In order for Cinderella to stand out at the ball, the fairy godmother had to micromanage everything to make her magical night possible. This includes the process from styling to coordinating, to transportation. Many invisible hands today are also swinging their wands to micromanage products in order for them to achieve success after a period of neglect or obscurity. But some companies are still facing challenges to meet proper hands, hands that can help their products to launch abroad with the most efficient strategy, and hands that can stylize their products in favor of the buyers' culture and standards.
Behind the scene of "bling bling" IT products, Korean export rates have slightly reduced in the last couple of years. Coinciding with economic recovery, now is the time for small and medium sized companies with highly competitive products to do some stretching and grow seeds in the global market. With a proper hand, the company may not even have to plant a factory or office overseas to do so. The recent news of Sharp and Elcoteq best explains the necessity of having a "product life cycle service partner".
Elcoteq and Sharp signed an extensive agreement for cooperation on industrialization, manufacturing, distribution and after market services for mobile phones on May 18. The cooperation focuses initially on Sharp´s latest smartphone product lineup "KIN," a new Windows Phone, developed for USA and Europe. The cooperation will cover all service areas with immediate effect. The agreement is estimated to contribute over 150 million euros to Elcoteq´s net sales in 2010.
The agreement with Elcoteq covers the Life Cycle Services that include engineering services, sourcing, New Product Introduction (NPI), box-build manufacturing and after market services for the products. NPI services do not only include the industrialization of various models but also the development of the test systems for the manufacturing process. Elcoteq will also have an increasing role in supplier selection and component sourcing. Products manufactured by Elcoteq will be delivered in full box-build mode and all the manufacturing is initially concentrated in Elcoteq´s factory in Beijing, China. Furthermore, Elcoteq will take care of the after market services for the delivered products in each region.
The wave of partnership has also been reaching Korea. Tomi Saario, senior vice president of Elcoteq New Sales and Business Development, visited Korea last week from Finland and said, "the Korean market is already one of the top ten important markets for us amongst many. In ten years, we have already secured a handful of Korean customers. We are here to express our gratitude to our regular customers as well as to meet potential clients. With our twenty five year history of global networks, we hope to aid Korean companies to reach abroad."
Signed, Sealed, Delivered by ELCOTEQ
Elcoteq is the global oroduct life cycle service partner for high-tech product and service companies. Approximately 10,000 employees are in 15 countries on four continents to micromanage everything for a product starting from product development to industrializing localized chains to manufacturing products and providing after services for the product.
Elcoteq has factories in eight locations close to the end market including Europe, Estonia, Hungary, China, India, Mexico and Brazil. These factories are conveniently located for providing after market service (AMS). They are close to customers' end markets in low cost countries to provide labor intensive services. Today almost 2,000 employees in Elcoteq are serving AMS customers.
Elcoteq provides OEMs manufacturing and sourcing in low cost countries, accessing new geographical areas with lower risks. Outsourcing low volume high mix manufacturing can enable OEMs to improve their capital structure by turning fixed costs into variables and to grab short-term business opportunities. "Low volume high mix manufacturing, or making complex products in small quantities offers many challenges. But they can be overcome with careful planning. Enlisting the services of a qualified and experienced EMS minimizes the difficulty as well. We've been providing responsive and customized supply chain solutions to our customers to reduce the complexity and give the benefits of rapid, reliable and on-time product ramp-ups," Tomi added. Manufacturing Market Insider (MMI) recently published the results of its annual survey to identify the world's top 50 EMS providers and appointed Elcoteq as the 8th place in the listing.
Elcoteq focuses not only on high-tech manufacturing but also on AMS, with repair of over 4 million devices annually. Customers can turn to Elcoteq to repair products that have failed in the field or to refurbish products when needed, regardless of who originally manufactured them. Elcoteq AMS services are usually provided together with different kinds of logistic services and real-time traceability. According to ETP and Elcoteq's internal estimates, AMS spending and outsourcing rates are expected to increase in the future.
Elcoteq specializes in repair, refurbishment and recycling services as well as on AMS Engineering and AMS Fulfillment to give its customers the possibility to concentrate on their core business.
"If I may clarify who we are, we don't produce products under our brand, but we help our customers to design and industrialize their vision to make it happen. That is our product in a way. We've been working close with the top companies in the world to produce their lines together. Let's say that a company is interested in making a mobile phone with high-end technology. They may come to us and open their vision to produce millions of this product. Then we take a look at the phone and start analyzing. If too many screws were used, we find the way to take them down. Then we take a look at the components. We question where do we get the components. What about manufacture, should we do this in China or Europe If the sales market is going to be Hungary, for example, there is no point of transporting the case cover or components all the way from China. Then we look for local supply chain. Once the product is finally made, then we must design the packages in different languages with multilingual manuals, software and the other things that come along with the phone. Then we deliver directly to the customer via our service partners. If it breaks within the warranty, the product is sent to the local shop then eventually to us to be repaired. Nowadays, a great service is required for every electronic products the company sells. Recycling is strict in Europe, and that is something we can help Korea with as well," Mr. Saario said.
Elcoteq's recycling services prevents the waste of useful material from used products and assures an environmental friendly disposal of non-reusable and hazardous materials.
Korea Suitable to do Global Manufacturing
Tomi Saario said, "Korea is a good place to do global manufacturing. If you calculate the total cost, in-house manufacturing is not so wise anymore. On top of manufacturing cost, you are shipping it to outside of the country delivering it to the end customers. If you take the whole chain as consideration, it might be cheaper to have factories close to customers' end markets in low cost countries. Companies like us, we have partners to provide all sorts of services. Our customers from Korea don't necessarily have to start their own factory or company in India to expand their sales market. We basically project manage the whole process, but some clients come to us with specific need in a particular area. We provide flexible service based on our customers' request."
The long-term vision of Elcoteq SE is to become a preferred company by many companies around the globe. "Our wish is that Elcoteq can be recommended amongst the electronic companies to any company who seeks for a good service," said Saario. Approximately 75% of Elcoteq net sales are from the business units like mobile phones, their parts and accessories, set-top boxes, flat panel TVs, LED lighting and other consumer electronics products. While the rest are wireless and wireline infrastructure systems and modules, enterprise network products and various other industrial segment products. Any company in search of cost-effective global services tailored to meet customers' local needs Talk to invisible hands.
