Electronics as an industry segment is gearing up to implement and drive value through the implementation of Industry 4.0. Pre-pandemic competitive pressures and wide-spread disruption in demand and supply, combined with workforce availability during the COVID crisis, has propelled industry incumbents to invest in fundamental Industry 4.0 technologies like MES. The goal is to ensure they can gain automation benefits, improved throughput, better quality and end-to-end supply chain traceability.

To that end, OEMs and manufacturers in the sector need to plan and achieve value-chain wide digitalization. Near term needs are ensuring customer satisfaction, maintaining quality levels and supporting the product life cycle.

This customer focus needs to be reinforced through monitoring and motivating supply chain partners– the contract manufacturers, the EMSs and the ODMs to apply the right technological tools within their respective operations, which drives the maximum possible value creation for the whole chain.

In a pre-pandemic report1, McKinsey highlighted the key trends which impacts the Electronics manufacturing companies in pursuit of Industry 4.0. The pandemic, in my opinion, has further reinforced these trends while possibly forcing top management of companies to align their understanding and expedite activities to respond to new market pressures:

  1. The industry is facing an ever-decreasing product technology lifecycle; technology upgrades are more frequent and faster than ever.
  2. The demand for larger number of product variants is increasing, which implies even in mass production, the need to handle more variants on the same production lines has increased. The market is also becoming more and more competitive.
  3. A skilled workforce is becoming harder to find and retain. High worker turnover and increasing labor costs are becoming prevalent. The pandemic further affected the availability of workers due to lockdowns and social distancing norms, which intensified the trend highlighted by McKinsey.
  4. Shortage of raw materials, stringent regulations and consumer awareness is driving the industry towards a more ecological circular economy-based model2.

Responding to pressures: drivers for Industry 4.0 in Electronics

The transformation of the Electronics industry starts with examining the manufacturing and supply chain practices. This includes improvements in material acquisition, product manufacturing, labor and quality management. Along these lines, McKinsey notes a few key drivers of Industry 4.0 for the Electronics industry: 

  1. Closed loop control through sensor-based inline quality inspection, which translates to automated and real-time quality control and management.
  2. Reduction of dependence on manual labor through pursuit of widespread automation, including advanced analytics, AR/VR and automated data collection.
  3. Traceability across the value chain, to extend beyond simple material traceability and cover all aspects of the manufacturing and supply chain processes.

MES for Electronics traceability

Traditionally, MES applications have been deployed in Electronics manufacturing to ensure material traceability, maintain full process documentation and provide overall process control. A modern MES is capable of providing manufacturers much more than that; in fact, the right MES data platform, which is IIoT enabled and has the capability of integrating with IT applications both from automation layer to the ERP/SCM/WMS layer, can act as the cornerstone for delivering on all key value drivers highlighted by McKinsey.

Let’s look at traceability first before moving on to the other benefits a modern MES has to offer. The first is to ensure product integrity and authenticity. Businesses and consumers within automotive and semiconductor industry are losing about $3 billion and $75 billion annually3, respectively to counterfeit goods. Whether it is fake memory chips or refurbished automotive components sold as new, every year counterfeit electronic goods and automobile accessories surge through the market in large numbers. Product traceability gains obvious priority and importance to combat counterfeit goods. Let’s examine what kind of traceability is desirable in an Industry 4.0-enabled infrastructure and value chain.

Traceability in a modern Electronics plant, irrespective of whether it is a contract manufacturer, ODM or EMS provider, begins from materials management. Materials management encompasses a complete record of all materials, parts and assemblies movements, starting with orders received, verified and inspected, which need to be prepared and sent to the shop floor. As the raw material moves through the process, traceability covers the transformation of this material (raw or semi-finished) through each and every operational step.

Traceability monitors each individual shop floor transaction; data must be gathered, recorded and eventually contextualized as the process progresses. The traceability naturally extends to the production/assembly process.

As each product is assembled, cured, packed and shipped, traceability gains a new dimension, which is now beyond the operation where the material was processed, and the product assembled. Traceability is now triggered when the part or assembly reaches the next member of the value chain and the process continues until the final product reaches the end customer. This kind of value chain-wide traceability is desirable due to customer preference and to adhere to safety-related regulations in the industry. All of these should be handled by the same system, to ensure end-to-end process traceability.

