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Isola 2016 Fact Sheet

EBN Blog: Corporate Responsibility in a Global Supply Chain World

Corporate Responsibility in a Global Supply Chain World

Written by Tarun Amla, Executive VP & CTO at Isola as featured in EBN

Globalization is generally understood to be the process through which products, people, ideas, culture, and capital are transferred around the world creating a system of global integration. The general consensus is that this process of integration has created a world that is not only smaller but better.  It's also assumed that the global supply chain of the electronics-manufacturing world is highly representative of globalization in action.

The electronics global supply chain is the base for the plethora of products perpetually being developed with new features and capabilities provided in each successive product generation.  These products are not just characterized as containing the latest technology innovations.  Increasingly, they are being identified as life enhancing, life saving, and necessary for the overall future growth and development of a global economy. However, a cautionary note needs to be added here: in order for this growth to maintain its current pace, it's necessary that the electronics global supply chain remain reliable and robust while taking into account critical product performance issues such as safety, reliability, and product integrity.

These product performance issues tie into one of the largest challenges the hardware industry is facing—our ability to better understand supply chain dynamics. We have the basics down. If we run a regression between printed circuit board (PCB) production and semiconductor logistics there is excellent correlation. But, this only works for broad swathes of time. We cannot use it for instantaneous or even short to medium time predictions. What we don't understand at this point in time is the leading/lagging nature of various supply chain markers. If, as an industry, we could pool data to address confidentiality concerns, particularly at the assembly and PCB level, the industry as a whole would be able to avoid the sudden precipitous drops and step ramps that we have experienced over the last several years. So far, analyses of these events have not yielded the most fundamental elements of information such as causality.  If we are able to share information and encourage transparency between the various segments within the supply chain, it would benefit all of the aspects and all of the players in the industry.

The reality is that the bigger the electronics global supply chain becomes the more influence it has. To borrow a saying from the common lexicon, when the supply chain sneezes, the world of electronics manufacturing catches a cold.  Evidence of this occurred in 2011 when the Japanese earthquake affected electronics production operations world-wide. Not only were critical parts unavailable but, in the wake of that shortage, prices for those parts available from other resources jumped substantially.

As a world, a country and an industry, we have a tendency to become complacent. We assume that when things work well they should always be expected to do so. In terms of increasingly competitive electronic hardware development, we need to strike a balance between what is good enough and what will ensure us against failure.

In addition, as an industry, electronics manufacturing needs to take into account culpability regardless of the origin of any issues that arise in the global supply chain. A good example of this is the recent crisis of airbag malfunctions in cars. It's been difficult for automobile manufacturers to determine which models are subject to the malfunctions because there is no adequate traceability of which vehicles contain which airbags. The airbags are from third party suppliers used by all automobile manufacturers. The bottom line for all electronic manufacturers is that if your product affects safety, health, and life enhancement, you have to be able to assume ownership for the entire product whenever an element within it fails regardless of where in the global supply chain that element is resident.

One of the ways that the electronics manufacturing market space can better operate within the structure of this supply chain is to continually look for ways to improve product development operations through cooperative efforts.  As a market segment, we need to create an infrastructure that emphasizes optimal efficiency, cost effectiveness and product quality.  This is not necessarily an easy nut to crack.

The highly competitive electronics market space is often plagued by the idea that cooperative efforts dilute the effectiveness of competitive value. It's important for us to adopt the mindset that what is good for one is good for many. Cooperative product development actually opens the doors for new products, better quality, and a bigger slice of the pie for all market participants.

Tarun Amla is the Executive Vice President and Chief Technology Officer for Isola Group. Along with Semico Research, Isola Group is launching a new Semico Impact Conference, Boards, Chips and Packaging: Designing to Maximize Results. The event will be held Oct. 13 at the Computer History Museum in Mountain View, California. More information regarding this event can be found here