. the formula of low labour cost alone.
Seven companies were toured. Capabilities, levels of vertical integration and manufacturing facility locations varied but all were focused on addressing higher complexity manufacturing requirements. Many projects were higher mix and/or low volume/short run, and manufacturing processes had been optimised to accommodate that business segment. Factory tours showed high levels of process control and traceability. Engineering support and robust program management processes were elements in each business model.
AMS Biomedical (PTE) Ltd is a Singapore-based contract manufacturer of complex electro-mechanical equipment and devices for the medical industry. Its capabilities include engineering design as well as electronic and electromechanical assembly. The company is certified to both the ISO 9001:2000 and ISO 13485 standards. Its manufacturing operations are located in Singapore, supported by a network of supply chain partners including its own precision machining plant in China.
Beyonics Technology Limited is headquartered in Singapore and has manufacturing facilities in Singapore, China, Indonesia, Malaysia and Thailand. It is publicly traded on the Main Board of Singapore Stock Exchange and had annual revenues of S$1.41 billion in FY 2008. Its industry focus includes automotive, consumer electronics, data storage, electronics/electrical, electronics equipment, medical and healthcare, communication and networking, and security surveillance applications. Certifications include Six Sigma, ISO 13485, ISO 14001, ISO 9001, OHSAS 18001 and ISO/TS 16949. Manufacturing capabilities include PCBA and system-level electronic assembly/test; medical disposables assembly and packaging; metal stamping; aluminium die-casting and precision machining; plastics injection moulding; and surface finishing. It has Class 100, Class 1,000 and Class 100,000 clean rooms.
CEI Contract Manufacturing Limited is headquartered in Singapore and has manufacturing facilities in Singapore, China, Indonesia and Vietnam. It is publicly traded on the Main Board of the Singapore Stock Exchange and had annual revenues of S$89.5 million in FY 2008. Its industry focus includes: avionics, analytical equipment, medical devices, oil and gas, electroluminescent displays, photonics and metrology instruments, and semiconductor equipment. Certifications include: AS 9100, ISO 13485, ISO 14000, ISO 9001:2000, ISO/TS 16949, ISO 14001 and UL508. It has Class 10,000 cleanrooms. Capabilities include PCBA and system-level assembly/test and metal stamping.
First Engineering Limited provides ultra precision moulds, plastics components and modular manufacturing assembly for high technology engineering applications. It is one of a few companies in the world able to produce ultra precision optical plastic lenses. Headquartered in Singapore, its capabilities include product design, tooling, production and assembly services, predominately for the hard disk drive (HDD), PC peripherals, optical-related products, life science, healthcare, business machinery and automotive industries. Manufacturing facilities are located in Singapore, Malaysia, India and China. Certifications include: ISO/TS 16949, ISO 13485 and ISO 14000. Six Sigma programs are also in place as majority of their global customers require and expect it.
Forefront Medical Technology (PTE) Ltd (FMT) is an integrated medical device contract manufacturer that provides collaborative product design and development, rapid SLS prototyping, tool making, injection moulding and extrusion, clean room scalable assembly and packaging, testing, sterilisation, and global logistics. FMT's manufacturing facilities are located in Singapore and China. Forefront is ISO 9001:2000 and ISO 13485:2003 certified, and FDA CFR 21 Part 820 registered.
Onn Wah Precision Engineering is headquartered in Singapore, and operates manufacturing facilities in both Singapore and China. Its products and services include precision CNC-machined parts, production tooling, jigs and fixtures, and contract assembly for OEM equipment and modules. Industries served include: aerospace, electronics/electrical, electronics equipment, medical, oil and gas, and photonics. Its certifications include; AS 9100 and ISO 9001:2000.
Rayco Technologies (PTE) Ltd is a precision elastomeric solutions specialist whose components are used in the medical device, lifestyle products, data storage, electronics, automotive and aerospace industries. Capabilities include: dispense-in-place gasketing (DIPG), and liquid injection, compression and transfer moulding. It can also overmold a variety of elastomers with materials such as plastic, metal and other substrates, as well as provide PTFE coating. Its manufacturing facilities are located in Singapore and China.
The value of public/private partnerships
The government of Singapore has several agencies focused on increasing manufacturing competitiveness within Singapore’s supply base.
The Singapore Economic Development Board (EDB)) is the lead government agency responsible for planning and executing strategies to enhance Singapore’s position as a global business centre and grow the Singapore economy. Its mission includes: attracting foreign investment, expanding existing industry vertical segments while also exploring new areas for growth, and helping to enhance Singapore’s existing pro-business environment by providing feedback and data to help ensure infrastructure and public services remain efficient cost competitive.
The Agency for Science, Technology and Research (A*STAR) is Singapore’s national agency for science and technology, supporting the development of industry clusters. Its mission is to foster world-class scientific research and talent. The Singapore Institute of Manufacturing Technology (SIMTech) is a research institute of A*STAR. SIMTech develops high value manufacturing technology and human capital to contribute to the competitiveness of Singapore industry. It collaborates with both multinational and local companies in precision engineering, electronics, semiconductor, medical technology, aerospace, automotive, marine, logistics and other sectors. Its technology competencies include research groups, research programs and innovation and commercialisation projects. Current research groups are focused on manufacturing processes, manufacturing automation and manufacturing systems. Research programs include microfluidics manufacturing, large area processing and low temperature ceramic substrates. Innovation and commercialisation focus includes: product innovation and development; equipment innovation and development, and sustainability and technology assessment. This platform allows participating companies to access collaborative research, participate in consortia or access expertise for a specific internal project.
SPRING Singapore is the enterprise development agency for growing innovative companies and fostering a competitive small and mid-sized enterprise (SME) sector. The agency works with partners to help enterprises in financing, capabilities and management development; technology and innovation; and access to new markets. As the national standards and accreditation body, SPRING also develops and promotes internationally-recognised standards and quality assurance to enhance competitiveness and facilitate trade.
A key point in Singapore’s approach to public/private partnerships is the word partner. Participating companies pay a portion of the cost of the resources they access. In order to receive agency subsidies, they must define the results the program is expected to achieve, and ultimately deliver those results. The other core aspect of Singapore’s approach is relevance. While some programs are focused on leading edge technology, others are focused on solving common manufacturing issues or helping companies better develop the skills of their employees.
For example, Onn Wah Precision Engineering Pte Ltd implemented its continuous improvement program in 2001 and partially funded the use of an outside consultant through a program offered by SPRING Singapore. Today, Onn Wah’s facilities combine 5S, Total Productive Maintenance (TPM) and Lean Manufacturing principles with a low cost structure environment, which is typically half that of Europe or the US.
According to François Beaufrère, Onn Wah’s General Manager, the platform offered by government agencies such as SPRING Singapore opens the door to improvement programs that many companies could either not afford or would not even think of doing on their own. “Because the prospect of funding is available, companies ask the question: ‘why not get an expert in that field to help us.’ That triggers the search for specialised resources. They can then ask for subsidies provided they deliver the results,” he added.
Today’s economy continues to drive a focus on supply base rationalisation and continued cost reduction. The benefits of responsive customer service support staff, supplier focus on continuous improvement initiatives and a business-friendly government infrastructure should be carefully considered in analysing the total cost equation.
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