Case Study: Firstronics
Solution: Plex Manufacturing Cloud
Industry: Electronics Manufacturing Services (EMS)
Location: Grand Rapids, Michigan
About The Company
Based out of Grand Rapids, Michigan, Firstronic is an electronics manufacturing services (EMS) provider delivering electronic assembly and materials management services for automotive, aerospace, commercial and industrial tier ones and OEMs. The firm takes pride in delivering superior customer service and a high degree of flexibility, using Lean principles to manufacture efficiently.
During the economic downturn the firm, like many others in the sector began to lose business to cheaper off-shore competitors. Faced with the uncomfortable truth that it may not survive, the leadership team took a strategic decision not to erode margins by competing on price, but to invest in a new way to enhance its efficiency.
The objective was to attain significant growth, which they would achieve by reclaiming, or re-shoring, lost revenues. To do this, Firstronic knew it had to come up with a compelling offer. It chose to develop a solution offering customers rapid new product introduction support and increased scheduling flexibility with superior quality.
Considering the options for growth
The firm knew its current system, DRB, was too basic to cope with the new strategy. Why? Because Firstronic operates in a complex production environment where products can require a BOM of hundreds of components, each with its own lead time of anything from 10 to 26 weeks. And because most contract manufacturers want to confirm schedules from between 6-8 weeks in advance up to 20 weeks or more, Firstronic knew it needed real-time visibility of its inventory, schedules, production lines and customer orders. While DRB could plan materials it didn’t have timeline capabilities built in.
Building the competitive advantage
John Sammut, President & CEO explains further: “To win customers back to North America we needed to help them get to market quickly. We were never going to be the lowest cost provider, but by cutting assembly times from 8 weeks to 1 week we could offer a huge competitive advantage over our off-shore competitors who were stuck at 6 to 8 week turnaround timeframes, plus shipping time on top!”
All the team needed to do was identify a system that could bring their strategy to fruition…
And then came Plex
Turning up production volumes and launching more products would require a more robust, agile, integrated ERP that could supplement its proprietary program management automation and MRP tools. They shortlisted solutions from SAP, Epicor and Plex, testing each technology, and finally selecting the Plex Manufacturing Cloud.
“Very few EMS providers make the kind of investment we have in Plex. The sophisticated management capabilities it offers add a new level of credibility to our proposition and one that prospective customers are buying in to,” states Sammut. “For example, in the automotive industry, OEMs and tier one producers have significant safety and quality obligations placed on them. Deploying Plex right across our operations gives them the peace of mind they need, and translates into increased revenue opportunities for us.”
Benefits & Results
Given the large bill of materials that Firstronic manages and its customers’ need for traceability, the firm benefits from the granular traceability of the Plex Manufacturing Cloud. Vice President of Supply Chain, Wally Johnson elaborates: “With Plex we can trace every component, where it came from, which circuit board it went on to, which crate it was loaded in and where it went. That degree of control is a real boon for customers and something that’s extremely difficult to achieve with other systems.”
Scalability and rapid deployment
“Our reshoring strategy included a significant focus on launching new products. In our organization, like many others, that means prototyping it in the US, then moving to the production phase in Mexico, China, the Czech Republic and other global locations.
Plex allows us to collaborate across locations, share and access real-time information using any desktop or mobile device. It would be very difficult for us to do this and make swift decisions without a real-time system like Plex,” explains Sammut. Web-based application with full support. “Plex is web-based with an extremely intuitive interface that’s fully redundant, so reliability is never a concern for us,” notes Johnson. “Nothing else on the market was anywhere as robust, integrated or easy to manage as the Plex Manufacturing Cloud.”
Made for manufacturers
One of the most important purchasing factors was that the Plex Manufacturing Cloud is purpose designed for manufacturers. Sammut explains: “We are able to use all the modules Plex offers because it is made for businesses like ours. Plex runs everything we do from financial reporting to managing our inventory through the use of Kanbans that automatically send EDI signals to our suppliers telling them exactly when and where we need new stock. This kind of Lean materials management allows us to manage our cash flow much more effectively. Then, if we look at Plex from a commercial perspective, we use the accounting and finance functions for our budgets and financial projections as well as financial recording. “Because of the regulations and high degree of scrutiny, risk of recall and quality issues in the automotive industry, when we have something that has become their system of choice, it’s clearly attractive to potential customers in other industries with similar issues, such as the medical sector.”
Firstronic’s reshoring strategy was not to compete on cost. Instead, Johnson believes that Plex allows them to create a more efficient and highly responsive supply chain. He explains: “The more we can get everyone in our supply chain to use advanced tools, like the Plex Manufacturing Cloud, the more we are able to reduce obsolescence costs and risk, rapidly implement engineering and design changes, and enjoy a greater visibility up and down the supply chain, which makes us incredibly attractive to customers whose own USP is time to market with quality product.”
The answer had to be cloud
With customers slipping away in the recession Firstronic had set itself an ambitious reshoring target. Consequently, the firm had always believed a cloud ERP would be their answer. With Plex, they were able to get up and running using in-house resources and completing user training in just 90 days. Their latest deployment in Mexico has taken just 12 weeks from signing the lease on the site to shipping products – something the management team puts down in no small part to the simplicity of the Plex Manufacturing Cloud. Plant Manager, Sandy Kolp, notes how smoothly and rapidly the deployment went – more so than he ever expected. “We were ready with back-up processes on the day of ‘go-live,’ but the cutover was so smooth we hardly needed them,” he explains. “We pretty much just stopped the unnecessary functions in the old system and started the new one with no delays or duplication of effort.”
Within a year Firstronic had achieved some transformative results as follows:
- Real-time inventory status visibility
Increasing inventory turns from four to ten in 12 months
- Significant revenue increase
Achieved while reducing the working capital in the business
- Granular traceability
A much higher degree of device history recordkeeping down to the component lot code and date codes used in each unit
The robust documentation system allows the firm to achieve essential quality certifications, including ISO accreditation, which has helped them to win new business
- Customer satisfaction
Customers can access Plex’s web-based portals to monitor plans and operations in real time. And that means fewer phone calls and emails – letting all parties focus on key project goals instead. The manufacturer also exceeded the time-to-market requirements of its first new customers by two months, and helped another customer to launch a new product within eight weeks when competitors baulked at the tight timeframe.
The proof that Firstronic’s strategy based on offering rapid time to market and quality has paid off? Firstronic has achieved 300% growth directly as a result of winning back off-shore business.
“Winning back offshore customers, 300% growth, and doubling inventory turns"