The Plexus Rx: for its operational excellence and financial performance, Plexus is our first EMS company of the year.
Quick: Name the best-performing publicly held EMS company. Jabil? Not anymore. Benchmark. Wrong again. Flextronics? Not even close.
That would be Plexus Plexus - A modular World-Wide Web server written in Perl by Tony Sanders <email@example.com>. Comes with interfaces to allow many other information services to be served via the Web.
Version 3.0m 1994-07-22. .
The 28-year-old EMS company has shown gross margins of 10.9% over the past three years and a compound annual growth rate of 14.4%. This despite having what in some circles would be considered excessive overhead: too many engineers and a footprint heavy on North American operations North American operation Surgical oncology Radical surgery of a 'frozen pelvis', consisting of radical en bloc resection of the uterus and urinary bladder. See 'Frozen pelvis.'. Cf 'All-American' and 'South American' operations. .
Yet, in this era, where it seems the only solution is a "China solution," Plexus stands as one of the few billion-dollar EMS players that can afford such a setup. One reason is the company's heavy drive to sell end-to-end services. "We focus on broad service offerings and points of engagement (with customers)," explains Mike Buseman, senior vice president of global manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. .
Engagement starts upfront (to say the company emphasizes design would be an understatement: Plexus' Technology Group has some 350 design and test engineers) and continues through procurement, supply chain management, assembly, test and box build, with a hard push ongoing in the backend and chassis build, followed with direct ship to OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers and follow-on field services. "It's more complex than people appreciate," vice president of manufacturing technology and quality Steve di Loreto says. "From womb to tomb, plus after-market services and end-of-life. There are a lot of aspects to it."
Overseeing the vast terrain, customer manager (CMVP CMVP Cryptographic Module Validation Program (NIST/CSE)
CMVP Certified Measurement and Verification Professional ) runs teams made of not just program managers but supply chain managers and scheduling and production engineers, all of whom may directly interface with a customer. This alignment pushes execution to the site level, Plexus believes. The CMVPs act as farmers, nurturing the accounts, while market sector VPs (MSVPs) are the "hunters," working closely with customer managers to refine service and support needs and define market opportunities.
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Those hunters have been working overtime. For its fiscal year ended Sept. 27, Plexus' revenue jumped 19% to $1.84 billion, bringing its five-year organic revenue CAGR CAGR
See: Compound Annual Growth Rate to 18%. The return on invested capital was 20.1%.
Yet for a company whose revenue has grown $600 million over the past three years, the Years, The
the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109]
See : Time customer base is practically going the opposite direction. The big switch came in 2003, after Plexus recorded a net loss of $68 million. The number of customers dropped from 238 in fiscal 2002 to 107 in fiscal 2006, when it recorded sales of $884 million. the sales per customer, however, jumped almost fourfold to $13.3 million during that time. Today, Plexus is on track to generate an average $14.1 million per customer, based on about 131 accounts, primarily in the networking, wireless infrastructure, defense and security, aerospace, and of course, medical sectors. Growth has traditionally been organic, not via acquisition. Stanford professor and business author Jim collins, who teaches focus and execution are keys to long-term success, is a strong influence, company executives say.
Like Jabil and Benchmark, and unlike most other large Tier EMS players, the majority of Plexus' manufacturing space remains in North America, where it hosts seven of its 13 sites (not including the just-shuttered plant in Ayer, MA). About 56% of the company's 2.1 million sq. ft. of plant space is in the US and another 5% in Mexico, versus 35% in Asia and 4% in Europe. And most of the Asia capacity is not in China but in Malaysia, where the firm has 696,087 sq. ft. across three sites. Plexus signed a lease in September to bring a plant online in Hangzhou, its second in China; the additional 106,000 sq. ft. will bring its Asian footprint to 948,000 sq. ft. Production is expected to begin late in January 2009.
Relative to other top-tier EMS companies, Plexus' disinterest dis·in·ter·est
1. Freedom from selfish bias or self-interest; impartiality.
2. Lack of interest; indifference.
To divest of interest.
Noun 1. in China is noteworthy. Why hasn't Plexus followed the herd East? Ultimately, the mix didn't match the locale, While every Top Tier EMS firm was under pressure from customers and Wall Street to offer a China "solution," for a low-volume, high-mix company like Plexus the math doesn't always work. several competitors suffered deeply trying to establish local supply chains in Southeast Asia. Plexus navigated those obstacles with the skill of a brain surgeon, focusing on more established, lower risk areas like Malaysia. Al logistics and other costs rose, the EMS firm looks more and more prescient pre·scient
1. Of or relating to prescience.
2. Possessing prescience.
[French, from Old French, from Latin praesci . Over time the trend for products where IP protections are paramount or end-product weight is a factor--in short, Plexus' main markets-has become to build product close to where it will be consumed, putting Plexus in a great competitive position.
