World electronics environment IEC e-Learning module Module 31 – unit 01 World electronics environment © IEC 2017

World electronics environment IEC e-Learning module Module 31 – unit 01 World electronics environment Welcome to the IEC e-learning course. This is Unit 1 of Module 31. The title of this unit is: World electronics environment. © IEC 2017

IEC e-Learning module M31-01 2/12

Biggest world trade sector Electrotechnical World trade in electronics & electrical devices: 17.7%  USD 2,893 trillion Raw energy: 11.1%  USD 1,822 trillion Electrical and electronic devices now form the biggest trade sector in the world. In 2015 they represented 17,7% of total trade value, according to UN Com trade statistics. This is a larger percentage than for raw energy and larger than that covering the world trade in vehicles. Vehicles: 8.0%  USD 1,314 trillion IEC e-Learning module M31-01 2/12

IEC e-Learning module M31-01 3/12 . IEC e-Learning module M31-01 3/12

“made in one place” Ford Motor Company River Rouge Plant  1920s Raw materials in  running vehicles out In the distant past it was possible for a manufacturer to master all phases of production and assembly. The best example of this was the River Rouge plant of the Ford Motor Company in the 1920s. Here raw materials, including coal and iron ore, wood, sand, rubber and cotton, would enter at one end of the plant and cars would roll out at the other. Steel was smelted, rolled and cast; rubber was volcanized and shaped; sheet glass was produced in a revolutionary continuous casting process, then cut and polished; mechanical parts were machined, tooled and fitted; and all parts were assembled, with the entire process taking place in a single plant. This is no longer possible today. The sophistication of components and the level of technology and investment required have led to rationalization of the electronics industry into specializations. IEC e-Learning module M31-01 3/12

“made in   IEC e-Learning module M31-01 4/12

“made in the world” Electrotechnical goods Economies are highly interdependent Electrical & electronic goods are “made in the world” Today, electronic and electrical materials, parts and subassemblies transit through multiple countries before being assembled in one location, shipped somewhere else and then consumed. Such products are generally no longer the result of industrial manufacturing in a single country. More often than not, electrotechnical devices are “made in the world”.   In fact, today without prior importation, there is no exportation. Without import  there is no export IEC e-Learning module M31-01 4/12

IEC e-Learning module M31-01 5/12

Direct impact on Business-to-business Consumer sales = demonstrate quality, safety, performance Business-to-business sales = demonstrate ability to consistently supply to the specification Today, economic growth depends directly on the ability of industry to sell successfully within a country, but also increasingly beyond. Manufacturers and suppliers must not only satisfy consumer needs and regulatory requirements, but also address the demands of other manufacturers and suppliers in business-to-business transactions. For consumers and regulators, such needs and requirements concerning electrical and electronic products generally include safety, performance and quality criteria. For business-to-business transactions, what is critical is the ability to produce consistently and reliably to a given specification. IEC e-Learning module M31-01 5/12

IEC e-Learning module M31-01 6/12

Supply Chain Customers / Suppliers Manufacturer assembles Component supplier supplies Sub-suppliers also supply The production of electronic goods today is essentially divided into two parts. Stated simply in generic terms, these include the customer and the supplier. For electronic goods, and again expressed in simplified terms, the customer is the product manufacturer, who primarily preforms assembly operations, while the supplier refers to the component supplier, who produces the constituent parts of the electronic goods. The supply chain may consist of multiple levels, with sub-suppliers furnishing elements to the component suppliers. Sometimes a supplier provides a specific service, such as application of surface treatments or special coatings. As a rule, such specific services are applied to parts produced by the customer. The essential element that makes these business-to-business relationships work is confidence that the supplier can consistently supply to the customer’s satisfaction. B to B works because of  confidence IEC e-Learning module M31-01 6/12

