Thriving in the Turbulent World of High Tech Manufacturing

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Sustained change holds the key to success in the high tech manufacturing business, says Bjorn Kuijt

In the history of high tech machinery manufacturing, one element has remained constant – change. As intellectual property (IP) evolves, new technology becomes available – a continuous cycle. In the high tech manufacturing business, sustaining change is the key to success. To change effectively requires flexibility, which encourages, stimulates, and provides the opportunities for positive, demand-oriented change. The company needs to be flexible, and just as important, the business application infrastructure must be able to adapt quickly to technological demands along the way.

Let’s take a look at a practical scenario, one that a high tech manufacturer needs to be able to cope with. At the beginning of the 1990s, both mobile phones and laptops were becoming a commodity. Their popularity fueled a large demand for chipsets, semiconductors, and machines to build integrated circuits. The high tech machinery manufacturers that designed and built these machines had hit the jackpot. Their business and profits sky rocketed. Expansion became the norm.

However, as with all commodities, new companies quickly infiltrated the industry. Although many high tech manufacturers are extremely vigilant about protecting their IP rights, new competitors inevitably rise and gain market share. Often, these new companies leap ahead of the competition by hiring cheaper labour and fine-tuning cost controls. At some point, the demand stabilises. How can high tech manufacturers sustain the business they were generating when the demand for their products was growing so quickly and is now reaching saturation point?

One of the key strategic imperatives for a high tech manufacturer is to predict when the saturation point is going to hit. Once it has done this, it has to determine what to do next with the business when that point does strike. Let’s continue the scenario. We’ve progressed from the early demand for mobile phones and laptops that took place in the last decade of the 20th century. In the first decade of the 21st century, availability of semiconductors and chip-producing machinery became abundant. The result has been that high tech machinery and parts manufacturers have had to change their business approach to create new opportunities that take advantage of the surplus.

Here's an example of how a high tech manufacturing business changed, adopted new strategies, and developed new revenue opportunity: the company switched its focus to manufacturing new machines to fabricate new sustainable products, such as solar panels and equipment. This change is a 180-degree turn from producing semiconductor machinery, but the business can still leverage its existing IP and concept. The critical tactic for keeping a high tech machinery manufacturing business thriving and ahead of the completion is innovation management. To manage innovation effectively, it’s crucial to understand the value and potential of IP. Even more important is changing IP to meet new business opportunities.

So how do you determine when it’s time to change your business needs to create new opportunities? First, you’ll notice a change in business data. Levels in bills of materials and route structure may show a drop. The need for subcontracting might increase or decrease. And the need to diversify engineering expertise might increase. These business aspects drive change in datasets and different procedures in the business application. Ultimately, these changes lead to diversified management information.

In the end, innovation pays off, and managing innovation data and processes in a structured solution will accelerate and enhance the benefits. At To-Increase, we recognise these challenges as a necessary aspect of running a high tech manufacturing business. In our quest to find the holy grail of constant innovations, we build and deliver solutions that support the scenarios described above to help you control costs, increase profitability, and increase long-term success.

Written by Bjorn Kuijt, VP product management at To-Increase

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