"We really need to think about the customer," adds Kirk Van Dreel, global process owner, PCBA PCBA Printed Circuit Board Assembly
PCBA Physically Challenged Bowhunters of America
PCBA Polk County Builders Association (Florida)
PCBA Punjab College of Business Administration (Pakistan) . "You can sacrifice customer service [when you move programs around] if not managed and executed effectively. We utilize a dedicated transition team and process to ensure we maintain customer service levels during these types of transitions."
Expansion is inevitable, although the locations being considered aren't so easily predictable. Besides the new factory in Hangzhou, Plexus is considering various sites in Eastern Europe and perhaps additional capacity in Mexico. Romania, Poland and Slovakia are current contenders, while the Czech Republic has been ruled out as "overbuilt o·ver·build
v. o·ver·built , o·ver·build·ing, o·ver·builds
1. To build over or on top of.
2. To construct more buildings in (an area) than necessary.
3. ." Says di Loreto, "We're walking the balance between where labor is low cost-but not the lowest--but focused on customer service." The company estimates a worldwide footprint of 2.6 million sq. ft. by 2012, up about 44% over 2007. Embedded in that estimate are 250,000 sq. ft. in Eastern Europe and 1.4 million sq. ft. in Asia-Pacific.
South of the border, some longtime employment struggles have been worked out. Turnover has dropped from 10% per month to 1%. A decision will be made in the next six to 12 months whether to add capacity in Mexico, di Loreto says.
It very well may be that placed programs tend to stay in one spot. But at Plexus, designs fly around the globe. Over the course of a day, the company has in-process coverage for about 20 hours, six to seven days a week. ASIC (Application Specific Integrated Circuit) Pronounced "a-sick." A chip that is custom designed for a specific application rather than a general-purpose chip such as a microprocessor. designs have given way to FPGA (Field Programmable Gate Array) A type of gate array that is programmed in the field rather than in a semiconductor fab. Containing up to hundreds of thousands of gates, there are a variety of FPGA architectures on the market. , primarily Xtera and Xilinx. Libraries are designed to retain customer "building blocks" to encourage design reuse. The smallest piece would be component footprints and geometries. On top of that would be process and DFM DFM Design for Manufacturing (newsletter)
DFM Design for Manufacturability
DFM Dubai Financial Market
DFM Delphi Form (computer filename extension)
DFM Distinguished Flying Medal
DFM Diesel Fuel Marine guidelines. The next level of reuse is more of a fine line. "We looked at it from a technical and legal standpoint to be able to reuse these [process technology] building blocks without getting into confidentiality problems. We don't cross-pollinate engineers," says Van Dreel. Design teams are kept separate to ensure the security of customer IP. "We pride ourselves on keeping that information separate."
Reuse is important to the medical OEMs that make up more than 20% of Plexus' annual sales. (Plexus has a long history as an EMS to medical OEMs, although Juniper Network is the firm's largest customer, at 19% of sales) These OEMs take the platform approach whereby a concept can be leveraged and reused across various products.
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Test strategies are a collaborative effort between manufacturing engineers and customers, as well as the test equipment OEMs.
The Plexus workcell approach is a sight to behold. Don't expect long, parallel SMT (1) (Surface Mount Technology) See surface mount.
(2) (Station ManagemenT) An FDDI network management protocol that provides direct management. Only one node requires the software.
SMT - Station Management lines. In Building 5 at the company's Neenah, WI, headquarters, the layout is such that within the 100,000 sq. ft. manufacturing plant are four distinct factories--each complete with an SMT line (Figure 1). (Staff must swipe their employee badges before passing ESD (1) (Electronic Software Distribution) Distributing new software and upgrades via the network rather than individual installations on each machine. See ESL. testing and entering the factory floor, only the second tine tine (tin) a prong or pointed projection on an implement, as on a fork.
1. The slender pointed end of an instrument, such as an explorer used in dentistry.
2. in 17 years I've seen that clever setup.)
Inside, banners outline each "factory's" borders. "We blended a dedicated factory with a cellular model," explains Kim Debenack, engineering manager. "This model makes us less rigid because we can run product anywhere, on any line. What we are going for is product velocity, not just velocity of placement." Building 5 handles 10,000 part numbers across five to six customers, at a rate of 15,000 assemblies per month. Nearly everything built is a system with direct order fulfillment. Debenack says board build cycle time has dropped to two days from 21 since this novel setup was implemented several years ago. A separate focused factory is integrated into Building 5 to handle repair services. Adds Buseman, "We're looking at what the next level of service would be."