Customers / Suppliers IEC e-Learning module M31-01 7/12

Establishing Confidence Customers / Suppliers Confidence = demonstrate ability to consistently supply to the specification or standard The essential element that makes business to business relationships work is confidence that the supplier can consistently deliver to the customer’s satisfaction. Sometimes electronic components are produced to a standard, but often they respond specifically to the customer’s specification. In either case, how does a customer know that a supplier can consistently deliver what it needs? And, when multiple potential suppliers are available, how does the customer decide which supplier to choose? The answer to these questions is that the customer performs audits on its various suppliers. How  qualification audit IEC e-Learning module M31-01 7/12

IEC e-Learning module M31-01 8/12

Qualification Audit by Manufacturer Short listing Full audit Get references & consult Component sampling / testing etc Full audit Of all short listed suppliers Each electronic goods manufacturer may have a wide choice of component suppliers. In order to choose between potential suppliers, a manufacturer has a number of methods at its disposal to short list the candidates. This may include requiring a reference list of the supplier’s clients, with the manufacturer then consulting some of those customers. It can also request sample components or test results concerning such components. All of these procedures already require time and resources. Once a short list has been established, the manufacturer will then need to audit each of those suppliers. Having more than one qualified supplier is useful, because it allows the manufacturer to compare offers and makes it possible to switch quickly to an alternative supplier, if the first supplier encounters provision issues. But auditing multiple suppliers requires considerable time and resources, especially if the suppliers are located in a foreign country. And since carrying out audits is not a manufacturer’s core activity, the results may not be very representative. In any case, performing audits draws time away from a manufacturer’s real business. Resource & time costly, especially if in foreign country May be not be accurate Distracts from real business IEC e-Learning module M31-01 8/12

Qualification Audit IEC e-Learning module M31-01 9/12

Qualification Audit of Supplier Short listing Full audit Send references, but also protect Component sampling / testing Background check of customer etc Full audit Each component supplier may have a wide choice of manufacturers as potential customers. In order to be short listed, a supplier may have to create a dossier for each manufacturer involved. This may include providing a reference list of its customers, while at the same time protecting the identity of some customers who may be in competition with the manufacturer concerned. The supplier may also have to provide sample components or individual test results concerning such components. Furthermore it may be necessary to conduct research on specific manufacturers to ensure that they are good clients. All of these procedures already require time and resources. Then, once a supplier is short listed, it is subject to audits from all the manufacturers involved. And auditing requirements can differ significantly from one manufacturer to another. The process of being audited requires considerable time and resources and inevitably draws time away from a supplier’s actual business. By all potential customers Resource & time costly Distracts from real business IEC e-Learning module M31-01 9/12

Qualification Audit IEC e-Learning module M31-01 10/12

Qualification Audit A business necessity But is Single qualification Time consuming & costly Distracts from real business Inconsistent, random results Single qualification Qualifying suppliers, and even customers, is indispensable. Conducting and undergoing audits is a business necessity. But such processes are costly, can be time-consuming and resource-heavy and distract the attention of industry from its core business activities. Moreover the results of such procedures can be rather random and inconsistent. For all of these reasons, the electronics industry decided to create a more efficient qualification method. It was determined that a single qualification approach, conducted systematically by an appropriate body, was a much more efficient method than conducting multiple individual audits in a random and miscellaneous manner. Systematic approach Consistent qualification Specialised auditing body IEC e-Learning module M31-01 10/12

Qualification Audit A business necessity As early as the 1970s, the IEC was asked to establish a worldwide supplier qualification scheme for the electronics industry. Today the IECQ operates a number of individual supply chain qualification schemes for different sectors of the industry. IEC e-Learning module M31-01 11/12

Qualification Audit A business necessity IECQ serving the electronics industry since the 1970s As early as the 1970s, the IEC was asked to establish a worldwide supplier qualification scheme for the electronics industry. Today the IECQ operates a number of individual supply chain qualification schemes for different sectors of the industry. IEC e-Learning module M31-01 11/12

World electronics environment IEC e-Learning module Module 31 – unit 01 World electronics environment END © IEC 2017

World electronics environment IEC e-Learning module Module 31 – unit 01 World electronics environment END © IEC 2017