This requirement of traceability is far beyond a simple recording of material movement tracking. In Industry 4.0, modern MES applications through an IoT-enabled data platform can provide traceability and include ‘edge’ processes to enrich the genealogy records. A modern MES goes far beyond traceability in terms of value delivery to Electronics manufacturers.

Going beyond traceability with MES

The best MES data platforms today are the very foundation on which Industry 4.0 can be built in a plant or across an entire value chain. The application connects to each and every piece of processing equipment, collects material conditions/consumption and production assembly through IoT-enabled smart sensors and through integration with both level 2 and level 4 (SCADA/PLM/ERP) applications. This enterprise integration allows for all process and production-related data to be captured and recorded in real-time, with reporting that happens in real or near real-time.

The automatic collection of real-time data has multiple benefits from a traceability perspective: all product and process-related data is recorded as the process executes, which eliminates delays and mistakes in data capture. The real-time data captured allows process owners to inspect and make changes immediately in response to an out of spec event or trend. Automated data capture results in better quality management, proactive action and better process control. As the application collects more and more data, AI-enabled Machine Learning prompts automated quality action in a predictive or prescriptive manner, which enables closed-loop quality control. 

Automation is enabled through deployment of robots/co-bots in the process and the primary process management through AI-based tools, and intelligent analysis and where negotiation between shop floor assets determines the most efficient production plan. Automation is not only enabled, but also promoted through the platform architecture. In response to events like the COVID pandemic, having the ability to continue operations with reduced manpower and a minimum level of manual oversight can be the difference between operating the plant at full capacity, or not operating it at all.

The MES also allows for adoption of AR/VR in the production process which has proven benefits in training of new manpower, improvement of maintenance activities and management of the Digital Twin of the actual shop floor. Modern technologies like 3-D printing, which might prove absolutely essential when the supply chain is unable to deliver promised goods, can also be harnessed and managed through a modern MES.

Modern MES – automation, quality and traceability

Getting back to the three main deliverables specific to the Electronics industry per McKinsey– Automation, Quality and Traceability– the modern MES unleashes all the value drivers simultaneously. It allows for end-to-end traceability, right from the time a sales order is entered in the ERP. It connects the sales order with required deliverables and ensures the order is executed as planned. Each component can be traced, which is a critical aspect in the case of quality failures, warranty claims or for product recalls. The MES is able to deliver high level product and process traceability is because it acts as the ‘system of record’ leveraging its data platform. All materials used and assemblies built are recorded, and as the product is packaged and delivered, the MES can capture its lifecycle data through IoT and extensive process documentation, which may help improve product quality or predict failures, to limit the impact of warranty costs and recalls.

Automation, integrated IT and OT bring the entire production process into focus, allowing the MES to perform a larger job—not just data collection, but analysis using big data and business intelligence for autonomous decision making, which goes beyond process orchestration, to predicting quality and maintenance events. Flexibility is built into the DNA of the operation and with the right investment in automation hardware any Electronics manufacturer can become fully automated. It can extend beyond SMT and consider all the additional processes until packaging and shipping.

Lastly, MES builds in-process and automated quality management into the very DNA of the process. This is based on the MES’ capability of gathering data from manufacturing’s edge and managing out of specification events. A modern MES allows both for automated closed loop monitoring and control of in-process quality and intelligence, which boosts improvements of unprecedented and unforeseen scale. The ability to store vast amounts of process data allows advanced analytics/AI to enrich Quality management to become more predictive in nature. MES defines trends based on historical and real-time data being captured from the shop floor. Quality events can be identified proactively, to stave off issues before they occur. This advanced analytics ability can make quality a differentiating factor for OEMs and end users.

Unleashing factory-wide digitalization in Electronics with the right MES

MES as an application goes beyond material and product traceability for Electronics manufacturing. The right MES allows manufacturers to unleash value chain-wide digital transformation and achieve best in class automation, quality and traceability. The benefits from increased productivity, lower maintenance costs, automated reporting and reduced manpower reliance are essential in a COVID-affected global economy to not only compete, but win.

1 Industry 4.0 – Capturing value at scale in discrete manufacturing

2 The Circular economy in detail

3 Anti-Counterfeit Electronics, Automobiles Packaging Market To Reach $24.2B, Globally, By 2020