Process optimization across Plexus' far-flung operations is driven by Van Dreel. Twice a year, he organizes summits involving representatives from engineering and quality. The group has two goals; to prioritize needed activities and processes, then formalize them into projects and execute them around the globe.
Flexibility is key. The number of engineering change orders in Building 5 tops 100 per month. The Neenah site uses DEK DEK - Data Encryption Key printers, Universal placement, Electrovert reflow (1) The process of heating and melting the solder that has been screen printed onto a printed circuit board in order to bond chips and other components to the board. Surface mount chips (SMT) use the reflow method. Contrast with wave soldering. See also reflowable text. , Vitronics Delta-Max selective solder, Agilent 3070 and Teradyne test equipment. Oracle and Agile ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. systems, coupled with homegrown MES (Manufacturing Execution Software) Software that provides real time access to plant activities that include equipment, labor, orders and inventory. An MES integrates the data with enterprise resource planning (ERP) systems so that management has complete control of tools, round out the picture. The organic supply chain management tools develop sourcing solutions based on such factors as component cost, variability and lead times.
Equipment evaluations are performed all over the world. However, there is limited variation from plant to plant. For example, Plexus' Buffalo Grove, IL, site uses Assembleon A5 placement machines. Assessments are conducted every three years on where Plexus' key markets are headed and the types of equipment needed to stay in step. Keeping with the site model, each factory develops its own value stream fashioned by data from on-time deliveries, labor contribution, cycle time, overall equipment effectiveness The introduction to this article provides insufficient context for those unfamiliar with the subject matter.
Please help [ improve the introduction] to meet Wikipedia's layout standards. You can discuss the issue on the talk page. (OEE OEE Overall Equipment Effectiveness
OEE Office of Energy Efficiency (Canada)
OEE Overall Equipment Efficiency
OEE Office de l'Efficacité Énergétique (Office of Energy Efficiency - Canada) ), and defects per million opportunities In process improvement efforts, defects per million opportunities or DPMO (or nonconformities per million opportunities (NPMO)) is a measure of process performance. It is defined as
DPMO Deployment Process Modernization Office
DPMO Defense Prisoner of War (POW)/Missing Personnel (MP) Office ).
Plexus managed its own raw material inventory, with each factory determining what's ideal for its flow. To shorten cycle time, 85% of parts are kept line-side (Figure 4), with 80 to 90% of all parts stocked dock-to-dock. Parts are bar coded and set up offline. The factory averages five to six changeovers per line per day, taking less than 60 minutes per line on average. "Nearly all of what we build, we also configure and test before we ship," says Debenack. Building 5's on-time delivery on several DOF See depth of field and 6DOF.
DOF - degrees of freedom product lines: 99.8%.
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Customer visibility into the factory is linked to demand and flow. Customers can view inventories and processes, and can get data, as desired.
Lean plays heavily into the Plexus model. According to Debenack, Building 5 performs a minimum of 32 Kaizen This article is about a continual improvement philosophy. For Kaizen ($K), a fantasy currency invented by Kaizen Games, see Priston Tale.
“Red tag” redirects here. For designation of damaged structures, see Red-tagged structure. events per year, with teams crossing operational and functional lines. Bulletin boards showing the status of active programs are placed on the factory floor and in the corporate buildings. All associates are trained in Lean techniques, and all salaried employees are Yellow belts. "We want everyone to understand the tools," says di Loreto. "And we get everyone focused on the business, not just what they are building that day."
Failure analysis is conducted in two locales: Neenah and Penang, Malaysia, where the Plexus campus houses its largest building, at some 400,000 sq. ft.
Future developments may include micro-engineering ("micro-E," in Plexus parlance), or packaging. Says di Loreto: "We see some potential for micro-E. Bumped die is becoming more mainstream, and I think engineers will glom glom Slang
v. glommed, glom·ming, gloms
1. To steal.
2. To seize; grab.
3. To look or stare at.
v.intr. onto that." He says better understanding of miniature solder structures of tiny chips, including 01005s, is needed to mainstream new micro technologies like 01005s and system-in-package solutions.
Over the past three years, Plexus has done a superb job at forging its own path for success. For its sustained performance, financially and operationally, and its forward-looking strategy, Plexus is Circuits Assembly's first EMS Company of the Year.
Mike Buetow is editor in chief of Circuits Assembly; firstname.lastname@example.org.